Serving on a condominium corporation board of directors can be an exciting job that imbues you with a sense of personal responsibility—after all, you're taking an interest in how the corporation fares while you're on the board—but it's important to be aware of potential conflicts of interest, and to handle them as openly and above board as possible. Not only is it a smart and ethical way to conduct business, but recognizing and avoiding conflicts of interest goes a long way toward preventing costly litigation.
To make the most of your tenure on the corporation's board, follow these tips to handle conflicts appropriately:
· Recognize what a conflict is: A conflict of interest is when a member's personal interests interfere with their ability to make a decision for the board's greatest good. For example, if a member owns a maintenance company and wants to contract their services, they would financially benefit from this partnership. That's a conflict of interest.
· Know the scope of your duties as a board member: As a member, you have a fiduciary duty to the corporation: a duty of care (making reasonable and informed decisions) and a duty of loyalty (put the corporation's needs above your own).
· Always be on alert: Conflicts of interest can be everywhere, and it is your job to recognize them and come up with a plan to handle them before they affect the board and corporation.
· Avoid the budgetary minefield: As you might imagine, the budget is the biggest minefield for board members. Simply put, you cannot make decisions that would disproportionately benefit your personal finances.
· Handle sensitive information appropriately: Board members are bound to come across sensitive personal information that cannot be exploited for personal gain. For example, you can't use knowledge of upcoming sales to profit in any way.
· The rules apply equally: It should go without saying, but the corporation's rules need to apply equally to every board member, no matter who they are and how they came to be on the board.
· Hold developer-appointed members to high scrutiny: Developer-appointed members have an ethical obligation to the board and the corporation, and need to hold their interests above those of the developer.
· Be open about the conflict: If there is a conflict of interest—and they will certainly arise from time to time—the most important thing to do is handle it openly, with plenty of documentation to back up your decisions and actions. Different provinces may have different laws governing condominium corporations.
· Hold your managers to the same standards: Finally, managers should be held to the same standards as the board, always putting the corporation's interests above all.
Imperial Properties has a reputation for effective and comprehensive condominium and multifamily residential property management. Our team of experts focuses on making each condominium a first-class living experience for all the residents, which we accomplish with our knowledge, service and efficiency. If you're concerned about conflicts of interest in your condominium corporation, reach out today to learn how we can help.