Conflicts of interest seem to have a negative connotation to them, particularly when it comes to condo board members. But, what if this isn’t always the case? What if a conflict of interest, when disclosed, turns out to be beneficial to your condo because of a board member’s “conflict?”

Condo boards and conflicts of interest

An example of a conflict of interest we often come across with our condo board clients is when they require an onsite resident manager. For instance, your condo board is looking for a resident manager to look after the day-to-day building maintenance of your condo building. The conflict of interest could be:

·         A board member who wants to do the work themselves, while receiving payment or remuneration of some sort, giving them a financial investment or interest, or

·         A board member knows someone who does this sort work, giving them a personal investment in who is hired.

In both circumstances, there may be financial benefits to the condo board and building itself. However, as the Condominium Property Act  indicates, so long as the board member who has this personal investment, including non-monetary, discloses their interest and removes themselves from the voting process, then this type of conflict of interest may actually benefit the condo building over and above any other option.

Specifically, Section 28.3, paragraphs a – c of the act states:

3.       Where a member of the board has a material interest in any agreement, arrangement or transaction to which the corporation is or is to become a party, that person

a.       shall declare to the board that person’s interest in the agreement, arrangement or transaction,

b.      shall not vote in respect of any matter respecting that agreement, arrangement or transaction, and

c.       shall not be counted when determining whether a quorum exists when a vote or other action is taken in respect of the agreement, arrangement or transaction.

Once disclosed, your board should weigh the benefits of going with the individual or company who might be involved in the conflict of interest. Typically, these benefits come in the form of:

·         Fiscal savings, and / or

·         Increased accountability on the part of the “interested” party.

What this means for your board

If, after weighing the benefits or disadvantages of your board’s options, the scenario where there is a conflict of interest is actually the best route for your condo building, then it’s on the board to properly manage this decision.

Make it clear to your board that any personal investment in an outcome must be disclosed, then said individual must remove themselves from all decisions and voting on said matter. This will help ensure your board manages the disclosure effectively.

Now, we’re not saying that every single conflict of interest will be positive, but in some cases they can benefit your condo and, ultimately, isn’t that the purpose of your condo board; to act in the best interest of your condo residents?

Uncertain as to whether or not your have a conflict of interest or are simply looking to learn more? Visit Alberta Condo Owners for Change and join the conversation.

Author Bio:

Author has many years of experience in the Calgary condo management market. He recommends that a condo association should seek the services of a reputed condo management company for successful handling of all operations.