Although the position offers little compensation apart from the satisfaction of a job well done, building board members are still in charge of running a business—a business with revenues, expenses, and assets. Regardless of the size of the complex and whether it is of the co-op or condo variety, a board member’s job can hardly be considered insubstantial.
Responsibility and Risk
Unlike their counterparts at Fortune 500 companies, the board members of co-ops and condos are not usually career executives armed with lengthy corporate management resumes. The boards of co-ops and condos are stocked with people from all walks of life. Some are attorneys, some dentists; some are real estate brokers, some plumbers. Whoever they are, their status as board members automatically exposes them to one of the perils of their position: the potential for conflicts of interest.
Board members have enough to contemplate as they carry out their buildings’ administrative duties, but avoiding conflicts of interest—or even the appearance of such—is crucial. Nothing undermines a community’s faith in their leadership faster than impropriety and self-dealing amongst the board and management team. Conflicts of interest can be hard to avoid completely, but how they are handled is of the utmost importance.
But what is a conflict of interest, exactly? How do they come about? Why are board members especially at risk of such relationships? And most importantly, how can they be avoided? Let’s take a look.
What is a “C of I?”
Board members have a fiduciary responsibility to their shareholders; the other owners of the units in their co-op or condo. This means, in simplest terms, that their loyalty cannot be divided. They cannot serve two masters. They must place the interests of their community above all other interests—including their own.