The following is an excerpt from the article “The Ethical Path” by Michael Ramsey, published in the September/October Edition of Common Ground Magazine…
“Avoid even the appearance of impropriety,” is a phrase many lawyers like to use when advising their clients on ethical grounds. Amongcommunity association institutes and boards, many scenarios arise that can challenge a board member’s question of ethics. The decisions they make, as well as the principals that guide them, can impact the credibility of the board and have significant financial consequences.
Common Community Association Board Ethical Dilemmas
Here are some scenarios that would call into question a Board’s sense of ethics. How would the members of your board respond to the following:
A board member begins dating an employee of the association
Adrian Adams of the California law firm Adams Kessler recalls a real-life incident in which board members at a high-rise condominium sought advice when one of them began dating the on-site engineer. “The rest of the board came to me and said ‘Whoa, what do we do? This makes us nervous, it just doesn’t feel right,'” says Adams, who maintains a website that offers a range of ‘what if’ ethical scenarios, coupled with advice. “I told them, ‘Look, it’s a problem in that as soon as he gets fired, he’s going to claim that he had to sleep with her. He now wants millions of dollars because of sexual harassment.’ We resolved it by asking the director to resign from the Board.” Fortunately, she did.
A board member uses association resources for personal reasons
One disgruntled board member of a St. Louis-are homeowners association tapped into e-mail addresses from a pool-registration database to contact owners and launch a board-removal campaign. CCAL member Marvin Nodiff says the plan worked, and the association board was without elected leaders for several months. The use of e-mail list is compromised by an ethical breach that fractures the undivided loyalty of the association. E-mails should never be used for any purpose that is not expressly granted by the homeowners, whether that be to advance a personal agenda, or market third party products.
A board member has a personal connection to a vendor or management employee
Mark Smith, president of the Sun City Aliante Homeowners Association in North Las Vegas, doesn’t want the appearance of impropriety- even the hint of it. That’s why he stepped aside when it came time to consider renewing the contract of his community’s management firm, RMI, which employs his daughter elsewhere in the region. Instead he designated three directors to renegotiate or go out for bids. Then he removed himself from the subsequent discussion and vote, even though Nevada law would have allowed his participation after he disclosed the relationship. “Sometimes perception is worse than reality,” Smith says. “I’m not going to do anything to give anyone a perception of bias or favoritism.”
What you can do to maintain ethics among your Association Board
Review the laws of your state
Many states have laws intended to help safeguard community association boards from ethical violations. In Nevada, the Silver State bans any board member from having a direct business relationship with his or her community association- period. The law doesn’t prohibit connections involving family members or relatives. Nevada also banned board members and managers from accepting goods or services totaling more than $100 from anyone. More broadly, Florida prohibits condominium board members from receiving any gift “of value,” though they can receive items or services in connection with trade fairs or educational programs. California doesn’t prohibit a board member from accepting a gift, which potentially sets the stage for debate among board members.
Adopt an Ethical Standard Policy
Jeff Kutzer, president of the Management Trust- Colorado, says only 20% of the communities in his division has some kind of ethics policy. “We have a number of boards where they literally have their ethical standards and policies that every board member signs, and they live by them,” he says. “It runs to that end of the spectrum to the other ones who say, ‘I think it, therefore we should do it,’ regardless of whether it’s in the statute or in their documents.”One of the client of The Management Trust, the Kipling Sun Town Home Association in Littleton, Colorado, adopted an ethics resolution in 2007 following an internal board dispute. Board President Neill Kefauver lobbied his peers to approve an ethics code that would, among other things, define the type of misbehavior that could trigger the removal of a board member. The ethics code also requires cordial and professional conduct, obligates board members to “treat other board members, owners and president with courtesy and respect” and discourages personal attacks. Associations can amend their documents to incorporate ethical standards, but more often, boards take the simpler rout of adopting a code as a stand-alone resolution. Professionals disagree on whether such a measure is legally binding, but they say board members at least feel peer pressure to honor the guidelines.
This article is provided by The Management Trust.
Common Community Association Board Ethical Dilemmas
Here are some scenarios that would call into question a Board’s sense of ethics. How would the members of your board respond to the following:
A board member begins dating an employee of the association
Adrian Adams of the California law firm Adams Kessler recalls a real-life incident in which board members at a high-rise condominium sought advice when one of them began dating the on-site engineer. “The rest of the board came to me and said ‘Whoa, what do we do? This makes us nervous, it just doesn’t feel right,'” says Adams, who maintains a website that offers a range of ‘what if’ ethical scenarios, coupled with advice. “I told them, ‘Look, it’s a problem in that as soon as he gets fired, he’s going to claim that he had to sleep with her. He now wants millions of dollars because of sexual harassment.’ We resolved it by asking the director to resign from the Board.” Fortunately, she did.
A board member uses association resources for personal reasons
One disgruntled board member of a St. Louis-are homeowners association tapped into e-mail addresses from a pool-registration database to contact owners and launch a board-removal campaign. CCAL member Marvin Nodiff says the plan worked, and the association board was without elected leaders for several months. The use of e-mail list is compromised by an ethical breach that fractures the undivided loyalty of the association. E-mails should never be used for any purpose that is not expressly granted by the homeowners, whether that be to advance a personal agenda, or market third party products.
A board member has a personal connection to a vendor or management employee
Mark Smith, president of the Sun City Aliante Homeowners Association in North Las Vegas, doesn’t want the appearance of impropriety- even the hint of it. That’s why he stepped aside when it came time to consider renewing the contract of his community’s management firm, RMI, which employs his daughter elsewhere in the region. Instead he designated three directors to renegotiate or go out for bids. Then he removed himself from the subsequent discussion and vote, even though Nevada law would have allowed his participation after he disclosed the relationship. “Sometimes perception is worse than reality,” Smith says. “I’m not going to do anything to give anyone a perception of bias or favoritism.”
What you can do to maintain ethics among your Association Board
Review the laws of your state
Many states have laws intended to help safeguard community association boards from ethical violations. In Nevada, the Silver State bans any board member from having a direct business relationship with his or her community association- period. The law doesn’t prohibit connections involving family members or relatives. Nevada also banned board members and managers from accepting goods or services totaling more than $100 from anyone. More broadly, Florida prohibits condominium board members from receiving any gift “of value,” though they can receive items or services in connection with trade fairs or educational programs. California doesn’t prohibit a board member from accepting a gift, which potentially sets the stage for debate among board members.
Adopt an Ethical Standard Policy
Jeff Kutzer, president of the Management Trust- Colorado, says only 20% of the communities in his division has some kind of ethics policy. “We have a number of boards where they literally have their ethical standards and policies that every board member signs, and they live by them,” he says. “It runs to that end of the spectrum to the other ones who say, ‘I think it, therefore we should do it,’ regardless of whether it’s in the statute or in their documents.”One of the client of The Management Trust, the Kipling Sun Town Home Association in Littleton, Colorado, adopted an ethics resolution in 2007 following an internal board dispute. Board President Neill Kefauver lobbied his peers to approve an ethics code that would, among other things, define the type of misbehavior that could trigger the removal of a board member. The ethics code also requires cordial and professional conduct, obligates board members to “treat other board members, owners and president with courtesy and respect” and discourages personal attacks. Associations can amend their documents to incorporate ethical standards, but more often, boards take the simpler rout of adopting a code as a stand-alone resolution. Professionals disagree on whether such a measure is legally binding, but they say board members at least feel peer pressure to honor the guidelines.
This article is provided by The Management Trust.