Broker/Board Member Conflict of Interest?

Wait, doesn't the board have to vote (at least majority) on who gets into the building? If so, obviously the other board members are ok with it...

it seems as though they should recuse themselves from the package vote whereby they are getting a fee (at the least).

My question is not regarding the board approval process but of a board member who makes a living off a building and is also making decisions as a board member in that very building. This broker/board member has been on the board longer than anyone else since she seems to have a lot of time on her hands and apparently views the building as her livelihood.

Some in the building are concerned that she proposes many projects not because they are necessary, but because they help make her job easier and sell apartments.

My building has a very easy approval process so board approval is not really an issue. TI would think of it as a condo with respect to board approval.

well how many units does she own? How big is the building? Does she have a controlling stake on the board, or not? I can see what you are saying about a conflict of interest, but it seems like if enough people in the building were worried about it, you'd be able to stop the behavior collectively.

it is not a conflict - just like when sponsors own most units and control the board -- the other shareholders hire him/her

She doesn't control the board and is not an officer but sometime she acts as she does. She hasn't been removed from the board since historically the elections are never official (no quorum) and therefore the board carries over to the following year.

I have limited experience in how Condos and Coops operate. Is it common to have a board member brokering in the building? It seems like a conflict to me and others.

is the building well run? that's the issue. could be a good thing to have someone who has experience and time on their hands who chooses to do a volunteer job. trust me, if the building is spending too much money on useless projects, that will not make it easier for her to sell apartments.

The building is on a tight budget but very presentable. We do have high maintenance. This broker always has grand plans to make the building more marketable, which costs money and will increase maintenance. She wants to spend shareholder funds to essentially make her job easier.

i can't believe that i 'm defending a broker but...high maintenance cannot make it easier to sell apartments. how much percentage wise do you think your maintenance has gone up in the last two yrs? I would say that anything around 7% per year is (unfortunately) pretty reasonable.

A broker / owner was on our coop board for a while. Shareholders only challenged her position when she started circulating postcards and mailers with statements about how she knew the building better than other agents and how she would be happy to represent any upcoming sales. While it wasn't directly stated, this kind of advertising could be interpreted as an ability to press power behind the scenes. Some residents thought it was a conflict of interest. When these views were brought up to her, she promptly resigned from the board.

1) a broker on a co-op bd. is not a conflict of interest;

2) a broker on a co-op bd. with half of the active listings in a bldg. should not want to be on the bd. (conflict of interest); recuse yourself, babe;

3) each and every member of a co-op bd. should have a fiduciary responsibility to each and every shareholder to do the 'right thing'.

4) perhaps anyone can 'better sell the buliding' [sic];

5) not to be smarmy, I think it's skeptical;

6) who can't reach a quorom?; the board?...illegal...the shareholders at the annual meeting?...I'm so sorry for you;

7) call me stupid but I believe one board cannot/may not appoint another; (you have a proprietary lease that outlines procedures; get it out & read it);

8) this is not rocket science.

Slightly off-topic, but how do you all feel about somebody on the board selling their apartment....should they step-down from the board? To me, it appears that they have different interests than the board, as one wants to sell their property for the highest price today and the other wants to make decisions that are in the best long-term interest of the building. These are quite often not the same goals.

Any thoughts/feedback would be much-appreciated!

One thought, non profits such as social clubs and golf clubs often find the best success when they are run by a benevolent dictator. Hard to find and hard to give up control, but if its all good, leave well enough alone.

waverly---being on the board is a thankless, rotten job. all you get is grief. perhaps a little "hey great job but...."

what nefarious thing do you think our hypothetical selling board member can actually do?

This is very very common -- serving on a co-op board is a thankless, time-intensive task, and real estate brokers are driven to do it by business interest -- and are usually welcomed because it's tough to find anybody to serve. I believe the three most senior agents in my office all serve on the boards of their buildings.

However, if you think it's inappropriate, vote her off the board -- though again, in a building where you can't even get a quorum, you're going to have a hard time finding anyone to take her place, and you might end up doing it.

ali r.
{downtown broker}

If enough of you are concerned about it then why don't you all run for the Board?

I think co-ops generally have annual elections, but check your proprietary lease. If you aren't reaching a quorum, then you might have to solicit votes from your neighbors on the q.t. to force an election.

This can get messy and nasty (these are the people who are living next to you, after all).

I would be uncomfortable having an agent on our co-op board, and when they have run in the past they have not been elected, so apparently my neighbors feel as I do. We are lucky in our building as there are usually more people running than slots available.

But like Ali said, it is an unpaid and thankless job.

Isn't this what lobbying is for? If people aren't showing up to make a quorum to rejigger the Board, lobby your neighbors and educate them on the issue. If you can make a case the interests of the building are being sacrificed for the personal benefit of one, they'll show up to the next meeting.

marie evans

The problem with having agents on coop boards is that some of them feel motivated to protect their profession by rejecting purchases that did not involve a broker. That is what I learned from a nasty piece of email I received from a broker the last time I sold an apartment FSBO. This is, of course, not necessarily in the best interests of the building.

I am lucky that my board is full of lawyers and not brokers.

cc - what nefarious thing could they do? They could push for the board to forego necessary repairs that would require an assessment. This would keep carrying costs down on their apartment and hurt the coop in the long-run. They could choose to tap into the line of credit, instead of choosing an assessment. They could choose to refinance the mortgage with terms that are good for the short-term, but bad for the long-term. They could choose to spend money on improvements that will help them sell their apartment, but are not needed in this difficult economy and will drain reserves.

These are all real possibilities, especially if another couple of people on the board are considering selling their apartments, too.

As a general rule, the interestes of the board should be the long-term health of the coop. The interests of somebody trying to sell their apartment are "how do I get the highest possible price today + who cares about the long-term state of the coop, since I will be gone."

waverly,
Good points, all. There are these tensions between those who seek a short-term gain and those who are arguing for the long-term health of the coop.

There may also be a concern where the board member broker is involved in interviews for apartments that she wanted to sell but where the sellers chose another broker instead. It may place undue pressure on owners to use the board member for fear of sabotage.