Leni Morrison, a member of Cozen O’Connor’s Real Estate Practice Group, discusses if it is legal for homeowner association (HOA) board members to also serve on the board of directors of the property management company that the HOA hires and oversees in The Cooperator. Leni explains that condominium and cooperative board members are required to perform their duties “in good faith,” including placing the interests of the condominium or cooperative above their own. The board member can ensure that they are acting in good faith by answering the following questions: Did he/she disclose their position at the property management company prior to the board hiring him/her? Did the board consider other management companies? Is the business arrangement with the management company competitive or fair market? Did the board member recuse him or herself from the vote in favor of hiring the management company? According to Leni, if the answer to one or more of these questions is “no,” then “it is possible that the board member may have engaged in self-dealing, which opens him or herself up to liability.”
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