Q&A: Conflicted in Connecticut

Q Our property manager wants to buy a unit in our condo community but a lot of  owners are not happy about it. Is that a conflict of interest? Do we have any  legal power in this manner? Please advise.  

 —Becoming a Buyer  

A “A conflict of interest does not exist simply because a property manager is or  becomes a unit owner,” explains attorney Franklin Pilicy of Franklin G. Pilicy, P.C., in Watertown,  CT. “A conflict of interest exists when a person stands to benefit in some form. For  example, a common conflict of interest arises when a property manager suggests  or campaigns for the association to use a certain maintenance company and the  property manager is involved with the business somehow—usually a family business or a personal relationship with the maintenance  company’s owner.  

 “In such situations the property manager should disclose his or her conflict of  interest. In my experience a property manager that is also a unit owner can be  beneficial to the community because the property manager has a vested interest  in making sure the community is—to the extent possible – run correctly, maintained and financially secure. Furthermore, it is almost  certain that if the property manager does not do his or her job the unit owners  will make him or her aware of their displeasure. Whether or not a conflict of  interest exists the association is powerless with regard to who can own a unit.  Federal law protects housing and most restrictions will be limited to age  restricted housing. Thus unless the community is an age restricted community  and the property manager does not qualify the association will not be able to  restrict his/her purchase of a unit. Notwithstanding, the association is not  without redress.  

 “If the board is not comfortable with a property manager that is also a unit  owner the executive board may choose not to renew the property manager’s contract when it expires. Future management contracts may contain language  that states the contract will expire automatically if the property manager  purchases or becomes an owner of a unit within the community. Such a clause  would probably be found valid because it does not restrict who can own a unit.  Instead it restricts a unit owner from being the property manager.”