Legal Question in Real Estate Law in Massachusetts

Conflict of Interest and Management Company

Hello,

I recently bought a condo and am concerned about a possible conflict of interest that has been brought to my attention. Due to situations in the past, our management company was able to elect himself as a member of our board of trustees. Currently he is sitting in both positions and I am interested in the legality of this situation. In addition, we just recently forced the board to provide a financial review of our 55 unit association. Many of us were inclined for an audit, however, that was not considered. Due to a lack of maintenance, a weak board, the management company sitting on the board, numerous health code violations (properties owned by the management company), lack of financial reviews for over 10 years, and owners feeling very frustrated I am wondering if there is a legal basis for removing the management company from the board. I look forward to any response and/or advice.

Thank you for your time,

--name removed--A. Davis


Asked on 2/06/04, 11:16 am

1 Answer from Attorneys

Re: Conflict of Interest and Management Company

While it is a conflict of interest, that does not necessarily disqualify the person from sitting on a board. However, he should not be voting on any issue in which he or the management company has a vested interest, unless it is allowed under the Condo Assn By-laws, Trust or rules or as a condition of sale. It is still bad form, even if permitted unless this is an early stage conversion or early stage development, when the Developer usually retains certain rights while he is developing and selling off units.

If there are health violations, you can request the local BOH enforce the correction of the problem. Without reading your Condo Documents and a review of the procedures it is impossible to know what you have to do prior to seeking the assistance of the Courts directly.

Also, you need to remember, Condo owners have fewer protections than Tenants. Tenants can withhold rent, Condo owners do not have the right to withhold dues.

I hope this was helpful.

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Answered on 2/06/04, 2:21 pm


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