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A Board Member’s Personal Stake

Levine & Montana
Lewis Montana, Principal Attorney

 

A 70-unit condominium faced the issue of a board member’s personal involvement in its decision-making process. The backdrop was cigarette smoke flowing from a unit into other units. The development consists of eight buildings, including 30 townhouses. The managing agent sent several letters, but the offending unit-owner did not take corrective measures. The organizational documents do not contain a specific provision concerning offensive odors escaping from one unit into the common elements or to other units. It does have a general prohibition against noxious or offensive activity being carried on in any unit or in the common elements. The local building code does not require remediation of tobacco smoke.

The discussion before the board centered about what steps could and should be taken to stop the smoke from affecting the common areas and the nearby units. One of the condominium’s officers happened to be the person who was most vocal in support of strong board action against the unit-owners and also the most persistent complainant as an adjoining unit-owner against the smoker.

After a passage of time, the board member felt the board was not taking sufficient action. He advised the board that unless the second-hand smoke was resolved within 30 days, he would be filing suit against the board of managers. He claimed that the board was not enforcing the bylaws.

When the managing agent related the problem to us, we first advised it to place the insurance carrier on notice of a potential claim.

Before the cigarette smoke, the first issue to be dealt with was the board member’s involvement in an issue that clearly affected him. It was recommended that the board member voluntarily recuse himself from general participation in the discussion and voting on his own second-hand smoke complaint.

Legal Lesson

Board members are fiduciaries. They have to act for the betterment of the unit-owners as a whole, and put their individual personal interests aside when acting as a manager.

To do so, they should fully disclose any personal interest that they may have in an issue being considered by the board, and then withdraw from further participation on that issue. It would not preclude the member from submitting a complaint or comment as a unit-owner to the board. Nor would it preclude a member from providing factual information or to respond to questions from the other board members.

The lesson for the board as a whole is to consider adopting either a bylaw provision or a policy statement setting forth a code of ethical conduct for the managers. This would include guidance for a member who might find himself or herself in a conflict of interest.

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