Fiduciary Duties and Ethics for Managers

One of my first jobs after I graduated college was working in the nature center on Kiawah Island. I spent my days kayaking, canoeing and teaching residents and guests about the wildlife on the island. Unfortunately, once the summer ended, so did my job. Not wanting to leave the beach life, I accepted a position as a community service liaison for Kiawah Island Community Association. At the time, I had no idea what it meant to be a community association or what working for one would entail. I just knew that once I was done answering the phone, issuing parking decals, and filing papers, I could still hit the beach after work.

What I eventually learned, however, is that each person employed by an association or a management company has a fiduciary duty to our board and association members. In its simplest form, a fiduciary relationship generally involves one person acting for the benefit of another person or entity. In a manager’s role as the fiduciary, we are tasked to act in good faith to protect the members of our associations and act in a way that is believed to be in their best interest. We also owe a duty of care that obligates managers to understand the governing documents and to act in accordance with the directives given by the board.

This all sounds great on paper but in the real world, we know that a manager’s life is anything but predictable and we somehow get involved in weird situations. So, how do we implement our fiduciary duties when our job is so inconsistent? First and foremost, we know our association. We know our governing documents, budget, relevant laws, and property. Second, we disclose conflicts of interest and act within our prescribed duties. This requires you to not only follow direction from the board but also comply with any contractual obligations between you and the association or your employer and the association. Third, we treat everyone fairly and in a professional manner. This applies to the members and residents of the association, the board, committees and association vendors. Fourth, we guide and educate our boards and committees on their duties and obligations to the members and each other. Fifth, we know when to ask for help and to seek the advice of professionals.

Fiduciary duties typically go hand in hand with ethics. The Merriam-Webster dictionary defines ethics as “the discipline dealing with what is good and bad and with moral duty and obligation” and “the principles of conduct governing an individual or group.”

In the community association industry, we often see ethics outlined in codes of conduct that guide our boards and committee members in implementing their duties and responsibilities. However, ethics also plays a major role for managers because managers are privy to a lot of information. We truly are the eyes and ears of the associations we manage.

Managers control the member’s unit or lot files and books and records of the association, prepare bids for vendor contracts, address resident disputes, work with counsel in times of litigation and collection of delinquent accounts, prepare board reports and executive session materials, access member’s homes for insurance claim administration and resale inspections, and so on. While we all have at least one instance where we wanted to divulge everything, we know to clear up some misconception or fight back against some falsehood, ethics requires us to take the high road and hold this information in confidence. Ethics also obligates us to be truthful in our statements to others. This means we bid out contracts in a fair and equitable manner, provide our boards and committees with all the facts and information available to us, and we do not make misrepresentations to our members.

I was a manager for over ten years and regardless of whether I was an association employee, a community manager or an on-site manager, the foundation of my fiduciary duties and ethical obligations to my associations remained the same. I also found these core values prepared me for the professional obligations I now owe to my clients as a community association lawyer.  While fiduciary duties and ethics are not an exciting topic, they truly are a necessary and integral part of a manager’s successful career and valuable tools that can be applied in everyday life.

By Kristen L. Buck, Esq.

Kristen is a community association attorney with Rees Broome, PC located in Tysons Corner, Virginia. Prior to becoming an attorney, she was an on-site manager as an association employee and also for a large community association management company. Once admitted to practice law, she was associate counsel for a title company and real estate developer. Her practice is now devoted to representing community associations in Washington, D.C. and Virginia.

Leave a Reply

Your email address will not be published. Required fields are marked *