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Subject: Real Estate Agent and HOA Manager
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Author Messages
TomG14
(Pennsylvania)

Posts:1


09/14/2021 2:39 PM  
Is there a conflict of interest if a broker/agent is also the hoa/coa manager. Can part of their management contract/payment arrangement be that they have exclusive right to sell or rent units?
MaxB4


Posts:1394


09/14/2021 2:54 PM  
No and Yes
ND
(PA)

Posts:634


09/14/2021 3:17 PM  
Posted By TomG14 on 09/14/2021 2:39 PM
Is there a conflict of interest if a broker/agent is also the hoa/coa manager...



There could be.
Posted By TomG14 on 09/14/2021 2:39 PM
...Can part of their management contract/payment arrangement be that they have exclusive right to sell or rent units?



It could be I suppose. But this to me could also be the source/cause of the conflict of interest.

In theory a broker/agent who has exclusive rights to sell/rent units has a vested interest in decisions made by the Board and the activities that they carry out as HOA manager and the manner in which they carry out those activities.
BenA2
(Texas)

Posts:1040


09/14/2021 3:38 PM  
If the broker/agent has exclusive rights to sell or rent then there is very likely a conflict, especially if the manager position has any control over the rent or sales price. If they have zero control over the broker/agent then there probably would not be a conflict since they would not benefit personally from any decisions they made.

I do think there will be a perception of a conflict of interest which will probably affect the owners' trust in the manager.

BenA2
(Texas)

Posts:1040


09/14/2021 3:40 PM  
Also, I think this might violate anti-competition laws in some states if not federal law.
CathyA3
(Ohio)

Posts:2475


09/14/2021 5:35 PM  
Posted By TomG14 on 09/14/2021 2:39 PM
Is there a conflict of interest if a broker/agent is also the hoa/coa manager. Can part of their management contract/payment arrangement be that they have exclusive right to sell or rent units?



Does hiring this person provide any benefit to the HOA in exchange for that exclusive right that you couldn't get from a different manager with no concession?

If a conflict of interest arises, who draws the short straw: the HOA or the broker?

If a conflict of interest arises and the broker/PM is unable to perform a function that is part of their list of obligations under the contract, how do you plan to resolve that?

What about sellers' right to choose the broker with whom they want to deal? How do you plan to enforce the broker's exclusive right if homeowners are not party to the contract with the PM? (It's the HOA corporation that is party to the contract, not individual owners.)

TL/DR: Not a good idea.




JohnT38
(South Carolina)

Posts:768


09/14/2021 5:44 PM  
I agree with Cathy's comment, "What about sellers' right to choose the broker with whom they want to deal? How do you plan to enforce the broker's exclusive right if homeowners are not party to the contract with the PM?"

I also would ask, if the governing documents don't give the HOA the authority to do this how could this possibly be kosher?
In my neck of the woods you can negotiate the Real Estate commission and I would not want to give up this ability.
MelissaP1
(Alabama)

Posts:10534


09/15/2021 4:10 AM  
I don't see a problem with this. It gets me how everyone wants to make this a "conflict of interest" thing. I'd be more concerned if the person was an accountant. They know how to handle money or hide it... LOL!

Selling Real Estate is a job. Also requires a license. Which comes with a certain code of ethics to follow. People also confuse HOA's as "Property". It isn't. It's a corporation. It is just made up of property owners.

My opinion of Realtors isn't the highest. They are more like "used car sales people of the housing industry". However, that doesn't mean they can't be involved in their HOA as a member of it.

Former HOA President
CathyA3
(Ohio)

Posts:2475


09/15/2021 5:07 AM  
Posted By JohnT38 on 09/14/2021 5:44 PM
I agree with Cathy's comment, "What about sellers' right to choose the broker with whom they want to deal? How do you plan to enforce the broker's exclusive right if homeowners are not party to the contract with the PM?"

I also would ask, if the governing documents don't give the HOA the authority to do this how could this possibly be kosher?
In my neck of the woods you can negotiate the Real Estate commission and I would not want to give up this ability.



The more I thought about it, the more I've decided that this is a legal deal breaker as John says. And what about the folks who want to do a For Sale by Owner? Is the HOA going to tell them that they can't? Good luck with that.

There are other practical difficulties. For instance, what if there is an emergency that requires prompt attention from the PM (eg. a broken water pipe), and the PM is out showing homes or attending a closing? What happens if delay results in more extensive damage? Which of the two will the PM regard as their primary job, with the other a part-time "get to it when you can" job? It's likely that the HOA would draw the short straw.

This arrangement could work if the HOA is just looking for a bookkeeper, which truly can be a part-time "get to it when you can" job. But you still have to ask what benefit hiring a realtor would provide over hiring a regular bookkeeper.

It still looks to me that the realtor/PM benefits more than the HOA in the proposed arrangement, which makes it questionable even if there is no conflict of interest - and once money is involved, then a conflict of interest is inevitable.
AugustinD


Posts:1695


09/15/2021 6:03 AM  
Posted By JohnT38 on 09/14/2021 5:44 PM
I agree with Cathy's comment, "What about sellers' right to choose the broker with whom they want to deal? How do you plan to enforce the broker's exclusive right if homeowners are not party to the contract with the PM?"

I also would ask, if the governing documents don't give the HOA the authority to do this how could this possibly be kosher?
This.

Party X (the HOA/COA) cannot create a[n enforceable] contract between Party Y (the HOA/COA manager) and Z (a unit owner), unless perhaps the Declaration gives Party X this right.

It would be like the HOA/COA contracting with Starbucks to provide every unit's yearly coffee supply. Without authority in the governing documents, the courts would never enforce such a contract.
CathyA3
(Ohio)

Posts:2475


09/15/2021 7:21 AM  
Posted By AugustinD on 09/15/2021 6:03 AM
Posted By JohnT38 on 09/14/2021 5:44 PM
I agree with Cathy's comment, "What about sellers' right to choose the broker with whom they want to deal? How do you plan to enforce the broker's exclusive right if homeowners are not party to the contract with the PM?"

I also would ask, if the governing documents don't give the HOA the authority to do this how could this possibly be kosher?
This.

Party X (the HOA/COA) cannot create a[n enforceable] contract between Party Y (the HOA/COA manager) and Z (a unit owner), unless perhaps the Declaration gives Party X this right.

It would be like the HOA/COA contracting with Starbucks to provide every unit's yearly coffee supply. Without authority in the governing documents, the courts would never enforce such a contract.



I recently saw an article about a court case in California (about a different issue) in which the court ruled that an association can't add a restriction that was not in force at the time the owner bought the property. (This raises questions about amending CC&Rs in general, but that's a topic for another time. I suspect nuance and details were involved.)

Anyway, an arrangement like the OP suggested *may* be OK if it existed from the beginning and buyers understood that this is what they were getting. It may work in communities where the HOA has a right of first refusal for buyers and tenants, but many HOA/COA CC&Rs don't allow that level of intrusiveness.
JohnC46
(South Carolina)

Posts:11539


09/15/2021 10:46 AM  


Is there a conflict of interest if a broker/agent is also the hoa/coa manager.
I say no conflict

Can part of their management contract/payment arrangement be that they have exclusive right to sell or rent units?
I would never go for that. That is conflic.
MaxB4


Posts:1394


09/15/2021 12:23 PM  
I have never believed that a company that specializes in rentals and real estate sales should be managing HOA's, at least under the same roof or corporate name. What if the owner was using the management company to manage their unit as a rental with the same company that the MC is also managing. It is quite possible that the property manager of the HOA doesn't know about the arrangement with the landlord. Generally, they are not up to speed with HOA laws in their specific states, as I know this is common in California.

If there is a clause in their contract about exclusive selling rights, that is on the Board and/or the attorney. Should never be allowed, although I coud see this in a developer situation.
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