STO Forums

Search

Type your search criteria above and click Search to search the forums.

To see if someone has already answered a query similar to yours, click the Search button above and search for terms related to your question.

Employee Fiduciary duties

By Anne Granada on Sat, 17 Mar 2012 at 08:12

I would appreciate feedback and input. Chairman and Employee Fiduciary Duties in a HOA -
Home Owners Association.
• 


Employees have moral and legal obligations to individual and collective homeowners


Fiduciary duty is commonly understood to be an obligation of one party to act in the best interest of another party. Employees have an obligation to the homeowners to act in the best interest of the organization and ALL its stakeholders –specifically the homeowners.
1. Employees Fiduciary Duty to the Company
◦ Because employees represent their employers, which are the homeowners, it is expected that they fulfill various moral and legal obligations to the homeowners. Employees are expected to be loyal to the homeowners. This means defending the interest of organization; being honest with peers and management; protecting and not misusing company property and resources and protecting the privacy of any material information. They are expected to obey homeowners’ policies and code of ethics. Moral behavior is expected. Employees also are obligated to demonstrate care and skill when completing daily tasks.


2. Employee Fiduciary Duty to the Client
◦ Certain professionals have fiduciary responsibilities to their clients that extend beyond their obligations to employers. For instance, financial advisers have to sell clients investments that are appropriate for them even if they receive much smaller commission from the sale. Managers of HOA are expected to recommend appropriate contracts regardless of whether or not they (or the directors) will make money from it, They are not allowed to personally benefit from the transactions. They are obligated to offer the quickest and best and cost-effective available solutions to their clients.


3. Breach Of Fiduciary Responsibilities
◦ The breach of fiduciary responsibility occurs when the employee does not act in the best interest of her individual and collective homeowners. Conflict of interest represents one such breach. It occurs when the employee's responsibilities to her company/employer conflict with other legitimate responsibilities. Conflicts of interest may become difficult to solve because both responsibilities may be important and affect many people.
 Another breach of fiduciary responsibilities involves receiving large gifts in, say, the form of holidays or use of a car, based on material nonpublic information with a purpose of making a profit. To benefit from such a ‘deal’ would be a breach of an employee's fiduciary duties. 
Misappropriation of company property and resources is also considered a breach of fiduciary duties to the employer. Employers entrust employees with their property so that they can do their jobs better and benefit the organization. When employees misuse company technology and petty cash or use work time for nonwork-related issues they are not fulfilling their obligations.

If they give preferential treatment to certain to certain homeowners so that they can benefit from that
4. Limit To Fiduciary Responsibilities
◦ An employee's obligations can only extend so far. His legal and moral obligations generally supersede his obligations to the company. When the conflict of interest occurs that involves the best interest of the homeowners versus the best interest of the manager or a specific large homeowner, the organization can in no way hold the employee liable. For instance, an accountant may be asked to report false numbers on the balance sheet or a personnel manager may be persuaded to hire more staff than needed. Whether this is in the best interest of the company or not, the employee has no obligation to fulfill these requests.


Professionals like chartered accountants have fiduciary duties to their clients.

Artisans like plumbers, electricians, mechanics have a fiduciary duty to their clients, which in this case is homeowners.

I would appreciate comments,

Replies

You must login to post a reply.

RE: Employee Fiduciary duties

John Yates replied on Sat, 17 Mar 2012 at 09:05

Follow.

RE: Employee Fiduciary duties

Annie Graeme replied on Sun, 18 Mar 2012 at 17:25

We often hear that a board of a HOA must act within its Fiduciary duty, but what does that really mean?

Fiduciary duty means that your home owners association board members are bound under state law - usually a general nonprofit corporation or specific condominium/community association statute - to act within their authority, to excercise due care and to act in good faith, taking into account the association's best interest. Under the fiduciary model, board members do not have individual power or authority. Rather, decision-making ability rests with the full board. (see our article Developing a communications policy for more information)...Show More

1
Advertisements
Banner
Website Statistics
  • Forum Topics: 11683
  • Users: 21199