The President's Brother-in-Law
A 180-unit condominium association's board president has a brother-in-law who owns a roofing company. The president did not disclose the relationship when the board solicited bids for a $95,000 roof replacement. The board received one bid-from the brother-in-law's company-and approved it 5–0; the president voted yes. The bylaws require at least three competitive bids for contracts over $25,000 and require directors to disclose conflicts and abstain. The management agreement says the manager prepares bid specifications and board packets. A week later, a unit owner emails the manager asking why no other roofers bid. The manager checks the file and finds no disclosure form, no other bids, and no minutes of a bid review.
1. Identify the legal and ethical issues and the immediate steps the manager should take.
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The core issues are conflict of interest, fiduciary duty, and failure to follow the bylaws' procurement rules. The president had a close family relationship with the bidder, did not disclose it, voted on the contract, and the board approved a contract without the required three bids. Even if the price was fair, the process creates an appearance of self-dealing and may violate statutory disclosure duties.
Immediate steps:
- Do not destroy or alter records; secure the bid file, emails, and meeting materials.
- Notify the full board in writing that the procurement process appears noncompliant and that the president's relationship should be documented.
- Ask the president to recuse from all related discussions and sign a written conflict disclosure.
- Consult association counsel before making payment or allowing work to proceed; counsel may recommend rescission, rebidding, or ratification after full disclosure.
- Obtain at least three independent bids and document the evaluation criteria.
- Record the corrective actions in the minutes, including the disclosure, recusal, and vote.
The manager should not conceal the issue or informally "fix" it by getting two late bids without board action.
2. How should the manager respond to the unit owner's email, and what belongs in the minutes?
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The manager should respond factually without speculating about motives or admitting liability. A suitable response: the board is reviewing the roof procurement for compliance with the association's bidding and conflict-of-interest policies; the association takes the matter seriously; and the owner may submit a written records request under the association's inspection policy. The manager should not disclose personnel matters or privileged legal advice, but contract procurement is generally association business and should not be stonewalled.
The minutes should record:
- The president's relationship to the bidder and the written disclosure.
- The president's recusal from discussion and vote on any corrective action.
- The fact that only one bid was received and that the bylaws require three.
- Counsel's involvement, if any, without waiving privilege.
- The board's decision-for example, to suspend the contract, seek independent bids, or ratify after full disclosure-and the vote tally.
Good minutes protect the association by showing a prompt, good-faith corrective process rather than a cover-up.