Conflict of Interest

In real estate management, more disputes stem from real or perceived conflicts of interest than from any other cause. Conflicts can arise almost anywhere, but they arise most frequently from external business affiliations, business gifts, use of confidential information, and influence peddling.

Fiduciary Relationships

A fiduciary relationship is a relationship that true professionals have with their clients and colleagues. It is held to a higher level of conduct than conventional business relationships. It is a concept of acting in a reasonable and prudent manner for the benefit of a client. A fiduciary relationship assures your clients and fellow professionals that they can trust and depend on you whenever you conduct business together. Additionally, with a fiduciary relationship, clients put their money, property, important records, and reputation into your hands as a manager. Your primary duty is not to compromise that trust.

Conflict of Interest Complaints

Because of the importance of fiduciary relationships, conflict of interest must be avoided. A conflict of interest is a situation in which a professional has a personal, usually financial, interest sufficient to appear to influence the objective exercise of his or her official duties. The most likely sources of conflict of interest follow:

• External business affiliations that might affect your duties as a CPM or Candidate.
• Business gifts or entertainment (e.g., regular lunch meetings for which the vendor always pays) that might appear to be bribes.
• Use of confidential information to further your own, private interests.
• Influence peddling. That is, soliciting money, gifts or favors in exchange for using your influence to change the outcome of an event or transaction.

Some “litmus tests” can help identify situations that have potential for conflicts of interest. If you answer, “Yes” to any of these questions, a potential conflict of interest may exist.

External business affiliations:

• Does your external business compete with your employer’s business?
• Does your external business allow you to “do business with yourself?”
• Have you concealed your external business interest from your employer? From your client(s)?
• Does your employer have a policy that the situation violates?

Business gifts that look like bribes:

• Does the donor expect something in return for the gift?
• Is the gift in cash, or is it of extraordinarily high value? Is the value high enough to affect your objectivity or high enough that an impartial observer might expect the gift to do so?
• Is the gift presented “out in the open,” or is it a secret?
• Is the gift really a payoff, bribe, or kickback?

Use of confidential information to further private interests:

• Does your use of this information harm your employer’s or your client’s interests?
• Does your use of this information violate a confidentiality agreement?
• Does your use of this information violate any laws?

Influence peddling:

• Does the other party think your influence will be used to advance a third party’s interests unfairly?
• Could your influence possibly be used to advance a third party’s interests unfairly?
• Are you representing the interests of someone other than your client or employer?

While avoiding conflicts of interest is important, taking an active role in preventing such conflicts is just as important.