Know your IREM code of professional ethics; Article 7: conflict of interest.(what'sup?)(Institute of Real Estate Management)

A Member shall not represent personal or business interests divergent from or conflicting with those of the client or employer and shall not accept, directly or indirectly, any rebate, fee, commission, discount, or other benefit, monetary or otherwise, which could reasonably be seen as a conflict with the interests of the client, employer or firm, unless the client or employer is first notified in writing of the activity or potential conflict of interest, and consents in writing to such representation.

There are a great number of business situations that violate or come close to violating Article 7. Here are two examples that present situations that may be considered conflicts of interest:

Example 1: You are a CPM candidate; you work for a medium-size management company where you directly supervise two other property management supervisors. The company has three roving maintenance persons who have been instructed to buy equipment at the local Ace Hardware run by your uncle. There is a 20 percent discount on any items sold to the company-managed properties. Your uncle gives you a monthly check based on a percent of sales to your company.

Example 2: You are a CPM and work for an AMO[R] firm. A large high-rise condominium you manage has just completed a $1.5 million renovation. The general contractor for the job has sent you two 50-yard line tickets to a major football game in your area. You note the printed price on the tickets is $150 each.

Have you violated Article 7 in either of the examples above? Perhaps. If we only read the first part of the Article, these examples are clear violations. But in the second part, there is a passage that reads, "unless the client or employer is first notified in writing." The Article does not say you cannot have other businesses or interests; however, if those businesses or interests provide any kind of benefit--monetary or otherwise--they must be divulged.

The best solution, of course, is to not get involved in any activity providing services or goods to your management clients. In reviewing the Article and the holdings of the Ethics and Discipline Committee, it would appear that if the relationship in example 1 was divulged in writing and approved by the client, there would be no violation. In example 2, the management company should have a written policy on gifts to all employees, including company executives. Many government agencies and companies have a policy that employees cannot accept a cup of coffee from a person with whom they are transacting business. While that may seem a bit extreme, it's always best to review what is being done in your market place and have a policy in place before there is any question regarding what presents a conflict of interest or not.

by Bob Demson, CPM[R] Emeritus

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