CAI-NJ February 2021

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DOES OUR COMMUNITY NEED ONE?

By Martin C. Cabalar, Esq., Becker & Poliakoff, LLP

W hile some may believe that a “Code of Ethics” or “Code of Conduct” is nothing more than a policy advising fellow owners on how to con- duct themselves like adults – and, make no mistake, it serves that purpose quite well – every community association needs one. As much as we may hope that common sense and civility will prevail in the operation of our communities, adopting a thorough code of conduct policy will ensure that every board member is appropriately educated as to their fiduciary respon- sibilities and that every resident is well-informed on the basics of proper community association governance. In New Jersey, and most other states as well, community associations are typically organized as non-profit entities. The members of the association elect a volunteer board of directors or trustees who are responsible for managing the activities of the association and bear the responsibility to act in a fiduciary capacity. For some, it may be their first time serving as a fiduciary. A code of conduct sets forth minimum standards to be upheld by the governing board in performing their duties and responsibilities, while ensuring that appropriate levels of transparency and con- fidentiality are maintained. The policy can also detail the conduct of the owners when participating in meetings or otherwise communicating with the governing board or its managing agent.

The following are some areas the policy should address: 1 1. Establish a Procedure for Meetings of the Governing Board and Owner Meetings, including agendas, minute taking, chair of the meeting, procedure for making and voting on motions, discussions of motions, owner participation, and the conduct of the owners at meetings. 2. Adopt Financial Ethics addressing improper solicita- tion or acceptance of anything of monetary value from any person seeking to obtain contractual or other business or financial relations with the association, or from any person whose intent it is to influence any decision of action on any official matter. Board members should not use their position to enhance their own financial or business positions and thus must also disclose any potential conflicts of interest. 3. Establish Business Ethics stating that board mem- bers will not seek to have a contract implemented that has not been duly approved by the board or, as we sometimes see, will not promise anything not approved by the board to any contractor, supplier, or contractor during negotia- tions. It is also important that board members refrain from interfering with the duties of the managing agent and any employees. Board members must not harass, threaten, or attempt through any means to control or instill fear in a representative of the managing agent or an employee.

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