Avoiding Conflicts of Interest in Property Management Image

Avoiding Conflicts of Interest in Property Management


As the snow continues to blanket the ground in Alberta, even in mid-April, snow removal remains a priority for property management companies to coordinate for their clients. More often than not, a property manager that manages a large rental complex owned by a company, will hire a third-party service provider to deal with regular maintenance, such as snow removal and landscaping.

For a property manager, hiring a third-party company or individual with which they have a relationship may seem like a non-issue. What difference does it make if a property manager throws some business to their brother-in-law or their best friend by hiring them to plow the snow or cut the grass? What some property managers may not be aware of is that the above situations present a possible conflict of interest.

In order for a property manager to provide the best service possible to their client, they are expected to choose third-party service providers that will provide the best service, for the best price.

If a property manager wants a related company or individual, for example, to provide services to their owner/client, the property manager must first disclose the relationship they have with the provider to the client. Once the property manager has disclosed this conflict of interest, in order to proceed, they need to first obtain the informed, written consent of their client. In order for it to be considered “informed” written consent, the industry member must explain the advantages and disadvantages of using the service provider at issue.

Along with this disclosure, a property manager should obtain quotes from other possible service providers to ensure that all due diligence has been done prior to hiring a company or individual that they have a pre-existing relationship with.

Even with disclosure and a client’s informed and written consent, a property manager needs to make every effort ensure they are actually hiring the best service providers for their client and not the one that satisfies their own personal situation and priorities.