Duty of loyalty, also known as fiduciary duty, requires the fiduciary to do what?

• A. Act to maximize the association's profits.
• B. Avoid any relationship with vendors.
• C. Act in the asset owner's interests and avoid serving personal or third-party interests.
• D. Disclose conflicts only after a dispute arises.

Answer: (C)

The main concept here is fiduciary duty of loyalty: the person in charge must put the association’s interests first and avoid personal gain or conflicts that could sway decisions. This means acting in the asset owner’s interests and steering clear of serving personal or third-party interests. If there’s any potential conflict—like a contract with a company you or a family member have a stake in—you disclose it and recuse yourself from related decisions. Relationships with vendors aren’t inherently forbidden, but they must be transparent and principled to prevent self-dealing. Decisions should focus on protecting the owners’ long-term interests and the association’s assets, not on maximizing short-term personal profit. Conflicts should be disclosed proactively, not only after a dispute arises.