The law imposes three key fiduciary duties on board members, one of which deals with conflicts of interest.  The law requires board members to discharge their duties in a manner they reasonably believe to be in the best interests of the association (as well as in good faith and “with the care an ordinarily prudent person in a like position would exercise under similar circumstances”).  See Utah Code § 16-6a-822 (“General standards of conduct for directors and officers”).

Thus, a board member must put the association’s interests above the board member's personal interest when acting as a board member.  It is worth noting that something can be in both a board member's interest and in the association’s best interest, so that just because something benefits a board member doesn’t mean the law is violated.

Section 16-6a-825 deals specifically with conflicts of interest.  In essence, it provides that, as long as a transaction is fair to the association, then the transaction is not problematic simply because the transaction involves a board member (that is, it doesn’t matter that a board member has a conflict).  Or, even if the transaction isn’t necessarily fair, if the material facts are known to the board regarding the board member’s relationship in the transaction (the conflict) and a majority of the non-conflicted board members approve the transaction in good faith, then it doesn’t matter that a board member has a conflict.

Exception:  An association may not