Article 4: Protection of Funds: What Is Your Fiduciary Responsibility?
McCarthy, William, Journal of Property Management
Fiduciary responsibility is a term always used with regards to professional relationships and contractual obligations. The word fiduciary refers to a person or an organization to whom property and/or power is entrusted for the benefit of another. This is essential to property management. We are contracted by our clients to manage their assets to the highest ethical and professional level. Fiduciary responsibility is based upon trust and it permeates through both the CPM Code of Ethics as well as the AMO Code.
The new AMO Code, in effect since January 1, 2012, states in its introduction that the "purpose of this Code of Ethics is to establish and maintain public confidence in the honesty, integrity, professionalism and ability of the professional real estate management organization." These words are reflected in the 11 distinct but connected articles of the Code. Protection of Funds is itself the title of Article 4 of the AMO Code.
This Article has as its primary focus on the responsibility for the AMO Firm to protect their clients' funds and maintain these in separate and clearly defined accounts. Under no circumstances can the AMO Firm co-mingle either personal or corporate funds of one client with another. There must be distinct and separate banking facilities established, regardless of the size of the account. Furthermore, the AMO Firm and its members must never use one client's funds for the benefit of another.
To ensure full compliance with the entire AMO Code, particularly Article 4, the leadership of the company and its CPM Members must have in place strict policies, procedures and oversight. Article 4 states that "at all times [the firm] shall exert due diligence for the maintenance and protection of the client's funds against all reasonably foreseeable contingencies and losses. …