Condo Association Management Blog

Under Texas law and our By-laws, you cannot pay board memebers. You may want to check for your state.

Most condominium documents as well as state laws applying to condominium prohibit paying members of the Board of Directors. Very unusual to find an association so satisfied with their board that they would propose to pay them. Remember most by laws and state condominium laws limit the length of service a board m,ember may serve.They are not elected for life.

Although this is not prohibited under Colorado statute, most governing documents prohibit compensation to Board members. In addition, if the Board members are compensated, they may no longer qualify for the liability protection available for voluntary Board members. Voluntary board member decisions are likely held to a less stringent standard of care then decisions made by "experts" who are paid.

Paying Board members, even if legal in your state, is not a good idea. They will become entrenched. Pay a Property manager, not a Board Member.  
 

Thoroughly check your gov. docs. and state law; you may find compensation of board members is not allowed. HOAs are volunteer organizations, which means board members should not be compensated although they may be reimbursed for out-of-pocket expenses. 
 
IMO, if board members are compensated you will have members running for board positions for all the wrong reasons!!

I have recently been elected treasurer on our incorporated non-profit HOA board. The other 3 board members have been serving on the board for many years because no one else wants the responsibility. Historically and currently the 3 out of the 4 board members have been paid a stipend/admin fee on a quarterly basis since 1998.  
 
Our by-laws state, "Compensation. No Directors shall receive compensation for any service rendered to the Association. However, any Director may be reimbursed for actual expenses incurred in the performance of his or her duties." 
 
The current board members are now pressuring me to pay out these quarterly "stipends" as they like to call them. Isn't this against the law? Currently no board members are bonded or insured and I don't want to be personally liable for "stealing" from the Association money by writing out these checks to myself (because the treasurer position has historically been paid a "stipend") or any other board member. Being a board member is a Voluntary position, but the other board member do not see it this way and feel entitled to this stipend and list it on teh annual budget statement to the members as "admin fee."  
 
 
 
I suggested if members wanted they could take up a collection annually or buy a gift card for whatever board members they so chose to give to in order to show their thanks if that is what historically the custom has been but we CANNOT co-mingle our monthly association income with compensating out own directors. What about the tax implications? Are the directors members going to fill out W-2s that have been paid 
 
I am the only "new blood" board member out of the others that is trying to protect our Association from risk and am trying to peacefully comply with our bylaws and all I receive is backlash from the other board members. How am I in the wrong? I just don’t understand. 
 
The current board does not care they are/were administering the Association improperly and I am trying to fulfill my fiduciary responsibility as treasurer and board member to protect our association assets/reserves/monies and will neither pay out a “stipend” to myself as treasurer nor any other board member. My goal is to do everything I can do to get our Association back on track and moving forward in a strong and positive way for the best of all association members and our community. Shouldn't the current board members pay back what they have illegally been paid out? What should I do? 
 

Sara, 
 
 
 
You are certainly to be commended for wanting to do the right thing instead of just going along with these old board members. Tell them you will not write their checks, if they want the money they'll have to get it some other way. Then, if I were you, I would take it to the members, simply because these board members are breaking the law. The board could be sued -- all it takes is one homeowner to get wind of this and take action. Any board member who willingly violates the law is not protected by the assn's D&O ins. If you take this issue to the members and they don't insist on change, then I would resign my position on the board. If you have a state agency that oversees HOAs take your complaint to them. BTW, make sure your objection to this custom is made in writing and filed with the minutes of the board meeting at which it is discussed.

This is what was last published in our board minutes: 
 
4. Stipends. Treasurer, Sara is refusing to pay the small stipends that have been paid for many years to the President, Treasurer, and Maintence Officer. Even though the membership voted years ago to acknowledge the time spent, materials used and obligations of the persons in these positions, they are no longer receiving that payment. Sara has taken it upon herself, against the board’s recommendations, to terminate stipend/payments. Other Board members mentioned that it was done originally because owners were not volunteering to be on the board, and a review of management companies revealed them to be cost prohibitive for us.

Sara, 
 
 
 
That's fine, just as long as your objection is a part of the record. If any member chooses to take the board to court over this, it will be noted that you were not a part of this decision. The board should be cautioned that they are violating their fiduciary duty to the assn by receiving compensation, even though the members may have voted on it. IMO, if the members feel this strongly about it then the gov. docs should be changed. However, if there is a state law saying it's not allowed, then the state law would prevail. When you check state law make certain to also check the nonprofit corp statutes; that's where it's stated in AZ, where I live.

We are located in Minnesota.

That's right Sara, these board members know it is wrong to receive compensation, but do not care-they want that money. You do not mention whether or not they gave you hard data receipts of expenditures etc. made in behalf of the association that would merit compensation.  
 
I believe you probably have the docs on your side and possibly state statutes. You will need a thick skin and sound knowledge base to stand up under the backlash of your board. i live in a condo that has been sacked and pillaged by every single board over a period of many years. 
 
Let the board know that you will report any income taken from the association by board members to the irs. You are one of the few that cares about the interests of all owners, I wish you the best.

No, the board members do not have any data receipts or expenditures for reimbursment, since 1998 they have illegally paid out over $13,000 in "stipends" to board members and we are only an 11 unit association! This is unacceptable!  
 
Thank you mary and Serola for you words of encouragement, it means alot!

The board members have not supplied any sort of documentation of this supposed "member's vote" and keep saying "Long ago we decided this that and the other thing including stipends to board members and since we are such a small association this is ok to do..." I feel they should have to pay those "stipends" back.

You bet they should pay it pack. Disgraceful. This infuriates me. Sally

Missouri -- Our members voted in an Annual Meeting to allow our Board Members to take 50.00 off the OFFICERS' (Pres, Treas, Sec)condo fees. That way, no one is "paid" and it is a token for the many hours of hard work. We don't have many people who want to be on our 40 unit association board so this works well. The others on the board are trustees and they only attend monthly meetings and vote, don't do the major work -- so it seems fair to give up 75.00/mo. 
 
 
 

OOPs... meant we give up $150/mo not $75/mo.

It is my reading of the Illinois condo act, that Illinois DOES allow compensation for board members, correct?

According to the Illinois condo act, compensation of board members for the office they hold is not allowed. The problem with most state condo acts is that they are very generalized. Clever attorneys and property managers find the loop holes and provide their own interpretation of the law. This happen with the HOA board where I live. I discovered that board relatives and spouses were being appointed for duties other than the offices they hold, so they can be paid. I objected and raised up the Ill. condo law, but was overruled. It doesn't matter if there is a conflict of interest (ie. husband of board president paid for pool maintenance) or if there are any violation of codes of ethics. Too many times I see the property manager making questionable decisions with the HOA board. It would be nice for a change to see a property manager stand up to the board and point out that this is not recommended.

Jane, 
 
 
 
IMO, if you take a good look at your docs I think you may find that reducing the condo fees of the board members is a violation. Most docs state that the fees are to be the same for all units, unless they are calculated by sq. ft. But the point is that everyone must pay the same fee -- or the same prorated fee based on sq. ft.

Sara, 
 
You quoted: 
"a review of management companies revealed them to be cost prohibitive for us" 
 
So your directors are doing the work of a manager? If so, then your association needs to either hire a part time manager, or else amend the condo documents (if allowed by law in your state) to allow directors to receive compensation when they perform clearly defined manager services.

In Milwaukee, I lived in a 12-unit self-managed condo. I was paid $10 a month to be landscape chair (of course, hired people mowed the lawn, planted shrubs, etc.) --worth more than $10 now, since this was the 1970s. I don't remember what others were paid. This worked well-- a little recognition, since some owners didn't want to be involved at all and a few were doing all the work. 
 
One person said, "IMO, if board members are compensated you will have members running for board positions for all the wrong reasons!!" 
 
This wasn't true in my Milwaukee condo, since the amount was so small that no one would run just to get the salary. But it was nice to have that little extra money. 

Hi. I am on our board and the answer is NO board member gets paid. If you are with a management service then they are the ones that gets paid by the board voting to put it into the condo fees of each of the unit holders. Also any one living in the association cannot clean, shovel, nor repair without being certified and that means having insurance to pay for yourself in case of injury.