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HOA Management Blog

At The Hignell Companies we have been providing professional management services for California Homeowner Association Boards for nearly 30 years. We love sharing our knowledge and perspective. Give us a call at 530-419-6032 if you have any questions.

Why Paying Your HOA Board Members is a BIG Mistake

January 14, 2015 at 3:25 PM / by HOA Manager

pencil erasing word mistakeDoes your homeowners association pay or compensate the Board of Directors? I recently learned of an HOA that compensated its board members for “volunteering.” Each month the board members would receive a credit on their accounts for their monthly assessments. The Board collectively felt that it was doing all the work and that it should be compensated for the time.

During a time when board members were voting to send other owners to collection they were not paying their own assessments. This bad habit went on for years without the knowledge of the membership! Once a new HOA board member found out about this practice, refused to take the credit on their account, and questioned the practice most of the board resigned.

Receiving compensation was a mistake on a couple of levels.

First, the documents are very clear that directors are not paid.

Check the governing documents to see if your homeowners association is doing this. If the documents don’t allow it, STOP IMMEDIATELY. Those directors should pay any credited assessments as soon as possible, and even set up a payment plan if necessary. Directors should not be paid, especially if the governing documents prohibit it. Protecting the Association’s funds is the Board’s fiduciary responsibility. 

HOA board members are supposed to be volunteers. If your directors are paid they lose the protections of being volunteers allowed in your Directors and Officers Insurance. The conflict of interest of having board members vote for a large increase in the assessments knowing that they will not have to pay it, is tremendous.

Secondly, they did not disclose that they were giving themselves this credit to the membership.

If your documents are silent, or in some very rare cases, allow directors to be paid, you should consult with your attorney. It most certainly should be disclosed to your membership in the financials. You may want to stop this practice even if it is allowed.

There are lots of responsibilities, duties, lack of recognition and no compensation that come with being members of any Board. It’s easy for board members to feel that they are doing everything and everyone else is benefitting from the work. Some resentment can result from this. But volunteering to be a member of your HOA Board of Directors is a volunteer position that you are taking on to better the homeowners association community you live in. Thoughts of compensation and personal agendas should be set aside. 

Related Articles:

3 Crucial Responsibilities of a New HOA Board Member

The One Thing That Can Make a Good HOA Board, Great

An HOA manager can help your Association avoid mistakes like these. Contact The Hignell Companies for a free evaluation to learn more.

Topics: homeowners association, HOA Board, Member of HOA