discount on monthly fee

Started by DavidM8 • 7 replies • 1752 views

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DavidM8 (California)
Posts: 9

Posted:

Hi, I live in a condo which is part of a 7 Unit complex in San Diego. Five of us are owner occupiers. We have had an extremely difficult time with the person who was supposed to manage the property and we have now found out that she has moved out of state and we are in the process of trying to get our funds returned etc. We have now taken on the management process ourselves and we shall carry out any management, maintenance etc unless expert help is needed. The following point was raised at our last meeting and I cannot find the answer to it so I am writing to you, thanks.
Our present monthly fee is $140 and as apparently we have no reserves (we cannot obtain proper financial statements from the person) we would like to do the following. To pass a motion to change the bylaws so that the fee is increased to $200 per month but to give a discount of $100 to owner occupiers as we the five of us will be taking responsibility for management and maintenance (we do not want to pay people direct for the work they do). I have spoken to somebody I know who is treasurer of another HOA (70 Unit complex) and he said that would be illegal because it is discriminatory. Is there any way we can implement this legally?

RogerB (Colorado)
Posts: 5,067

Posted:

David, the assessment should be equal for all owners, you can not discount it for some. Check your state's rules regarding whether or not Board members can be paid or the Board can hire owners through competative bidding process as independent contractors.

DavidM8 (California)
Posts: 9

Posted:

Roger, thanks for the information. Our main point is that we believe that owners living in the complex and who are involved in maintenance and management on a "voluntary" basis should in some way be compensated (without direct payment) for their efforts and that the two "absent" owners should not receive the advantages of our efforts without some contribution - any input appreciated (appreciating that we cannot have different payment system or a discount). One other matter. I have taken on the admin side and that is going fine but I would like to update the present bye-laws. These were written in 1979 and run to 18 pages. I am trying to avoid typing the 18 pages. Is there anywhere on the internet where I could copy R&Rs and then customize it for our complex - thanks. Take care. David

WilliamT (Arizona)
Posts: 489

Posted:

David, your situation is not unique. In most communities there are absentee owners who contribute nothing except their monthly dues.

It's unfortunate that a few of us have to take on the volunteer job of administering to the community and in many cases also do some physical work.

Most Bylaws state that board members serve without compensation. Any discount on dues would be compensation.

They are probably set up that way to prevent board members from ripping off the community in excess pay. If board members were paid, then the board would attract people who would be there only for the money, and may not have the best interest of the community at heart.

Board members can and should be compensated for all out of pocket expenses.

BrianB (California)
Posts: 2,820

Posted:

I don't believe that can be done legally. Board members can't be paid for their duties as board members, although technically, you could set up a shell board, and then "hire" other non-board members to act as a management company, and pay them. Of course, that opens you up to a ton of laws and potential abuse, much like you have already experienced, so that's not my advice.

secondly, being paid to do something somewhat removes it from being "voluntary".. and in essence, that's what your sentence describes: paying people who live there because they are doing more work. If one of those owners refused to do anything, would they still get that discount? Would they get a break for being a "live on site" owner, if they did not contribute any effort to the maintenance?

RogerB (Colorado)
Posts: 5,067

Posted:

Can anyone provide a state statute which states that Board members can not be paid? According to an article I read from a very good HOA attorney it is a misconception that Board members can not be paid. I know of no Board members that have ever been paid. All By-laws I've read state the Board members may not be paid. But based on this attorney, in whom I hold in highest regard, this is a misconception.

BrianB (California)
Posts: 2,820

Posted:

Roger, not sure there is a statute... just that almost every by-law has written instructions to prevent it.

LuciusD
Posts: 139

Posted:

Roger, To answer your specific question....
I posed essentially the same question to counsel. As I recall, the answer was except for the bylaws prohibition there was no legal barrier to Director compensation (in Colorado).
However, the practical problem is devising a system of compensation that is fair, ethical and not a blatant conflict of interest. What was suggested as an acceptable compensation plan for Directors would be a flat fee per meeting attended and equal for all Directors.
In my opinion, an owner who wants to assist in "managment work" should not be a board member and should be treated as an empoyee supervised and directed by the board.
It seems to me the discounting of dues for work done fails the "smell test" on several criteria.

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