board member also paid manager

We have a board member (the vice president) who is also receiving pay as manager. Last year we had a board member receiving pay (condo fee waived) as a bookkeeper. Our by laws state managing the building is a function of the board and bookkeeping is a function of the treasurer. However, these can be hired to outside firms. I think paying board members in this capacity is against our bylaws and it is a conflict of interest for a paid manager to also be a board member. Please help. What do you think. I am a new board member as of Jan 10 of this year. This is in the state of Nebraska

I wish to add that State Laws may also be of assistance in determining the "legality" of this.

The same two options would apply.

This needs to change. You cant have a board member benefiting from services. Inform membership, vote in a new vice president.



Easy fix if your docs require everyone to pay dues. The board member failed to pay dues, and the board has no legal authority to waive dues. Require back dues.

Well, based on what you said the compensation is for Prop. Mgmt. not a BOD position.

I do see how one could think otherwise but you'll need proof that the "P.M. responsibilities" being performed are NOT above/beyond that of a BOD member.

These MAY include property policing for violations, gatering contractor quotes for needed services, verifying contractors perform the services and honor contractual obligations, publishing meeting agendas and documents for BOD meetings, responding to member inquiries, etc.

BOD members may in some cases only review supplied materials, attend meetings and vote on motions, etc. others may do more.

Unfortunately what we (proverbial we) think is not alwats in-line with the controlling docs. or laws permit or prohibit.

I'm sure its perfectly legal..... its just incredibly stupid. The guy in charge of hiring a painter is also the painter. What ends up happening is he ends up hiring himself for things that do not need to be performed to increase his pay.

Its not rocket science, it human nature.

Hi Bonnie:

You might want to check your by-laws and with your HOA insurance company to see if this situation is covered. My HOA documents state any managing agent shall maintain fidelity insurance coverage or a bond in an amount not less than $50,000 or such higher amount as the board may require.

It is prohibited in our bylaws and (I believe) in our state statutes that any board member can receive compensation. Of course, this is a conflict of interest. If this person wants to be paid, I should think that he would have step off the board and be hired in an open meeting by the entire membership....

I quess our documents do allow this. Article 8(C) of the Master Deed and Declaration and Section 8(H) of the Association By-Laws
permit the Board to appoint a manager and to retain "a Board member, officer, Owner or
Occupant" to provide services to the Association "in an individual capacity."

Bonnie, it's not clear to me what your bylaws are talking about in the snippet you provided. It's generally not illegal in most states (maybe all) for an association to hire the services of a board member, if those services are not normally in the job description of a director of the Association. For example, you might have a director who is also a professional gardener. Unless your documents or statutes prohibit it, the Association could hire the director to do gardening work. It would be tricky, because of potential conflict of interest issues that might arise when deliberating or voting on motions that would affect the amount of remuneration the gardener receives, and so on, but the director would merely need to abstain from taking part in those deliberations and voting. Tricky and awkward, but it can be done.

Beyond that subject, there seems to be some confusion in these forums about the differences between a director (generally required to be a volunteer member of the Association who is elected by a majority of a quorum of the membership), and an officer (appointed by the board). There are variations on this theme across states, and maybe even across HOA bylaws within states, and it may be legal in some states for an HOA to amend their bylaws to allow paid non-member directors.

Generally, most states prohibit compensating a member director for performing the duties of a director. A director can be reimbursed for reasonable expenses, such as a Per Diem for attending an HOA seminar, classes, mileage expenses while on Association business, etc.

An officer is a different matter. An office, in most states, is not an elected position - it is an appointed position. This may sound confusing to some of you, but officers do not vote - only directors vote. A director may also be an officer, and as such may say "aye" or "nay" when a vote is taken, but it is the director voting - not the officer. Depending upon what your state's statutes or civil code say, and/or what your governing documents say, it may be perfectly legal to hire people to perform the duties of an officer. On the other hand, hiring a director may be fraught with peril, even if your bylaws have been amended to allow it. Generally, a paid director does not have the same legal protections that member volunteer directors have (HOA legal counsel, for example), and there may be numerous pitfalls associated with it.

Your mileage may vary.

Rob