Questions for those that pay their BOD

Started by TimB4 • 9 replies • 1866 views

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TimB4 (Tennessee)
Posts: 21,061

Posted:

All,

We are considering changing our bylaws to allow our Directors to be paid. Although I am not completely in favor of the idea, I am willing to consider it to try and address the lack of volunteers to serve on the Board. Therefore, I have the following questions for anyone who has a Board that is paid:

1) What is the language in your governing documents that allow this (if your willing to share)?

2) Who determines the amount (membership or Board)?

3) Do you have a management company?

4) Since your Board is being paid, do you also pay your standing Committee members?

5) How much to they get paid (25%, 50%, 75%, 100% of assessments or a different amount)?

If your willing to share but unwilling to post on an open forum, I can be reached via email at [email protected]

Thank you in advance.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

You need to check your CCR, bylaws and state laws. Its likely paying someone to be on your board of directors is not allowed. If you started paying them and five years later someone who knows the CCR/laws would likely demand all the money be paid back, possibly with interest.

BonnieG1 (Nebraska)
Posts: 1,186

Posted:

I don't think most states allow BOD to be paid. My understanidng that if a member of to Board is paid they loose legal protection.
However we pay a Board member who is our bookkeeper.
Our by laws state "Except as authorized by the Bord of Directors, officers of the Association shall receive no compensation for their services in such capacity, provided, however, a Bord member, officer, or other Owner or Occupant may be retained by the Association and fairly compensated for services performed or materials supplied to the Associaiton in an individual capacity.
We have a Resident Agent (who recently resigned due to health problems) who was also a Board member. We paid her. We have a current bookkeeper who is a Board member. We pay her. But the other Board members are not paid.

DavidW5 (North Carolina)
Posts: 565

Posted:

Bad idea. Rather than try to pay board members, use the money for a contract for a management company that covers all but the highest level oversight functions (those remain for the board). If finding board volunteers is the problem, consider minimizing the number of board members by amending the governing documents (a board of 3 is probably the minimum practical). In order to drum up volunteers for the board, let it be known that without volunteers, the monthly assessment will have to be raised to pay a contractor to do work that should be done by volunteers.

TimB4 (Tennessee)
Posts: 21,061

Posted:

All,

I understand the need to change Bylaws and the potential liability issues from no longer being volunteers. We are currently paying a bookkeeper as this does take away a lot of the day to day tasks. The Hiring of a bookkeeper or Management company doesn't negate the requirement to have a sitting board of directors.

As I stated in a different thread, the problem is lack of volunteers among those few who even care what is happening and apathy from the rest. The main reasons I've been given for the lack of volunteers from that group is "been there, done that, somebody else can take a turn" or "I'm involved in other things and can't devote the time right now".

In my other thread, paying the board members was suggested as a possible remedy. The outgoing board (who wouldn't achieve any benefit from the idea) thought it was worth looking into. This is why I'm asking for input from those who are paying their Directors.

GlenL (Ohio)
Posts: 5,491

Posted:

Tim, it might be time to have a come to Jesus meeting with the membership and lay out their options. Pay the BOD, hire a Management Company or turn it over to a Receiver to run.

Option One: Pay the BOD, if your assessments are $200.00 a year and you have five Board members that will mean that everyone elses assessments will have to go up to make up for the shortfall. Now I personally am against this and while I am willing to volunteer my time, my time is worth more than $16 dollars a month, especially since I will have to pay taxes on it.

Option Two: The MC, while hiring one would take the day to day pressure off of the Board, even a mid-level MC, depending on their services would probably cost at least $10.00 per home per month so everyone's assessments would have to go up $120.00 per year.

Option Three: The Receiver, the homeowners get no say in how the HOA is run and assessments can raise dramatically to pay for everything plus the Receiver's salary.

Let them know, they can either step up and help or pay through the nose.

Studies show that 5 out of 4 people have problems with fractions

PetunkaM (Florida)
Posts: 1,009

Posted:

Tim,

we are paying the BOD members a fee which is really quite small. In the early days only the President, Treasurer and the Secretary were paid 50% of annual assessments. Not all Board members took it. Now, we authorize a fixed sum and leave it up to the board to allocate that money among them.

The vote is taken at the annual meeting and this is the only vote when we get 100% in favor. Only a couple of times one member was against it.

We do not have a management company. And, we do not pay any Committee members.

Here is the By-laws wording under the Article: Annual Meetings of the Membership.

‘Directors’ fees, if any, shall be determined by the majority of the membership of the Association.‘

PS: I do not think anything is wrong with paying a small fee to the Board members. In fact many corporations pay their Boards huge money.

SusanW1 (Michigan)
Posts: 5,202

Posted:

I personally feel that anyone serving on the board should have their dues waived for that period, or the option of accepting the "value" of the service.

But that's just me. Of course, they would be issued an IRS form W2 for the value of the dues if over $600.

SusanW1 (Michigan)
Posts: 5,202

Posted:

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By SusanW1 on 11/14/2011 6:35 AM
I personally feel that anyone serving on the board should have their dues waived for that period, or the option of accepting the "value" of the service.

But that's just me. Of course, they would be issued an IRS form W2 for the value of the dues if over $600.

You wouldn't issue a W2 unless the person was an employee, and then you would also have to pay FICA, and possibly, FUTA taxes. Otherwise, you would issue a 1099-MISC if the amount was over $600 per year.

Actually, the IRS expects people to report ALL income whether or not a W2 or 1099 is issued. Even barter exchanges are considered income (which many people don't realize). Therefore, waiving dues is considered income as far as the IRS is concerned. Let's say I own a home and I let you live there rent free provided you take care of minor maintenance, do yard work, etc. The rental value of the home is income to you and the value of the services you provide is income to me. If a person breaks into a house and steals items, the IRS considers that income for the thief. Whether or not a person reports such income to the IRS is an individual decision. Anyone failing to report income does so at their own peril. The penalties are extremely harsh if the IRS can prove willful intent to avoid payment of taxes.

Also, some states will not allow waiving of dues for any HOA member (although you could pay someone the same amount provided compensation of directors was legal).

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