Paid Board Member

Hi, we live in Los Angles in a 9 unit condo building. My husband is the HOA President and i am the Secretary and our neighbor is the Treasure. Its a newer property, 5 years old and we have been on the board for 4 years. We are self manage except for accounting services which is outsourced. I have been the "handyman" around the building, changing light bulbs, setting up and managing vendors (Janitorial / Gardener/ Painters)and making sure the property is is top shape. The Treasure really doesn't do anything since we deal directly with the accounting service company. When anything goes wrong, the resident would call us. After 4 years, i am tied of managing the property. There are no other volunteers that would take on my responsibility since our complex is so small. We looked into a management company and for them to do my job, they would charge around $500 a month. I was going to offer my service for $100 a month for my time and energy. Would that be an issue?

The work that you are performing is not that of a board member. Look into conflicts of interest on Davis-Sterling but I believe that the board can lawfully hire one of its own members to work as a paid employee.

Richard,

Is there a law to that effect in California? Or is that just a requirement in the bylaws of most associations?

Does that mean that a person who serves on a board must give up all sources of income and perform no other work of any kind? Or may they perform other work and be compensated for that?

Someone changing light bulbs is not acting as a board member so why should they be denied compensation for their services? Or must they call a board meeting so that they may change a light bulb without compensation? Does it take a quorum of directors to change a light bulb?

I am unaware of any laws prohibiting a director from holding some other position, including a paid position, with the same association. The only issue I can see is the perception that the director has a conflict of interest in hiring himself as a paid employee. If all members are comfortable with that arrangement then I would see no problem.

Just remember, if you are being paid as an employee to perform work other than a board member, there are many other details that complicate the issue: payroll taxes, federal and state withholding, unemployment taxes, worker's comp insurance, etc. Some may advise being paid as a private contractor to do that, but the IRS has a very strict definition of what a private contractor is. Even then, the association must issue a 1099-MISC if you are paid more than $600 a year, and you must file a schedule C with your tax return.

The IRS does not recognize "under the table" income.

After taxes, more like $50-$75 month

Thank you everyone for your helpful input! Some more details: the Board consists of
1. President
2. Treasure
3. Secretary
• 9 Unit building. Besides the 3 of us, no one ever wants to volunteer for anything or do anything.
• We self-manage except for accounting services in which an outside company handles that for us. (colleting HOA dues, billing, issue checks, and they do our taxes)
• We have a cleaning lady who comes once a week to clean the building (common area) My husband and I pay her cash. We would purchase light bulbs, cleaning material or any other HOA items use for the upkeep of the building. We would then submit the Invoice to the accounting office and they would issue a refund check.
With that being said, I am willing to step down as Secretary, since we only have HOA meetings 2 times a year and I am responsible for drafting the agenda, taking notes and sending emails reminder to everyone. Of course that position will be eliminated since no one will volunteer.
To be honest, after 4 years of doing this and what JonD1 said “going above and beyond” my secretarial duties, I feel as though the residents are taking me for granted. Or more likely, I know!
I got a few quotes and the average monthly cost is around $500 for a management company to do what I do. It’s really not about the money but the principle. $100 is nothing to me, but I feel being compensated for the work should make me not so resentful of the other residents.

People are not allowed to make money off the HOA here. We have had some members work very hard, including myself. So it does not sit well when one member is paid but others are not or were not. Let someone else step up to the plate.

Of course you could have the community vote. Maybe you'd get more "volunteers" if they were compensated.

I wouldn't want to open that can of worms. Money always causes conflict.

Again, I believe you should not overlook the tax ramifications.

Whatever arrangements you make with another individual for performing services for compensation is between the two of you. If both of you choose to ignore federal and state tax laws you only place each other at risk. On the other hand, if the board (the association) or all homeowners agree to this, you are all at risk.

Remember:

1. The association is supposed to file annual tax returns, even if there is no taxable income.
2. All expenses of the association, including your compensation, have to be accounted for.
3. I believe you said earlier you have an accounting firm handle the association's money. I assume that means they are collecting assessments from your members, paying the bills (including your compensation), and filing the appropriate tax returns. You might be wise to consult them to learn what requirements must be met.

As Steve pointed out earlier, that $100 will be reduced by federal and state withholding, FICA, and Medicare taxes. To bring home $100, you are going to have to be paid more. Also, the costs for other requirements (worker's comp insurance, employer's share of FICA and Medicare taxes, unemployment taxes, etc.) might bring the overall cost to the association a lot closer to that $500 a month than you realize.

Thanks John for the reply.
To answer your question, on average I put in about 3 to 10 hours a week. Like today, I spent 3 hours researching bids for a new garage gate and Janitorial company. I will have to meet with a few vendors on Friday after work. I have a full time job, so this is just side work. Since the condo is in the heart of Hollywood, right in the middle of the city, the amount of trash that accumulate around the building tend to pile up if not taken care of. Being the anal person that I am, things are taken care of immediately when they go wrong. When bulbs are burnt, I take care of them right away. When the sidewalk is full of trash or puke, you can see me out there on hosing it down. When it rains and the drains are clog, I’m out there sweeping the leave to make sure the water flows correctly. All these things add of and if I’m not doing it, in a 9 unit building, no one else will. Also of the 9 units, 2 of the units are rentals. The owners are off site and are never heard of.
Our building is very modern, you can say iconic. So to keep it look nice, there is a lot of upkeep. We don’t have that many amenities so our HOA dues are very low.

I, too, Tyler, behave as you do by reporting all kind of things to our onsite PM. Do many the directors or owners report those things? NO. They do not "notice."

If I remember right, Jon of NY has been a director for many years, and president for many years, has done a great deal of actual labor on behalf of his HOA, too. But, I do not recall that he gets paid for his diligence. Maybe i don't remember correctly.

Welcome to HOA life. That sounds like a normal day when I was president of the HOA. Was never paid a dime. Maybe reimbursed for a few things like supplies but never labor. It was a labor of love. I believe if you want paid for something then you no longer want to do it. People who love and care about something don't ask for money just to feed their pride...

Whenever I hear phrases like "low HOA dues" I typically think, this HOA is not planning for future expenses and will need to issue a special assessment if anything goes wrong.