Compensation of HOA manager?

Hi,
I recently moved into a 4-unit condo in California need to manage the HOA account for the 4 units. Currently, we have a Corporation set up but we need to set up a business account for all incoming HOA fees and to pay bills. The other tenants are ok with compensating me for my time and effort in managing but I wanted to know if there is a California law that dictates how much you can be compensated. Also, would it make a difference if I gave my unit an HOA discount instead of direct compensation?
Thanks,
A G

Most HOA governing documents specify that directors/officers are not compensated. What do yours say? Assuming they have similar, your association might be able to hire you to as a manager, depending on your governing docs state law. In any case if you are compensated it would be considered taxable income and would need to be reported on a 1099 or similar form. There are some posters here from CA that might be able to chime in on state specific laws, but this site seems to be the CA HOA law bible:
https://www.davis-stirling.com/

I don't have time to try to research this, but you can see if there is anything there.

Not sure of the law in CA. Any compensation with a value over $600 has to be reported to IRS. I don't see a problem with a credit towards dues as long as it accounted for with a debit and credit in your books and you get 1099 over $600. Our docs let us pay Board members except the President but we can pay him for doing work that are not his duties. If it was me I would do it for 6 months or a year and see how much time it takes and then decide if I wanted paid. Just because you can be paid does not mean you want to be paid. Sometimes the issues with receiving payment is not worth the payment.

A reduction in the amount of the assessment is nearly always a hard NO. Condo assessments are usually described in the CC&Rs and are based on things like percentage of ownership. The CC&Rs form part of the contract you sign when you buy a condo and may only be changed with an amendment that must be voted on and recorded.

For a HOA this size, aren't all of you capable of meeting once a month to determine what needs to be done instead of paying someone? it might be a good idea to hire a bookkeeper to help prepare income expense statements, but beyond that, each owner could take on a part of association affairs to oversee. For example, one oversees landscaping, another works with the bookkeeper, someone else keeps track of documents like meeting minutes, and so on.

By the way, paying you and/or giving you a discount on your assessments is a dumb idea. First, it's probably against your documents (which you should be reading anyway). If the documents don't say say anything, do the math. Your association budget (you do have one, don't you?) Is based on assessments paid by all 4 homeowners. If you get a discount, you still have to make up that percentage, meaning the others would have to pay more, which isn't fair.

Call your neighbors together, determine what needs to be done, divide up the work. Every month, you meet and everyone should have some sort of status report. you might also consider visiting the community association institute website and but a few books on self managing a HOA so you can see what best practices could be adapted to your group. Good luck!

First, you need to understand your governing docs. Second, you need to have a Board of Directors. Ten you need officers, a President, a Secretary and a Treasurer. If your docs say all Officers must be Directors, then there is no way in hell for you to be compensated. You can get reimbursed for supplies and such, but no payments for services and no reduction in dues, that is compensation, in and of itself.

I don't think my CC&R specifies directors or officers. Which section of it would talk about this stuff? Would I need to create an amendment for this? If so, where could I find official paperwork and does it need to be notarized?
What is the difference between a manager, director, and president of HOA?
Thanks,
AG5

AG5,

I plugged in your last questions to google and came back with hundreds of citations.

Look in your bylaws, not in the CC&Rs.

In short, a director is a board member and has been elected to the board by the membership. Once on the board, he will typically be named to an officer position (president, secretary, treasurer, etc.) You can be a director but not an officer. You can also be named an officer without being elected to the board. Only board members have decision-making authority, and no single board member has more authority than the others (although some presidents seem to think that they do).

A manager (often referred to as a property manager or PM) takes care of the everyday running of the property, although PMs can perform a wide range of duties that are spelled out in their contract. PMs are nearly always paid. The PM works at the direction of the board and not the other way around. A PM does not have live in the community, although some do in large communities.

Small communities are often self-managed, which means the board also handles the tasks that are performed by the PM in professionally managed communities. The economics make sense. However, professional PMs generally have specialized knowledge and skills that homeowners do not, which leads some people to describe communities as being "self-mismanaged".

My rule of thumb is, if the board knows how to do it, they should do it without compensation. If they lack certain skills, employ professionals. You'll be spending enough on the professionals that it's unlikely you'll want to pay yourselves on top of it. I mean, what's the point of receiving compensation if you have to raise your assessments to pay for it (as well as do the necessary paperwork to account for it)? Work for free: you end up in the same spot financially, but without the paperwork.

My opinion - just an opinion - is that one person of four doing work and being compensated in this particular construct, is inadvisable. Lots of things can happen, almost all bad.

If someone is going to get paid for their limited work (in this case), just get a local accountant or bookkeeper to handle it. It stays neutral and is likely regulated by state law.

Ya need to straighten out your organization first - sounds like the four owners need to ALL get smart on what their actual governance is, or could be.

Start doing the reading.