💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in

JackS15 (Massachusetts)
Posts: 84
Posted:
I assume the answer is yes but how would he/she get paid?
Is it possible to have them not pay condo fee or only pay partial amount instead to avoid taxes?
TimB4 (Tennessee)
Posts: 21,061
Posted:
Can you hire a resident for a specific purpose?
Yes.

Do not waive any fees.
The proper way to do this would be to have them keep paying fees and the Association issue a check for the services rendered.
This provides protection for both parties.
The member has documentation that the condo fees were paid.
The Association has documentation of services being provided.

Taxes will have to be paid.
The Board does not want to open up the liability of not complying with IRS rules/regs. It would only take one disgruntled individual to report the issue to the IRS. They would reap a cash reward and the Association would reap an audit or two.

If you hire as an employee - then the Association provides a W-2
If you hire as an independent contractor - then the Association provides a 1099-misc
If you waive fees - then the Association provides a 1099-C

The Association should hire the individual as an independent contractor otherwise there are additional risks and taxes the Association will have to pay.
See: Understanding Employee vs. Contractor Designation from IRS website

SheliaH (Indiana)
Posts: 6,964
Posted:
This is far too cryptic - are you talking about someone cleaning your individual condo or someone cleaning the common areas of your condo building?

Usually, it's not a good idea to hire homeowners to do association tasks because it can make things fuzzy when it comes to - paying assessments (would the board decline to go after him or her in the same way for delinquent fees for fear he/she will quit and you'll have to find someone else?). You don't forgive assessments either - your budget has to be based on all homeowners paying assessments and he/she has a legal obligation to pay as a member of the association. Why pull this stunt to get him/her - or you - in trouble?

And forget this nonsense about "paying a partial amount to avoid taxes." If you were on my board and made this suggestion, I would ask the board for a vote to censure you right then and there. Board members are always supposed to try and behave in an ethical manner and avoiding taxes isn't part of that. Either do things right or get off the board and go do something else.

Meanwhile, you'll have to find a replacement the old-fashioned way - put an ad in the paper or call a housekeeping agency, which would be easier.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
JackS15 (Massachusetts)
Posts: 84
Posted:
Yes a unit owner clean and take out the trash the common areas.
JackS15 (Massachusetts)
Posts: 84
Posted:
He is already doing the snow removal to save on money so is pretty dependable.
KerryL1 (California)
Posts: 14,550
Posted:
Are you on the board, Jack? With Shelia, I'm not sure I understand your question.

If Tim has it right, I'd add if your board insists on hiring an owner, that they have insurance and that they're prohibited from certain work. We, for example, have a professional cleaning service with 5 full-time staff at our high rise. They may use a step ladder, but not a tall ladder. Can't get at the contract now, but I think they're not responsible for anything above 12' off the ground.

Another question is: do your governing documents, probably your CC&Rs (Covenants; deed restrictions, declaration) permit your HOA to hire direct employees?
AugustinD
Posts: 3,698
Posted:
Similar to TimB4's post:

-- Hire as a contractor, issuing a 1099-Misc at the end of the year. Per law, said contractor sets her/his own hours, for the greater part.

-- Do not waive or reduce the assessment to this person. The law does not allow this.

-- I think you need to check what the insurance requirements are for this person. I wish these things were easy, but if your association's governing documents has insurance requirements, review them now. Maybe check with the association attorney as well.
HenryS7 (Pennsylvania)
Posts: 336
Posted:
Quote:
Posted By AugustinD on 01/12/2022 12:44 PM
Similar to TimB4's post:

-- Hire as a contractor, issuing a 1099-Misc at the end of the year. Per law, said contractor sets her/his own hours, for the greater part.

-- Do not waive or reduce the assessment to this person. The law does not allow this.

-- I think you need to check what the insurance requirements are for this person. I wish these things were easy, but if your association's governing documents has insurance requirements, review them now. Maybe check with the association attorney as well.

I don't think that an individual cleaning a building would qualify as an independent contractor. That sounds like an employee rather than independent contractor.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By HenryS7 on 01/12/2022 12:45 PM
I don't think that an individual cleaning a building would qualify as an independent contractor. That sounds like an employee rather than independent contractor.
I am acquainted with the rules for when a person is paid as an employee vs. an independent contractor. If the person is calling her or his own shots regarding the work being done, especially the hours he/she works, then he/she is an independent contractor. The net covers this in more detail, of course.

With employees, the HOA has to pay FICA, unemployment insurance et cetera. Furthermore, in many states firing an employee without facing a lawsuit or having to pay unemployment is quite difficult.

You might note that many at this site say for HOAs/COAs to avoid having employees. Instead, the HOA/COA should try to pay all who do work for it as contractors.
AugustinD
Posts: 3,698
Posted:
And to the OP: Having this person shovel snow, possibly without the appropriate insurance, scares the bejeezus out of me. One back injury...
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Quote:
Posted By AugustinD on 01/12/2022 12:53 PM
And to the OP: Having this person shovel snow, possibly without the appropriate insurance, scares the bejeezus out of me. One back injury...

I agree. Any "worker" should be licensed, bonded, and insured. Never reduce due for services. Just pay the person.
PatJ1 (North Carolina)
Posts: 568
Posted:
Quote:
Posted By AugustinD on 01/12/2022 12:44 PM
Similar to TimB4's post:

-- Hire as a contractor, issuing a 1099-Misc at the end of the year. Per law, said contractor sets her/his own hours, for the greater part.

-- Do not waive or reduce the assessment to this person. The law does not allow this.

-- I think you need to check what the insurance requirements are for this person. I wish these things were easy, but if your association's governing documents has insurance requirements, review them now. Maybe check with the association attorney as well.

Anyone who is a 1099 contractor needs to provide the HOA with an insurance ACORD that includes Worker's Compensation coverage.

Reducing the assessment to an owner is income to that owner and requires a 1099 to be filed. They provide their own confirmed insurance coverage.

Our MC will not issue payment to any vendor without a W-9, for 1099 purposes, and an insurance ACORD. At my full time employment, I won't either unless it's for goods(parts).

AugustinD
Posts: 3,698
Posted:
Quote:
Posted By PatJ1 on 01/12/2022 12:59 PM
Anyone who is a 1099 contractor needs to provide the HOA with an insurance [card?] that includes Worker's Compensation coverage.
I trust you meant that you believe any contractor doing business with a HOA must have workers comp coverage.

I am not sure all HOAs/COAs have Declarations or state statues that require workers comp for contractors. Though I think workers comp is terrific in general and highly advisable.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By AugustinD on 01/12/2022 1:06 PM
Posted By PatJ1 on 01/12/2022 12:59 PM
Anyone who is a 1099 contractor needs to provide the HOA with an insurance [card?] that includes Worker's Compensation coverage.
I trust you meant that you believe any contractor doing business with a HOA must have workers comp coverage.

I am not sure all HOAs/COAs have Declarations or state statues that require workers comp for contractors. Though I think workers comp is terrific in general and highly advisable.
Or maybe state law would require the workers' comp, under certain conditions?
PatJ1 (North Carolina)
Posts: 568
Posted:
Quote:
Posted By AugustinD on 01/12/2022 1:09 PM
Posted By AugustinD on 01/12/2022 1:06 PM
Posted By PatJ1 on 01/12/2022 12:59 PM
Anyone who is a 1099 contractor needs to provide the HOA with an insurance [card?] that includes Worker's Compensation coverage.
I trust you meant that you believe any contractor doing business with a HOA must have workers comp coverage.

I am not sure all HOAs/COAs have Declarations or state statues that require workers comp for contractors. Though I think workers comp is terrific in general and highly advisable.
Or maybe state law would require the workers' comp, under certain conditions?

I was referring to our MC's requirements, for our HOA's protection. In NC any employer with over 3 employee's requires WC. It's not in our CCR's. It is a good very good business practice. Anyone can get hurt and anytime. Even a board member performing community a walk-around could become injured.

Vendors doing work on property can fall or injure themselves doing a simple thing. Why have the HOA responsible for an injury that may involve medical bills, loss of job function,even a disability? Or death?

I don't sell insurance. Vendors need to provide the insurance and it's a good idea that the HOA also secure a policy for volunteers (even if just board members walking around)to cover mishaps. A uninsured handyman could fall off his ladder and break his back. Like other's have mentioned here, HOA's have deep pockets and who needs to worry about that.

TimB4 (Tennessee)
Posts: 21,061
Posted:
Quote:
Posted By HenryS7 on 01/12/2022 12:45 PM

I don't think that an individual cleaning a building would qualify as an independent contractor. That sounds like an employee rather than independent contractor.

There are small start ups all the time.

We hired a resident to be a bookkeeper.
They were paid and were issued a 1099-misc.
The contract specified all requirements outlined in the IRS website.
Including them providing their own materials (in this case office supplies).
MarshallT (New York)
Posts: 414
Posted:
While there are some concerns about hiring an owner to perform work for the association, it is possible.

The board must be fully transparent about who the employee is though. And it's a hard no to waiving condo fees.
MarshallT (New York)
Posts: 414
Posted:
While there are some concerns about hiring an owner to perform work for the association, it is possible.

The board must be fully transparent about who the employee is though. And it's a hard no to waiving condo fees.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

  • ✓ Ask follow-up questions
  • ✓ Share your experience
  • ✓ Get expert advice
  • ✓ Access 350,000 discussions
Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here