Board Members Not required to pay dues?

-- Be aware that officers are not necessarily directors. Are the secretary and treasurer directors as well as officers?

-- Do either the declaration or the bylaws allow the HOA to compensate the treasurer or secretary?

-- Is this a condominium? Because if it is, I want to check something in the Michigan Condo Act.

-- Always or nearly always, the declaration requires each owner to pay an assessment. The only way to waive the assessment would be by a vote of the owners to amend the declaration. Directors on their own cannot waive the assessment.

-- Would you please answer all questions asked of you here? In your response, would you please use the name of the person asking the question?

Typical statutes specify that Directors may not be paid for the performance of their duties.
Officers, may be paid if the board desires.
Keep in mind that Directors and Officers are two different positions (even if filled by the same person).

IF the board desires, they need to do it properly.

1) Collect Assessments as normal and required by the CC&Rs.
2) Write a check to the individuals for the performance of their duties.

NOTEs:
Said check is taxable.
Paying for the job indicates the individual hired is a professional and loses any volunteer protections.
If an independent contractor contract isn't made with the individuals, they could easily be considered employees.
Employees require payroll taxes, etc.
Waiving of a debt owed, is considered income by the IRS.
Depending on the amount, 1099-misc, 1099-C or a W-2 may need to be issued by the Association.
Failure to do things properly can cause an awful lot of issues for everyone if just one disgruntled member wants to report the issue to the IRS

See:

About Form 1099-C, Cancellation of Debt by the IRS

About Form 1099-MISC, Miscellaneous Information from the IRS

Independent contractor (self-employed) or employee? from the IRS

IRS 20-point Checklist for Independent Contractors

Understanding Employment Taxes from the IRS

Should HOA Board Members Be Paid? News Article

VOLUNTEER PROTECTION ACT OF 1997

No One Has Time to Volunteer for HOA Board: Can We Pay Them? From Nolo

If the amount waived is over $600 per year, 1099s should be issued and sent to the IRS.

This does not answer the question. What do the bylaws say about compensating o-f-f-i-c-e-r-s?

The Michigan Nonprofit Corporation Act permits the board to compensate officers as long as the HOA's Articles of Incorporation do not prohibit this compensation.

As a matter of law, director duties are distinguishable from officer duties.

As others said, the manner of payment depends on the amounts paid.

Generally, most HOAs prohibit reimbursement for duties as a board member. If a board member was providing services ( accounting) they may be paid, but that payment should not be in the form of a fee reduction and paid by check.

The membership elect individuals to serve as Directors (i.e. the Board of Directors).
Directors (required by Corporate law and most, if not all, governing documents) make the decisions for the Association (should we hire people (PM, bookkeeper, etc.), who to award a contract to, do we foreclose, do we bring legal action, how to respond to x, approve policy changes, etc.).

Officers (required by Corporate law and most, if not all, governing documents) implement the decisions of the board and carry out the day to day tasks of running an association (Collect mail, track payments, make deposits, pay bills, file the taxes and annual report, sign contracts with contractors, oversee contractors, hire people, oversee work, maintain records of the Association, handle complaints, investigate violations, etc.).

Larger Associations may actually hire employees to perform many of those tasks. Self managed associations may do all of the tasks themselves. However, all Associations must have both (Directors and Officers).

Often, there simply are not enough volunteers or money to hire individuals. When this occurs (which is typically the case) the Directors appoint officers from amongst themselves. Essentially, the individuals then have two different jobs at the same company.

However, as you pointed out, many do not understand the difference between Directors and Officers. I would suspect that many who serve on their board do not understand the differences.

Therefore, when an Association pays it's Officers, and when Officers and Directors are the same individual, the perception is that the Directors are being paid to serve.
This is why it's best, if needed, to hire a bookkeeper to help the Treasurer and, if needed, to hire a PM to help the Secretary and other Officers perform their duties.
The appointed Officers are still accountable for the work to get done. They simply assigned the physical task to someone else.

Hope this helps,

Tim

You have been posting here for a little over three years. I estimate that the difference between officers and directors is explained to a new HOATalk member about once a month. And yet it has not sunk in for you.

If this concept (officers v. directors) is so difficult for volunteer HOA/COA directors, legislators should imagine how volunteers must routinely struggle with interpreting and applying all manner of other covenants and statutes.

For god's sake, enough. Directors and officers should both be paid. All directors and officers must receive training and pass a standards test.

TimB4, thank you for the citations.

I too ran into chatter about "offsets" not being allowed. But I am not sure what I was proposing denotes an offset.

I agree your way is best practices.

I am saying that if the board voted properly and lawfully to compensate officers, and documentation was provided in the HOA books of the correct credits and debits to the officer's account, then I would not care.

The above certainly leapt out at me.

True.