Parking space available for board memebers only

Started by AllenB3 • 9 replies • 1335 views

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AllenB3 (Illinois)
Posts: 10

Posted:

Hello all,
We have a parking space which is a limited common element and owned by the association in our 50 unit complex in Illinois. All other parking spaces are individually deeded to unit owners. The Board has deemed that this one limited element parking space shall be allowed to be rented yearly by a board member only. No other HOA member shall be eligible to rent the space, only a board member. This seems illegal to me. The president claims that if it were available as a lottery/auction then the board risks being sued by a HOA member who could not afford the yearly rental space. Any comments would be appreciated.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By AllenB3 on 08/06/2008 3:01 PM
Hello all,
We have a parking space which is a limited common element and owned by the association in our 50 unit complex in Illinois. All other parking spaces are individually deeded to unit owners. The Board has deemed that this one limited element parking space shall be allowed to be rented yearly by a board member only. No other HOA member shall be eligible to rent the space, only a board member. This seems illegal to me. The president claims that if it were available as a lottery/auction then the board risks being sued by a HOA member who could not afford the yearly rental space. Any comments would be appreciated.

Allen,

I don't know whether it's legal or not, but, IMO, it is unethical. Only allowing a board member to rent the space gives the appearance of allowing special privileges to board members. I think the Pres. made that claim because he/she couldn't think of anything else that sounded better! If a person can't afford the yearly rental why would they enter into a lawsuit over a lottery/auction? The board must have the authority to rent the space rather than just assigning it to someone. The best thing to do, and IMO, the fairest, would be to designate it as a "visitor" or "handicapped" space.

SusanW1 (Michigan)
Posts: 5,202

Posted:

That's what I call a "parking perk."

How was it decided what Board member got to use it?

What kind of revenue COULD have been earned from this spot?

AllenB3 (Illinois)
Posts: 10

Posted:

Only one of the board members were interested in the spot. The revenue is $400 per year.

BradP (Kansas)
Posts: 2,640

Posted:

It is definitely unethical...no question

DJ1 (Ontario)
Posts: 798

Posted:

I like Mary's idea and failing that, highest bidder anyone? IF a board member wants it then let them pay the highest price possible and the revenues go back to the HOA.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By AllenB3 on 08/06/2008 6:12 PM
Only one of the board members were interested in the spot. The revenue is $400 per year.

Good thing! There may have been a battle royal if more than one board member wanted the space. LOL Do you know for a fact this board member really did pay the $400 rental fee? I don't want to open a big can of worms here, but if a group of people (your board)show no ethics about one matter, it's really easy to operate that way about other matters too.

AllenB3 (Illinois)
Posts: 10

Posted:

Yes, the monthly statements show the parking rent. One of the unit owners had suggested that there would be an auction with the highest bid winning the space for the year. This is when the president said it could open up the association to a possible law suit from a low income owner who could not afford the space...which seems like bs to me. I thought board members were not allowed to receive any perks and this would seem to constitute one. I know this seems unethical, but it also seems like it should be illegal. I am trying to find something regarding this matter in the Illinois Condominium Property Act, but have been unsuccessful so far.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

By the way, that $400 income to the homeowners association is probably fully taxable...

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By GeorgerwilliamsW on 08/07/2008 8:32 AM
By the way, that $400 income to the homeowners association is probably fully taxable...

I think it's a bit iffy. An example of income that is NOT exempt function income (and subject to tax) is:

"Payments from members for special use of the org's facilities, apart from the use generally available to all members."

The CPA could reason that this parking space is available to all members, therefore the rent could be considered exempt function income. However, if, in fact it does not qualify as exempt function income, after deducting the $100 "specific deduction", the assn would be taxed $90 ($300 x 30%) just for renting this one parking space.

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