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Subject: Compensation of HOA manager?
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Author Messages
AG5
(California)

Posts:3


02/15/2020 7:40 PM  
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
MarkW18
(Florida)

Posts:717


02/15/2020 7:59 PM  
Yes, there is, ZERO compensation!
DouglasK1
(Florida)

Posts:1489


02/15/2020 8:12 PM  
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.

Escaped former treasurer and director of a self managed association.
MarkM19
(Texas)

Posts:563


02/15/2020 8:20 PM  
AG5,
I guess if you are on this site long enough you can say you have seen it all. This is the first time I have seen a request like yours. If you have a 4 unit Condo I doubt it takes much to run it. If you have 3 board members that only leaves 1 person not on the board. Not sure why any HOA would be need for this Condo.


Am I missing something?
SamE2
(New Jersey)

Posts:243


02/16/2020 5:01 AM  
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.
GeorgeS21
(Florida)

Posts:2308


02/16/2020 6:02 AM  
AG5,

What does California HOA law say?
CathyA3
(Ohio)

Posts:832


02/16/2020 6:12 AM  
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.
SamE2
(New Jersey)

Posts:243


02/16/2020 6:36 AM  
Cathy is correct that the assessments have to be divided according to the docs. What I have seen done is a unit get a credit for $100 and the dues was $100 so the owner never had to pay their dues because they always had a credit to offset. Obviously it is easier to do this in a 4 unit HOA than a 1000 unit HOA. The most important thing for me is to document it and be transparent.
SheliaH
(Indiana)

Posts:3054


02/16/2020 7:28 AM  
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!
AugustinD


Posts:2915


02/16/2020 7:44 AM  
-- If you are on the board of the condo, then by taking payment for board service you lose the protections that the federal Volunteer Protection Act provides. These protections are significant. (Thanks to member TimB4 for posting this every so often.)

-- I can understand your wanting compensation. I am glad the others at your condo approve. Just make sure this compensation is not for any type of board service.

-- As the others wrote, do not take a reduction in your assessment as payment.

-- This site may cover any relevant California law regarding paying directors:
https://www.davis-stirling.com/HOME/Paying-Directors

-- Else I do not think California law sets a limit on how much you can be compensated.
MarkW18
(Florida)

Posts:717


02/16/2020 8:43 AM  
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.
JohnC46
(South Carolina)

Posts:9313


02/16/2020 9:15 AM  
Posted By MarkW18 on 02/16/2020 8:43 AM
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.




This is how I see it.

AG5
(California)

Posts:3


02/17/2020 1:17 AM  
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
(California)

Posts:3


02/17/2020 1:17 AM  
Posted By DouglasK1 on 02/15/2020 8:12 PM
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.




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
GeorgeS21
(Florida)

Posts:2308


02/17/2020 5:21 AM  
AG5,

I plugged in your last questions to google and came back with hundreds of citations.
MelissaP1
(Alabama)

Posts:9130


02/17/2020 5:50 AM  
Am I the only one who's skin crawls when I hear "Well if I do the job I want compensated?" when it comes to HOA's? That is usually a red flag to me if I ever get someone interested in "volunteering" for their HOA. It is like someone going to a soup kitchen and telling everyone they want paid because they are serving the food...

Former HOA President
CathyA3
(Ohio)

Posts:832


02/17/2020 6:06 AM  
Posted By AG5 on 02/17/2020 1:17 AM
Posted By DouglasK1 on 02/15/2020 8:12 PM
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.




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




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.
SamE2
(New Jersey)

Posts:243


02/17/2020 7:00 AM  
My docs allow all Board members but the President to receive compensation. The President can receive compensation for doing things outside the scope of being President. For example if the President took care of the pool we could pay him for taking care of the pool or if he did the bookkeeping we could pay for that service. While it is true he would be paying for part of his service but not the total, in your case you would pay 25% and other 3 owners would pay 75% so you would be ahead financially. I think it is okay to compensate Board members when they are doing jobs outside the scope of their duties and when other owners are not pitching in with the work.

GeorgeS21
(Florida)

Posts:2308


02/17/2020 7:38 AM  
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.
CathyA3
(Ohio)

Posts:832


02/17/2020 11:59 AM  
Posted By SamE2 on 02/17/2020 7:00 AM
My docs allow all Board members but the President to receive compensation. The President can receive compensation for doing things outside the scope of being President. For example if the President took care of the pool we could pay him for taking care of the pool or if he did the bookkeeping we could pay for that service. While it is true he would be paying for part of his service but not the total, in your case you would pay 25% and other 3 owners would pay 75% so you would be ahead financially. I think it is okay to compensate Board members when they are doing jobs outside the scope of their duties and when other owners are not pitching in with the work.





Personal opinion: No first time board member is worth paying - they don't know enough and will be making mistakes, some of them potential serious. Then couple that with losing the protections of being a volunteer. You couldn't pay me *enough* to put myself in that position.
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