All Work and No Pay! 3 Notes on HOA Board Member Compensation
If you're looking for paid HOA board members, you might as well be looking for a needle in a haystack. While HOA board members are some of the hardest-working people we know, they're rarely compensated in the traditional financial sense. There are good reasons for this (which we'll discuss a bit more below), but a lack of pay doesn't mean the position isn't rewarding.
3 Notes on HOA Board Member Compensation
If you've been wondering whether your HOA board members are being compensated for their labor, here are three notes to help clarify why they likely aren't being paid.
Laws and By-laws
In most cases, the issue of whether HOA board members are paid for their work is settled through a combination of state law and community bylaws. Many states prohibit paid HOA board member positions without individual bylaws on the books that specifically provide for that. If you're in doubt as to whether your community bylaws allow for paid HOA board member positions, always read them carefully and consult with a legal professional if necessary.
Conflict of Interest
By and large, community bylaws prohibit compensation for HOA board member positions. The reasoning behind this decision is clear. When working as volunteers, board members are cooperating for the betterment of the community. If they are getting paid for their service, their relationship to the work (and, by extension, the other members of the community) undergoes a shift.
- Those paid for their work may feel they have more decision-making power/authority than their position affords
- Those paid for their work my find other community members treating them like employees rather than partners
- Those paid for their work may make decisions out of self-interest rather than for the good of the community
To avoid any potential conflict of interest, it is best that such positions remain volunteer.
Occasionally, community associations do choose to compensate their board members. Unfortunately, paid HOA board member positions have led to some scandalous situations in the past.
In February of 2014, one San Diego HOA held an open board meeting to discuss the HOA manager Pete Smith's $275,000-plus pay for the previous three years. HOA board president Ann Boon had only learned this compensation data by studying the HOA's tax filings.
The tax filing said the manager's compensation was approved by the board or compensation committee and that a compensation survey or study was used in setting the manager's pay. Though president, Boon says she'd never seen Smith's contract or any salary surveys and hadn't voted on his contract. (HOA Leader)
Unfortunately, when Boon raised questions of financial transparency related to Smith's compensation, she was voted out of her position by Smith and other members of the HOA.
While HOA board member compensation doesn't always lead to scandals as big as this one, it does open the door to their possibility; this is likely why most state laws and community bylaws seek to bypass the option completely.
Is It Worth It?
While most HOA board members don't get paid in the traditional sense, that doesn't mean their work isn't rewarding. Many of them get involved in the first place because they enjoy helping people and want to see their communities flourish.
Even without traditional pay, board members can expect to enjoy the following compensations:
- Gratitude and stature in the community
- Satisfaction and pride of a job well done
- Deep pleasure in knowing they helped make a difference
In many cases, these are the most satisfying rewards possible.
We Can Help
At RealManage, we're here to help you navigate these tricky issues. For more information on compensation, especially as it relates to a board member code of ethics, please feel free to contact us.