I am the president on our board, and we have gone through management
companies quite a bit lately. Our treasurer is a CPA. He and I have been
thinking of taking over the management and the books to save the HOA
money. We would require compensation. We'd get board approval first, of
course, but what are the legal implications?
: Many small associations self-manage. However, it’s done with volunteers
Paying directors for management services is not illegal provided (i)
there is full disclosure, (ii) the fees charged are at or below market,
and (iii) the benefited directors recuse themselves from discussion and
votes on this and related issues.
However, many protections are lost if a director becomes a paid
director. To maintain their protections, directors cannot receive
compensation for their service on the board as a director. In
addition to potential conflicts of interest, any time you have a
disgruntled owner he/she will go after you and make a myriad of claims
involving self-dealing, conflicts of interest, incompetence,
over-charging, and so on. It gets very personal. To reduce potential
conflicts, you should resign from the board—it reduces the large targets
on your backs.
. Another consideration is insurance. Will you be carrying
your own insurance? You won’t be covered by the association’s D&O
policy for paid services in the event you are sued. If it were me, I
would continue using an outside service.
. Directors are allowed to receive reimbursement
for expenses incurred on behalf of the association without being deemed a "professional director
: Associations needing legal assistance can contact us
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