Adams Stirling PLC


“[T]he services of directors and officers of nonprofit
corporations who serve without compensation are
critical to the efficient conduct and management of
the public service and charitable affairs of the people
of California.” (Corp. Code § 5047.5(a).)

"Volunteer" means the rendering of services without compensation. Compensation means remuneration whether by way of salary, fee, or other consideration for services rendered. Most CC&Rs and bylaws prohibit the compensation of directors.

Expense Reimbursement Allowed. Payment of per diem, mileage, or other reimbursement expenses to a director or executive officer does not affect that person's status as a volunteer. (Corp. Code §7231.5(b), Civ. Code §5800(b).) For example, if a director buys light bulbs for the common areas using his own money, the association can reimburse him without impacting his volunteer status. Directors should ALWAYS produce a receipt for those items for which they are seeking reimbursement.

Protection from Liability. By statute, volunteer officers and directors are protected against personal liability for mistakes they make while carrying out their duties. However, protections from personal liability are premised on the directors meeting certain standards of conduct established by law. Problems arise when directors (i) become "professional directors" or (ii) they wear two hats, i.e., they become an employee of the association while continuing to serve as a director, thus creating a conflict of interest.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC