Question: We live in an 18-unit condominium complex. Nobody wants to serve on the board nowadays because it is so much work. Can our homeowner association choose to compensate board of directors members for performing their duties?
Answer: Common interest developments are predicated on the concept of self-management. Civil Code section 1351 says that the association is formed to manage the common interest development. Owners are to become the elected directors of the entity known as a homeowner association. It was believed that titleholders would have a vested interest in caring for and protecting their property.
To encourage volunteerism, Civil Code section 1365.7 provides that an officer or director is protected from personal liability when certain other conditions are met, including not receiving any salary and carrying the required insurance.
Without a board, the entire membership is subject to liability should someone want documents, which the association is required to produce and maintain.
Protecting directors and protecting titleholders are different propositions. The amount of insurance required to protect volunteer officers and directors (Civil Code section 1365.7) is less than the amount the association is required to carry (Civil Code section 1365.9) in order to protect the homeowners from individual liability.
Hiring third-party vendors such as a management company does not absolve any board director from performing his or her duties. Board director duties and obligations can’t be delegated. Management company personnel still have to be supervised by the board. But hiring an accounting firm, large or small, that could perform periodic audits, produce invoices, collect assessments and issue receipts could be helpful and cost-effective for an association like yours.
Send questions to P.O. Box 10490, Marina del Rey, CA 90295 or e-mail firstname.lastname@example.org.