Reader Questions - Director Compensation

board members h o a homefront reader questions Nov 03, 2014

Dear Kelly,

Our HOA president has been working for one of the vendors that we use for some of the work around our complex. He did not disclose this information to anyone on the board or any of the homeowners. I feel this is considered a conflict of interest.

This was brought to the attention of the board by one of the HOA’s employees. This has never been brought to the attention to the homeowners. Is this right? 

J.S., San Bernardino

Dear J.S.,

Civil Code Section 5350, new this year, adds for the first time a definition of “conflict of interest” to the Common Interest Development Act. However, the definition is quite minimal, and does not list all possible conflicts of interest. A director being paid by an HOA vendor should disclose his relationship with that vendor, should not participate in discussions or vote on decisions regarding that vendor, and should not sign any checks to that vendor.

Bluntly, the president is making a mistake. By becoming involved financially with an association vendor, he is damaging his immunity and his credibility with the membership. He should be asked to decide what is more important – leading the association or receiving money from the vendor. If the money is more important, he should resign. If the HOA is more important, he should quit the vendor.


Hi Kelly!

Our HOA bylaws state that anyone can be elected to the Board including non-owners, non-residents, etc. Our Board Secretary is a renter and our Board is planning to have that position to be a paying job.

Our Board also holds its meetings at a restaurant at which they order food, wine and beer which then they get reimbursed with Association funds.

Our bylaws state: “no director, officer or committee member shall receive, directly or indirectly, any compensation for any service he or she may render to the Association …, but any such agent shall be reimbursed for actual out-of-pocket expenses…”

We believe those actions are violations of our bylaws. What do you think?

We love your column!

C.W., Goleta, CA

Dear C.W.,

First, restaurants are usually poor board meeting locations, because they are usually noisy and do not allow for members to observe the meeting. While sometimes HOAs will provide sandwiches for a board meeting, a restaurant meal is more likely to be controversial – perhaps directors should pay for their own meals. Also, alcohol during board meetings is never a good idea – the board should take its decision making more seriously.

Second, your HOA should consider amending its bylaws to require membership to serve on the board. Otherwise, neighbors, real estate agents or tenants could serve.

Third, some associations hire “recording secretaries” to take minutes, although it’s often unnecessary. Minutes are often a problem simply because too much unnecessary information (such as commentary) is included in them. Minutes should not be a major task, since they only record who attended, what reports were received, and motions made (and the outcome of those motions).

Directors should not be paid for what they do during the meeting, and paid recording secretaries do not have volunteer immunity.

Make sure your minutes are not overdone, or at least get help – so your board Secretary can participate in the board’s deliberations.

Best regards,

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at All rights reserved®.