Reader Questions - Manager Disclosures, Board Composition

board members community managers h o a homefront reader questions Dec 01, 2014

Dear Kelly,

Managers’ pay: commission vs. non-commission. What should a board know about this when working with a management company? Is it a practice for vendors to pay some form of gratuity to a management company when an HOA selects their services? (A management company may have an “approved” vendors list.)

Thank you,

D.L., Riverside

Dear D.L.,

Management firm compensation of their managers is their business, not yours. What is important to the HOA is what the management firm charges and the level of service it provides. Don’t meddle in management firm compensation, because you could actually harm the manager’s relationship with their employer.

As to vendors, it is not acceptable for vendors to compensate a manager or the management company for a new account – that is a kickback. A manager could steer your HOA to a vendor because they give valuable compensation, not because the vendor is the best fit for your HOA. You should have a selection of vendors. If you confirm your management company is receiving commissions or cash rewards from hiring a certain vendor, change vendors and managers – the practice is unethical.

Thanks for your questions,


Our Bylaws specify a 3 member board but we’ve kept a 5 member board because originally our attorney told us that meant a MINIMUM of 3 members but 5 would be OK and even better to involve more homeowners. Current board roster includes a married man and woman from the same unit, one is the President. There were challenges to this, and our Bylaws state only one vote per unit at the annual meeting. However, our management company interprets that because nowhere else in the Bylaws does it prohibit two members from same unit serving on the board together, it is ok.

Additionally, the board now decided to reduce itself to only 3 members with the next upcoming election. Even though the Bylaws don’t require homeowner approval to do this, it would seem more appropriate to at least have an open meeting discussion on reducing the number of homeowners’ participation in governing our HOA. 

Can you provide some insights? Thanks,

D.D., Long Beach

Dear D.D.,

If your bylaws state your board is composed of three directors, then that is the end of the question, regardless of whether a lawyer thinks it might be better to have it larger. If you want to expand or shrink your board size, then amend your bylaws, which normally requires a membership vote. I have occasionally seen bylaws allowing board size to fluctuate – it’s a bad idea. If your HOA has been ignoring your bylaw-prescribed board size for years, ironically, the board could on its own decide to start doing it correctly without a membership vote. But they aren’t shrinking the board, it was always three – you simply had two more, holding fictitious seats.

Having not read your bylaws, I don’t know if your manager correctly interpreted candidate eligibility, but I do know that managers should not provide legal interpretations. Ask your HOA’s lawyer. When drafting bylaws, I normally do not allow two owners from the same membership to serve (married or not) as directors, as there is only one membership there – and so only one person can represent the membership.

Best to your HOA,

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®.