Reader Questions - Presidential Discount, Late Board Packets

Kelly,

I read your column in the newspaper on HOA’s and I’m currently a President for a homeowner association. A friend of mine also belong to a homeowners association as a condo owner and the person commented to me that they pay to have a president for their HOA by allowing the president to not pay their monthly association dues. This is how they get someone to be their president. I told the person that there isn’t any pay for HOA board members of which the person didn’t know that information. I know this is wrong paying their president and what kind of fines could my friend’s HOA be looking at if they don’t stop paying to have a president that owns a condo in their HOA?

Thank you,

J.S., Monrovia

Dear J.S.,

California law does not prohibit an HOA from paying an officer or director, BUT it law does list the consequences of being compensated for board service, and the consequence is quite severe – loss of volunteer immunity under the Business Judgment Rule, and loss of immunity under the HOA’s Director and Officers (“D&O”) insurance coverage. In addition to the legal consequence of being compensated, the trust of the members is also adversely affected. To put it in the shortest terms, it just is not worth the small amount of money. Immunity is too valuable.

Directors can be reimbursed for actual out of pocket expenses they incur while doing the HOA’s business (and that does not mean reimbursement for the value of their time or lost work… it means something for which they can present a receipt, showing money spent).

Instead of spending money paying an officer (and wiping out their immunity), consider spending that money on upgrading the HOA’s management services, which will make board service much more palatable for all.

Best regards,
Kelly

Late Board Packets

Dear Kelly, 

I have just joined my association board a few months ago. I am just learning the ways and just visited caionline.org. I am sure I will be using that website. My question is: How far in advance does a board normally receive board packets before a meeting. I just received a 300+ packet Friday at 4pm to meet at 8am the next morning (Saturday). When I mentioned this was preposterous to the rest of the board, not much was said. Is this normal?

Sincerely,

B.H., Yorba Linda

Dear B.H.,

No, it is not normal. Board packets can be very voluminous, but you should not be receiving them at the last minute. If they are routinely over 300 pages long, ask your manager to provide recommendations and more condensed information where possible. Ask to receive the board packet when the agenda is published to the membership (at least four days before the meeting). You need time to be prepared.

Directors should arrive at the board meeting having already reviewed the packet, and ready to discuss the matters on the agenda. There is nothing more discouraging to a volunteer than to look across the table and see a director obviously thumbing through the packet for the first time – it means that the director is unprepared; the hard work to prepare the packet has been wasted; and that the meeting will run longer, since unprepared directors need more to “bring them up to speed.”

Thanks for your question,
Kelly

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 www.hoahomefront.com. All rights reserved®.