Becker & Poliakoff

“Should Board Members Be Paid?” – News-Press

“Should Board Members Be Paid?” – News-Press

Q: Is a condominium association permitted to pay the members of the board of directors? Board members spend a lot of time and energy in a thankless job. It only seems fair that they should get some benefit for all the effort. (M.S., via e-mail)

A: Section 718.112(2)(a)1 of the Florida Condominium Act states that directors and officers shall serve without compensation unless otherwise provided in the bylaws. In my experience, it is uncommon for the bylaws of a condominium association to authorize compensating board members, although many bylaws permit reimbursement of expenses reasonably incurred on behalf of the association.

Chapter 720 of the Florida Statutes, the Florida Homeowners’ Association Act, and Chapter 719 of the Florida Statutes, the Florida Cooperative Act, contain the same basic rules.

There is no doubt that service on a board can be time consuming and, in some cases, thankless or even unpleasant. While I have heard some commentators opine that “professional directors” should be the industry norm, those opinions are usually aimed at requiring outside paid professionals to act as the decision-makers. The condominium concept in Florida was recognized by statute in 1963, and for the 60 years the law has existed, has been predicated on the concept of not-for-profit operation by property owners, on a volunteer basis.

There are reasonable discussion points on both sides of the coin. In my view, compensating board members, even if properly authorized by the bylaws, is probably not a good idea. There are a number of issues that are evident, and some that are more subtle. For example, is the paid director an employee or independent contractor, and who is responsible for his or her tax withholding and tax reporting requirements?

Perhaps most fundamentally, the current statutes and case law provide a broad degree of immunity from personal liability for board members. There are exceptions for crimes committed, embezzlement of funds, and the like, but very few situations pose any real concern about director personal liability. The obvious question then becomes whether the legislature or the courts would decide that if someone is being paid for what they are doing, they should also be liable if they do it wrong.

Many associations have a difficult time getting volunteers to serve on the board and creating more potential personal liability is unlikely to improve that. In fact, if someone runs because they “need the money,” they probably shouldn’t be on the board at all. Remember, directors are supposed to act as fiduciaries, not paid employees.

I see other potential landmines, including whether receiving compensation triggers manager licensing requirements. Another question is whether the association’s liability insurance policies, which are usually written and underwritten on the basis of a non-profit/volunteer organization, would provide adequate protection and coverage.

I have worked with a few associations, mostly small HOAs, where the members decided to basically “pay” the directors by absorbing their quarterly dues (so everyone else makes up the difference). That seems to work fine in those cases, but I think these are the exceptions to the rule.

Community association laws and governance have gone through two or three transformational phases since the laws were put on the books six decades ago. I believe we are entering another transformational phase, which will probably take years to percolate and settle. In addition to the obvious issues regarding maintenance and structural safety we will be hearing about, I believe the role of technology as part of association governance will play a central role and be more thoroughly addressed in the statutes, which is long overdue.

I also think the underlying concept of whether a group of well-meaning volunteers is the best place for the buck to stop when it comes to managing millions of dollars in real estate assets, not to mention those who dwell in them. It is entirely possible, perhaps probable, that the idea of “professional boards” will play a role in this conversation.  Stay tuned.

Joseph E. Adams is a Board Certified Specialist in Condominium and Planned Development Law, and an Office Managing Shareholder with Becker & Poliakoff. Please send your community association legal questions to Past editions of the Q&A may be viewed at