Can a Board Member from outside the Association be Contracted to Serve?

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T.R. from outside of Connecticut writes:

Dear Mister Condo,

Are you aware of any circumstances in which the board of a community association has a “contract” board member?  Specifically, a person who is serving as a treasurer, does not own a property in the community, and presumably is paid for his “contract” services in his capacity as treasurer? What is propriety of the “contract” treasurer’s wife assisting him with the association’s books, such as cutting checks, for the “contract” treasurer to sign?

Mister Condo replies:

T.R., I am not aware of any circumstances that would require an association to “hire” a Board member. By definition, in the case of all association governance documents I have read, Board Members need to be duly elected owners from within the association. To have a vendor in a “contract” role on the Board creates tremendous opportunity for conflict of interest and would open the Board to lawsuits from unit owners within the association. Officers are either elected by the Board members or the unit owns at the Annual Meeting as per the association’s governance documents. There are two occasions I can think of when this may not be true. The first is during the development phase, before the governance of the community has actually been turned over to the association. The second would be if the community has been placed into some type of receivership by a court. This is rare and is usually the beginning of dissolution and bankruptcy. The numerous functions of the treasurer for the association (bookkeeping, budget preparation, tax filings, and so on) is often contracted to a property manager or an accounting firm.

Assuming that the vendor is paid by the association to perform the duties of the Treasurer (versus actually serving as the Treasurer), the contract with the vendor would reveal who can handle these tasks. If the contract is with “John Smith” and only “John Smith”, then it would hold that “John Smith” is the only person who has been hired to handle these tasks. If the contract is with “Smith Accounting Services”, then it may be possible for any employee, including Mr. Smith’s wife, to handle these tasks.

Keep in mind that just because I haven’t seen it before doesn’t mean it can’t happen. Boards make crazy decisions all the time. It’s part of what makes our industry so interesting (and entertaining). If this Board has, in fact, entered into a contract with a vendor to serve as their Treasurer, they should probably speak with another paid vendor, namely their association attorney, to see what the potential liability they have created. If a contract was signed, they may own the decision until the contract expires. If they can get out of such a contract, I would recommend doing so at once and renegotiating with the vendor to provide the services of the office and not the assume any of the governance responsibilities that come with being an elected member of the Board, let alone serving as Treasurer. Good luck!

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