Conflict of Interest to be Paid for Service on the Board

C.V. from New Haven County writes:

Dear Mister Condo,

Is it a conflict of interest for the condo Board to get paid?

Mister Condo replies:

C.V., in my opinion it is a potentially tremendous conflict of interest for members of the Board of Directors to be paid by the condo association which they govern. However, there are some associations that allow the practice and others that actually call for the directors to be paid. Most associations that I know of have very specific wording in their condo documents that prohibit Board members from being paid by the association. They are certainly allowed to collect reimbursement for expenses caused by serving on the Board (printing, postage, and such) but those expenses need to be well-documented and authorized before being paid.

As a rule, Board members are democratically elected volunteers from within the community who serve to make their community a better place for themselves and their fellow unit owners. Since they control the finances of the association, they are responsible for determining the annual budget which includes all of the association expenses and income, which comes in the form of common fees to all unit owners. There is a clear conflict of interest in allowing a person set an expense of the association and then benefitting from that expense. That is the reason it is a volunteer position.

My advice is to see if your condo documents allow for the members of the Board to be paid. Chances are it is not allowed. If it is not allowed and the Board has still decided to pay themselves, it is time to get a new Board. Spread the word and elect new leaders who will conform to the spirit of volunteerism that is required for service on the Board. All the best!