Richard White: Compensation for directors is not allowed

Q. We are a HOA. For the past few years it has been very difficult to get any volunteers to serve on the board of directors. This year we were forced to reduce the number from seven directors to five directors. Would it be legal to have the members vote to exempt the directors from paying their fees? If this were feasible we think we would no longer have a shortage of volunteers. We feel that this would be cheaper than to hire a management company.— H.F.

InvernessA. FS 720.303 section 12 does not allow compensation for directors serving. That also means a forgiveness of any fees due would not be allowed. That also would mean the directors cannot receive any gain or special benefit. It is not the duty or responsibility of the directors to save money. It would be their responsibility to properly operate, maintain, and spend the funds wisely; a fiduciary duty. Here is what I suggest to get volunteers. Start with better communications. Go out and meet the members and ask them to help face to face. I call it knocking on doors and meeting your neighbors. Create a comfortable environment for volunteers. Face the facts, a director must volunteer to work and give time to the operations. Why not hire a manager to do the day-to-day work and assist the board. Saving money and giving your time is not a way to attract members to do the day-to-day work. Explain to the members that if they volunteer and a manager does the daily work, all they would have to do is provide the guidance and observation. You need to explain that a failure to volunteer to serve your community will in the end lower property value and can result in higher fees. As directors, you must think of operating a big business not a mom and pop shop. Hire professionals to help provide guidance and labor and you will find that your association will operate better and increase the property values. It will also decrease the number of hours directors must work to manage the association.

Q. Today I am coming to you for information and advice. Our HOA board of directors is considering a significant special assessment to compensate for non-payment of monthly dues by many homeowners. It is unfair to impose this penalty on owners who always pay their dues. It is equally unfair to allow the delinquent owners to have their dues paid for them by others and let them get away without paying their fees. Is this assessment legal? If it is, please refer me to the relevant articles of the law. If it is not, what is your advice on how to counter this unfair solution of our board? For instance, short of resorting to a lawyer, could we instead offer the board a six-month to a one-year loan to its operational budget, on condition that it be paid back in full to the "lending homeowners?"— Y.L.

OrlandoA. The bad news is that nothing in life is fair. If an owner does not pay, then the other owners in the association must pay. The board is obligated to maintain and operate the association. To do so, the statutes give the board the right to assess the members the necessary funds to accomplish their duties. This could mean a special assessment or an increase in the budget to cover the shortfall. Members do not have a right to dismiss this duty. However, it is expected that the board is taking proper collection action against the delinquent owners. The board has the most powerful tool in that they can foreclose on a home and put the owners on the street. That action would be to have an attorney lien and foreclose on the delinquent homes. The board must take fast action rather than delay the collection procedure. To do so, they need the guidance of an attorney. If your board is not taking fast action to lien and foreclose on the delinquent owners, then you have a valid reason to complain.

Q. The board sent me a letter to stop feeding the birds in my yard. They said it was illegal to feed them, which is not true. My neighbor fed the egrets and other lake birds for years but moved away. Since he moved, I have been feeding the birds. Please advise if I can continue to feed the birds.— G.A.

Tarpon SpringsA. Residents must never feed a wild animal or bird. This is especially true of feeding alligators and there is a Florida law against feeding them. As for the birds, some do have protective laws. If you feed them, they may begin to return to the location. If you look at the area where you feed them, you will find droppings. These droppings can be very dangerous and can cause serious illness in humans. It is best to let them find natural food as human food can harm them. Very rarely do they die of hunger. I suggest that you call your county health department and find out the laws for your area as well as illnesses that the birds can carry. You are not doing the birds a favor as they can become dependent on human feedings. The question is do you really know what feed they need to remain healthy? It is best to admire them from a distance.

Q. I am a director in my HOA. We are a not-for-profit association. We have the good fortune of make a profit on a recent fair and bazaar. I told the other directors that we should give the money to charity because we cannot raise money from such events. I told them that we could not make a profit. Can you advise me on how I should address this problem with the other directors?— R.G.

Vero BeachA. You need to understand the difference between a for-profit, a not-for-profit, and a non-profit corporation. The non-profit corporation must have certain IRS and dtate tax exemptions, most times called 501(c) corporations. Rarely is a HOA or Condominium a 501(c) corporation. Most associations are formed under FS 617 which is the "Not-For-Profit" business. That does not mean you are limited to only certain incomes such as your fees. My guess is that you fall under the FS 617 statute and you are allowed to venture into businesses that allow you to earn income or a profit. You must file an IRS tax form each year and declare the income. Even if you are a 501(c) corporation, you must still file a tax form. I know of not-for-profit HOAs that have many sources of income. Many operate golf courses, lounges, clubs and cafes. In one association, they operate a gas station for the members because they operate a fish house and pier for the members, thus allowing boats to be filled with fuel at the dock. I would suggest that you seek answers from your CPA or accountant if you have any restriction as to income that you can generate.

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Comments » 1

BlackCat writes:

It's illegal to feed some animals and sandhill cranes in FL. It's not illegal to have a bird feeder.

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