Do HOA board members pay dues? This is a question many homeowners ask, particularly when considering running for a board position. Since serving as a leader comes with many responsibilities, some believe leaders must be compensated for the job. Yet, the answer isn’t as straightforward.
Do HOA Board Members Pay Dues?
Generally, board members pay dues to the HOA, but situations can vary based on state regulations and the governing documents.
Board members have two sets of obligations in an HOA or condo association. The first is their obligation to manage the community, which involves enforcing the rules, maintaining common areas, and making decisions that prioritize the association’s best interests. The second is their obligation as homeowners, which includes maintaining their own properties, following the rules, and paying dues.
While board membership comes with duties, it is not a traditional job. Serving on the board is on a volunteer basis, so compensation is not normally part of the equation. That said, it is important to check both state laws and the association’s governing documents for guidance.
Can HOA Board Members Get Paid in North Carolina?
North Carolina law prohibits paying HOA board members unless the governing documents expressly permit it or the board approves the payment in advance (Section 47F-3-118).
This applies to both financial payments and payments in the form of goods or services. The prohibition also extends to any business or relative connected to a board member, to prevent conflicts of interest.
The only exceptions are when the CC&Rs and bylaws expressly allow compensation or when the board authorizes payment in advance. If an HOA wants to hire a landscaping company owned by a director, for instance, the board must approve it before the work is performed. Payment can’t happen after the fact.
Are HOA Board Members Exempt From Dues?
Generally, board members are not exempt from paying HOA dues.
Some owners mistakenly believe that joining the board gives them special treatment, such as being exempt from paying dues or following the rules. Yet, an HOA board member dues exemption is permissible only if state laws and the governing documents allow it.
Board directors have the same obligations as other homeowners. They receive the same benefits as everyone else, so they must also share in the expense.
Allowing fee waivers might attract the wrong kind of leaders. An association needs board members who genuinely want to serve the community, not those who just want a break from dues.
Can HOA Board Members Waive Their Own Dues?
Board members can’t waive their own HOA dues unless the governing documents specifically permit it.
Some may rationalize that a fee waiver is not the same as being paid, since no money changes hands. That said, waiving dues essentially accomplishes the same goal as compensating board directors. There is a financial element to it, and it can create legal and ethical problems for the HOA.
Additionally, when board members waive their own dues, owners may question the decision. They may claim that the board is using its position of power to bend the rules and secure a financial benefit for itself. This can increase liability exposure and damage trust in the board.
Do HOA Board Members Pay HOA Fees? Understanding Implications
Board members must pay their dues to the HOA, just like all other homeowners. When board members get paid or have their fees waived, it can create certain implications.
Potential Breach of Fiduciary Duty
Board members have fiduciary duties to the association. These include the duty of loyalty, the duty of care, and the duty to act within the scope of their authority. Paying board members or waiving their dues can create a financial imbalance, potentially breaching these duties.
Conflicts of Interest
Conflicts of interest are bound to arise when board members have their fees waived or get paid. They may start to weigh the effects of financial decisions on their own pockets. Soon enough, they might place their personal interests above the association’s best interests.
Unequal Treatment
Associations work on a “shared benefits, shared cost” concept. This means that all homeowners receive the same benefits, such as access to amenities, common area maintenance, and community insurance, but they also share the costs. When board members waive their own fees, they are no longer sharing in the costs.
Financial Impact
Fee waivers can significantly impact an association’s revenue stream, as they cut off potential income from three to seven members of the community. It is akin to having three to seven delinquent accounts, except there are no collection methods to recover the funds. This loss of income then leads to higher dues for everyone else.
Loss of Volunteer Protection
In North Carolina, volunteer board members receive broad legal protection from personal liability (Section 55A-8-60). Fee waivers may be considered compensation, and directors may lose liability protection.
Do HOA Presidents Pay Dues?
As with any other board member or homeowner, an HOA president must pay dues to the association.
Presidents don’t receive special treatment because of their role. In fact, as leaders, they must set a good example by paying their dues and following the rules. The HOA president does not have the power to exempt themselves from HOA fees.
Dues Waiver vs. Expense Reimbursement
A dues waiver is not the same as a reimbursement.
Reimbursement happens when a board member temporarily pays for an HOA-related expense out of pocket. They are later reimbursed for the cost, provided they submit proper documentation such as receipts and forms.
Meanwhile, a dues waiver eliminates the board’s obligation to pay dues to the association.
HOA Board Members Not Paying Dues? Here’s What Happens
When a board member doesn’t pay their dues, they are subject to the same penalties as any other homeowner. These include late fees or interest, revocation of privileges, liens, and foreclosure.
- Late Fees or Interest. Once a payment is considered overdue, it accumulates late fees or interest charges.
- Revocation of Privileges. The director may lose their right to vote or access to amenities.
- Liens. The HOA may attach a lien to the board member’s unit, establishing the association’s claim.
- Foreclosure. Nonpayment can even cause a director to lose ownership of their home.
In some cases, delinquent assessments by HOA board members may even lead to the loss of their position. This means that the nonpaying director may be kicked off the board, either temporarily or permanently depending on the governing documents.
Do HOA Board Members Pay Dues? Answered!
Board members must fulfill the same obligations as any other homeowner, which includes paying dues to the HOA or condo association. They do not receive special treatment or financial compensation in exchange for their services. That said, some governing documents may permit the waiver or payment.
Cedar Management Group provides effective management services to HOAs and condo associations. Call us today at (877) 252-3327 or email us at help@mycmg.com to get started!
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