Can HOA committee members be compensated?

Q:  I am the chairperson for the social committee of my homeowners association (HOA). Our bylaws state that the HOA compensates committee chair positions by waiving their annual HOA assessments, after serving a full year on the committee. The members of the board of directors are not compensated. We have a new board that was elected in 2016, and they want to change the bylaws so committee chairpersons only receive a gift card for their service. They want to change it effective immediately.  Our annual assessments are due next month, which means that I have completed almost the entire year of committee service, and am now being told my compensation will be far less than what was promised to me. Is it legal for the new board to do this? Is compensating committee chairpersons illegal in NC?

A:  You have raised a good question.  North Carolina law, in both the Condominium Act and the Planned Community Act, prohibits HOA officers and directors from being compensated for their service, unless the bylaws specifically provide for it.  The laws do not mention committee members – probably because it never occurred to the legislative committee that wrote the laws that it was a possibility.  Though I cannot say with certainty that the practice is “legal”, I cannot point you to any law that specifically prohibits it, either.

As to whether the board can change your compensation at the end of your term- you can certainly take the position that you and the board entered into a binding contract.  You agreed to serve as committee chairperson for one year, and they agreed to pay you by waiving your annual assessments at the end of your term.  Your position could be that the board has breached its contract with you, it is patently unfair to you, and it may deter others from volunteering to serve as committee chairpersons in the future. However, if the board were to make the compensation adjustment prospective instead of retroactive, your particular issue would become moot.

I also question whether the board has the authority to amend the bylaws acting alone without a vote of the members. Most HOA bylaws have provisions that require a “super-majority” vote of members to approve amendments.  Bylaw provisions that give the board the authority to approve amendments on their own are rare, but I have seen them occasionally. I suggest that you read your bylaws to answer this question for yourself – the amendment provisions are usually found at the end of the document.

This column was originally published in the Charlotte Observer on March 4, 2017. © All rights reserved.

2 thoughts on “Can HOA committee members be compensated?

  1. In response to Mr. Hunter’s statement in the Charlotte Observer on March 4, 2017, that he doubts whether a Board has the authority to amend bylaws acting alone without a vote of the members, I have the following questions:
    Our HOA Bylaws, Art. V, Sec1, Powers of the Board, state that- The Board Shall: A.- Manage and control the affairs of the Assoc. and D.- Perform other acts the authority for which has been granted herein or by law, however the Bylaws do not state who, what, or how the Bylaws can be adopted. We are a pre ’99 community and under 47F-3-102 the Association may: (1) Adopt and amend bylaws and rules and regulations. As a NFP under 55A-10-20 – Bylaws – Amendment by Directors, it states… its incorporators, until directors have been chosen, and thereafter its board of directors, may adopt one or more amendments to the corporations bylaws subject to any approval required pursuant to GS 55A-10-30… (which doesn’t appear to apply to us).
    Historically, the Board, solely by an affirmative vote of minimally five of the seven directors, has amended and adopted bylaw changes or revisions. Presently there is question as to whether we must put the currently planned amendments to the bylaws before the membership for a vote of approval or continue our past practice. The amendments being considered are reasonable and impose no additional restrictions, penalties or further encumber the membership in any manner. Your input would be greatly appreciated as to who, what, and how the bylaws can be amended.

    • Mr. Ashe – I cannot provide any legal advice or opinions through our blog on fact-specific issues presented by readers. I can say that my statement in that March column was a broad one (as are most of my columns), not intended to apply to every situation. Probably 98% of HOA bylaws that I have reviewed in my career have a provision that requires the consent of members to approve amendments to the bylaws – often a super-majority of 2/3 or more. If you would like to engage our firm to provide you with a legal opinion specific to your HOA’s situation, feel free to contact me. My contact info can be found on http://www.horacktalley.com. Thanks for reading.

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