Should You Discount Assessments for Board Members?

Should You Discount Assessments for Board Members?

In community associations, a frequently debated topic is whether board members should receive discounted assessments as compensation or recognition for their service. This issue is particularly relevant in Illinois, where community associations must navigate both legal frameworks and ethical considerations.

Legal Framework

According to the Illinois Condominium Property Act, no provision allows for the discounting of assessments for any unit owner, including board members. The Act states explicitly that the association shall have no authority to forbear the payment of assessments by any unit owner​​. This means that all unit owners, regardless of their position within the association, must pay their assessments in full.

Providing a discount to board members can lead to several complications:

1. Legal Non-compliance: Offering a discount would be a direct violation of the Condominium Property Act, which can expose the association to legal challenges and potential penalties.
2. Financial Inequity: Discounting assessments for board members effectively shifts the financial burden to other unit owners. This could lead to dissatisfaction and disputes within the community.
3. Budget Deficits: As assessments are designed to cover the operational costs of the association, reducing these contributions from some members could create budget shortfalls. This would necessitate either cutting services or increasing assessments for other members to compensate for the deficit.

Ethical Considerations

Beyond the legal aspects, there are ethical considerations to account for:

1. Fairness: All members of a community association should be treated equitably. Providing financial benefits to board members could be perceived as favoritism, undermining trust and morale within the community.
2. Conflict of Interest: Offering discounts to board members may create conflicts of interest. Board members might be perceived as making decisions that benefit themselves financially rather than acting in the best interest of the community.
3. Voluntarism Spirit: Board members are typically volunteers. Their motivation should ideally stem from a desire to serve the community rather than receive financial compensation. Offering discounts could change the nature of board service from volunteerism to a paid position, potentially attracting individuals more interested in personal gain than community service.

Alternatives to Discounts

While discounts on assessments are not permissible, there are other ways to acknowledge and support the work of board members:

1. Reimbursement of Expenses: Board members can be reimbursed for legitimate expenses incurred while performing their duties, such as travel or office supplies.
2. Recognition Programs: Establishing programs to recognize the contributions of board members can provide appreciation and acknowledgment without financial incentives.
3. Training and Education: Offering opportunities for professional development related to community management can be a valuable benefit for board members, enhancing their skills and effectiveness.

Conclusion

While the idea of discounting assessments for board members might seem like a way to reward their hard work, it is loaded with legal and ethical issues. According to the Illinois Condominium Property Act, such discounts are not permitted, and doing so would not only be illegal but could also disrupt the financial and social harmony of the community. Instead, associations should explore other methods of recognizing the efforts of their board members that comply with legal standards and promote fairness and integrity within the community.

Rita Khan is the Director of Marketing at Hirzel Law, PLC. Ms. Khan received her Bachelor of Arts in American Culture from the University of Michigan, Master of Business Administration with a focus on Business Intelligence from Baker College, Paralegal Certificate from the University of Michigan Flint – Center for Legal Studies, and Graphic Design Certification from the New York Institute of Art and Design. Ms. Khan has over 15 years of experience in the property management industry from residential real estate, student housing, and condominium & HOA management. Ms. Khan holds several designations and certifications such as Certified Manager of Community Associations (CMCA), Association Management Specialist (AMS) and Professional Community Association Manager (PCAM) from the Community Associations Institute (CAI), Accredited Residential Manager (ARM), Accredited Commercial Manager (ACoM), and Certified Property Manager (CPM) from the Institute of Real Estate Management (IREM), Certified Apartment Manager (CAM), Certified Apartment Portfolio Supervisor (CAPS), and Certified Apartment Supplier (CAS) from the National Apartment Association (NAA), Project Management Professional (PMP) from the Project Management Institute, Certified ScrumMaster (CSM) from Scrum Alliance, Professional Certified Marketer Marketing Management (PCM) from the American Marketing Association and Certified Digital Marketing Professional (CDMP) from the Digital Marketing Institute. She is a licensed Michigan Real Estate Salesperson, Broker and Notary Public. Ms. Khan is also a Real Estate Property Management faculty member at Schoolcraft College where she teaches Introduction to Property Management and Residential and Commercial Property Management. Ms. Khan currently serves as a member of the CAI-Illinois Digital Communications Committee, is the Chair of the CAI-Michigan Social Media Committee and is an active member of the Institute of Real Estate Management (IREM), where she serves as a member of the IREM Foundation Board of Directors and a member of the Board of Directors for the IREM Michigan Chapter. Ms. Khan has previously served as a Delegate Member on the CAI Michigan Legislative Action Committee. She may be reached at (248) 478-1800 or rkhan@hirzellaw.com.