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.