Wednesday, April 14, 2010

Holiday Bonuses, Farewell Dinners and other Niceties.

I am often asked whether or not it is appropriate (particularly at holiday time) to acknowledge a job well done by an association employee with a bonus or other gift. I am also asked whether or not it is ok to have a farewell dinner of sorts for long-standing board members who are leaving the board (by choice not by recall!).

While these sorts of social niceties are routine in the regular world, in association-land they can draw the ire of members who do not agree that such expenditures are a proper common expense. In fact, Chapter 718, the Condominium Act, is very clear about what is or is not a proper common expense; it must be defined as such by the statute or the governing documents.

Condominium and other community associations wishing to have the flexibility for the discretionary spending described above would be well advised to amend their governing documents to allow them to do so.

In the absence of such an amendment, the only other proper manner to give that employee a holidaygift or to host that farewell dinner would be to allow owners wishing to donate funds to underwrite the costs involved. It might seem burdensome to do so but it is important to remember that common funds are just that: funds that have been contributed by all members and they must be spent in accordance with statutory and documentary guidelines or the board risks censure.

1 comment:

  1. I like what you say about bonuses but the condo I live in the Board does what they want. and not until this year have they taken out the proper taxes. Only because I insisted.
    They also have been collecting so much in assessment fees that there is a susplus of 420,000.00 in bank accounts after operating expenses and reserves are accounted for. I think they should have to return the monies. It belongs to the owners...