Question: With the lack of interest by homeowners to serve on the board, can an association offer director compensation to increase owners’ interests and willingness to serve on boards?
Answer: Yes, unless prohibited by the associations governing documents.
Director compensation is not currently prohibited by Colorado law, although it may be prohibited in the association's declaration or bylaws. Therefore, prior to initiating a compensation plan, the governing documents must be reviewed to ensure director compensation is not prohibited.
Although director compensation is not a violation of Colorado law, it nevertheless may result in a negative political impact in the community. Oftentimes, compensation of directors creates the appearance or perception of impropriety on the part of board members, and as a result, owners become suspicious of the board and all board decisions. This results in an atmosphere of distrust and hostility within the community.
Despite its risks, compensation of directors has been used successfully by a number of associations in Colorado to increase owners' willingness to serve on boards; thus, it can be a useful tool for communities experiencing owner apathy.
Question: It seems that there is a conflict between the Colorado Common Interest Ownership Act, which requires owners be allowed to speak before the board takes a vote, and the Colorado Revised Nonprofit Act, which permits the board to take action without a meeting. May a board still take action without a meeting?
Answer: In our opinion, a board still may take action without a meeting as allowed by the Colorado Revised Nonprofit Act (“Nonprofit Act”). The provision in the Colorado Common Interest Ownership Act (“CCIOA”) that grants owners the right to speak before the board takes a vote addresses only physical board meetings and is silent on a board’s ability to conduct business outside a meeting. Since the legislature declined to address this issue, our interpretation is that CCIOA’s participation requirements apply only to physical board meetings and do not affect the other means of doing business granted by the Nonprofit Act.
[PRINTER FRIENDLY VERSION]
