Board Members – Compensation

Q

Is there any law in New Jersey that prohibits condo Board members from being compensated for their work on the Board? I have been asked this question and in the assumption is there can be no compensation. I can find no law however that states that.
- Robert

A

According to Ms. Mary Ann McNulty, CMCA, AMS, President of MAMCO Property Management, an Associa company headquartered in Mount Laurel, New Jersey, the association’s governing documents should contain specific language concerning compensation for board officers, trustees, or committee members. These documents usually state that no compensation shall be paid. However, the board may determine that it is appropriate to pay the treasurer and/or secretary for their services if the governing documents permit.

Reimbursement for out of-pocket-expenses or for services rendered in any other capacity to or on behalf of the association and approved In advance by the board can be compensated. New Jersey Law does not prohibit compensation. According to the 2011 Edition of New Jersey Condominium and Community Association Law, A Practical Guide to Condominium & Other Common Interest Communities by Wendell A. Smith, Dennis A.Estis and Christine F.Li,

The provision prohibiting compensation to persons who perform services in capacities other than as trustees and officers is intended to prevent self-dealing by those individuals who would assume leadership roles and then abuse their fiduciary trust by establishing salaries or some other form of compensation for their service. While there is nothing in the law to prevent the provision of such compensation, it is rarely ever done and there is serious doubt whether compensation would achieve any positive result. Should your association’s governing documents be silent on the issue of compensation for board officers, trustees or committee members regardless of the fact that there is currently no New Jersey Law prohibiting same, it is recommended that you consult with the association’s legal counsel and advise owners of the board’s intention.

Sincerely,

Margey

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