Q: I live in a condominium in Sarasota County. Every year, the board approves the formation of a holiday fund committee consisting of two people who collect and disburse the fund. The board president sends a letter to each owner soliciting donations. This letter is posted on all bulletin boards, as well.
However, the distribution of these funds is never disclosed to the owners. The board and office staffers claim not to know, and the two people designated to collect and disburse the funds say they are not permitted to talk about it.
Is it appropriate for the board to solicit these contributions, but not disclose how they are distributed?
– P.S., Sarasota
A: I received your email along with many others in the past month, and I debated with myself whether to address the issues you raised. I know it is too late for 2013, but I have some suggestions for the future, even at the expense of sounding like “The Grinch Who Stole Condo Christmas.”
If you live in a planned community, chances are that you encounter association employees on a regular basis. People being people, there will be some that you like more than others, and some who may like your neighbor better than they like you. Some who you feel went out of their way for you; others, in your opinion, were indifferent or even worse. In other words, to you, one may be “naughty” and another “nice.”
This is the season of giving. I get that. But are gifts playing favorites?
I don’t know, but I do think about this. Community associations are corporations and need to be run that way. If you went to your dentist or doctor, and there was a box into which you were asked to contribute monetary donations for your favorite staff member, would you be a little leery that something bad or “miscommunicated” could happen to your file if you did not contribute?
Just sayin’.
Bonuses to community association employees should be made by the association and treated as additional compensation for tax and all other purposes. It is my opinion that all employees should be forbidden from accepting “tips” as well as from providing private services to individual owners, even on their own time. I know that may sound harsh, but I have seen too many such arrangements go south.
Some associations choose to appoint a special committee to collect donations to employees in an effort to distance the corporation from the funds that are raised. I am not sure that works.
Even if the money is directed to an individual’s account rather than the association’s account for disbursement to the employees, I think funds raised by an official board committee constitute association revenue and must be reported as such.00
If any CPA doing work for an association disagrees with me, I would like to hear from you, and I will be happy to report any contrary view. Although the tax code is filled with loopholes, I suppose my general guidance is to not to try to do indirectly that which cannot be done directly.
I may be Scrooging it here, but a policy against an organized holiday fund also protects the association employees, who may feel pressured to bend or break the rules for an identified contributor to that fund, even if only the name but not the amount is disclosed to the employee.
One final note: If the association does maintain a holiday collection box, please make sure it is secured. More than one case has been reported in which such a box, filled with checks and cash, has disappeared from an unguarded lobby or mailroom. Almost Dickensian, if that happened. Compensate good employees for good work.
And, Merry Christmas to all.
Tamela Eady is a Florida Bar board-certified real estate attorney with 25 years’ experience. She concentrates her practice on community associations and real estate. The subjects discussed in her columns are not intended as specific legal advice to anyone and are subject to principles that may change. Questions may be modified for clarity or for brevity. Email questions for possible inclusion in a future column to tke@eadylaw.com.
