Florida Community Association Manager Practice Exam

According to FS 617, which of the following is allowed for a community association?

1. Distribute income to board members

2. Pay reasonable compensation to officers for services rendered

3. Keep all income from operations taxable

4. Distribute assets to members upon dissolution

The correct answer is: Pay reasonable compensation to officers for services rendered

The correct choice indicates that a community association is permitted to pay reasonable compensation to its officers for services rendered. This provision recognizes the need for community associations to attract and retain qualified individuals to manage and operate the association’s affairs. It emphasizes that while compensation can be provided, it must be deemed reasonable, ensuring that the association remains financially responsible and preserves its resources for the benefit of all members. Compensation for services is a vital aspect of managing the day-to-day operations of a community association, as it allows the association to ensure that competent individuals are overseeing management duties, which can include financial oversight, maintenance, and compliance with various regulations. The other options present scenarios that would not align with the regulatory framework governing community associations. For instance, distributing income to board members would conflict with the principle that community associations are meant to serve all members equitably, not to provide personal financial gain to individuals in leadership positions. Keeping all income from operations taxable runs contrary to many community association structures, which often seek tax-exempt status under specific conditions. Lastly, distributing assets to members upon dissolution would typically violate laws regarding the proper handling of assets and responsibilities to creditors when winding up an organization.