Reserve Study issue

I have been asking for the past couple of months if our HOA is going to perform the required HOA study this year. Our last one was in 2007. Per the California Civil code supposed to conduct one every 3 years. Finally today I was informed via the Mgt. Company that the Board is looking to either due it this year or beginning of next year and the Mgt. company is currently getting quotes for the process. I asked if it was the law it be conducted this year and I was told "Yes, it is supposed to be every three years. The Reserve companies are really busy right now."
My impression given how our 2010 Board operates is they will leave it for the next Board to perform the task as the current Board members, as of my current understanding, will not be running for the 2011 Board.

My question is what is the responsibility of the 2010 HOA Board to perform this study and what is their liability if they do not conduct it? Can they be held personally accountable for not conducting the study?

thanks,

Actually it is not an issue if its important or not the issue is the laws governing the Association require it to be conducted every 3 years. Example, we have 1 unit in foreclosure and 2 units in short-sale. For those prospective buyers they may not be provided the latest information on the state of the HOA financial condition as it relates to reserve funding if the report they have access to is 3 years old because the HOA BOD has not performed its obligation to have the study done every 3 years. It is also not right to pass on this legal requirement to an incoming Board. The issue of cost is a mute point as you can not justify not doing it just because of money concerns if it is legally required.

It can also be argued if their is substantial need to raise dues as a result of a reserve fund finding and the existing Baord does not conduct the study and puts the burden of raising dues on a future BOD then cause is in place that the past BOD's did not meet their legal obligation as a BOD. One of my concerns is the President is short-selling his home and he does not want to conduct a reserve study this year so as to prevent any potential negative issues arising while he is short-selling his home.

What I'm looking at is what legal liability, regardless if an attorney will take it or not, is placed on the existing Board of Director's if they do not follow the law govering them for this issue?

REQUIREMENT

(e) At least once every three years the board of directors shall cause to be conducted a reasonable competent and diligent visual inspection of the accessible areas of the major components which the association is obligated to repair, replace, restore, or maintain as part of a study of the reserve account requirements of the common interest development, if the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association, excluding the association’s reserve account for that period. '

The board shall review this study annually, or cause it to be reviewed annually and shall consider and implement necessary adjustments to the board’s analysis of the reserve account requirements as a result of that review.

The study required by this subdivision shall at a minimum include:

(1) Identification of the major components which the association is obligated to repair, replace, restore, or maintain which, as of the date of the study, have a remaining useful life of less than 30 years.

(2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.

(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1) during and at the end of their useful life.

(4) An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (1) during and at the end of their useful life, after subtracting total reserve funds as of the date of the study. ***

(5)(f) As used in this section, ?reserve accounts” means moneys that the association’s board of directors has identified for use to defray the future repair or replacement of, or additions to, those major components that the association is obligated to maintain.

(5)(g) As used in this section, ?reserve account requirements” means the estimated funds which the association’s board of directors has determined are required to be available at a specified point in time to repair, replace, or restore those major components which the association is obligated to maintain. ***

David,

Perhaps you could offer to chair a committee to complete the study. I've found that if someone is passionate about an issue, having them involved in the process usually produces a better result.

Tim

David,

Am I right in thinking you are the only member who is concerned about how the BOD operates? How many members in your HOA?

Hi David:

As I read your statement the Mgmt Company told you the board will complete either end of this year or beginning of next year and that the reserve companies are "really busy". So we are talking about maybe 3-6 months late?

If I am guessing correctly your concern is if it is not done this year is there personal liability.

I'm not an attorney; however, if they have been trying to get it done this year, but may run into the beginning of next year because the reserve company is "really busy" ... then they have been trying to comply with performing their duty. FYI ... they should NEVER be personally accountable for the "Reserve Companies" being "really busy" per your statement. Plus as long as any board or officer is performing their duty and attempting to benefit the HOA even if something may run a few "months" behind ... they are still performing.

David,

There are 1,702 members in my assn. I serve on the Advisory Board and was a board member in a former assn (hands-on Treas). Of course, it should always be a concern of all members of an HOA how their board operates. But no matter the size -- a very small one such as yours or a large one such as mine -- member apathy seems to prevail.

Now I recall all the problems you've uncovered with your board from past messages you've posted. I know it must be very frustrating for you especially since your assn is so small and you know all the members. I know this is not a good time to sell, but if an offer presents itself I think you should grab it. This cannot be good for your well-being. It's doubtful the board is going to change since their hands have already been slapped by the court and they're still not complying with state law. To continually take them to small claims is only going to get them madder and madder at you and put more of a financial and mental strain on you. There comes a time when you have to realize that it isn't worth the time, money and aggrevation.