AlexU
Posts: 1
Posts: 1
Posted:
This is an accounting question: The Board agreed to repair the interior of a condo and pay for the expenses. Are there rules how the expenses should be funded? from capital reserves or from the operating budget?
A service of:
Community123.com
Professional websites for HOAs & condos, since 2004
Professional websites for HOAs & condos, since 2004
🎁 1st year FREE for HOATalk members! →
Repairs funded from Capital Reserves?
Started by AlexU • 7 replies • 1476 views
💬 Join us to post & get advice from 50,000 HOA & Condo leaders.
Create Free Account →
⚡ Takes 30 seconds
Already a member? Log in
CarolR11
Posts: 2,560
Posts: 2,560
Posted:
Welcome to the Forum, Alex. In CA, reserves may only be used to replace or repair (usually) major components that are listed on your reserves schedule. Furnishings of someone's unit shouldn't be on that schedule.
So, you probably need to pay for this out of your operating budget. If you have a "contingency" line item, I'd say that's how your pay for it
To learn more about reserves in CA, visit davis-stirling.com, Main Index, Reserves. A wealth of info!!
So, you probably need to pay for this out of your operating budget. If you have a "contingency" line item, I'd say that's how your pay for it
To learn more about reserves in CA, visit davis-stirling.com, Main Index, Reserves. A wealth of info!!
TimB4
Posts: 20,986
Posts: 20,986
Posted:
Alex,
The Board can "borrow" from the reserves to pay for something the operating budget should pay for. However prior to borrowing, they must have a plan in place on how to repay what was borrowed from the Reserves.
The Board can "borrow" from the reserves to pay for something the operating budget should pay for. However prior to borrowing, they must have a plan in place on how to repay what was borrowed from the Reserves.
CarolR11
Posts: 2,560
Posts: 2,560
Posted:
Tim is correct, Alex, but a pretty strict procedure must be following involving notifying owners. Again,for CA legislation, please see davis-stirling.com, Main Index, Borrowing from Reserves
BruceF1
Posts: 2,516
Posts: 2,516
Posted:
Quote:
Posted By AlexU on 11/02/2013 3:32 PM
This is an accounting question: The Board agreed to repair the interior of a condo and pay for the expenses. Are there rules how the expenses should be funded? from capital reserves or from the operating budget?
This is an accounting question: The Board agreed to repair the interior of a condo and pay for the expenses. Are there rules how the expenses should be funded? from capital reserves or from the operating budget?
Why would the board agree to pay for anything other than common property? I could understand it if it's a liability issue, but then, doesn't the association have liability and property damage insurance for such situations? If so, then the association should only have to pay any required deductible.
As for whether the money should come from reserves or the operating budget, you haven't supplied enough information for me to make any determination. Also, as some have said, it is possible to borrow from reserves in some cases.
KellyM3
Posts: 2,233
Posts: 2,233
Posted:
Alex,
Be transparent in your board meetings, read the CA laws on borrowing from reserves and proceed if you must. The board agreed to restore a condo's damage so you'll ultimately re-direct money towards that effort rather than boost your reserves. Sounds like a tough break and I hope a one-time event for your budget.
Be transparent in your board meetings, read the CA laws on borrowing from reserves and proceed if you must. The board agreed to restore a condo's damage so you'll ultimately re-direct money towards that effort rather than boost your reserves. Sounds like a tough break and I hope a one-time event for your budget.
GailT
Posts: 1
Posts: 1
Posted:
I belong to a florida HOA and the BOD put a line item on the budget under revenues or income called Aministration Income, this year in the amount of $18,000. All the maintence fees income and sewer fee income, interest income and any other income fees are listed. I asked them what is Administration income? There is no such thing. The bookkeeepers says she takes it out of the sewer checking account and puts it into the general fund. If all the money coming in as sewer fees is accounted for and spent how can it be from sewer fees? My conclusion is it is from the reserve fund without voter approval. The BOD does a lot of creative budget antics. They have differed the Reserve Fund for the last 15 years illegally. They are putting Our HOA is real danger of all members having to come up with a huge assesment in the near future. I am working on trying to get them to see the error of their ways but it isn't easy. This is just the tip of the iceburg. They change by-laws illegally make deed restrictions illegally. I have only been an owner the last two years and can't believe the other owners have let them get away with this. But it isn't an easy job to change things so I can see how it can happen.
JohnC46
Posts: 14,230
Posts: 14,230
Posted:
Quote:
Posted By AlexU on 11/02/2013 3:32 PM
This is an accounting question: The Board agreed to repair the interior of a condo and pay for the expenses. Are there rules how the expenses should be funded? from capital reserves or from the operating budget?
This is an accounting question: The Board agreed to repair the interior of a condo and pay for the expenses. Are there rules how the expenses should be funded? from capital reserves or from the operating budget?
Alex
I am curious why the BOD agreed to repair the interior of a condo. Please explain why.
Thanks
🎯 You've read this entire discussion
Join the conversation with 50,000 HOA & Condo Leaders:
- ✓ Ask follow-up questions
- ✓ Share your experience
- ✓ Get expert advice
- ✓ Access 350,000 discussions
Create Free Account →
⚡ Takes 30 seconds
Already a member? Log in here