Fire Inspection, can it be part of the Reserve?

We got hit with 4000 in fire inspection charges this year.

I'm told by our property manager that this is not something covered by reserves, that reserves are for items budgeted for.

Yet... this item isn't budgeted from operating expenses.

I'm also told that fire inspections occur every 5 years.

We had no budget for this, so we overran our budget by 4000 which normally would require repayment when tapping into reserves.

Rather than burden homeowners with special assessments, I'm hoping to implement this somehow. I think it should be from reserves since it occurs beyond an annual budget.

If not... then I think we should be hiring someone who is aware of fire inspection laws so we can always be up to date so we don't incur this loss every 5 years.

Any advice?

preliminary research on a weekend

before I address the management

and having said that

I find your response... well, I'll just leave it at that.

So, Joshua, the below is an actual quote from CA Civ. Code on what you can spend reserves finds on. In a nutshell, only items, called components, that are listed in your reserves study. And inspections of any kind are not listed.

"Spending Restrictions. Boards may not spend reserve funds for any purpose other than the repair, restoration, replacement, or maintenance of, or litigation involving the repair, restoration, replacement, or maintenance of, major components that the association is obligated to repair, restore, replace, or maintain." (Civ. Code §5510(b).)

But, Joshua, the below might help. You can borrow the inspections expense from reserves if you follow the CA Civ. Code below. To see more about reserves, go to davis-stirling.com, which is put together by a CA HOA law firm. Very useful!

"Borrowing From Reserves. Boards are allowed to borrow from reserves but are required to give notice of their intent to borrow by listing it as an item in the meeting agenda. The meeting notice must include the reason the reserve transfer is needed, some of the options for repayment, and whether a special assessment may be considered. If the board authorizes the transfer, it must issue a written finding recorded in the minutes explaining the reasons for the transfer, and describing when and how the money will be repaid to the reserves. (Civ. Code §5515.)"

It is true that your PM should have informed your board that this inspection was due, so that it could have been in your 2016 operating budget.

It could be argued that REQUIRED inspection of a common element IS PART of "..... or maintenance of, .....".

Simply budget for it going forward and raise assessments SLIGHTLY next year to repay shortfall.

I see your point, Tim, ditto, PiTA. But, inspection-required or otherwise- and maintenance are two very separate things.

Our three different certified reserves analysts never put inspections on our reserves lists. but components that ARE inspected are listed in the study, for example, testing the water that supplies our 2 cooling towers; 35 common area heat pumps, fitness center equipment, 6 elevators, various pumps and motors, generator to run our emergency lighting; ceiling fire sprinklers; generator to run them if needed and much more. Some inspections are required by the City; some are advised in our HOA manuals and by manufacturers' information.

It still looks to me that however Joshua's board might want to borrow from reserves and pay back with next year's budget. what does your PM suggest, Joshua?