Assoc board officers making repair contracts with owners for Building repairs

Unfortunately, that does happen when reserves studies are not updated.

A good rule of thumb is that reserve studies should be reviewed and adjusted yearly and completely redone every 5 years.


Unfortunately, this also happens when those who might have issues with budgets are in control.

I also suspect that you are utilizing cash flow (aka pooled) reserve method vs. component reserve method. You provide a perfect example of why I believe the component method is the right way to do reserves.

The proper way to handle things when reserves fall short is a special assessment.


I agree.

Unfortunately, the Association doesn't seem to have the money for an independent contractor to evaluate the situation.

Personally, If I were you, I would consider moving before the special assessments start and annual assessments are raised.

If you choose to stay and try to fix the issue, you are going to have to educate your board and membership.
I would start by obtaining a new reserve study.

For more info on reserves, see the following thread on this forum:

Subject: Reserve Studies/Funds 101

Note: some early links in the above thread are broken but were corrected later in the thread.
Some links are simply broken (as that happens with old threads).

Thank you TimB4 for the easy to read summary. I am working a bit from it and then drawing from SueB9's post as needed in my responses.


-- I agree with TimB4 that the proper way to deal with this is via a Special Assessment. SueB9, look at your HOA's governing documents for discussion of this.

-- The governing documents may also permit the HOA to assess each unit/building one at a time for work done. Once the money arrives, proceed to repair the next unit/building.

-- SueB9's HOA's governing documents might say that if an owner undertakes certain repairs at her or his own cost, then the HOA has no duty to reimburse the owner.

-- SueB9, is this a condominium?

-- SueB9, does the siding et cetera have to be repairs a.s.a.p. due to, say, leaks?

-- SueB9, respectfully, I for one find posts, emails, letters and so on that do not use all-caps; multiple exclamation marks !!!!; and other punctuation marks that emphasize; much more readable. These punctuation marks made the author sound not calm. The issues you raise are serious and in my opinion, require calm and careful thought. I hope this is not insulting. Two cents.

Thank you Tim,

The bullet points are exactly what is occurring!
Here is the new issue:
Board has wanted to remedy the financial deficiencies by applying for a state loan program for Associations; 15yr loan w/4.875% interest, and a required 75% owner approval.

The board will not get 75% approval from owners, as owners favor a combination interest free assessment imposed on each unit equally, plus a dues increase. Owners disapprove of the amount of interest compiled that goes back to lender for the loan, amortized 15yrs, will = between $180,000 to $241,000, depending on the principal amount loaned.

The board, still wants to spend as much as possible in 2020, hoping to persuade owners to approve the loan, to turn in a sizable expenditure amount, as the state assoc loan prom pays back to the association the money already spent, plus allows a matching draw for unfinished repair projects.

This is where I draw the line: The board has chosen in a 4 to 1 vote, to move forward with replacing a worn out roof this fall for $70,000, when the roof has no active leaks; without using that money to make the necessary repairs on the few active leaks reported by the owners, who want their units fixed now.

Instead the board has picked up on that one owner offer to pay in advance to fix his unit on his own dime before he leaves town for 6 months, and allowing the association to start paying him back with dues credits starting in January 2022. So now the board sees this idea as a windfall for the association to get money from owners up front, AND replace a worn roof on one of the 12 remaining buildings that needs roof replacement in the near future, to build up expenditures in 2020 for the loan application, and use this same general contractor instead of a roofing contractor to replace that roof, because all the reputable roofing contractors don't have time to schedule that job in, with the weather deteriorating, as it does here in Anchorage by October.
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There is so much liability involved with these personal contracts, with little safeguards and protections built in for the owners or the association. Plus there is a huge conflict of interest in assigning the same contractor to determine the repairs, fix the repairs at time & material, and provide most of the oversight, along with 2 volunteer board members, who are enamored with the contractor!!

Problem is the owners have not decided yet, as to how they want to raise the funds to continue with needed repairs and slowly replenish the reserves and the operating funds the board has been depleting. Again not enough owners to approve of that 15yr association loan program (75%), because of the waste of interest money paid out on the principal amount.

Is this not almost a criminal act to manipulate the owners money, and allow 3 board members to put our association in a financial choke hold, without putting a plan in place first?
I asked my fellow board to take a pause, wait to see what the owners want to approve for increasing dues assessments and how to prioritize the repairs needed, then move forward. I want the board to step back, stop operating in "panic" mode, and start operating with a "planning mode".

Owners are in support of raising dues and revenues by Special Assessments in accordance with our Declarations, but establishing individual contracts with owners is not defined as a way to raise revenues in our Declarations, other than a special assessment with 2/3 owner approval of attending owners at a special meeting held for that purpose only. The Special assessment is also applied equally amongst the entire unit owners of our association.