Use of Capital Reserve

I think you need to raise your maintenance fees ASAP. I'm not sure how it is in your state...but in Florida, the reserves can not be touched without the approval of the membership. At this point, I'm sure your management company had no choice, in order to pay your bills---but for goodness sake, doesn't ANYONE in that management company actually MANAGE your property?!? In other words, don't you have a Board of Directors who INSTRUCTs the management company what to do? Is there no communication? The management company works for your association; not the other way around.

Point missed, folks. Yes we are very aware of the budget, yes we have some sense and yes we communicate. The budget runs on the calendar year, there were some large extraordinary expenses this year and that's why the Class B member is required to make up the shortfall. All services were continued with the assumption he would do so. He refuses to contribute anything even though we're only 1/3 built out, ergo the soon to be filed suit. The money taken fron the capital reserve was taken in one fell swoop to pay one months's bills. I believe without specific authorization, the mgt company should have left the bills unpaid rather than accessing the capital reserve. That probably would have forced the developer into some contribution as opposed to letting the place lose its luster and disturb his sales. And yes, we understand the potential ramifications of that and the affect on our development. We actually can manage ourseles, thanks for the advice, but the question is simply whether or not the capital reserve can be tapped by the mgt company without specific authorization. Thanks

HowieI and Fellow HOA Talk Posters - I could be wrong but what the hey, let me make my statement and see if HowieI can verify. The Board is majority controlled by the Developer. Since HowieI's Association is 1/3rd developed they'd be lucky to have 2 owner board members and even then the owner board members would not be able to do much to influence the Developer or the MC. The MC is usually hired by the Developer, there is not supposed to be a relationship but my experience proves otherwise.

As owners, all I would suggest doing is quietly, quietly, quietly document the amount taken from Reserves, and sit patiently. The Developer isn't stupid and needs sales and closings to continue construction. The Reserves are important, however the community is not fully constructed so only 1/3 of the replacement costs for the elements constructed are making the clock tick for the time to set those Reserves aside. Be on the lookout for an operating budget that is probably underestimated, typcial Developer tactic because the reality of what it will really take may diminish sales/buyers. Those owners on the Board and those others savvy enough to recognize this must walk a tight balance act in pushing the Developer to the sticking point at the cost of closings.

Once the Owners control the Board hire an independent Transition Engineering Firm without Association money, and get them to perform a Capital Reserve Replacement Analysis and Deficiency Study on the Association. Get copies for the Board/Association of "as built" plans or landscape/architectural/electrical/lighting plans and ALL warranties on Association Common and General/Limited Common Elements. Get an Association attorney, develope a Transition Committee, develop a healthy/respectful dialogue with your Borough and building code departments to show interest and express concerns on construction. Try to get a copy of The Developer's Agreement of the Developer with the Borough. Then be prepaired to negotiate and go after the Developer for the amount taken from Reserves and all the other construction deficiencies that may exist.