A service of:
Community123.com
Professional websites for HOAs & condos, since 2004
🎁 1st year FREE for HOATalk members! →
← Return to Topics List

Budget and Bylaws

Started by GailS1 • 19 replies • 1662 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in

GailS1 (Florida)
Posts: 7
Posted:
Our association Bylaws indicate that betterments in excess of $1,000 require approval by the members of the association.

The President of our Board added an $8,000 line item on the budget to add fencing on the community property. He insists that it is legal for him to do so, thus bypassing our Bylaws.

I'd like to know if any other associations have had this issue in their community. I'd also welcome attorney opinions.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
GailS,
Peggy Lee used to sing a song called, "Is That All There Is?"

If the documents say expenditure of over $1,000 is required to be owner approved, and the President can not show you different, he is wrong. The trick now is to get evidence he did it or get him to respond in writing a reason for his actions. So, write him a note asking if the $8000 was spent at his discretion or ask how it was justified. Take you evidence to BBB or legal aid or county councilmen or to any Florida Agency that deals in HOA. Florida is changing their laws fast and furious and the state is becoming more involved.

But first, go to a Board meeting, ask the question and make sure they include you question and response in the minutes. Make a motion that this should happen and ask for a vote, do anything that will create a paper trail.

Is that all there is? If he did what you said, I would question his judgement on a lot of matters. This may be the tip of the ice berg or it could be a person doing things his way because he has always been able to.

Snoop around and see what is going on.
GailS1 (Florida)
Posts: 7
Posted:
Thank you for your reply.

Our Board held the budget meeting yesterday. I brought up the fact that the Bylaws had a restriction concerning the amount of money that the Board could spend on any single item or purpose without association approval. The President of the Board claims that the Board obtained an attorney's opinion reflecting otherwise. After the meeting, I sent a note to the Management company requesting a copy of the attorney's opinion.

Our previous Board had utilized this line item technique during 2006 and spent thousands of the associations dollars on landscaping, lighting, and other purchases without association approval. At one point, they were even going to expend funds to move the children's park that is in our development to an alternate location...at a significant expense.

I am concerned that the new Board and future Boards will use this loophole to make decisions and purchases that are not in the best interests of the community.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Gail,
You were right in going to the meeting and asking about who spends the money. Were there minutes taken at meeting? If so get a copy. If not write a letter requesting the President provide you with his authority to disregard the Documents.

I would like to know what makes people act this way. If he has the authority he has to provide it, if he don't he is trying to bully or deceive you. Most of the time I believe folks act like this because they believe they know what is right, convinced of it and nothing will move them except if they start to realize they could be in trouble and sometimes even that doesn't work. In any event, it takes a determined person to buck this kind of member. It will not be easy, it could get messy and you may lose a friend or two but you will gain some. Your concern is legitimate, all owners have the right to a clear accounting of money spent. You may have top use tactics that you don't want to use, such as court action (last resort) so get your thinking cap on and get some other owners involved, get public in your regime and make some noise until you are satisfied. Lots of time this ends up with folks like you having to do the job themselves. So, it is critical you are not looked at like some kind of agitator looking for trouble. Be nice and be accurate, and keep focused on this one issue, no matter what he does, he does not have the power the owners have. He was elected, he can be voted out, the board or any number on the board can be voted out, but don't threaten, if have the support, follow your documents and toss whoever out.
Hopefully it will not come to that, if the board does some things well, recoginize it at a meeting, volunteer to work with a committee to rewrite or make a study of your documents, get it on record and do everything out in the open. The board is as guilty as he is and make them understand that you know this, quote State Statutes and and relevant clause in you documents, be an expert. As a retired navy guy, we have a definition for an expert: someone from another ship. When in the fleet there is a practice of one ship holding inspections on other ship to assess readiness, hence if you are from another ship you are the expert.
JeanneK3 (Maryland)
Posts: 562
Posted:
I agree with Robert R totally. When Board mistakes are allowed to continue they become "urban legends" and can go on for years. If your President and Board want more financial authority they must ask homeowners to change the bylaws by the process described in your documents. Get the necessary documentation and then mail it to everyone in the community. Your neighbors will help you control your Board.
DonnaS (Tennessee)
Posts: 5,671
Posted:

Gail,
Your concern for using the loophole by future Boards is very valid. Setting a precedence for ignoring a bylaw is not healthy for future issues that might use this as a way to bypass future expenditures.

But in the Boards defense, $1000.00 is an extremely small amount to require a vote by the membership to spend your funds. Gosh, our Board would be handtied if we needed that kind of approval. It is difficult enough to get a required percent of approval votes to make major changes such as amendments . I also think that the $1000.00 number needds to be amended to a more workable number.

Expenditures by the association can be very controlled by having a realistic budget and a good Treasurer or Board that pays attention to the budget.. That way the moneys needed for a solid operation are already approved and cannot be held up for perhaps months, while waiting for member approval.
GailS1 (Florida)
Posts: 7
Posted:
Donna,

I agree that a $1,000 limit is a handicap. A former Board member had suggested amending the bylaws to increase the limit to a more realistic amount. The Board does not want to spend the time or money to have a vote on this issue. They prefer a more immediate solution.

The majority of the association members that attended the budget meeting support the Board's decision to spend money in this manner given that they want certain things done. While I agree with how the Board wants to spend the money, I do not agree with the manner in which they are doing it.

I live in a new community. The homeowners have only been in control of the Board for the past two years. Given the illegal activities that occured during the first tenure, I'm concerned that the current (and future) Boards will continue to ignore the established bylaws.

I appreciate all of the comments and suggestions posted on this forum.
JoeW1 (New York)
Posts: 728
Posted:
GailS1 - IMHO, $1,000 should not be considered a handicap because the majority of residents didn't say so and your governing documents specify the threshold. They bought into an association where that was the rule. Would you agree that $1,000 was a handicap if it was for buying different color drapes for a clubhouse, or some other such matter, when you have a budget crisis? Probably not. Was the majority of the association that attended the budget meeting the majority of the community that is required to vote to approve an expense over $1,000? It seems that the expense without owner approval was forgiven by those that attended the budget meeting and they spoke for those that did not attend. Totally inappropriate according to the letter of the by-laws. A vote of owners was supposed to occur, end of story. And to quote Peggy Lee, though out of context, "If that's all there is my friends, than let's keep dancing, let's break out the booze, and have a ball."
GailS1 (Florida)
Posts: 7
Posted:
Unfortunately, only a dozen or so residents, out of a community of near 200 homes, showed up for the budget meeting. Even fewer residents show up for the monthly board meetings.

I was amazed that so many residents are willing to forsake the Bylaws in the interest of a speedy resolution to their issues. I do not think that they realize the implications of allowing the Board to operate against the Bylaws.
RogerB (Colorado)
Posts: 5,067
Posted:
Quote:
Posted By GailS1 on 11/10/2007 3:58 PM
Our association Bylaws indicate that betterments in excess of $1,000 require approval by the members of the association.

The President of our Board added an $8,000 line item on the budget to add fencing on the community property. He insists that it is legal for him to do so, thus bypassing our Bylaws.

I'd like to know if any other associations have had this issue in their community. I'd also welcome attorney opinions.

Did the members ratify a budget which included the $8000? If so, the By-laws were followed. Also, change that bad By-law.
DonnaS (Tennessee)
Posts: 5,671
Posted:

Gail,
Your position as to following the ByLaws is the correct way to run a HOA. Things can always come back to bite you in the rear but by doing it by the book, it releases you from responsibility for future lawsuits by some disgruntled homeowner. Stick to your guns and do it the right way. And where does changing a bylaw cost so much money? Lots of leg work but the cost is minimal unless you use some crazy attorney. ut you have the ByLaw already on the books. It is just a matter of changing the limit amount, stamps and envelopes for the mailings and a minimal fee to register it with the County if it passes. Documents are not to be changed willy nilly but some of these Developer turned over documents need tweeking. Rather than dealing with the constant frustration of not being able to accomplish anything in the community, just get them changed.
JoeW1 (New York)
Posts: 728
Posted:
Quote:
Posted By RogerB on 11/12/2007 7:57 AM
Posted By GailS1 on 11/10/2007 3:58 PM
Our association Bylaws indicate that betterments in excess of $1,000 require approval by the members of the association.

The President of our Board added an $8,000 line item on the budget to add fencing on the community property. He insists that it is legal for him to do so, thus bypassing our Bylaws.

I'd like to know if any other associations have had this issue in their community. I'd also welcome attorney opinions.


Did the members ratify a budget which included the $8000? If so, the By-laws were followed. Also, change that bad By-law.

RogerB - Your entitled to your opinion of course, however Gail is talking about betterments, not other expenditures. As she posted only 20 homes out of 200 showed up to the meeting. Getting any by-law changed requires much more than 20 homes and shame on her board and the rest of the residents for not speaking up. Seems to me that $1,000 is a very reasonable limit because Gail has what seems to me to be a very irresponsible Board and very apathetic membership.
JoeW1 (New York)
Posts: 728
Posted:
Oh, forgive me, I posted 20 homes showed up, that was wrong. It was only a dozen or so that attended not even 10% of the total # of households.
GailS1 (Florida)
Posts: 7
Posted:
By members, do you mean the Board members or the homeowners? The Board members did ratify the budget including the $8,000. The homeowners were not given the opportunity to vote on this item.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
I conclude the Board members had no authority to approve the expenditure of $8 grand, it was spent or is going to be spent in conflict with the Documents.

I think it is just as important to know who is signing for all expenditures, who signs the check?

I believe 1 grand can be a reasonable amount is some circumstances. I also believe anything over a grand that is not itemized in a budget approved by homeowners should not be allowed. Emergences excepted, but a complete accounting and justification should be board approved.
They could have requested the money at any members meeting and in the abscence of a 51% vote could go out and inform homeowners the reason to spend the money, if board approved. If they are still up in the air, the Board would have authority and would have to justify expenditures. Painting a fence would not be a valid reason. The President has one vote....period.

A bigger budget association may require higher limits. But, let me add, if there is a will, there is a way, and it sounds like this president is going to do what he wants. He has a resource to amend the documents, he does not have the power to violate the documents. Stop him from doing it?
How: Charge the Board and implicate them it what he does. They all won't cave in. If the do that is reason for recall.

Joe: "So sit'em up Joe, I got a story to tell that you outta know."
GailS1 (Florida)
Posts: 7
Posted:
BTW...The question above is for Roger B from Colorado. Thank you!
RogerB (Colorado)
Posts: 5,067
Posted:
Quote:
Posted By GailS1 on 11/12/2007 10:34 AM
BTW...The question above is for Roger B from Colorado. Thank you!

Sorry, I should have said members of the association. We recommend the Board approved annual budget be presented at the annual meeting and be ratified by the association members. And if the budget is not ratified the Board must rework the budget and present it again.
GailS1 (Florida)
Posts: 7
Posted:
Roger,

Does the Board need the approval of the majority of the homeowners to ratify the budget? Or just the majority of the homeowners present at the budget meeting?

Here is our association's website:
http://www.hiddenlakeestateshoa.com/

RogerB (Colorado)
Posts: 5,067
Posted:
Gail, all association members are provided a copy of the Board approved budget with the notice of the annual meeting. At the meeting it requires a simple majority with a quorum present. Members can chose to attend or provide a proxy to present them during the ratification vote.
DonnaS (Tennessee)
Posts: 5,671
Posted:

Roger,
Florida's S.S.720, states that "If the governing Documents allow the use of proxies" in many different sections. Many Associations have amended the use of Proxies to not be allowed. Proxies serve a useful purpose but they can be harmful if misused, which is why the Statute statement was written. We are required to have every owner/ member recieve a copy of the annual budget, 14 days prior to it going to a vote. In Florida, the B.O.D. votes in the proposed budget, not the members of the association.

🎯 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

Terms of Use and Privacy Statement