Paying from reserves

Do you have a policy that specifies exactly what the reserves are used for? If your policy states these types of expenditures are appropriate, that's fine. That diedntvmean you don't do yo u r due diligence, like getting at least three repair estimates, checking references and so on. You'd be surprised how many people miss those steps,

I think it's important to spell out what reserves are for, how often reserves studies shoukd be done and so on so that board members (and homeowners, from where we get board members) aren't tempted to misuse the money. There are no specific rules on what the policy shoukd entail, m do onevp l a e to start is talk I ng with your reserve specialist on what tgevpolicy might include. You'll also want input from your master insurance policy carrier and attorney.

Oh, you should already have policies on who cuts the checks for association work so you prevent misuse, embezzlement and abuse. If you don't, get that established before doing anything else.

I agree.

Sue,
This is interesting to me. When I was on the Ca. board, I remember our reserve accounts having check writing ability and when I was president myself and the treasurer would approve payment to be made by our PMC.

Recently in my Texas board I noticed that many items (4) were to be paid and I just spoke to our PM and asked why all were paid out of operating and a single transfer made out of reserves to cover these bills. Our PM is going to see if we are able to pay future bills using our cash reserve account to pay these bills directly with check writing ability being added.

This seems simple to me and makes these transactions much clearer and easier to account.

Nice citation, Terri. Our Bylaws also state that requirement.