California question re financial transfers

Started by TerriS6 • 7 replies • 172 views

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TerriS6 (California)
Posts: 3,284

Posted:

Below are the limits of transfers that need prior written approval. Question: supposing the threshold is $4,000. One month legal invoice is $2,000. and treasurer pays it from operating account. Next month the same vendor's invoice is $3,000. and the treasurer pays it from operating account. Does the total of $5,000. require board's written approval?

CIVIL CODE SECTION 5502. BOARD AUTHORIZATION OF FINANCIAL TRANSFERS.
(a) Notwithstanding any other law, transfers shall not be authorized from the association’s reserve or operating accounts without prior written approval from the board of the association unless the amount of the transfer is less than the following:

(1) The lesser of five thousand dollars ($5,000) or 5 percent of the estimated income in the annual operating budget, for associations with 50 or less separate interests.

(2) The lesser of ten thousand dollars ($10,000) or 5 percent of the estimated income in the annual operating budget, for associations with 51 or more separate interests.

(b) This section applies in addition to any other applicable requirements of this part.

DeanJ
Posts: 1,786

Posted:

It seems to me the section is not a per recipient limit. Only the amount of each transfer is limited, not the total of all the transfers.

If the total of all the transfers are limited, once the total of all unapproved transfers approach the limit, all transfers must be approved.

TerriS6 (California)
Posts: 3,284

Posted:

And yet, HOAs pre-approve by resolution budgeted totals above the threshold even though periodic payments are below the threshold. Foe example, pest control. A conundrum.

MichaelS56 (Minnesota)
Posts: 858

Posted:

When I was President, all invoices for payment were sent to our Property Management company. The Property Manager then put the invoice in our Board packet for discussion and a vote to approve by the Board. Every invoice/bill went before the Board for a vote.

TerriS6 (California)
Posts: 3,284

Posted:

Quote:

Posted By MichaelS56 on 11/04/2024 6:05 AM
When I was President, all invoices for payment were sent to our Property Management company. The Property Manager then put the invoice in our Board packet for discussion and a vote to approve by the Board. Every invoice/bill went before the Board for a vote.

Thank you. What about when invoice is due prior to next board meeting?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Prior to entering into contracts for services, board would approve. Payments based on the approved contract required no further approval.

Prior to purchasing supplies, the individual would get approval. Not necessary for a dollar amount but for the work. Example: I need to copy and mail notices for the next meeting to the membership and request approval to do so. Approval granted - cost is what it is. If the individual was good, they would provide an approximate cost. Another example: we would like to ask the attorney about xyz. Cost is what it is.

If it was for unplanned work (removing a fallen tree for example), the individual would get bids and an action without a meeting would approve the cost/work.

For planned work - estimates were obtained prior to approval.

MichaelS56 (Minnesota)
Posts: 858

Posted:

Excellent answer Tim.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By TimB4 on 11/04/2024 6:38 AM
Prior to entering into contracts for services, board would approve. Payments based on the approved contract required no further approval.

Prior to purchasing supplies, the individual would get approval. Not necessary for a dollar amount but for the work. Example: I need to copy and mail notices for the next meeting to the membership and request approval to do so. Approval granted - cost is what it is. If the individual was good, they would provide an approximate cost. Another example: we would like to ask the attorney about xyz. Cost is what it is.

If it was for unplanned work (removing a fallen tree for example), the individual would get bids and an action without a meeting would approve the cost/work.

For planned work - estimates were obtained prior to approval.

Someone should be responsible to check the quality of the service performed before a check is issued.

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