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Approving Projects and Other Expenditures

Started by PeggyW3 • 12 replies • 322 views

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PeggyW3 (Michigan)
Posts: 73
Posted:
Two issues: 1. Our board is trying to stop the voting process required by boards in approving projects, and monies spent on behalf of the co-owners in the Association. I am not inclined to agree with this and want your feedback, please. The treasurer and president think that they can agree to put projects etc. in the new budget before approval of such and then these projects do not have to be approved again in a separate voting procedure. I disagree. Just because we have approved the budget does not mean we have each approved every expenditure. Who knows, the budget may get whammed by other expenses and then what happens? The Secretary and president think it a waste of time to vote twice
on approving something when I think the budget is different than a project.

Another issue: We are told as directors that we can spend up to $1000.00 if we need to for any emergency or Association need that needs filling. I have looked and looked and I find nothing in any of our documents to support either of the above actions. Is there some sort of general emergency HOA rule for this? Somewhere I read when the president can spend up to 3,000 if needed for an emergency? I understand the need to be able to do this, but I also understand we can be reimbursed too by the Association for something emergent.

AND WE ARE ALWAYS TOLD TO LOOK IN OUT DOCUMENTS FOR DIRECTIONS IN THESE AREAS, AND I FIND NOTHING!

THANKS AGAIN,
Margaret

MichaelS56 (Minnesota)
Posts: 859
Posted:
What a process that allows two Board members determine projects without formal Board approvals. Board meetings are held to discuss which projects should be bid on. At times, even determine the specs for the bid to follow. Once the bids are in, then the Board reviews and discusses the pros and cons of each bid. The Board then votes on approving or declining the bids.
KellyM3 (North Carolina)
Posts: 2,239
Posted:
The president and treasurer can certainly allocate funds for projects in an annual budget before a budget is approved, but the project still needs approval.

Regarding emergency repairs, I cannot recommend getting upset that the board doesn't call a meeting to vote on routine-yet-unexpected repairs and other maintenance that passes common sense standards and doesn't exceed normal repairs (leaks, broken windows, etc). The property can need attention on a very timely basis at times. A trusted HOA board is trusted to ensure proper maintenance over politics, but not every community can enjoy that kind of operation.

MichaelS56 (Minnesota)
Posts: 859
Posted:
Emergency repairs should be discussed at the next board meeting so each director knows what happened and how much was the cost.
KerryL1 (California)
Posts: 14,550
Posted:
Are you saying that each director can spend $1,000? ( year, or?)And the prez, $3,000? No that is not typical or standard! Insist someone show you in your documents.

I believe you've been on the Board for quite some time. Do I recall correctly? Don't you have a community manager who can show you answers to these questions? And does this manager a handle emergency repirs??

So far as I know only a Board voting at a meeting can approve projects. See Michaels' reply
ElleN (Idaho)
Posts: 1,339
Posted:
I think the issue may be:

When does certain maintenance, that the budget speaks to, have to be put out to bid and so a board vote?

What maintenance is the President allowed to arrange without a board vote?

Otherwise, to say anything intelligent I think I would need examples of these so-called "projects."

The president and treasurer by any chance are not just adding amenities and/or capital improvements willy-nilly, are they? Because the HOA is supposed to be using assessments strictly for the activities named in the covenants, and nothing else.
JackS20 (North Carolina)
Posts: 271
Posted:
Quote:
Posted By ElleN on 03/27/2025 4:56 PM
I think the issue may be:

When does certain maintenance, that the budget speaks to, have to be put out to bid and so a board vote?

What maintenance is the President allowed to arrange without a board vote?

Otherwise, to say anything intelligent I think I would need examples of these so-called "projects."

The president and treasurer by any chance are not just adding amenities and/or capital improvements willy-nilly, are they? Because the HOA is supposed to be using assessments strictly for the activities named in the covenants, and nothing else.

our covenants say the board can improve the common areas, so adding amenities is allowed, but I agree with you that the CCR's need to be changed to not allow this.
DeanJ
Posts: 1,786
Posted:
Quote:
Posted By PeggyW3 on 03/27/2025 1:17 PM
Two issues: 1. Our board is trying to stop the voting process required by boards in approving projects, and monies spent on behalf of the co-owners in the Association. I am not inclined to agree with this and want your feedback, please. The treasurer and president think that they can agree to put projects etc. in the new budget before approval of such and then these projects do not have to be approved again in a separate voting procedure. I disagree. Just because we have approved the budget does not mean we have each approved every expenditure. Who knows, the budget may get whammed by other expenses and then what happens? The Secretary and president think it a waste of time to vote twice
on approving something when I think the budget is different than a project.

Another issue: We are told as directors that we can spend up to $1000.00 if we need to for any emergency or Association need that needs filling. I have looked and looked and I find nothing in any of our documents to support either of the above actions. Is there some sort of general emergency HOA rule for this? Somewhere I read when the president can spend up to 3,000 if needed for an emergency? I understand the need to be able to do this, but I also understand we can be reimbursed too by the Association for something emergent.

AND WE ARE ALWAYS TOLD TO LOOK IN OUT DOCUMENTS FOR DIRECTIONS IN THESE AREAS, AND I FIND NOTHING!

THANKS AGAIN,
Margaret


Two issues:

The budget is simply a plan. It includes the line items how the funds are expected to be spent, funds to be placed into reserve and the revenues to be collected through assessments. This usually doesn’t mean the board has to follow that plan exactly as written . Projects are not are part of the budget.

The spending of any HOA funds from reserve and operational accounts require board approval, not owner approval. The board may resolve to allow the president to spend an approved value on an emergency repair without further board approval. This usually doesn’t not involve a board member spending their own money and being reimbursed. The HOA is invoiced for by the contractor.
KellyM3 (North Carolina)
Posts: 2,239
Posted:
There is consensus here.... a board president should always handle a repair where the broken amenity/machine/pipe will cause more immediate physical damage the longer it is delayed, generally that means water damage or acute electrical issues where fire is predictable. Regarding non-routine repairs, "projects," or capital improvements, the board will have the only (and final) say.

Regarding the operations budget containing projects that are pre-funded, the board members should make clear that budgeting a non-approved project - then approving that budget - does not signify approval of the project itself. Watch the board leaders try to equate budget approval with project approval down the road.
PeggyW3 (Michigan)
Posts: 73
Posted:
Yes! That is what is happening at our Association. Our lawyer said " The Board should approve the Association's annual budget, including any line items in the budget for projects and dollar amounts. I don't believe any second Board vote or approval of those budgeted expenditures is required. That being said, if the Board engages in third party/independent contractor to perform the work for which a dollar amount has been budgeted, if the project/dollar amount are material, the Board should review and discuss the contract for such work and hold a vote on the contract. The Board vote on the contract is not a second vote on the approved budget item, but rather, just good governance practice for the Board relating to a material contract. I don't believe a Board vote is needed for contracts that are not material." So does this follow what you are saying? I think it says mostly what you are saying until she gets to the "material" part. I asked her what was meant by "material"? Her reply was, "something valuable, highly important, significant." Which to me is very subjective and I CONTINUE TO BE UNCOMFORTABLE WITH THIS RESPONSE.

I must SAY I INTERPRETed her WORDY REPLY this way. Yes, we have in our reserve fund capital items that we have budgeted for like timbers, roofs, decks siding replacement etc. All that is good but I still think once a project is determinded and the bid is in for it, we should vote on it or ask for more bids, have I got this correct. How can I get this across to the other board members? They think they don't have to vote on anything. I am so tired of it all.
TimB4 (Tennessee)
Posts: 21,062
Posted:
You allocate the funds in the budget.
The board approves the budget - hence approving the funds.
However, the board still needs to award the contract for the project and that requires a board vote.
DeanJ
Posts: 1,786
Posted:
Quote:
Posted By PeggyW3 on 05/14/2025 2:02 PM
Yes! That is what is happening at our Association. Our lawyer said " The Board should approve the Association's annual budget, including any line items in the budget for projects and dollar amounts. I don't believe any second Board vote or approval of those budgeted expenditures is required. That being said, if the Board engages in third party/independent contractor to perform the work for which a dollar amount has been budgeted, if the project/dollar amount are material, the Board should review and discuss the contract for such work and hold a vote on the contract. The Board vote on the contract is not a second vote on the approved budget item, but rather, just good governance practice for the Board relating to a material contract. I don't believe a Board vote is needed for contracts that are not material." So does this follow what you are saying? I think it says mostly what you are saying until she gets to the "material" part. I asked her what was meant by "material"? Her reply was, "something valuable, highly important, significant." Which to me is very subjective and I CONTINUE TO BE UNCOMFORTABLE WITH THIS RESPONSE.

I must SAY I INTERPRETed her WORDY REPLY this way. Yes, we have in our reserve fund capital items that we have budgeted for like timbers, roofs, decks siding replacement etc. All that is good but I still think once a project is determinded and the bid is in for it, we should vote on it or ask for more bids, have I got this correct. How can I get this across to the other board members? They think they don't have to vote on anything. I am so tired of it all.

A second approval is required for some line items. This approval is fulfilled when the board approves a proposal from a contractor. Once proposal has been approved, your treasurer / PM is authorized to pay the invoice upon satisfactory completion of the work.

Typically the board does not approve each month payments for recurrent expenses.

KerryL1 (California)
Posts: 14,550
Posted:
Completely agree with Tim.

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