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MaryS54 (Pennsylvania)
Posts: 1
Posted:
If a special assessment was levied and was collected from each owner according to his square footage, percentage, can those funds in the capital reserve account be used toward limited common expenses? The Association has determined that a project is necessary which involves limited common elements. Instead of assessing each owner who benefits (in this case essentially a direct charge to the owner who is going to be "billed"), the pla is to use finds that are already in the cap reserve account and apply them toward what each owner would owe under the different calculation being assessed individually. Is this possible? In my state, limited common expense funds are to be segregated. I am inferring from that that one can't just do some accounting magic and move common expense funds over.
SheliaH (Indiana)
Posts: 6,964
Posted:
What are limited common expenses? I've heard of limited common ELEMENTS, which are usually areas that are owned by the association but are used exclusively by one unit specific set of units, such as a balcony. The maintenance and repairs may be the owner's responsibility or costs are split with the association, or some tasks are the owner's responsibility and others the association's.

Next, special assessments are usually levied for major repairs and replacements for the entire community, such as new roofs for a townhouse community. The community usually votes to approve special assessments - what were you told when all this got started? And what type o e of repairs are we talking about - it sounds like you're talking about common limited elements

As for the rest, have you asked your board these questions? What was the response? Do you have a reserve fund? Is it underfunded? I suspect it is because many communities have underfunded reserves because the assessments haven't kept up with inflation - because people were more interested in keeping assessments low. When was the last time the board authorized a reserve study? Have they kept up with the funding recommendations?

You're correct that reserve funds should be separate from operating expenses, but some boareds behav as if reserves are a slush fund they can use for anything. It shouldn't be used to plug in operating expenses shortfalls, which may be what n your noard is trying to fo. Its setting up your community for more mess down the road if they don't learn how to budget.

Getting the answers to those questions could explain this attempt to change what the assessment is for. I would say this isn't allowed without another homeowner vote, but you may need an attorney to look at the documents to see if it's allowed. Before taking that step go to the next board meeting and ask those questions - bring your neighborsso they can also hear the answers. . It may require a special homeowners meeting to unpack all this and until the homeowners know exactly why there's a change, they should insist that the money only be spent for the original unless abd until homeowners say otherwise.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

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