touching reserve accounts again

Started by BarbaraD6 • 11 replies • 1450 views

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BarbaraD6 (Florida)
Posts: 347

Posted:

I just got an email from the manager that he wants to take more money out of our reserve accounts to pay for a lawsuit.(he has already taken $51,000 out to pay bills). I know the florida statute and our gov docs say the money can only be used for its intended purpose. He is once again stating "we have a fidurciary responsible to keep the association going." What are your thoughts on this
thanks
Barbara

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

What are the alternatives?

BarbaraD6 (Florida)
Posts: 347

Posted:

To get a loan, but in the same sentence said we wouldn't be able to get one.
Barbara

DonnaS (Tennessee)
Posts: 5,671

Posted:

Barbara,
Either you get a loan or a special assessment will have to fund the legal bill. NO WAY is he allowed to use those Reserves. You really need a new P.M. if he does not understand what the Statute says on use of the Reserves and not being allowed to use them except by a vote of the membership.

JonD1
Posts: 2,350

Posted:

Barbara:

From the information you have provided it is impossible to offer you any real advice.

What is the money to be used for?

The lawsuit. Who brought the lawsuit? Against whom? Shouldn't that be covered?

Are you the defendent or plaintiff in the lawsuit?

Your suggestion "he" has taken $51,000 already well what was that money used for?

Did he vacation in Europe or use the money to cover the expenses of your property?

How did he "take" money without Board approval?

From your other posts isn't this the guy you wish to replace as your management?

And the rest of the Board what do they think?

Does the Treasurer have some grasp on your property's finances?

Sounds to me like there are numerous "issues" either real or imagined going on here.

I just wish I could hear the other side of the story from other members of the Board and from the MC.

There are always three............

DonnaS (Tennessee)
Posts: 5,671

Posted:

Jon,
It wouldn't matter if he wanted to pave the HOA streets with gold. He cannot use the Reserve Funds for anything other than what they are appointed for. UNLESS by a vote of the membership, they pass by a majority vote, a use other than what they are put aside for. No ifs ands or buts.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Jon,
Your post has many very important questions which I certainly would want answers to if it were my HOA. There is definitely something amiss with this financial situation but the original poster wants to know specifically about using their Reserve account. That is what I answered but not to consider your questions as unimportant. They are seriously important.

AnnaD2 (Florida)
Posts: 960

Posted:

Barbara,

Donna is 100% CORRECT. Your P.M. has no right to touch your reserves funds and you (the board members) have no legal authority to allow him to do so, nor to give him permission to touch that money!

It sounds like you need a meeting to discuss a LOT of problems, issues and to learn the State Statutes.....maybe not you so much, but is your P.M. even licensed? He doesn't sound like he knows what he's talking about.

SusanW1 (Michigan)
Posts: 5,202

Posted:

And I hope that "reserve accounts" is clearly defined: is this the bylaw's "Reserve Fund", or money set aside as a reserve. There IS a difference. Yes, I'd like to hear from the other side.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Susan,
The O.P. Barbara is in Florida. Our Reserves Statute is very specific on what it is. It is NOT reserve money. I posted just a single paragraph to understand what the State wants from a Reserve account.

h) Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts and shall be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a meeting at which a quorum is present. Prior to turnover of control of an association by a developer to parcel owners, the developer-controlled association shall not vote to use reserves for purposes other than those for which they were intended without the approval of a majority of all nondeveloper voting interests voting in person or by limited proxy at a duly called meeting of the association.

JonD1
Posts: 2,350

Posted:

Donna:

As I am not familiar with the Florida codes it is utterly amazing to me what rules and regulations those properties need to operate under according to state law.

How in the world can the members be informed as to the daily needs of the property which would give them the ability to decide when and where funds are used.

In this particular case it would seem there are many issues which should have been addressed and how an MC has been allowed to "take" funds for any purpose without a clear understanding of the Board is beyond me.

The MC would not be the problem here for me it would be the Board members. They are supposed to run the affairs of the property NOT the MC.

If the Florida laws require the members to approve the allocation of reserve funds then the circumstances as discribed would be another added issue.

One question for the lawmakers in Florida. Are these regulations intended to make the operation of these properties easier or more complicated?

Seems to me some if not all make the Board's job even more difficult.

EllenS1 (Florida)
Posts: 1,148

Posted:

Barbara,

Our contract with our management company states they shall not incur any expenses for any single item of repair or replacement which EXCEEDS the sum of Five Hundred Dollars, except in case of an emergency and then the company will notify the board as soon as reasonably possible.

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