Reserve Funds

Our HOA of 101 townhomes has approx $25,000 in a reserve account. The Board sent a letter out saying they may have to use our reserve to pay some operating expenses since in this economic climate we have delinquencies.

When I received the letter I sent the board relevant information including FS 720 statements on reserves saying this would require a members' vote. The president said he had advice from an attorney saying it was within the Board's discretion to do this. We all know there are attorneys who know what they are doing and then some that do not.

At the board meeting the president said since their was some dispute they would not be doing this right now but....that since there has been nothing found on exactly what the fund should be used for they could do this. I suggested we immediately list the major items that will need replacing or repairing but this hasn't happened in two months.

I intend to keep an eye on things and if I see the reserve is used without a vote plan to notify all owners. I don't like being reactive and would rather be proactive. Would it be better to copy owners on what I had previously furnished the board?

Please no advice on seeking an attorney. I have thought; however, of asking the president to furnish me a copy of the letter from the attorney saying the reserve could be invaded. Of course, the advice may have been verbal so that the attorney could not be held responsible for his "advice".

Susan,

We have had a drop in assessments being paid. At the board meeting several months ago the outstanding amount owing on assessments was given but no specifics, ie., how long were certain owners owing, etc. I also asked what collection procedures were being used. How many had a lien put on them and received either no or vague replies.

Two months ago a finance committee was started by one board member but except for giving advice via email on how we could implement savings we have seen no financial information nor had a meeting so I resigned yesterday. I do not think the management company is doing anything wrong and that the board is trying to act in good faith but the board seems to think they are the only people with privy on info. My plan for now is to let the management company know I will be visiting their office to see the latest financials.. a pain since their office is quite a bit away from where I live.

When I was on the board the other PM gave us a monthly financial showing who owed what and who had been liened. This PM uses a lock box and by the time the board receives a financial the info is usually stale and does not show who has been liened. When the PM is asked specific questions at the board meeting their answer is usually we don't know. Hopefully we can get a new PM who will be know more but, of course, the board is the only entity that can replace them. I've served on the board three times and must admit the way I feel now do not want back on so plan on making periodic trips to the PM to see how things are going.

Ellen, you and I both know that the board cannot just "announce" that they will/may use the reserve fund to make up for a shortfall in the operating account. It's against State Statutes.

They need to go through the proper proceedures and let the ENTIRE membership vote as to whether or not they want their reserves used for SPECIFIC things other than what they're saved for.

The membership then VOTES to allow the board to do that. They'll probably vote YES; because no one likes to be assessed. But obviously then they can't see the whole picture.

Apathy, apathy, apathy....and "blinders"....people have no involvement in their community....then bitch when their maintenance fees go up.

It's an endless cycle....

Peter,

I don't care who owes what but do care if our PM is not following up to collect these funds. It sounds like you are doing a good job as treasurer. My thinking is it is all of the owners' money and they should be kept advised which is not being done here. I hope to change that and hope I will be succesful. My thinking is that if the board pays everything then the owners should not have a problem being kept in the dark but they are not and owners should know where their monies are going.

Ellen if you want to know how many liens the PM has filed if any, you could visit the County Court website (civil cases) and enter your Association name. Any thing that has ever been filed going back to incorporation should appear. Also using the "lock box" as an excuse to not have up to date financials is Bravo Sierra, our meetings are the first Thursday of the month and the MC has financials as of the end of the previous month for everyone including H/O's to view.

I am surprised when I hear that an HOA does not require monthly financial reports including an accounts receivable report. For townhomes we provide an aging delinquent accounts report which includes comments showing which properties have liens, foreclosure status, and other information. You may want to amend your management agreement if your management company is doing your collections and accounting.