Request for communication

DavidA7 (California)
Posts: 179

Posted:

Our BOD transferred money from Reserves to the General Budget fund twice.

1) I asked Management Co. why and was informed it was "to pay for insurance."
2) I asked Management Co why and was informed it was to "pay for major property repairs"

In both instances I informed Management Co. that this was in violation of the Davis Sterling Act.
Situation 1 I asked for Board to meet and proceed with following law by paying the money back into reserves per the Davis Sterling Act.
Situation 2 I informed Board via e-mail to Mgt. Co. that this was illegal and that major property repairs were to be paid directly from Reserves not transfer reserves to general and then pay.
I also asked Mgt. Co. why they didn't advise Board of the legallity of this process and I was told basically to stop telling the Mgt. Co. how to due their job.

Both the Board and Management Co. will not listen or respond to my e-mails any longer on this subject. They will not conduct a Board meeting to discuss.

I have filed a small claims action against the Associaton but am curious about members comments in this forum.

Note: In Los Angeles, CA

Thanks,

MaryA1 (Arizona)
Posts: 7,043

Posted:

David,

Copied below is the section from 1215.5 of the Davis-Stirling Act that deals with reserve spending:

"(2) However, the board may authorize the temporary transfer of moneys from a reserve fund to the association's general operating fund to meet short-term cashflow requirements or other expenses, if the board has provided notice of the intent to consider the transfer in a notice of meeting, which shall be provided as specified in Section 1363.05. The notice shall include the reasons the transfer is needed, some of the options for repayment, and whether a special assessment may be considered. If the board authorizes the transfer, the board shall issue a written finding, recorded in the board's minutes, explaining the reasons that the transfer is needed, and describing when and how the moneys will be repaid to the reserve fund. The transferred funds shall be restored to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the common interest development, temporarily delay the restoration."

As you can see using the reserve funds to pay the insurance premium is not against the law. The only requirement is that the board include this action in their notice of the meeting at which this action will be discussed.

With regard to your assertion that payments should be made directly from the reserve account instead of being transferred to the operating account is not correct. In fact, the section posted above even states ". . .a transfer of moneys from a reserve fund to the association's general operating fund" can be made. Where ever did you get the impression that this was improper.

With regard to your small claims action, I think you're being quite petty and I doubt you even have grounds for a claim. I'm not surprised the BOD is ignoring you!