HOAleader.com - Tip of the Week - March 12, 2010
Published: Fri, 03/12/10
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Looking to Your Reserves When Your Homeowners Association
Needs a Loan
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Not enough funds in your operating account to pay the insurance
premium due next quarter because a number of your homeowners are
behind in assessments? This week's tip offers a possible solution
for boards that have a short-term cash crunch: borrowing from
reserves.
States have different rules governing loans from reserve funds.
California and Texas permit associations to borrow from their
reserves. Florida, however, makes it very difficult.
"Reserves are like 401(k) accounts--there are controls on when and
how the money is to be used," says Robert DeNichilo, an attorney
at Neuland & Whitney APC in Rancho Santa Margarita, Calif., who
specializes in representing community associations, of the rules
governing California associations. "The board has a fiduciary
obligation to use prudent fiscal management in maintaining the
integrity of the reserve account."
In addition, California law specifically defines reserves and
spells out how they can be used. It permits short-term borrowing
if the board meets certain criteria. A board must give members
notice that it's going to consider borrowing from reserves at a
meeting and that the board will discuss options for repayment,
including whether a special assessment will be required to repay
the funds.
"The board has to have a full discussion on it," says DeNichilo,
"and part of that discussion has to be about how the board is
going to pay this money back."
Those aren't the only requirements before California boards can
borrow from their reserve funds. And even if your state allows
the practice and you can follow the rules, is it wise to borrow
from your reserves? Learn more about the rules and risks of
borrowing from your reserves in our new article:
http://www.hoaleader.com/members/402.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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HOA Finances: Can--and Should--Your Association Consider
Bankruptcy?
If your homeowner association has been beaten up by the economic
downturn and there seems to be little hope of ever getting back
onto solid financial footing, bankruptcy is something your board
can consider. Here's what you need to know about how bankruptcy
might affect your HOA.
Click here to read full article:
< http://www.hoaleader.com/members/401.cfm >
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HOA Finances: Tips for Handling Your Reserve Account
Are you putting enough money aside to pay to replace or repair
your HOA's buildings and amenities? Is it possible your condo or
homeowner association is putting too much aside? Does the HOA
board know how reserves are supposed to be used? This article
provides tips on how much to save and how to properly use
association reserve accounts.
Click here to read full article:
< http://www.hoaleader.com/members/400.cfm >
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HOA Security: Low-Cost Ways to Improve Security in Your Homeowner
Association
Here are a few tips for improving security in your HOA without
digging deep into your condo or homeowner association's wallet
for expensive security devices.
Click here to read full article:
< http://www.hoaleader.com/members/399.cfm >
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HOA Rules: Using Webcams and Video to Enforce Rules in Your
Homeowners Association
Webcams may be the simple and low-cost solution to some common
but annoying problems with enforcing HOA rules. But can your
condo or homeowners association install cameras and use the
evidence you capture on video to impose fines on your residents?
Click here to read full article:
< http://www.hoaleader.com/members/398.cfm >
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Help Homeowners in Your HOA with a Model Code of Conduct
In a new article, we've posted a model code of conduct for
homeowners in a community association. Based on input from
experts from across the country, it's a great tool for new owner
orientation, or as a reminder to longtime owners. In this week's
tip, we offer two points to include in any model code of conduct
for owners.
Click here to read full article:
< http://www.hoaleader.com/public/397.cfm >
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