HOAleader.com - Tip of the Week - June 10, 2011
Published: Thu, 06/09/11
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Don't Spend HOA Money on Capital Improvements Until You Read
This!
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Brand-new special report!
HOA Management Companies:
A Practical Guide for Homeowners Association Boards
http://www.hoaleader.com/public/568.cfm
Members (and trial members) can download the report for free now.
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This week's tip gives you a heads up before you approve funds to
make capital improvements.
Some states place restrictions on boards' ability to spend HOA
funds to make capital improvements without owner consent. "In
Florida, we don't have a statue that limits expenditures for
capital improvements, but governing documents frequently will,"
says Dennis J. Eisinger, a partner at Eisinger, Brown, Lewis &
Frankel PA in Hollywood, Fla., who represents more than 500 condo
and HOA associations.
"If your documents don't limit it, it's likely to be a
discretionary board decision, but near half the time, you'll
find restrictions," Eisinger adds. "They might say, 'If a
capital improvement will cost more than X, it needs to be
approved by a vote of homeowners.' It's usually $100,000 or 5
or 10 percent of the association's budget. I had one governing
document last week that said it was X dollars, but as increased
by the consumer price index, which is a pain to calculate."
However, there's a twist under Florida law. "In the law for
condos, but not in the HOA statute, if there's a material
alteration or improvement to the common areas, unless your
documents provide otherwise, you need 75 percent owner approval
of the alteration, unless your documents call for a lower vote,"
explains Eisinger. "It has nothing to do with cost. Some
improvements could even save the association money, like closing
a restaurant or gym the association was subsidizing."
Minnesota doesn't govern spending on capital improvements by
statute. "But many governing documents do impose restrictions on
capital improvement expenses," says Nancy Polomis, a partner at
Hellmuth & Johnson PLLC in Edina, Minn., who advises
associations. "They tend to be older communities, which to me is
telling--that as we learned more about association governance,
imposing those restrictions wasn't a good idea. You can't spend
more than $5,000 on a capital expenditure without homeowner
approval, and often it has to be at a meeting with a super
quorum, which has horrific results. Boards may not get the
approval to do something, but not being able to do it has a huge
detrimental effect on the community."
But what is a capital improvement? Find out in our new article:
http://www.hoaleader.com/members/584.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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HOA Capital Improvements: What You Need to Know
Some states and homeowners association governing documents place
restrictions on boards' actions on capital improvements. Example?
Restricting how much money boards can spend on capital
improvements without owner approval. Here, we explain what an HOA
capital improvement is and discuss various restrictions you
should be aware of.
Click here to read full article:
< http://www.hoaleader.com/members/584.cfm >
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Beware Making these HOA Board Mistakes
We've covered the mistakes that new HOA board members make. But
experienced homeowners association boards make mistakes, too. In
this week's tip, we cover three of the most common board mistakes.
Click here to read full article:
< http://www.hoaleader.com/public/583.cfm >
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HOA Boards' Biggest Mistakes: Have You Made These Nine Blunders?
If you're not careful, you can take huge missteps in overseeing
your homeowner association. Here, we summarize what our experts
consider the nine biggest mistakes HOA boards have made and
explain what the boards should have done instead.
Click here to read full article:
< http://www.hoaleader.com/members/582.cfm >
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HOA Voting: Can You Track and Publish How Owners Vote?
Can your HOA track who votes in each election? Can it also track
how owners vote? Is there even a legitimate reason for your
association to track that information? And if your owners ask for
that information through a records request, are you permitted to
release it? Here's the rundown.
Click here to read full article:
< http://www.hoaleader.com/members/581.cfm >
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Should Your HOA Manager Approve All Lawsuits?
There are reports that some HOA management companies have
arrangements with the attorneys of the HOAs they both represent
that prohibit the attorneys from beginning legal action without
the management company's approval. Here, we explain why it's a
really bad idea for your association to agree to such an
arrangement.
Click here to read full article:
< http://www.hoaleader.com/members/580.cfm >
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