HOA broke

Pres. called requesting that I not be paid my monthly well maintenance payment the association is broke. It didn't take a rocket scientist to figure out this was going to happen what can be done about officers who continue to spend like crazy we used to have several thousand in reserve until the Sec/Treas spent it all on a road project that wasn't voted on and there was no contract for.They also want to raise dues with no budget presented at meeting. And yes I do know the costs involved in running this association I used to be Pres.

BB5,

The Sec/Treasurer is not the person who spent the money, they just write the checks. The road project should have been a Board decision.

As you know, there are always unintended consequences for any decision. The Board must now address this unintended consequence for overspending on a project prior to having the funds in place to cover the expenses. Since the Board can not return the road for a refund, the only other options are to raise annual assessments, levy a special assessment or a combination of the two.

The issue now is that your Association can no longer meet it's normal operating expenses. In my opinion, the best thing to do is inform the membership asap of this issue along with a plan on how to cover expenses. Yes the membership is going to be ticked off. However, it's better that they are informed by the Board about the situation vs. someone finding out on their own and have it appear that the board is trying to hide this.

If you used to be president, then you know how much road replacement/repairs are.

I can't belive that ONE person decided to contract with a road company to make major repairs.

Something is missing here.

PS - were you told you were not going to get paid EVER,, or DELAYED just this month? Perhaps there is a cash flow problem. Perhaps in the past the entire HOA budget was underfunded, and the current board is now having to make hard decisions because of lack of planning in the past.

BB5,

I agree with others, it doesn't appear as if the whole story is available.

If the Treasurer entered into a contract without board permission they could be held directly responsible for the entire cost of the contract.

If the Treasurer used funds to pay bills without the Boards knowledge, there could be other issues involved.

If the Board discovered the issue and did not do something (like remove the treasurer from office) to prevent these things from happening in the future, each member of the Board (those sitting on the Board when it happened and those sitting when it was discovered and perhaps those sitting now) could be equally personally responsible. Additionally, if the procedures put in place for awarding contracts were violated in awarding this contract, D&O insurance might refuse to cover the cost of litigation leaving the cost to be paid by the membership and/or the individual directors.

IF you are/were on the Board at the time this is taking place - I would strongly recommend that you seek the opinion of a local attorney to see what your personal liability might be and how to protect yourself.

Of course, if the Board was made aware of the contract prior to signing and/or approved payments to the contractor for work done - then it's difficult to indicate that the treasurer acted on their own.

Tim

1. Consider using short sentences or possibly punctuation to improve readability (and understandability).

2. The board is required to use good business judgement. This does NOT mean that their decisions turn out in hindsight to have been the best, just that they were justifiable given the circumstances. Boards can make mistakes (even mistakes that lead to running out of money). That's why it is important to have good people on the board.

The solution in your case probably involves raising assessments. (Unfortunately). Depending on the circumstances you (meaning you and all the other owners) may have recourse. But the important thing is to get things on a sound financial foundation first.

No.

1) Toss the bums out
2) Identify the annual operating expenses amount for a budget
3) Perform a Reserve Study to identify the amount needed to be set aside each year to defray the cost of planned maintenance/repairs/replacement of capital components.
4) Determine an amount needed for contingencies (typically 1/12 of the annual assessments)
5) Add together the annual amounts from 2,3,4 then divide by the number of lots. This should be the amount of your annual assessment for each lot.
6) Did I mention to toss the bums out.