ChristinaR (Maryland)
Posts: 99
Posts: 99
Posted:
I am the recently elected President of an HOA Community with 102 THs in MD.
Last night I found out that our previous board requested proposals for Parking Lot resurfacing and Striping. They had planned on using our reserves to pay for this.
Our CCRs state:
Section 3. Reserve Fund. The annual assessments shall include an amount adequate to establish a reserve fund for replacement of capital improvements in the Common Areas. A proportionate amount of each assessment payment received and held by the Association in trust, and shall be held separate and apart from other Association funds. Such trust funds shall be retained by the Association and used only for capital improvements and/or replacement of Common Areas facilities of the Association upon the approval of a majority of Owners.
Can we use the money for this? There was discussion at our meeting and some board members think this is maintenance and not a Cpaital Improvement and therefore should not be taken from reserves, while others think it is fine. Even our management company said we can use the funds for maintenance if we want.
We know that we need a majority vote, that is not an issue...its whether this is considered maintenance or improvements or replacements to 'facilities.'
I just don't want to end up in a lawsuit later from a homeowner that questions if we should have spent this money on maintenance or not. We have a good amount of parking areas (not enough for 102 homes) and the last time this was done, we only re-striped and it was $15,000. I'm sure we are looking at $25-$30k from reserves and don't want to have to raise dues to replace that if we legally can't use this money.
Last night I found out that our previous board requested proposals for Parking Lot resurfacing and Striping. They had planned on using our reserves to pay for this.
Our CCRs state:
Section 3. Reserve Fund. The annual assessments shall include an amount adequate to establish a reserve fund for replacement of capital improvements in the Common Areas. A proportionate amount of each assessment payment received and held by the Association in trust, and shall be held separate and apart from other Association funds. Such trust funds shall be retained by the Association and used only for capital improvements and/or replacement of Common Areas facilities of the Association upon the approval of a majority of Owners.
Can we use the money for this? There was discussion at our meeting and some board members think this is maintenance and not a Cpaital Improvement and therefore should not be taken from reserves, while others think it is fine. Even our management company said we can use the funds for maintenance if we want.
We know that we need a majority vote, that is not an issue...its whether this is considered maintenance or improvements or replacements to 'facilities.'
I just don't want to end up in a lawsuit later from a homeowner that questions if we should have spent this money on maintenance or not. We have a good amount of parking areas (not enough for 102 homes) and the last time this was done, we only re-striped and it was $15,000. I'm sure we are looking at $25-$30k from reserves and don't want to have to raise dues to replace that if we legally can't use this money.