CAN THE BOARD CHANGE IT'S MIND ABOUT AN ALREADY BUDGETED ITEM?

Started by FrancescaM • 9 replies • 1672 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

FrancescaM (Washington)
Posts: 264

Posted:

I am very concerned about this.

According to our budget projected for this year our HOA set our Board had set up and agreed for a budget to redo our outdated lobby. It has torn wall paper, chipped tiles ect. It's hasn't been done in more than 10 years.

Our board approved the monies, we got bids, items approved by our board via the appropriate committee. It s a go. We finally got a great bid on the demo, and installation of proposed and approved items.

We now have a few board members who are asking that we "change our votes" due to the fear they have of economical issues all around. Not specific to our board, but our HOA has a 5% foreclosure rate.

I hate to sound like a broken record, but I have read out governing documents. We could be found negligant of non maintemance of our property at this point. The lobby redo has been an item voted on, materials ok'd and all approved, now we have second guessers on our board, one who is behind in his dues >6 months.

Unfortunately , our governing documents do not allow us to remove this person due to back dues owed to the HOA. I know many HOA's have this as a clause in thier documentst hat HOA Directors be in good standing etc.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Absolutely--the board can revise the budget if necessary, even if it has been approved by the members. It's a no brainer.

The budget is simply a financial planning document.

One of the things you elect a board to do is make reasoned judgments in lieu of calling for a vote of members every time a check has to be signed.

Boards can change their minds, just like you can. They can ask you to change the vote at any time.

Don't sweat the negligence issue. There is such a high standard to meet to make such an accusation stick.

Do the right thing!

MaryA1 (Arizona)
Posts: 7,043

Posted:

Francesca,

Budgets are not carved in stone. A budget is just a projection of the estimated income and expenses for a specific year. The board should review the budget periodically and make necessary changes as they deem appropriate. IMO, they would be negligant if they didn't! Perhaps now is not the time to renovate the lobby if the assn has a high rate of foreclosures and perhaps delinquencies too. I don't know what your total financial picture is, but perhaps these board members have legitimate concerns which should be discussed. Nothing wrong with putting the lobby project on hold until the total financial picture is reviewed.

FrancescaM (Washington)
Posts: 264

Posted:

Quote:

Posted By MaryA1 on 09/24/2008 7:03 AM
Francesca,

Budgets are not carved in stone. A budget is just a projection of the estimated income and expenses for a specific year. The board should review the budget periodically and make necessary changes as they deem appropriate. IMO, they would be negligant if they didn't! Perhaps now is not the time to renovate the lobby if the assn has a high rate of foreclosures and perhaps delinquencies too. I don't know what your total financial picture is, but perhaps these board members have legitimate concerns which should be discussed. Nothing wrong with putting the lobby project on hold until the total financial picture is reviewed.

They are unfounded and fueled by panic. The orginating conern was initiated by a board member in financial crisis, but I am concerned about the inabiity of HOA on a whole to stick to the reserve study, and the maintenance on this property is behind in years.

Our reserve totals over 150K.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Francesca,

So now you have your work cut out for you to change the minds of those board members who feel this renovation project can wait! Just don't use the philosophy that the budget cannot be changed. Instead show them proof of why the assn is in good financial shape to allow the project to move forward.

TamaraW (Ohio)
Posts: 193

Posted:

Quote:

Posted By MaryA1 on 09/24/2008 7:37 AM
Francesca,

So now you have your work cut out for you to change the minds of those board members who feel this renovation project can wait! Just don't use the philosophy that the budget cannot be changed. Instead show them proof of why the assn is in good financial shape to allow the project to move forward.

We have a high foreclosure rate as well and my suggestion comes from our financial adviser and personal experience.

I would suggest you work on the second guessers and focus (along with what Mary suggests) on how the renovation/maintenance upgrade will enhance your property value. You know as well as I with foreclosures in the community OUR property values can suffer. Anything to enhance the property, if finances allow, helps the community in whole.

Budgets can change. I had added our perimeter fence to ours, because it has never been maintained. I took a year off at the end of my term and we had a whole new board, they took it off the budget, didn't replace it with anything.........for reasons I do not know. The following year I was re-elected and called to run by members at the annual meeting, the fence went back on the budget and work has been started on it this summer.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Fran,

As others have noted, budgets are just outlines and subject to change. But if you have reserves of over $150K, and your reserves cover capital improvments/maintenance, I'd agree your Board is being unreasonable about this cosmetic work, esp. as the lobby is probably used by Membership every day, not to mention the first interior space potential buyers/tenants will see.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Fran - if your board has signed contracts with remodeling companies, made purchases of materials for the project, or started demolition, etc. then, YES, it is too late to "recind" the motion. It can, however, be amended. (Spend less on the wallpaper, tile instead of carpet, etc.)

FrancescaM (Washington)
Posts: 264

Posted:

Quote:

Posted By SusanW1 on 09/24/2008 5:52 PM
Fran - if your board has signed contracts with remodeling companies, made purchases of materials for the project, or started demolition, etc. then, YES, it is too late to "recind" the motion. It can, however, be amended. (Spend less on the wallpaper, tile instead of carpet, etc.)

Our little lobby remodel is only going to cost the HOA $4000.00. Considering that this is budgeted for, our bids approved, it's a bit late to second guess I think. It just really caused a concern for me as work is suppose to start next week. The member in quesiton who started the "concern" is himself looking at financial issues personally. I think he is just projecting what is happening inside his home onto us.

KirkW1 (Texas)
Posts: 1,665

Posted:

Here is what I would say about the whole thing:

Changing your mind will not affect the number of foreclosures at all. You can not affect the number one way or the other. I will grant that foreclosures may affect the amount of money to spend next year. It could also raise your fees next year.

Which then brings to mind that if you have the money and budget and wait, you may find you don't have money and budget later.

But here is something else to consider:
The lack of action has already had an affect on the value of your units. And if not on the value, the saleability has gone down. In a condo "curb appeal" stretches all the way down the hall. I would not buy into a unit when the lobby is a dump.

Now if you have foreclosures, the bank really does want to sell the unit. They want to balance the best price they can get with the least amount of time to get it. And if your lobby looks nice, it improves the odds of a sale. It also improves the amount the sale will go for.

My own feeling is that while this may not be the best time to put money where there is no return, it is the worst time to let things slide. In a buyer's market you simply can not sell if you don't have appeal. Those in danger should really pay heed. More then ever banks are allowing short sells to avoid foreclosure. And a short sell is more likely in the for nicer looking property.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here