Budget in bylaws

Started by SusanP5 • 10 replies • 1132 views

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

⚡ Takes 30 seconds

Already a member? Log in

SusanP5 (Michigan)
Posts: 13

Posted:

The subdivision is in Michigan with approximately 170 single family homes.

A recent incident has caused me to pull out my by-laws and read them thoroughly. I was surprised to find that there is no requirement to set a budget -- so there is no approval process. There is no formal record on file of income/expenses from over the years (30+).

Is this normal? What should I do?

BarbaraP3 (Maryland)
Posts: 90

Posted:

Check your declarations. The by-laws state how the association is run....i.e. meetings, quorum, committee, appointments,etc. The declarations should cover the BOD/association's responsibility for preparing a budget.
Barb

DonnaS (Tennessee)
Posts: 5,671

Posted:

Susan,

Do you have a Treasurer? Who pays the bills?

SusanP5 (Michigan)
Posts: 13

Posted:

No declarations. Just the bylaws.

There is a treasurer. Bill paying seems ad hoc. In the prior minutes, it seems that you have to present a request at a monthly board meeting with a request for money. The members present vote.

However, these seem to only be "unusual" items. For example, a youth just presented a request for him and a group to plant trees in a common area and are wanting $500. It was approved.

But, in all the minutes there is no mention of the annual lawn care fees and other routine items like that.

GlenL (Ohio)
Posts: 5,491

Posted:

Susan, I find it hard to believe that there are no Declarations. I would start with a search of the County Recorders office (the one here is available on-line) and pull the records for your lot. It sounds like over the years the business part of the HOA has degenerated into the mess you described.

Studies show that 5 out of 4 people have problems with fractions

MaryA1 (Arizona)
Posts: 7,043

Posted:

Susan,

The bylaws is the proper document where the duties of the board of directors and the officers are outlined. I don't think it's unusual that it is not specifically stated in the bylaws that the BOD is resp. for preparing a budget. The bylaws of my HOA do not state this but it does state that the BOD ". . .shall have the powers and duties necessary for the administration of the affairs of the assn. . .". Not all bylaws require the budget to be ratified by the membership.

The fact that the expenses paid by the assn are not noted in the minutes is not unusual; that information should be contained in a treasurer's report. Does your treasurer prepare financial statements each month which are then accepted by the BOD at the monthly board meeting? If not, then I suggest you ask that he/she starts doing this, that is if you are a board member.

If you are saying that over a period of 30+ years there is no record of any financial statements ever being prepared, all I can say is that I am shocked. There must never have been a treasurer who was familiar with accounting/bookkeeping practices nor a BOD wise enough to know that financial statements should have been prepared monthly and a budget prepared annually. Actually I like to think what really happened is that the Secretary neglected to keep these records!

SusanP5 (Michigan)
Posts: 13

Posted:

Quote:

Posted By MaryA1 on 07/21/2010 3:31 PM
Susan,
If you are saying that over a period of 30+ years there is no record of any financial statements ever being prepared, all I can say is that I am shocked.

No, I meant that the HOA had been around for 30+ years. Sorry 'bout that!

In the bylaws it does state that the declarations is filed with the county registrar of deeds office -- but they don't seem to be online. So, I'll be going to that office tomorrow.

In the monthly minutes, it does state that the "treasurer presented his report," but doesn't get into detail and there isn't recorded approval to pay the bills and such.

I'm not inferring there is a $$ problem. It's just I've lived here for 8 years. I admit, I've never attended a board meeting. This week, I sent an email to the board asking if they could trim some hedges that had become overgrown in a commons area that their landscapers maintain. It has become a blindspot to drivers and it's a hazard. The reply was, we're all volunteers, we don't get paid, gather your neighbors and take care of it -- this just after approving $500 to plant more bushes to maintain. Another member berated me for only being critical and never doing anything (this is the first time I've approached the HOA about anything.)

Since I WILL be attending the next homeowners meeting, I just want to have my ducks in a row so that I'm not totally ignorant. (That's another topic I'll start! ;) )

MaryA1 (Arizona)
Posts: 7,043

Posted:

Susan,

Had a board member said that to me, I would have had a few choice words for him/her! I really get incensed when a board member says "I'm only a volunteer". That may be true; however no one held a gun to their throat to "volunteer" to run for a position on the board. And once elected they have a responsibility to perform their job. Since there is a landscaping company responsibile for trimming the bushes it's certainly not unreasonable for you to ask that they do their job.

The only time the BOD may need to approve an expenditure is if it's for an unexpected expense that had not been previously approved or if a board or committee is asking to be reimb. for out-of-pocket expenses. IMO, there is no need for the board to approve expenditures for routine monthly expenses or for payment of contracts that have been previously approved.

BarbaraP3 (Maryland)
Posts: 90

Posted:

Susan,

The declarations should outline the "members/owners" responsbility and the "Association/Board's" responsbility. Such as levy and collect annual assessment sufficient to provide revenue to pay all costs including reasonable reserves, special assessments, state that the governing body of the association is the board of directors, the members of which shall be elected by the members for such terms and in the manner provided in the by-laws, allows the association (board) to levy fines, liens, foreclose on lots, appoint committees, set rules and regulations and remedies for violations, etc. Our declarations specifically states that "in January of each year the board shall adopt a budget setting forth all costs and obligations......."

As far as approving bills/invoices to be paid, that doesn't happen during a bod meeting. Contracts should be approved/voted on by the board, then when the invoice is received it gets paid. Routine monthly bills do not get approved by the board at their monthly meetings. Who receives your invoices/bills, who signs your checks and mails them? Do you have a manager that may be doing this?

Barb

SusanP5 (Michigan)
Posts: 13

Posted:

Quote:

Posted By MaryA1 on 07/21/2010 3:57 PM
Since there is a landscaping company responsibile for trimming the bushes it's certainly not unreasonable for you to ask that they do their job.

Thank you. I was feeling that I was totally out of line.

SusanP5 (Michigan)
Posts: 13

Posted:

BarbaraP3 --

That's what I want to find out. Those are great questions, and it seems they should be outlined somewhere and hopefully I'll find out after studying the Declaration thingy. ;) (technical term, I know. It's late - and I haven't slept in 2 nights since the verbal beatdown.)

🎯 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