What is the role of budgets and reserve studies in the expenditure of Association funds?
Operating budgets provide an estimate of the upcoming years income and expenses. In some common interest communities these operating budgets are subject to veto by a percentage of the membership at the annual meeting. In other common interest communities, approval is only required by the Board of Directors of the Association. Estimated expenses in an approved budget allow the Association to establish the annual assessments necessary to operate the community. Depending on the governing documents, the Board may have the right to increase the assessments by any amount to meet the budget requirements; other documents limit the increase of the assessments to a certain annual percentage, or require the budget be proposed to the members and are subject to possible veto by the members.
Related Questions
- My association wants to invest reserve funds in the stock market to earn a profit, rather than let them sit in a low interest savings account. Is that a good idea?
- I live in California, where can I find some reserve study guidelines for Homeowner Association Budgets?
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