Who’s in Charge of Investing the Reserve Fund?
QUESTION: I live in a condominium association. Our reserve funds total about $200,000. Our board treasurer is doing a good job of investing our money in certificates of deposit and treasury notes.
Who is responsible for making decisions about investing our money? Should the board treasurer have this responsibility, or the management company, or should we delegate this task to an outside money manager?
ANSWER: The board of directors has the duty to protect the association’s funds. Though the board can delegate the authority to a financial advisor or banker or the management company, the board is ultimately responsible for the decisions regarding investments.
The board should abide by any requirements in the association’s legal documents. Many associations have specific guidelines hat require placing the funds in relatively risk-free, government-secured investments.
The board should abide by any requirements in the association’s legal documents. Many associations have specific guidelines that require placing the funds in relatively risk-free, government-secured investments.
All board members have a fiduciary responsibility to know how and where the association’s money is being invested or spent.
Even though you feel that your board treasurer is making good decisions, the funds should never be under one person’s control. California law requires two board signatures for withdrawal of reserve funds. Any reserve expenditure or withdrawal of reserve funds should be with the approval of the board of directors noted in the board meeting minutes.
Rule Enforcement Causes a Question
Q: I own a condominium unit that is rented to a very reliable tenant. The tenant was recently cited for violating the condominium rules because the garage door had been open “For a long time period of time.” The tenant said that the citation must be a mistake because he has valuable items in the garage and has not left the garage door open.
What method is required to file a complaint about a violation, verbal or written? Who receives the complaint? Am I entitled to know who originated the complaint? What can the violator do to deny the allegation? What role does the management company play in the process?
A: All of your questions should be addressed to your association’s board of directors. You have the right to know the facts about your association’s rule enforcement procedures.
Some association boards accept verbal reports of violations from owners while others require written notice of a violation. Written complaints reduce the chance of error.
Some associations keep the complaining person’s name confidential while others will reveal the name of the person who filed the complaint. Confidentiality prevents resentment and retaliation.
The owner who is cited for a violation should always have the opportunity to respond to the violation notice either in writing or by appearing at a board meeting or both. Many associations have established methods for processing complaints and dealing with violators. If you are being charged a monetary penalty for the violation, the association must give you the opportunity to state your innocence.
You have the right to ask the board to consider your tenant’s contention that he was cited in error. The board should then decide whether to withdraw the citation.
