What Are Deadlines for Slow Treasurer?

QUESTION: I have served on the board of directors of our homeowners association for three years. We are an association of more than 100 lots with single-family homes. We have private streets and street lighting, swimming pools, spas and several acres of landscaping that must be maintained.

The board treasurer takes sole responsibility for preparing the annual budget. He is a procrastinator and always waits until December to present the budget to the board for approval.

What is the legal requirement for distribution of the budget to the owners? What other fiscal deadlines or disclosures about reserve funds are required of the board?

ANSWER: Even if the treasurer takes responsibility for the preparation of the budget, all board members have a responsibility to see that the budget is a realistic one and that its distribution complies with the law.

In California, as in several other states, the legal requirements are very specific. The annual budget must be sent to all owners not more than 60 days nor less than 45 days prior to the beginning of the association’s fiscal year.

The budget must include estimates of the association’s operating and reserve expenditures, plus the following reserve funding information:

1--Identification of the major components belonging to the association that will require future repair and replacement.

2--The estimated replacement cost of these components and the estimated remaining useful life of each one.

3--The current estimate of the amount of cash reserves necessary to repair, replace, restore or maintain the major components,

4--The percentage of total funds needed that are currently accumulated for reserve expenditures.

5--A statement regarding the likelihood of a special assessment being levied during the fiscal year.

6--An explanation of the procedures used to calculate the reserve needs of the association.

The budget information could also include the association’s delinquency policy since the written procedure for collecting unpaid assessments is supposed to be sent to owners some time within the 60-day period prior to the beginning of the fiscal year.

Another important deadline comes 75 days after the close of the fiscal year, the date for filing the association’s tax returns. If your fiscal year ends on Dec. 31, your tax returns must be filed by March 15.

If your association’s total income for the year is $75,000 or more, an annual financial report must be sent to all owners within 120 days after the fiscal year-end.

In addition, if your association charges penalties for violation of the legal documents, all owners are entitled to receive a schedule of the amount of the monetary penalties or fees that the association charges.

Your board treasurer should be reminded that even volunteers have deadlines that are important. The rest of the board should assist him in meeting those deadlines because you can all be held responsible if the board’s failure to comply with the law results in legal problems.

Association Can’t Charge Move-In Fee

Q: Our condominium association charges a hefty move-in fee for any renters moving into the building and a move-out fee when they leave. Owners do not have to pay either fee. I inquired about the reasons for this apparent discrimination. I was told that owners already contribute to the upkeep of the property; so, if they damage the building when they move in or out, they are forgiven. I believe that owners should be required to pay for any damage that they cause. What are your comments on the fairness of this association’s procedures?

A: The association has no authority to collect any fee from a tenant since the tenant’s contractual relationship is with the owner of the unit. Perhaps the association is collecting the fees for the tenants from the unit owners.

In my opinion, charging only the tenants is a discriminatory procedure. Any rule that the board adopts must be fair and reasonable if it is going to be enforceable.

You stated that the fee is “hefty.” The association is allowed to charge only the amount necessary to pay for the cost of the change in occupancy, for example, the cost of new common-area keys, changing the front entry directory board, padding the elevator for the move and other special services. If the amount is justified, then it is reasonable to require payment from owners also.

In addition, the owner is responsible for any damages caused either personally or by the owner’s tenant. Most associations have provisions in the legal documents that require payment for any damage caused to the common area of the property by owners, their guests or tenants, whether the damage occurs during a move or at any time. The difficulty lies in finding an eyewitness to the occurrence, because not all owners or tenants will confess or pay willingly if they are accused.

Your question illustrates the belief that many owners have about tenants: Owners are good, tenants are bad. The board has passed a rule that punishes tenants, whether they cause damage or not, and allows the owners to damage the property without any penalty.

I would urge the board to reconsider this rule and revise it before someone challenges it.