Reader Questions - What Can Managers Spend and Should They Run Elections?

Hi Kelly,

Thanks for your weekly articles. I have 2 questions.

First, should the Board conduct the election meeting, allowing the manager to assist, advise and count ballots or conduct the entire meeting? In the past, some management representatives opened and controlled the meeting, overseeing opening and counting ballots. I believe the Board should have the election as an agenda item and as such seek their advice, leadership and management of the voting.

Secondly, for what association financial matters should the manager be allowed to obligate money without board approval? I concur they should be allowed to authorize emergency repairs. I believe the Board, as representatives of the members, issuing non-emergency repair contracts is Board responsibility to approve first. Possibly the Board could set certain dollar limits? 

Any input you can provide would be appreciated. Sincerely,

A.D., Santee

Dear A.D.,

Generally speaking, the management can be very helpful in facilitating elections. Of course, just as the Inspector of Elections, the management must be absolutely neutral as to who should serve on the board. The membership roster is usually maintained by the manager, and often the manager’s experience in checking in members and ballots is extremely helpful to the Inspectors of Elections. If an association’s election rules allow the HOA to have a current vendor also act as Inspector, the manager could act as the official Inspector. However, HOA volunteers or professional inspector firms are a better choice – allow the manager to assist the Inspector. While management firms often provide personnel to run annual meetings, it is better for the HOA to have the president chair the meeting, closely supported by the management personnel.

As to spending authority, some managers have wide discretion to commit the HOA to expenditures, while others are handcuffed with minimal or no spending authority. Sometimes the management contract limits the manager’s spending permission. The board’s fiduciary responsibility to the corporation would require the board not to allow managers an unlimited spending authority, but banning the manager from any spending is just as unreasonable. For example, if a window is broken in the community building, does the board wish to convene a board meeting to vote on the repair? A reasonable spending limit protects the board from meetings on minor items, and allows the manager to be more effective in their role. The amount of the spending limit depends upon the association’s needs. Associations more often establish manager spending limits which are too low rather than too high.

Boards should consider the association’s needs and determine what expenses are minor and, along with emergencies, therefore appropriate to include in the manager’s authority. Require the manager to disclose all such authorized expenditures in writing in the Manager’s Report at each open board meeting, and attach that Report to the minutes.

However, there is a difference between spending authority and disbursement authority. The safest financial practice is not to allow HOA managers to sign checks (disbursements), and that HOA directors should not prepare checks. The manager should prepare checks for two directors to sign, and the check request should be accompanied by documentation of the expense. For example, the manager may be authorized to call the plumber for a $500 repair, but the board signs the check.

Thanks for your questions,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.