Last year’s legal funds were budgeted at $5000. As the actual total spent surpasses $16,000, residents should be asking three questions: Why, Who authorized these over-expenditures, and How will these costs be recovered?
Legal expenditures are most often related to collection of assessments, or occasionally, a dispute with a resident. However, sometimes the BOD needs to consult the association attorney regarding interpretation of the Community Charter or Bylaws, contractual obligations with a supplier, developer settlements or actions, internal board member disagreements, or other unexpected questions.
Why are legal expenditures three times budgeted? No satisfactory answer has been provided yet. Who authorized all these extra costs? Not the whole Board …. How will these costs be recovered? Associations use several mechanisms to “balance” a budget: increased assessments, raiding an emergency fund, account transfers, or taking out a loan. If you care about your finances, attend the next Board meeting and demand some answers!