Legal Expenses
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BUDGETING LEGAL EXPENSES

Over the course of a fiscal year, boards of directors will face a variety of legal issues ranging from interpretation of the CC&Rs, compliance with the Davis-Stirling Act, determining liability for water damage, maintenance obligations, rules enforcement, responding to threatened lawsuits, fighting external issues that may impact the association, and more.

Line Item.
As a result, most associations from time to time need knowledgeable legal counsel.To that end, boards need to add a line item in the association's budget for legal expense. The amount allocated, whether $5,000, $10,000, $20,000, $40,000 or more, will depend on the size of the association and the anticipated number of legal issues.

Fluctuating Amount
. Unfortunately, legal expenses are not as predictable or as steady as insurance or utility expenses. Associations could go an entire year with no legal expenses and the next year spend $50,000. The more prudent course is to fund the line item each year and hope it will not be needed.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC