Spending Reserves
Adams Stirling PLC
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PRIORITIZING RESERVE SPENDING

QUESTION: Our neighborhood needs to have all of the streets repaired. The bids for the work are about $50,000. Does the board have the authority to vote on this capital expense? Some members insist the homeowners must vote on this large expenditure. They argue that some members may want to make other repairs first.

ANSWER: The board has the authority to make reserve spending decisions without a vote of the membership. Moreover, as provided for in Lamden v. La Jolla Shores, boards can decide the timing, method and extent of repairs.

Spending Limitations. Associations are limited on the kinds of things for which reserve monies may be used:
The board of directors shall not expend funds designated as reserve funds for any purpose other than the repair, restoration, replacement, or maintenance of, or litigation involving the repair, restoration, replacement, or maintenance of, major components that the association is obligated to repair, restore, replace, or maintain and for which the reserve fund was established. (Civ. Code §5510(b).)
Boards are allowed to borrow reserve funds for specific limited purposes.

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Adams Stirling PLC