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We are frequently called upon to give POA Boards guidance on whether or not they can spend Association funds for a particular purpose. The quick answer is that Boards are limited by the powers given them in their governing documents. However, that kind of advice is not much help is it?
This question really boils down to whether or not the members have agreed (by their acceptance of the covenant contract when they buy their unit) to spend association funds in the manner requested. Because Board members are fiduciaries, they cannot spend association funds for any purpose other than those for which funds were assessed. For each request, the question that has to be answered is:"Is it proper for us to use the money required to be paid by every homeowner, under threat of losing their home, to pay for this request?" Another way to ask the same question is:"Did every homeowner, by virtue of their acceptance of the covenants when they bought their home, agree to pay this cost?"
So when, for example, the request comes in to pay the cost to correct a construction defect by the developer, the Board has to decide whether the item is something everyone agreed to pay for out of the common assessment funds or whether that homeowner has to deal with it themselves. Because each Board member can be held legally liable for misspending association funds, it is important to get legal guidance when the answers to those questions are not clear.
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