Spending Unbudgeted Money on WILDFIRE SAFETY

Spending Unbudgeted Money on WILDFIRE SAFETY

Below is a helpful tip from the Davis-Stirling.com Newsletter by ADAMS | STIRLING PLC on spending unbudgeted money on wildfire safety.

QUESTION: We want to pay for wildfire fuel reduction on non-HOA property contiguous to our common areas and homeowners’ property lines. This would provide an additional buffer against wildfires. Is such an expenditure permissible? Is it an operating expense or reserve expenditure? –Philip H.

ANSWER: Assuming you have permission from the adjoining property owner, assessments can be used to clear brush to protect your association from potential wildfires.

Court Case. In Finley v. Superior Court, a homeowners association used association funds to fight the conversion of a nearby military base into a commercial airport. Members of the association sued claiming the board exceeded its authority and misused association funds. The court ruled that political contributions were not illegal and boards can take actions they believe are in the best interests of the association, even if members disagree. That means your board can authorize funds to clear brush to protect the association.

Operating Expense. The project does not qualify as a reserve expense since it does not involve maintenance of the common areas. That means it should come out of operations. If the expense was not budgeted, it is unlikely there will be sufficient funds in operations to cover it. In that case, the board can borrow from reserves and then repay it, or special assess the membership up to 5% of the current budget without a vote of the membership.

RESPONSE: My recommendation is for boards to lift restrictions in accordance with applicable health department requirements. Those who want to take the additional step of prohibiting members who have not been vaccinated should seek the advice of legal counsel.

For more knowledgeable information regarding the business of HOA’s, visit: The Davis-Stirling.com Newsletter

DISCLAIMER. The Davis-Stirling.com Newsletter by ADAMS | STIRLING PLC provides commentary only, not legal advice. For legal advice, you’ll need to hire legal counsel.  You can hire ADAMS | STIRLING PLC; Keep in mind they are considered corporate counsel to associations only.