DOES THE RIGHT TO BORROW MONEY GIVE BOARDS THE RIGHT TO BUY ANYTHING THEY WANT?

By Jan Bergemann

Published November 8, 2013  

    

Most governing documents give boards the right to borrow money. I think that right was established in order to give board members the possibility to pay for repairs and maintenance in case of emergencies like hurricane damages etc. – things that were not necessarily foreseeable. In my opinion these rights were granted to the board in order to avoid having to levy special assessments that would get some of the owners in financial trouble.

  

But it gets in my opinion outright ridiculous if board members and even association attorneys interpret the right to borrow money from the bank to mean that they can buy anything they ever want – including golf courses.

 

I think using borrowed money for such a purpose is a clear breach of fiduciary duty.

 

As much as I can understand the financial intention of the attorney – it sure will create a law suit -- I think that giving such an interpretation borders on malpractice. But it’s pretty obvious that some specialized association attorneys don’t mind handing down interpretations of the governing documents that will definitely increase the billing hours!

  

Even if the governing documents give boards the right to borrow money, the right should only be used in absolute emergencies – and only if it really benefits the owners – and only for repairs or needed maintenance, not for the purchase of more costly liabilities.

  

Never forget: The repayment of a loan taken out many years ago by a board seriously decreases the property values of the single owners.

  

If your board is planning on taking out a loan for some sort of nonsense serving their private agenda of some board members make sure that you quickly remove such board members from office before your property values take a big dump!


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Jan Bergemann

Jan Bergemann is president of Cyber Citizens For Justice, Florida's largest state-wide property owners' advocacy group. CCFJ works on legislation to help owners living in community associations. He moved to Florida in

1995 - hoping to retire. He moved into a HOA, where the developer cheated the homeowners and used the association dues for his own purposes. End of retirement!

  

CCFJ was born in the year 2000, when some owners met in Tallahassee - finding out that power is only in numbers. Bergemann was a member of Governor Jeb Bush's HOA Task force in 2003/2004.

  

The organization has two websites to inform interested Florida homeowners and condo owners:

News Website: http://www.ccfj.net/.

Educational Website: http://www.ccfjfoundation.net/.

   
We think that only owners can really represent owners, since all service providers surely have a different interest! We are trying to create owner-friendly laws, but the best laws are useless without enforcement. And enforcement is totally lacking in Florida !

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