Condo Association Management Blog

unless you have an odd set of by-laws, the HOA always gives the manager their working orders, period. HOA hires and fires its agents, such as, manager!

I totally agree with kb. Our Board and the manager work together to determine the budget for the coming year. And, we publish this budget to all the co-owners. The managers work for us.

Budgets must be voted on by the Association. A management company cannot just "implement" a working budget. Have an attorney review the declaration of condo that is on file with the Secretary of State (of your state). All of the "bylaws" for governance of your association can be found there.

I agree and say dig a bit further - in that the contract between the HOA and the Management company will have the exact answer. Perhaps the BOD has given this authority to the Manager in the contract. The language in the contract will hold the answer.

Despite there are some instances wherein smalelr condo projects (less than 8 units) where the management company will prepare budgets and implement them, at every instance the board has to vote and approve (hopefully after reviewing) the budget. As it is the responsability of the Board in the end to make sure the budget is realistic and in the best interes of Homeowners

The manager may have his or her recommendations for the Associations budget, but it is the Board of Director's that must review, ask questions and perform its due diligence as part of their fiduciary duty to the Association. The final approved budget is the Board of Director's responsibility.

Well, ultimately this should be dictated by the management contract. That said however, the HOA IS the client and the HOA Board IS the governing body that manages the manager.  
 
Generally, the manager/management company will prepare a draft budget based on the previous year's expenditures, and anticipated expenditures and revised costs for the up-coming year. This draft should then be reviewed, edited, and approved by the HOA Board BEFORE it's mailed to the membership. Often there is a budget meeting set with the Board (and open to the membership to observe - not to participate in, although certain things can't be discussed in open session committee meetings, like salaries or contract negotiations, etc) to discuss the budget.  
 
I have seen certain cases where entire boards refuse to participate in the budget process, or they ignore emails or requests by the manager to review and approve the budget. In these cases - and especially if the budget MUST be increased - Boards can be put on notice by the manager that if they don't respond by a certain time that their non-reponse indicates an approval. Again, this sort of tactic ultimately goes back to the management contract and whether it gives the manager this sort of authority.

The association bylaws usually state that the budget for the coming year must be approved by the Board of Directors and provided to the ownership by a certain date. The management company may be required by its contract to prepare a first draft of the budget, but its still the responsibility of the Board to modify the draft as appropriate and approve the final version. Any Board that ignores this responsibility is in violation of its fiduciary duty to the association membership.