Validity of the Vote on Condo Annual Budget and Loan


R.G. from Hartford County writes:

Dear Mister Condo,


Is voting on a budget, the borrowing of money require on ballot only the percentage of ownership, and if otherwise an illegal method and would be invalid in a court of law?


Mister Condo replies:

R.G., I am not sure I follow your question but let me address a few of the points to see if I can add some clarity. Also, since I am not an attorney, please consider my answers as friendly advice. If you have “court of law” questions, I must advice you to seek the advice of a qualified attorney.

The Annual Budget is presented and voted upon at the Annual Meeting, where all unit owners are invited and a quorum must be achieved before any votes can be taken. Your by-laws and state law spell out the rules for quorum so as long as quorum is achieved, the outcome of the vote would hold up in a court of law, in my opinion. Some associations have the ability to borrow money as part of their governance documents; many do not and require a vote of the membership in order to be able to do so. Again, the rules for modifying documents are spelled out in your governance documents and state law. As long as quorum is achieved and the rules are followed, I see no reason the vote wouldn’t hold up in court. The percentage of ownership formula does not generally come up in voting, meaning all unit owners votes are equal – one vote per unit. If you feel your Board has wrongly passed an Annual Budget or taken out a loan on behalf of the community association, you have the ability to question it. Unless you are knowledgeable in the law in these matters, I would highly recommend consulting with an attorney to see if you have a case. Unless either is contested in court, the budget and the loan would be considered valid. For what it’s worth, I don’t know of any community association banks that will issue a loan to an association that didn’t get the proper approvals from the association before issuing the loan. Chances are, all was done in proper method. All the best!

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