Condo President Spending Unauthorized Association Funds on Repairs

T.K. from Fairfield County writes:

Dear Mister Condo,

I am one of five board members in my condo complex. As a board, we agreed to pay a contractor $75K to do various jobs that were sorely needed, as the previous board deferred maintenance for 10+ years. However, the president, who is retired, insists on babysitting the workers (and tells our property management company they do not need to be present when contractors are on our property). We just learned a few days ago that the president, acting unilaterally, orally authorized $42K in additional work to be done by this contractor last year. He did not ask the board to consider/vote on this issue; he just gave the OK to do various additional jobs, and now we are faced with a huge payment. We have impressed on him how wrong it was for him to do this, but he doesn’t see the error; in fact, he rationalizes his actions by saying the work was needed, which isn’t really the point. Short of calling a special unit owner meeting to potentially vote the president off the board, how can we ensure that this sort of unauthorized work expenditure does not occur again?

Mister Condo replies:

T.K., in a word, there is nothing you can do to prevent this President from doing this again as long as he is President and has control over the association’s finances. The recall meeting would be a drastic measure but is the only true way to prevent such further behavior. However, recall actions require great support from the entire community association. Are you sure that the majority of unit owners are unhappy with the repairs that are being made? As a Board member, the President is no different than any other unit owner in that he or she is also a common fee and special assessment paying member of the community. The President’s job with the Board is to “preside” over the Board, leading meetings and holding votes on the association’s business. There are a few additional “executive” functions which allow the President to also act in between Board meetings when small decisions need to be made. The Property Manager also usually has some small amount of discretionary money to spend on behalf of the association. Of course, any of these expenses need to be accounted for and reported to the Board and become records of the association, which may be examined by any community association member. The President does not have the authority to spend an extra $42K of association funds, even on needed repairs. However, if the Board and the majority of community association members are in agreement that the repairs were needed and there is no objection to the additional expense, there may be little to do to “prevent” this or future expenses of this type. Let’s not forget the real culprit here. Your association failed to properly maintain itself for over 10 years. Depending on your point of view, this president may be doing the best job possible of getting the community back in shape. It is unfortunate that the project was not properly priced and approved at the proper price tag. The good news is that the work is finally getting done. The micromanagement of the workers by the President is another matter altogether. If the President is truly out of control, you may wish to pursue a recall. Otherwise, you might just want to speak with the other Board members about his behavior and see if they can’t reel him in and keep the expense authorization process intact and get the Board’s approval BEFORE committing the association’s funds to this repair project. All the best!