S.R. from Middlesex County writes:
Dear Mister Condo,
What authority does a President have in an emergency situation to authorize expenditure? Our Board is suggesting limiting the expenditure authority to the President for only $1,000 in an emergency? What are your thoughts and concerns? Should the President’s discretionary emergency spending be limited?
Mister Condo replies:
S.R., “Emergency” spending should be reserved for a true emergency. If your condo were located along a river bed that is on the verge of flooding, you would be thankful to have someone in the association like the President with the power to purchase sandbags to help stave off the damage. That might be considered a true emergency expenditure. The real issue here is what constitutes an emergency. If a Board president is claiming a right to make discretionary expenditures and classify them as emergencies, there may be a problem.
Since you live in a community with less than 25 units, I am guessing there aren’t that many truly emergent expenses. There may be times when it is simply more efficient for a Board President to make a decision that is in the community’s best interest than it is to wait for the next Board meeting and have the decision go through proper channels. That is not the correct way to do it but as long as there are no objections from residents, I can understand how a community might function that way. However, the President is setting him/her self up for a potential problem in that any community member can cry foul and bring suit against the President for not following the rules and by-laws of the association, which, generally speaking, do not empower any Board member to make discretionary decisions on how or when to spend association money.
A better approach would be to anticipate expenses and have the Board vote on the expenditures before they are made. In the event of a true emergency – flood, earthquake, fire, and storm – true emergency decisions may need to be made. Those decisions should be made to stop further damage. I don’t know if I would want to limit the spending authority of a President if the safety of the community were at stake. However, the decision to spend money to repair emergency-related damage may have to wait until the next Board meeting, which could be called quickly in the event of a true emergency. Let’s keep our fingers crossed that your community doesn’t need any more emergency expenditures.