Question: We have $200,000 in reserve funds that the board wants to invest long term to earn better interest. The funds are not going to be needed for about 3-5 years and we can double our return if we buy 3 year CDs. The management company thinks this is a waste of time and so far, it hasn't carried out the board's request. Is this raising a red flag about our management company?

Answer: The management company is there to carry out the board's reasonable requests. Doubling the return on reserve funds is certainly a worthy endeavor and, yes, the manager should make it so as soon as possible. If there is more resistance, you should investigate the current status of the reserve account to make sure all is as it should be.

However, normally, the manager does not have check writing authority over the reserve funds since there can be significant sums there and it might be an enticement to embezzle. If your management company has authority over this account, I would recommend changing that to, say, the board President and Treasurer. Board officers can also embezzle so the HOA should have Fidelity Insurance to protect against this and insist that all checks written have two signatures.

Question: Could you please clarify the definition of an open meeting? We have a moisture intrusion problem which needs to be investigated and possibly litigated. Based on advice from our attorney, the board appointed a Task Force comprised of both board members and non-board member owners. When there is Task Force meeting, should it be open to the members?

Answer: Board meetings are held to approve HOA business. Those meetings should definitely be open to the general members. Task Force meetings are essentially committee meetings. Changing the title to Task Force doesn't change its purpose. As the saying goes, if it walks and quacks like a duck, it's a duck. Committee Meetings do not need to be open to the members unless the board authorized the committee to make decisions on behalf of the board. But Committees are generally advisory only. That means they make recommendations to the board and it's up to the board to make decisions based on those recommendations.

So if the Task Force is truly only there to gather information and make recommendations, the Task Force meetings can be closed. However there is a caveat: If the Task Force is largely made up of board members, it essentially is a board meeting or certainly would be perceived to be one. To avoid that perception, populate the Task Force with non-board members.

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Published: September 7, 2011

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Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .