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How Can HOAs Use Reserve or Settlement Funds?

Boards in need of cash may want to use cash in the reserve accounts or from legal settlements, but there are important restrictions.

§6000 - Complaint Prerequisites

  1. Before an association files a complaint for damages against a builder, developer, or general contractor (respondent) of a common interest development based upon a claim for defects in the design or construction of the common interest development, all of the requirements of this section shall be satisfied with respect to the builder, developer, or general contractor.

§5520 - Litigation

  1. When the decision is made to use reserve funds or to temporarily transfer moneys from the reserve fund to pay for litigation pursuant to subdivision (b) of Section 5510, the association shall provide general notice pursuant to Section 4045 of that decision, and of the availability of an accounting of those expenses.
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