Q We are a 56-unit condominium. Our bylaws require that end-of-year excess funds be returned to unit owners, either in a lump sum or credited to monthly installments until exhausted. Bylaws define excess funds as net excess of income over actual expenditures plus reserves. The past couple of years, end-of-year cash balance has been rolled over to the next year, and in some cases transferred to reserves. Our question is, when bylaws require excess funds to be returned to owners, do owners have any rights concerning a voice in how these funds are disbursed when the funds are not returned to them as prescribed in the bylaws?
—Waiting for Money
A “Assuming that the language of the documents is exactly as has been stated, the sole right of the owners is to demand that the board make the determination of whether the funds are to be paid directly to them (according to their percentage interest) or be used to offset future common area fee charges,” says attorney Henry Goodman, a principal and co-founder of the law offices of Goodman, Shapiro & Lombardi, LLC in Dedham, Massachusetts. “However, that determination as to how to return the funds has been given strictly to the board. To avoid this problem, unless otherwise prohibited in another portion of the documents not cited, the board can transfer such funds to reserves leaving no excess to deal with.”