SETTLEMENT MONIES

Settlement with the developer and the receipt of monies by the association frequently raises the questions described below. 

Distribution to the Membership
1.  Who receives the settlement monies? Current members or members who paid the assessments?
2.  Is there a breach of fiduciary duties if the board distributes monies needed for repairs?

Repairs to the Common Areas
1.  Must repairs begin immediately?
2.  Can some repairs be deferred?

Repairs to Units
1.  If settlement monies included damage claims by individual owners, the association may need to allocate monies to address those claims.
2.  Can the association pay money to homeowners in exchange for release?

Boards should seek legal counsel before refunding money to owners and/or spending it.

Updated by ADAMS KESSLER 8/9/2008