Revised Bylaws — Article VI: Financial and Administrative Matters

Sound Legal — Original

Section 6.1 Accounts. The Association shall establish banking and other financial accounts in the name of the Association at one or more financial institutions as necessary to provide for the maintenance, operation, and administration of the Association.

Section 6.1 — Accounts

The Association shall establish banking and other financial accounts in the name of the Association at one or more financial institutions. These accounts shall contain less than the FDIC maximum insured amount and provide for the maintenance, operation, and administration of the Association.

What Changed & Why

Keep every dollar insured. Association money is held in accounts in the Association's name, never in a director's or the managing agent's name.

New: balances must stay under the FDIC insurance limit. The FDIC only insures bank deposits up to a set amount, and anything above it could be lost if the bank failed. As our savings grow, this means the board spreads money across banks instead of keeping it all in one place.

Sound Legal — Original

Section 6.2 Operating Fund. There shall be established one or more checking accounts in a reputable, FDIC insured, financial institution to be known as the "Operating Fund" or similar named accounts. The Operating Fund will be used for the normal operation of the Association and will generally receive all monthly Assessments and other monies received by the Association. Checks shall be issued from said accounts for all management and operational expenditures necessary for the Association and its maintenance expenses of a routine or minor nature that do not require resort to the Reserve Fund. Additional reasonable uses of the Operating Fund shall be as directed by the Board. Owners may be directed to make payments for Assessments or other expenses to a third party as agent for the Association or to the Association, as the Board may determine.

Section 6.2 — Operating Fund

There shall be established one or more checking accounts in an FDIC insured, financial institution to be known as the “Operating Fund”. The Operating Fund will be used for the normal operation of the Association and will generally receive all monthly Assessments and other monies received by the Association. Checks shall be issued from said accounts for all management and operational expenditures necessary for the Association from the Operating Fund. Additional reasonable uses of the Operating Fund shall be as directed by the Board. Members may be directed to make payments for Assessments or other expenses to a third party as agent for the Association or to the Association, as the Board may determine.

What Changed & Why

The everyday account. Monthly assessments go into the Operating Fund, and routine bills are paid from it. Keeping it apart from the savings for big repairs (Section 6.3) means everyday spending can't quietly eat into those savings.

The board can approve other reasonable uses without amending the bylaws. It can also have members pay through the managing agent or a payment service, but the money still belongs to the Association.

Sound Legal — Original

Section 6.3 Reserve Funds. The Association shall maintain one or more accounts at a reputable financial institution known generally as the "Reserve Fund," or similar named accounts. These accounts shall be used to deposit funds earmarked as reserve funds as required by the reserve funding provisions of the Declaration and laws governing the Association.

Section 6.3 — Reserve Funds

The Association shall maintain one or more interest-bearing accounts, known generally as the “Reserve Fund,” at an FDIC insured financial institution. These accounts shall be used to deposit funds earmarked as reserve funds as required by the reserve funding provisions of the Covenants and laws governing the Association.

What Changed & Why

Savings for big repairs. Reserves are money set aside for large, predictable costs down the road, like replacing roads or common-area infrastructure. They live in their own account, separate from everyday spending, so they can't be drained to pay routine bills.

New: the reserve account must earn interest and be FDIC insured, so the savings grow and stay protected. Under Washington's HOA law, every withdrawal from reserves needs the signatures of two officers or directors (RCW 64.90.535(3)).

Sound Legal — Original

Section 6.4 Combination and Deposit or Investment of Funds. The funds of the Association shall not be commingled with the funds of any other association or with the funds of any Managing Agent. The reserve funds may be combined in one or more savings accounts, certificates of deposit, or other accounts or deposits, as may be deemed reasonable in the discretion of the Board.

Section 6.4 — Combination and Deposit or Investment of Funds

The funds of the Association shall not be commingled with the funds of any other association or with the funds of any other entity. The reserve funds may be combined in one or more Reserve Fund-designated savings accounts, certificates of deposit, or other accounts or deposits held in the name of the Association, as may be deemed reasonable in the discretion of the Board (See RCW 64.90.535(2)(a) or successive statute).

What Changed & Why

Our money stays ours. Association funds can't be mixed with anyone else's money. The original named only other associations and the managing agent; "any other entity" closes that gap for every outside business or person.

Reserves can be spread across savings accounts or CDs to earn interest, as long as each one is marked for reserves and held in the Association's name. The new reference points to the state law on where reserves can be held (RCW 64.90.535), which also requires reserves to stay separate from the Association's other funds.

Sound Legal — Original

Section 6.5 Reconciliation of Actual Expenses to Assessments. The Association shall establish and maintain its accounts and records in such a manner that will enable it to charge Assessments for Common Expenses and any other Assessment, including allocations to reserves, to the account of the appropriate Units and make its expenditures from the appropriate accounts. The accounts of the Association shall be reconciled at least annually.

Section 6.5 — Reconciliation of Actual Expenses to Assessments

The Association shall establish and maintain its accounts and records in such a manner that will enable it to charge Assessments for Common Expenses and any other Assessments. These shall include allocations to reserves, credit to the account of the appropriate lots, and expenditures from the appropriate accounts. The accounts of the Association shall be reconciled at least annually.

What Changed & Why

The books have to match. At least once a year, the Association checks that what members were charged, what went into reserves, and what was spent all add up. That paper trail is what lets anyone answer, "Does my assessment match what was actually spent?"

The long sentence was split in two to make it easier to read. The requirement is the same.

Sound Legal — Original

Section 6.6 Corporate Records and Books of Account. The corporation shall keep, at its registered or principal office or at the office of the Secretary or Managing Agent, current Articles of Incorporation and Bylaws; a record of Owners, including Owner names and addresses; records of accounts and finances; a record of the names and addresses of officers and Directors; minutes of the proceedings of the Owners, the Board of Directors, and any minutes that may be maintained by committees of the Board; a record of Board resolutions (in the event such resolutions are memorialized separately from the minutes); and any other necessary or advisable corporate records, or any records required to be kept under the Declaration or under applicable law. The non-privileged records of the Association shall be available for inspection by Owners and subject to a reasonable fee as determined by the Board. Inspection and disclosure of records need not exceed what is required by law.

Section 6.6 — Corporate Records and Books of Account

The corporation shall keep, at its registered office or at the office of the Secretary or Managing Agent:

current Covenants and Bylaws;
a record of Members, including Member names and addresses;
records of accounts and finances;
a record of the names and addresses of officers and Directors;
minutes of the proceedings of the Members, the Board of Directors, and any minutes that may be maintained by committees of the Board;
a record of Board resolutions; and
any other necessary or advisable corporate records, or any records required to be kept under the Covenants or under applicable law.

The non-privileged records of the Association, including electronic records, shall be available for inspection by Members and subject to a reasonable fee as determined by the Board. Inspection and disclosure of records need not exceed what is required by law.

What Changed & Why

Your right to see the records. This section lists the records the Association must keep and lets members inspect them for a reasonable fee. It turns "the Association keeps records" into a right members can use. The list is now in bullets so it's easier to scan.

New: electronic records count too.

The proposed language below goes a step further. Board members' written messages about Association business, on any platform, are records members can see. The board may black out only the specific categories state law allows, such as legal advice, personnel matters, or contracts still being negotiated (RCW 64.90.495(3)), and it has to justify each one.

Sound Legal — Original

Section 6.7 Fiscal Year. Unless another fiscal year is selected by the Board, the fiscal year of the Association shall be the calendar year.

Section 6.7 — Fiscal Year

Unless another fiscal year is selected by the Board, the fiscal year of the Association shall be the calendar year.

What Changed & Why

No change. The Association's financial year runs January through December unless the board picks another. Budgets, audits, and reserve savings all measure the same twelve months.

Sound Legal — Original

Section 6.8 RCW 64.90 Financial Requirements. If and only if the Association is fully bound by RCW 64.90, the provisions of RCW 64.90.530 & 535 as in effect at any given time or any successor statutes thereto shall apply notwithstanding anything to the contrary herein.

Section 6.8 — RCW 64.90 Financial Requirements

This section has been removed. Open the Sound Legal tab to see the original wording.

What Changed & Why

Removed: it only repeated the law. This section said that where state law applies, state law wins. That's true whether or not the bylaws say so. We're avoiding repeating the law in the bylaws unless there's a reason to, so this section was dropped. Nothing about how the Association handles money changes.