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So this is in our bylaws and it looks like we cannot have an assessment when there is a tax rebate - without a vote. Anyone run into this? (our sponsor owns about 20%).
"So long as the Sponsor or the Holders of Unsold
Shares continue to own any percent of the then
Outstanding shares of the Apartment Corporation, the
Apartment Corporation will not impose upon the
shareholders any assessment whatsoever except by
affirmative vote of one-hundred (100%) of the issued
and outstanding shares, unless the Reserve Fund has
first been reduced to a sum of $15,000, or such sum
has been irrevocably committed for other improvements. "
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Do you automatically place exce4ss funds in the capital reserve funds?
Do you not separate ordinary income from capital improvements for “tax purposes” for the owners? Your CPA should be advising on this.
Do the bylaws elsewhere stipulate that there are to be several reserve funds?
If yes, then capital reserves and ordinary working capital reserves need not be commingled and should not be commingled. Again your CPA firm should be offering counsel. Thus, if there is a need for capital improvements, one can ensure that there is less than $15,000 in the “capital” reserve fund after the board commits to spend it, regardless if a contract has been signed for the capital work.
Again pass this through the corporate counsel and CPA firm.
And, maybe plan on changing the bylaws to more clearly state the restrictions and to reduce 100% to something tolerable.
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