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Attyadvisor
Attyadvisor, Attorney
Category: Real Estate Law
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Can the Board of Directors of an HOA in the State of WA. invest

Resolved Question:

Can the Board of Directors of an HOA in the State of WA. invest HOA funds in an unsecured investment - one that is not covered by FDIC!!!
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Attyadvisor replied 1 year ago.
Welcome and thank you for your question. I will be the professional that will be assisting you.

Can you tell if your governing documents specify that the investments must be FDIC? That being, said that is not a very responsible move on the part of the Board.
Customer: replied 1 year ago.

No - they do state that it has to be with an insured institution - which does not in it self mean that if your invest tanks that your investment loss will be covered by that institution!!!

Expert:  Attyadvisor replied 1 year ago.

I understand and it would be prudent to stick with FDIC investments.

Chapter 64.38 RCW Homeowners Association does not mandate any requirements for investments by the Board.

However, the Association as a not for profit corporation does have a fiduciary duty to owners under RCW § 11.100.020 Management of trust assets by fiduciary.

(1) A fiduciary is authorized to acquire and retain every kind of property. In acquiring, investing, reinvesting, exchanging, selling and managing property for the benefit of another, a fiduciary, in determining the prudence of a particular investment, shall give due consideration to the role that the proposed investment or investment course of action plays within the overall portfolio of assets. In applying such total asset management approach, a fiduciary shall exercise the judgment and care under the circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, and if the fiduciary has special skills or is named trustee on the basis of representations of special skills or expertise, the fiduciary is under a duty to use those skills. http://apps.leg.wa.gov/rcw/default.aspx?cite=11.100.020

By making risky investments the argument can be made that the Board is breaching

their fiduciary duty to the owners. A loss incurred as a result of the investment may

open the Board up to personal liability.

Attyadvisor, Attorney
Category: Real Estate Law
Satisfied Customers: 3725
Experience: 25 years of experience in general practice, real estate law and estate law.
Attyadvisor and 5 other Real Estate Law Specialists are ready to help you
Expert:  Attyadvisor replied 1 year ago.
Thank you.

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Attyadvisor
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25 years of experience in general practice, real estate law and estate law.