Does an HOA need a purchase order or spending approval policy?

By OurHOA · General information · Revised September 23, 2026

Dollar thresholds for board approval, who can commit the association between meetings, how an emergency repair gets authorized, and the paper trail behind it.

The gap in most small associations is authorization, not payment

Almost every set of bylaws says who signs the checks. Almost none says who is allowed to promise the money in the first place. Those are two different moments, and the expensive one comes first. A director calls a tree service after a storm, the crew works for two days, and an invoice for $6,800 arrives addressed to an association whose board never voted on it. By then the only question left is whether to pay, because the work is done and the vendor relied on someone who appeared to be speaking for the association. A spending policy exists to move the decision earlier, to the moment someone commits rather than the moment someone signs. Write it as three separate acts, because they should rarely be the same person. One person or body authorizes the commitment, within a stated dollar limit. Someone else confirms the work was delivered and codes the invoice. A third signs or releases the payment. Our guide on whether an HOA check needs two signatures covers that last step, including the gap between what the bylaws say and what a bank will actually enforce. The policy described here sits in front of it, and it is the part that small self-managed boards most often skip entirely.

Set the thresholds in dollars, and take the numbers seriously

A policy saying that significant expenditures require board approval decides nothing. Write real numbers and scale them to your budget. If you have no starting point, one is available in statute. California Civil Code section 5502 bars transfers from an association's reserve or operating accounts without prior written board approval once the amount reaches a threshold tiered by association size: for an association with 50 or fewer separate interests, the lesser of $5,000 or 5 percent of the estimated income in the annual operating budget, and for 51 or more separate interests, the lesser of $10,000 or 5 percent. Section 5380 applies those same two thresholds to a managing agent moving association funds, alongside the requirement that association money be held separately from the agent's own. Read carefully, both sections govern transfers out of accounts rather than purchasing decisions, so neither is a purchasing rule. What they are is a legislature's published view of how much money a small association should be able to move before the board has to look at it in writing, and 5 percent of budgeted income is a defensible place for a board with no policy to start. Then add the second axis most boards forget, which is term. A $400 monthly contract is a $14,400 decision over three years, so set the approval level on total contract value rather than on the first invoice.

Who can commit the association between meetings, and what can never be done that way

The genuinely useful part of a spending policy is the between-meetings rule, and some states have already drawn that line. Texas Property Code section 209.0051(h) lets a board act outside a meeting, including by electronic or telephonic vote and without prior notice to owners, provided each director gets a reasonable opportunity to express an opinion to the others and to vote. It then removes a specific list of actions from that shortcut, among them fines and damage assessments, initiating foreclosure, increasing assessments, levying a special assessment, lending or borrowing money, adopting or amending the annual budget, buying or selling real property, and capital improvements other than routine repairs. Whatever state you are in, that list is a sound template for what a board should refuse to settle by group text. The statute also closes the loop on records, requiring that action taken outside a meeting be summarized orally, with an explanation of any known actual or estimated expenditures approved, and documented in the minutes of the next regular or special meeting. Delegation to a committee carries its own limits. Under California Corporations Code section 7212, a committee exercising board authority must consist of two or more directors and be created by a majority of the directors then in office, and it may not fill vacancies on the board, fix director compensation, amend or adopt bylaws, or alter a resolution the board made non-amendable. A committee of one, or a committee chaired by someone who is not a director, is not the board acting.

The emergency clause, and how to write one that does not swallow the policy

Every policy needs an exception for the burst pipe, and every weak policy is one where the exception has eaten the document. Build it in two halves. The first half is a spending authorization: name one or two roles, usually the president together with the treasurer or the manager, give them a hard dollar cap, and limit the purpose to stopping active damage or removing an immediate hazard rather than completing the repair. The second half is a deadline to come back to the board, which is easier to meet than boards expect. California Civil Code section 4923 lets an emergency board meeting be called by the president, or by any two directors other than the president, when circumstances could not have been reasonably foreseen, require immediate attention and possible action, and make the usual notice under section 4920 impracticable. A meeting you can convene within hours removes most of the argument for open-ended individual authority. On the assessment side, California Civil Code section 5610 defines the emergency situations that let a board exceed the ordinary increase limits: an extraordinary expense required by a court order, one necessary where a threat to personal health or safety or another hazardous condition is discovered, and one that could not have been reasonably foreseen when the annual budget report was prepared, with that last category requiring a board resolution explaining the necessity that is distributed to members with the assessment notice. Copy the discipline even where the statute does not reach you, because an emergency finding that has to be written down and justified is one a board thinks about twice.

The review that makes the policy real instead of decorative

A purchasing rule nobody checks against the bank statement is a document, not a control. California Civil Code section 5500 supplies a usable monthly list: a current reconciliation of the operating accounts and of the reserve accounts, the current year's actual operating revenues and expenses compared against budget, the latest statements from the financial institutions holding both accounts, an income and expense statement for the operating and reserve accounts, and the check register, monthly general ledger and delinquent assessment receivable report. Nothing on that list is unique to California. It is simply what a board has to see in order to notice an unauthorized payment while the vendor relationship is still young enough to fix. Section 5501 supplies the practical relief for volunteer boards that cannot meet every month: the review may be done independently by every individual director, or by a subcommittee consisting of the treasurer and at least one other board member, provided it is ratified at the next board meeting and that ratification is reflected in the minutes. Note who is permitted to do that review. It runs to directors, not to the manager or the bookkeeper, and for good reason, since the person preparing the reports should not be the only person examining them. When a check register comes back carrying a payment nobody can tie to an approval, the policy has earned its existence, and the ratification entry in the minutes is what makes the question askable without it sounding like an accusation.

Writing the one page your treasurer can actually enforce

Keep it to a single page and adopt it by motion at an open meeting so that it lands in the minutes with a date. Six lines do the work. First, the thresholds: what any director or the manager may commit alone, what takes two officers, what takes a board vote, and what takes owner approval under your declaration. Second, the rule that approval attaches to total contract value including renewals, not to the first invoice. Third, a written authorization for anything above the lowest tier, which can be a numbered purchase order, an email from the treasurer, or a line in the minutes, as long as it names the vendor, the scope and a not-to-exceed figure. Fourth, the emergency clause with its cap and its ratification deadline. Fifth, the instruction that makes everything above enforceable: the treasurer does not pay an invoice carrying no approval reference and instead brings it to the board, which spares the treasurer from making that call alone. Sixth, a note that competitive bidding sits on top of this rather than inside it, since a threshold that requires bids is a separate question from who may award the work, and our guide on whether an HOA has to get competitive bids for contracts covers that side. Then test the draft against the last twelve months of your own check register. If most of the spending would have fallen below your lowest tier, the tier is set too high.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

More on living with an hoa

Or browse all living with an hoa guides.