update bank signature card

Started by KW3 • 11 replies • 5518 views

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KW3 (California)
Posts: 146

Posted:

Hi,

We have a board meeting coming in early Jan with the "bank signature card" business in the agenda. The main purpose is to update the card with the new (and old) board directors. After a little search on this forum for some old threads with similar topics, I found this coming "bank card" business may be not so simple and easy without a preparation of info and knowledge. So first, I asked MC to bring the old b.s.c. (and a new empty card) to the meeting for the new board to check/delete the old names and make new signatures effective. Evidently, I could be off line and not knowing the exact process of doing this. The MC responded with a statement: "Old bank signature cards are confidential for privacy purposes" cited in CA Civil Code 1365.02 (Davis-Sterling act). Then I thought if it (old card) for privacy reason can't be inspected by the board or hoa members, how do we know who are on the old card and delete the signatures no longer authorized/empowered to sign hoa checks? I believe the board (and members) has every right to know who's names are on the bank cards and so the board has duty and power to delete/update them legally/effectively. Could anyone advise the formal way/procedure to get this done (in CA)? Also sharing your experience related to this issue is much appreciated.

GlenL (Ohio)
Posts: 5,491

Posted:

This might be a radical idea but I would just contact the bank, explain your concerns and ask them how to go about it.

Studies show that 5 out of 4 people have problems with fractions

TimB4 (Tennessee)
Posts: 21,059

Posted:

KW,

Good for you to request that information. Having just updated our signature cards, I know that the bank will require someone who is currently on the signature card to say add or subtract individuals. Our bank (BOA) said that if no-one who is currently on the signature card is available, then a statement from the secretary with corporate seal stamping informing the bank of the election results and that all old signatures should be invalid and that x,y,z should now be the ones authorized to sign checks from all association accounts.

As glen said, just contact the bank. Personally, I would recommend that the board meet at the bank for the sole purpose of signing signature cards (this wouldn't be a meeting but an outing). Just propose a vote in a meeting prior to going to the bank that you go and that xyz should be the only ones on the new signature cards.

Tim

BrianV1 (California)
Posts: 12

Posted:

All directors have the absolute right to inspect all records of the association at any time. Corporations code 8334.

The MC does not own the records, the association does - and the board is the ultimate decisionmaking authority on how they are handled. Even if you end up resolving this a different way, you should set the MC straight on this issue.

JenniferM9 (California)
Posts: 42

Posted:

We have to add/delete signatures for check approval every year. We have never disclosed who has check signing privileges, but then again no one has ever asked. Whoever needs to be on the new signature card goes to the bank contact with I.D. and a letter from our finance VP if she is not available and the paperwork is taken care of. It is usually the president and two vice presidents who have signing authority.

However, we are a small association and do most things ourselves, so it's a relatively simple procedure. Our finance VP has remained the same for many years and has always written the checks as well as gathered the required signatures.

It's easier to handle if all people with signing authority go to the bank at the same time, as TimB4 stated.

I see no reason why the agenda item should not include a disclosure of who is authorized to sign checks.

KW3 (California)
Posts: 146

Posted:

Thanks, guys.

-Jennifer, I like the way your hoa issues checks. I'll recommend to our board with a similar procedure you described. We are a medium size hoa, but only have regular "quarterly" board meetings. So the setup for signing checks will be monthly, but not at or after meeting. I think it should work well for our hoa.

-Brian, is b.s.c. a record/property of the association? I believe it is, but it may also involve the "privacy" issue according davis-sterling act. I will stress on knowing (accessing info) who's names are on the old card rather than "inspecting" who's signature on the card.

-Glen & Tim, I contacted our bank as you suggested and asked their policy and procedure on the b.s.c. As I stepped into critical details, the lady then directed me to contact our MC for help mentioning that they only have direct relationship with our MC, not us the hoa account holder. To my question in what if someone not in the new card signs a check from our accounts, she said that they will contact our MC to verify the check and if MC is ok, they will honor the check even if the signature is not on b.s.c.! I object that, but then she ask me to contact our MC. Obviously this issue is not as easy and simple as I imagined and expected before.

Thank everyone for your advice and info. Hope more help keep coming.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Sounds like you need to take control of the money and either move the accounts or remove the MC from having anything but deposit capability.

My HOA doesn't have a MC. We do have bookkeeping services but they only deposit the assessment checks and track who has/hasn't paid. Our treasurer keeps the checkbook and two signatures are required to issue a check.

BrianV1 (California)
Posts: 12

Posted:

KW3, since a bsc determines who has (or had) access to the association's money, I would say absolutely. The account may be managed by the MC, but it is the board that is ulimately responsible for it. It isn't the MC's job to hide records from the board. I'd be a little suspicious if an MC didn't want me to see who has authorization to sign (I shold recognize all the names, right?)

Below is a link regarding DSA and board members' access to records.
http://www.davis-stirling.com/MainMenu/MainIndex/MembersRighttoInspectRecords/tabid/1581/Default.aspx

FredB4 (Ohio)
Posts: 375

Posted:

The account is opened in your name and your signatures are on the account and the board is ultimately responsible for the finances of the association. I don't see how they can denie you that vital information so you can verify/ change who has access to your account.This gives you MC too much control over your account.
If you didn't go into the bank in person with proper identification then they may have just been protecting themselves because, as they said, they don't have a working relationship with you and wouldn't know who they were speaking to.
I would think the Mc should also be able to provide you with a letter to the bank authorizing them to provide this information.
I can also see reasons why they may not be willing to let you see the actual signatures but, At the very least the bank should be able to tell you who else has access to your accounts.
On a side note, we recently found out that a lot of banks no longer pay any attention to the two signature requests from account holders. They claim that because everything is handled by computer, as long as one authorized signature is on the check they will make the transaction and will accept no responsibility for not checking for two signatures.

KW3 (California)
Posts: 146

Posted:

Hi, b4 replying to individual poster, let me give a more specific picture of our case: (bank personnel mentioned) our bank accounts were opened by our MC on behalf of the association based on the contract between our MC and our association and currently our accounts are taken cared of by the bank's HOA Banking Services located in L.A. area (we are in northern CA). I found that our monthly assessment pay tab states mailing address: Remittance Processing in S.F., which is also hundreds of miles from our community. Now I figure that our MC made working relationship with the bank using their services collecting and reporting assessment deposit as well as fund withdraw from our accounts. Bank personnel told me the update procedure of b.s.c. require the new board to authorize new signers (board members) and fill a new b.s.c., then send to our MC together with a copy of (secretary signed) meeting minutes stating the approval of authorization. Our MC then submits the doc to the bank and bank will "scan" the new b.s.c. to replace the old one. Technically (I reckon), the bank uses the scanned image of signatures to e-verify our checks for validity. The bank stated that if any check issued from our accounts fails the signature verification, they will contact our MC for final verification (i.e., if MC say ok, they honor the check). I mentioned my object on this to the bank lady and she told me that I should contact our MC to review our contract; the bank has no direct working relationship with the association and won't take my approval or objection on the issue. When I asked to see who's on our current b.s.c., she required 3 account info to verify my identity which I only have one, so none was told me. The bank lady also mentioned another issue regarding transfer fund (between accounts or transfer out to external accounts?): evidently this is not done by a signer with signature verified, but by an authorized (or unauthorized?) person(s) with access to our accounts' info. I see this "transfer fund" issue may need a review and clarification. So far, upon the b.s.c., I am aware of: 1) it's on the agenda of coming meeting (b.s.c. and check writing/signing procedure) and 2) MC will bring a new card for this matter. Personally, I feel I am not prepared with complete info for tackling this matter in the meeting. Would appreciate if adding more info/advice from you. The info I inquired from ex-president and MC before I became a board member was coincident with what I was told from the bank recently that for the checks from reserve account two bard members are required to sign, but checks from operating account MC is allowed to sign as valid. (** I have 99% confidence to suspect MC is on current b.s.c. Anyone has otherwise wisdom?) I also took a look at our 25+ year old, never reviewed/amended, management contract which has one of the provisions on Financial services: From the funds collected, Agent (managing agent) shall "make disbursements" for regular operating expenses... All disbursement checks and drafts will be signed by 2 members of the BOD ...

From the contract provision, my understanding is: the managing agent has a duty to provide the service of "making payments" for regular operating expenses... i.e., prepare checks with invoices for BDs' signature and send to vendors. Clearly, the contract does not authorize MC sign any checks, but states that ALL checks are to be signed by BDs.

Am I understanding the contract correctly? or I have lost in the "wording" game? Need a firm, clear answer.

Another small question (especially to Jennifer): How do you take care of the small purchases made by MC (e.g., light bulbs for common area etc.) if you set a monthly schedule of signing checks?

Reply to Tim: We have this problem mangled with MC and it becomes not so simple as your hoa.

Reply to Brian: Again thanks for the info & link.

Reply to Fred: As from our background story, "just go to the bank in person" to settle the matter is very much impractical for us. On the other hand, according to their procedure, the board should send the card and doc to MC and then MC forward them to the bank. It's not a direct process from our board to the bank, but from board through MC to bank. I wonder why would our bank deny a direct process from the board to the bank? Their excuse: bank doesn't have direct working relationship with the board? Does that sound right?

When I asked the bank lady what happen when they receive a new b.s.c.? what do they do with it? She told me they will scan the new card to replace the old one, so the new signatures become effective. I asked her if they will destroy the old card or keep in their record? She wouldn't give me a direct answer, just kept saying the new card will replace the old. And then I asked that after they receive the new card, how do we (the board) know that new signatures are on and old are out? Will they inform us? She said no, but if we call they will tell us so. I kind of demanded that they should send us a confirmation in writing. And she again changed to say that I should contact our MC for info.

I think so far this matter has become much more complex than I have thought at the beginning. Don't you? need more help. Any from Richard (CA)?

GlenL (Ohio)
Posts: 5,491

Posted:

KW, I would set up a meeting with the MC to hash this all out. It might be time to close the account and open a new HOA account. Last time we went with a "local" bank rather than a multi-state mega-bank. The service is better and they try harder and value our account. As to small purchases we opened a petty cash account with $500.00 for such items.

Studies show that 5 out of 4 people have problems with fractions

TimB4 (Tennessee)
Posts: 21,059

Posted:

KW,

I agree with Glen. It sounds like the owner of the account is the MC and not the Association. This could cause issues, real or perceived.

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