HOA Financial Statements

Started by HaykP • 21 replies • 4360 views

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HaykP (California)
Posts: 50

Posted:

Hi,

I am a home owner and not a board member at our HOA. For past 6 month I was trying to get our HOA Financial Statements by asking President verbally to provide them. Our HOA is self managed, so there is no managment company. I am trying to understand how our collection is going and where our money is spend and so far I am unable to get these documents.

It is my understanding that as a Home Owner I am entitled to get these documents, but I am first time home owner and don't know exact procedures or laws to enforce my rights. Can someone advise what can I do? My property is located in Los Angeles county, CA.

More, we didn't have our scheduled meeting and when I asked our President when we are going to have one so we can discuss our needs I didn't get any specific answer.

Thank you for your suggestions!

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi HaykP:

Below is the link to review Davis-Stirling Act for California. On the top right is a search which is excellent for looking up any questions.

http://www.davis-stirling.com/

For example if you type “financial statements” the following is one of the pages you can access:
http://www.davis-stirling.com/MainIndex/FinancialStatement/tabid/3117/Default.aspx

That page in turn also has a link within to the Civil Code §1365. Financial Records and Reporting:
http://www.davis-stirling.com/MainMenu/Statutes/CivilCode1365/tabid/892/Default.aspx

Anything noted within the text that is dark blue is a link to another statute area. You will also be able to find information pertaining to regulations regarding the annual meeting. Just type “annual meeting” into the search box and information will be listed.

Take a look around and if you need anything clarified post your question and we will help, but I would like you to check it out and become familiar because this is important when you live in an HOA to know your rights and responsibilities. Knowledge is power and everyone should become familiar with their HOA documents and state statutes.

TimB4 (Tennessee)
Posts: 21,059

Posted:

You may just want to sit in on a board meeting to observe and see what is happening

HaykP (California)
Posts: 50

Posted:

Thank you for a promt reply.

I did lookup and found "California Civil Code Section 1365.2" which allows me to request all the information and obligates board to provide it within 10 business days, so will do so on monday. But what can I do if president is not organizing board meeting and on question "when" says "we will" but does not move along and being very ignorant?

On another note... All this was caused by the flooding I am having in my basement because of drain or some other insalation problems and on my reqest I am being told that it is not HOA resposibility, so I was wondering how can I find out what is HOA resposiblity and what is not?

Thanks!

JanetB2 (Colorado)
Posts: 4,219

Posted:

Find out when the last meeting was held. In CA the HOA is suppose to have annual meeting and here is some information:

http://www.davis-stirling.com/AnnualElectionsRequired/tabid/2028/Default.aspx

As to your other question ... first I need to know ... are you a Condominium HOA?

HaykP (California)
Posts: 50

Posted:

Hi JanetB2,

Thank you for your reply.

We are Townhouse HOA, and I believe we have 45 units.

We had our anual meeting in mid October, 2010 where we had voting for president and board members. Since then I was brining this issue I had with my porch and leaking and every time I would be told that this will be done sometimes in the future (it's been over 7 month now) and last time I was told that it is my resposibility. Today it was raining hard so I got fluding in my laundry room and need to address this. President is being ignorant and not giving me any information at all, so I am feeling like they are simply "eating" money and don't do anything.

Thanks!

JanetB2 (Colorado)
Posts: 4,219

Posted:

Your documents should state what the HOA’s responsibility is and what the homeowner’s responsibility is regarding repairs or what is considered HOA common area. I am not sure in CA, but some states with regards to townhomes they can fall under the homeowner association statutes or the condominium statutes, depending on how they are set up. Therefore, do your documents reference which statutes would cover your association?

Your annual membership meeting would not be until at least October 2011. However, there are also association board meetings in the meantime. Many associations will have monthly board meetings; however, they must be held at least quarterly in CA so the directors can at least review the association financial documents per:
http://www.davis-stirling.com/MainIndex/MinimumNumberofBoardMeetings/tabid/1285/Default.aspx

HaykP (California)
Posts: 50

Posted:

JanetB2,

Thank you so much for the information. I am going to look into my HOA papers (though it will be hard considering that there are 100 of pages in it) to try to find out what status is it. Do you by any chance know which section shoud I look it in?

During quarterly meetings only board members are meeting? And if so should they produce meeting minutes?

Thanks

JanetB2 (Colorado)
Posts: 4,219

Posted:

It should be in the beginning of your HOA documents in potentially a section refered to as maybe recitals. Should definately be in the first couple of pages regarding any referenced statutes you are covered under.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Here is why I am asking if you are under HOA or Condominium:
http://www.davis-stirling.com/MainMenu/MainIndex/TownhomeTownhouse/tabid/1454/Default.aspx

JanetB2 (Colorado)
Posts: 4,219

Posted:

You are allowed to attend all board meetings and should be given notice of such meetings. The only part you are not allowed to participate in is “executive sessions” which are allowed to discuss certain confidential issues such as litigation, personnel matters, etc., not open to public due to federal and state privacy laws. However, any matter discussed in executive session must be “generally” noted in the meeting minutes following the executive session and open to the entire membership.

This falls under the Open Meeting Act:
http://www.davis-stirling.com/MainMenu/Statutes/CivilCode136305/tabid/879/Default.aspx

JanetB2 (Colorado)
Posts: 4,219

Posted:

Sorry ... second part of your question. Yes ... if requested they are to provide copies of all board meeting minutes to homeowners to review. In some states they are allowed to charge a "copy fee" for hard copies or you can review at no charge without a personal hard copy.

HaykP (California)
Posts: 50

Posted:

On few pages of my HOA docs it says "Condominimum Project" - is this what I should look for?

JanetB2 (Colorado)
Posts: 4,219

Posted:

Whether you are HOA, Condominium, or Townhomes you are entitled to receive financial information, meeting minutes, or other documents as noted in the statutes.

GlenL (Ohio)
Posts: 5,491

Posted:

HaykP, somewhere in your documents (CC&R's) there should be a description of what your unit encompasses. Anything else or any item specifically excluded is generally the responsibility of the HOA. I say generally because every set of CC&R's are a little bit different as to what is and isn't the HOA's responsibility. And yes you really need to read ALL of the CC&R's because the devil truly is in the details when it comes to HOA documents. I would suggest you make a copy of your documents and sit down with some highlighters. Color everything the HOA is responsible for in one color and everything you are responsible for in another. Or you can simply go to a Board meeting and ask them to point out the section that says you are responsible for the repairs.

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

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By HaykP on 03/30/2011 9:22 PM
On few pages of my HOA docs it says "Condominimum Project" - is this what I should look for?

Yes ... that should mean that you fall under the Condominium statutes.

HaykP (California)
Posts: 50

Posted:

Hello everyone,

Thank you very much for the information and advise you've provided so far.

Using information from the forum I sent a letter to HOA (addressed to president) requesting financial and other documents on April 7, 2011. It has been over 10 business days and not only noone replied, but actually nobody even claimed that letter. I sent it using Certified and when I check status it says that letter was delivered to PO Box but nobody signed for it. So what should I do in this case? Though I know that checks are mailed to that PO Box during the month and our treasury is collecting and depositing them.

Thanks

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It sounds like your president isn't the one who picks up the mail in that PO box. The person who is, isn't going to sign for a letter without their name on it. You may try re=addressing the letter with the official name of the HOA on it. Believe me, people will try to get out of signing a certified letter and it doesn't have to be signed/picked up by anyone. They think it's a legal manuever on their part for NOT signing it. They don't sign it, then no proof they ever got etc...FYI: It doesn't work.

The developer's role in a developing HOA should best be understood. A HOA to a developer/builder is a SALES tool. They use it to attract potential buyers into thinking that they can maintain/honor their home values because they would have control on making the rules of their neighborhood. No one here can deny they didn't fall for the tool good or bad. That's neither here or there...

This leads to the financial responsibilities of the developer. The developer buys the parcels of land and clears it for building. They then sell the parcels/lots for building to individuals. The developer/builder may save some of the land for items such as clubhouse, pool, and other amenities. Those amenities are where the dues of the paying HOA members are to go to maintain. Once the HOA is turned over to the Owner's, the owner's will be responsible for the long term maintenance of these items and rules. The developer then takes their profit (if any) and gets out.

Where is the money made? The developer bought the land for $100K. He breaks it up into 50 lots selling them for 40K a piece. (200K). It COSTS the developer money to clear out the land 10K. Adding the amenities like pool (15K - 20K) clubhouse (80-100K), or other amenities (10 - 20k). They collect the dues of the owner's to offset some of these costs until they can get out. The REAL money in a HOA isn't technically spent in it's development, but it's LONG term cost of maintaining those items the developer/builder installed with their initial investment. There has to be money made in this type industry for any developer/builder to continue.

As you can see, it' not alot of profit margin for the developer. Hence, why many go broke or get out before they sink farther. A very clear reason don't you think, why they may NOT want to provide their financial statements? Especially, to those members who want to "KNOW" what the developer's obligations are?

Former HOA President

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi Hayk:

After a certain amount of time via US certified mail you may receive the letter back … DO NOT OPEN. Keep this letter in your files unopended as you received back just in case there is any potential litigation issue which may arise regarding this issue. You have proof then that the information was requested via the appropriate address as noted in your documents and could be opened in a court of law with no tampering.

If you have the letter returned I would again send the letter and address to the HOA and not to a particular officer. Also, I would suggest you send a copy to each home address of every officer of the HOA. This way everyone as a whole cannot state I did not know or receive notification.

HaykP (California)
Posts: 50

Posted:

Hi JanetB2,

Thank you so much for helping me on this issue - it is greatly appreciated.

Today I’ve learned that our President is not in town for long time and wasn’t checking PO Box. Instead our Treasury was and she told me that she didn’t open letter because it was addressed to President. Though she told me that she is going to try to get me at least bank statements for last 12 month, I am going to send another certified letter to HOA itself (addressing it “to whom it may concern”) tomorrow.

In the meantime I spoke with other home owners and it seems that everyone is dissatisfied with the way things are going and I’ve learned today that they are not keeping proper accounting books which is worry some. So I was wondering which steps we can take to hold new elections and elect new board members. I know that they didn’t have board meetings for past 6 month, so that should already mean that they don’t follow proper procedures.

Thanks again for your advice.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi Hayak:

You potentially have two options:

1) If the elections are only a few months away then get all homeowners involved and determine who is willing to step up to the plate and properly serve. All owners can then elect these individuals to serve the community.

2) If elections are in the far future, homeowners can in essence recall the current board of directors. This will potentially take a period of time which is why #1 above is the best potential option.

You can go to:

http://www.davis-stirling.com/

This site is regarding your state statutes and in the top right corner search box put for example “recall board of directors” in the search box and you will have information available for this option.

HaykP (California)
Posts: 50

Posted:

Hi JanetB2,

We've decided to choose option 2) and on May 9 we served Petition to Recall Entire Board to Treasurer and I got a signed paper acknowledging the receipt of Notice. Notice was signed by more than 10%, basically everyone we spoke with wants the board out. It has been 25 days since then and Board didn't notify us about any plans to hold a new election. From what I understand Corp. Code §7511(c). requires board to set the date within 20 days from the day of Notice, is that right? If so, then it means that I now can set the date myself and according to Civil Code §1363.03(e) it should be not less than 30 days from the day of notice. But it is not clear if I can simply post notice on everyone's door or it should be mailed to them. Mailiing might a problem, because we don't have everyone's name and getting it from current board is going to be problematic.

On another note... After over a month since my certified letters requesting Financial Statement and other document, they finally received it on May 23 and it has already been 10 days since then and I didn't receive anything, no statements, no call, nothing. So it means that they are late and by the law I can start charging them late fee for that. But I am not sure how to do that? Should I take them to court?

Thanks a lot for your help!

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