BobC6 (Virginia)
Posts: 77
Posts: 77
Posted:
Our HOA members do not know what happened to $500,000 of our funds since the declarant developer claims we have no rights to see the receipts of where our money went. Our declarant controlled HOA took out a loan for $3.2 million to cover the $2.5 million purchase of the country club plus $250,000 for working capital and $500,000 in closing costs e.g. legal fees, capital reserves and other unknowns. But no HOA member is allowed to see the receipts of where the money actually went.
The declarant decided that the HOA it controls would not buy the country club assets directly but through an LLC and therefore we have no rights to see their records since that private LLC is not subject to Virginia's Property Owners Association Act (http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+TOC55000000026000000000000 ).
We argued that we did not request to see the LLC's records but our HOA records of the spending of our funds since all receipts of expenditures always involve the records of the other parties to the transaction so the LLC's privacy is irrelevant. The declarant also claims this is a first - it has never been done before where the HOA owns the assets but has no property rights or information access rights nor are the assets commons of the HOA.
Since this is a forum to educate ourselves about what has worked or not worked, I'm asking for some history of what other HOA's have been through.
1. Is this a first for HOAs in this country - namely putting HOA funds into an LLC such that there is no accountability to the members for how their money is being spent?
2. If never been done before - why? Is it a violation of the declarant's fiduciary responsibility to put HOA funds into any corporate structure that evades the transparency requirements of the POA laws?
3. If it has been done before, then how did these HOAs avoid theft or misuse of their funds? Where are the checks and balances to protect community funds?
Bob
The declarant decided that the HOA it controls would not buy the country club assets directly but through an LLC and therefore we have no rights to see their records since that private LLC is not subject to Virginia's Property Owners Association Act (http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+TOC55000000026000000000000 ).
We argued that we did not request to see the LLC's records but our HOA records of the spending of our funds since all receipts of expenditures always involve the records of the other parties to the transaction so the LLC's privacy is irrelevant. The declarant also claims this is a first - it has never been done before where the HOA owns the assets but has no property rights or information access rights nor are the assets commons of the HOA.
Since this is a forum to educate ourselves about what has worked or not worked, I'm asking for some history of what other HOA's have been through.
1. Is this a first for HOAs in this country - namely putting HOA funds into an LLC such that there is no accountability to the members for how their money is being spent?
2. If never been done before - why? Is it a violation of the declarant's fiduciary responsibility to put HOA funds into any corporate structure that evades the transparency requirements of the POA laws?
3. If it has been done before, then how did these HOAs avoid theft or misuse of their funds? Where are the checks and balances to protect community funds?
Bob