Can I request financial statements from HOA (Colorado)?

I did search this, but can't find anyone from Colorado asking this, and I'm not sure were to actually get this info, so that is why I'm asking this question here.
First, my wife is a double MBA (finance and accounting) and is an accounting supervisor. I'm 2 semesters away from getting my masters degree in accounting. That is our background.
Ok, we just got a letter today from our HOA saying that because of a hail storm we had a few months ago, they want to repair the shingles on the roof. We live in a townhouse complex.
This is all well and good, except that they are requesting and that each homeowner pays $100 to help them cover the cost of their insurance deductible.
Naturally, this raised my wife's and my eyebrows. Shouldn't the HOA be responsible enough to carry enough capital to cover their insurance deductible?
Their response is: "Per the Amended and Restated Declaration, Section 6.4, the Board may levy a Special Assessment, without the vote of the owners, to cover certain costs of restoration or replacement as set forth in the Insurance section of this Declaration."
This right there says that they are being very cavalier with their spending and are mismanaging their (our) dues. Our dues are $215/month with 36 units in the complex. Upkeep has been non-existent, so our money has to be going somewhere.
So, do I have the right to go over their books? I want to find out why they don't keep enough cash on hand to cover their own insurance deductibles. I have a real problem when it comes to being under an HOA if the HOA can't even manage it's own money responsibly.
What sort of financial/accounting records would my wife and I be allowed to review? Again, it isn't like we are just upset homeowners trying to be difficult, we have a valid reason, and the master degrees (mine almost done) to back up our concern and requests for records.

Thanks for your time

Pete

You may be overthinking this a bit. There is a difference between book-learning and reality. Once you get into the HOA world you learn this quickly. It would seem that dues would cover such and expense on the surface and in theory. The reality is a different story...

I don't think the $100 special assessment is out of line at all. It's probably to cover the insurance deductible costs. Those can be extremely high. HOA insurance isn't cheap and often a HIGH deductible is needed to keep the costs manageable. I would dare say 60%+ do NOT keep enough money in savings/reserves to cover their insurance deductibles. With the power to levy a special assessment, they may not see a reason to keep that amount on hand at all times.

A HOA is ONLY funded by it's owners by it's owners. Whatever the HOA takes in is what they should spend out. This doesn't always work this way. No matter how well a HOA manages their money. It's not a mis-management issue as much as ups and downs of owners paying their dues. A HOA typically doesn't have a 100% co-operation on paying dues on time. There are various reasons including foreclosures, angry owners, and economic reasons...

My HOA had $5K a month in bills it had to meet each month. We had 2K in savings. The dues were $50 a month. Late fees $20. We had 107 homes. The average that paid consistently on time was 90 - 95 homes. (90X50 =4,500). That is money we could depend on. Atleast 5 homes paid late (5X70 =350). That means we had 4,850 income a month. The other 5 - 7 home were continous NON-Payers. A few of them with liens on them. We basically did get enough in each month to just pay our bills. Any extra we put toward next month's amount and any emergency repairs. Our insurance deductible was several thousand dollars. Our HOA wasn't being mis-managed at all. However, we wouldn't have had enough money to pay the deductible if the time came. Getting a majority vote to increase the dues was nearly impossible. We were allowed to increase the dues by 2-3% each year if the board chose but nothing higher unless the majority of owner's agree.

You have the right to see the books. The collections may be a different story. You may or may not be allowed to see OTHER's people's accounts. YOu can see your own. However, you should be able to know how much is collected a month in general terms. Expense reports should always be available. We used them to discuss at our meetings. Which is where you should also attend to get an understanding...

A Balance Sheet would have given you info on whether there was an Emergency Fund that had $$ in it.

Our HOA is supposed to keep enough $$$ in this fund to cover the deductible(s) for any emergency.

My wife and I bought this townhome in January, and have been remodeling ever since (total gut job as it was in horrible condition).
I haven't been able to attend any board meetings because certain classes that I need to take are only offered at night, and the night that I have class is the night that they have meetings.
I go to school year round, so it isn't like during the summer months I can attend. I still take my classes in the summer to bust out this degree as quickly as possible.
I called to see when the meetings were and was given a very wishy-washy answer. I know what you're gonna say. You're gonna say "how can you get a wishy washy answer for a date?" Easy!
HOA office contact: "3rd thursday of each month."
Me: "oh, so three days from now?"
HOA Office Contact: "No, it's already happened."
Me: "but the 3rd thursday isn't for a few more days."
HOA Office Contact: "Well, it can change sometimes."

So as you can see, this HOA is mismanaged and/or completely unprofessional. Unfortunately, there isn't much I can do if other owners don't vote them out. They've been the HOA for more than a year, so they are apparently being re-voted in.
When my wife's school is finished in October (she is an overachiever and loves getting more degrees), she will start attending these meetings. I was really just curious to see what we would be entitled to look at when it comes to their financials.
Any good business plan would have a mandatory fund that can cover deductibles. Like BradP said, they should have the money. Whether or not they choose to invest that money in a short term investment (those that can be easily turned to cash)
so they can make money on that fund is up to them, but they NEED to be abel to cover their liabilities.
Would I be able to look at their Income Statement, Balance Sheet, Cash Flow, Journal/Ledgers, Insurance policies, etc? The numbers won't lie, and because I don't have any ties to them, I will sniff out any attempts to "cook the books" by them trying to pull any Enron/World-Com shenanigans.

Also, to answer any other questions... "They" and "their" would be the HOA. "Me, our, my" would be Me/my family.

Thanks guys

Peter, you can request reviewing all records of your HOA except those related to legal and personnel matters.
You might want to read the link given to CCIOA by another poster. More important than reviewing the financials is to review the association's Policies and Procedures on their Reserve Fund. A competent Board will always have a Reserve Fund with a contingency item to cover an unexpected expense such as an insurance deductable.

IMO well planned budgeting would eliminate most special assessments.
First, I would review their budgets starting with a long range (20 or more years) Reserve Plan. The long range Reserve Plan incluedes line item replacement of capital expenditures which will need to be addressed in the future (may include contingency fund); the life span of each of these items; average annual inflation rate; and funds transferred from the annual assessment income into the Reserve Fund. Based on the long range Reserve Plan the annual budgets for income and expenses should be developed each year. This includes an operating budget of income and expenses and a reserve budget of income and expenses. The annual income in the reserve plan which needs to be transferred should be determined in the long range Reserve Plan.

There are some high and mighty people on this forum / dis- cuss ion (intentionally spelled like this) board that will attack you, criticize you, and cook you for not being involved.They will dissect your every word and demand you explain to them what you mean by they or our. When they know damned well what you are saying. They play symantecs. They will spend more time and effort telling you how wrong you are instead of just answering the question.Those same people will dissect and scrutinize every word, including your typing and spelling skills, rather than trying to help you solve the issue. They are "Professionals" at running HOAs, POAs and COAs. If you don't believe me ask them or read their post.Some do not understand that some people do the best they can with what they have and try to improve their positions. Such as you and your wife furthering your education. Congrats on doing so!

To answer your question, you are entitled to make the request and view the books. But, that doesn't mean you will find the answers you are wanting.
Suggestion, since you are made aware of the problem, suggest that you and your wife do an independent audit of the books, since you and her have the credentials. And offer your services to your association. This will seem you two are contributing to helping your community, while getting a handle on your situation. After the audit, you could make suggestions, as at this point you would be well educated on the financial position of your COA.
That is my suggestion to you and your wife.
As I read your post, I do not think it is $100 you are yelling about as much as it is your concern about not having the funds in reserve to cover the deductible.

This post was ran through a spell check and gramar check before copying and pasting to the Dis-cussion board. If there is a mispelled word or something that is not gramatically correct, tell MicroSoft about it, because I don't care!

Hope this helped.

Some of you guys have hit the nail on the head. It isn't the $100 that I care about. We can easily write a check for $100 and not have it impact our life/spending in the slightest. It's the perception that our HOA isn't allocating it's resources/cash in a responsible manner.
Dues were raised in January (when we bought the townhouse) to follow inflation etc... so I know they raised them from last year. I also beyond accounting have a minor in auditing, and I will be taking my CPA next year, so I'm confident I could help if they would take it.
I just have the problem with the HOA not doing anything outwardly that looks like any sort of maintenance, all the while still taking our dues. And then when they need to pay their insurance deductible, they have the audacity to tell us that we are required to pay up.
Like I said earlier, it wouldn't matter if it was 1 penny or 100 dollars, it's the perception that the HOA is mismanaged or mis-allocating it's funds. When they are so strict that I can not even change a tire in my parking spot, I expect them to have their stuff together enough
to cover an insurance deductible.
I don't want to sound like I'm whining (even though I kinda am). It's just frustrating, cause if I went to the board or the property manager and said "I can't pay my HOA dues this month, can you guys all pitch in $10 to help me cover it", they would scoff at the idea and put a
lein on my place as soon as the law allowed. I feel like this is the exact same situation, just in reverse. My wife's dad owns his own construction company which builds residential houses. My uncle owns his own construction company which does the masonry/pools/tile etc...
on residential houses, so it isn't as if we don't know the costs of up-keeping the exterior of the townhomes/lot.
I will call and politely request all this information from them next week when I get a chance to catch my breath with homework and actually go over their books. My wife and I want to eventually buy up all the townhouses in our complex as they go on sale and then kick the
HOA out and incorporate us to be the new HOA. We own multiple houses, and my wife was the head of the board of another HOA before we moved to Denver, so we know the game.

Great point, and I have no idea. I'll try to get my wife to attend the next meeting (should be 3 or so weeks).

Here goes other unsubstantiated accusation. The last time I checked people are innocent until proven guilty. No wonder people are reluctant to serve on the board in HOAs.

Kelly,
I know but you also have realize that Peter really does not know anything. He is just blowing smoke. And, that turned me off, right from the beginning.

Also, every reasonable person, would find the fact first before accusing the board of wrong doing This is all what I as saying. Also note his last commend. It says it all.
‘My wife and I want to eventually buy up all the townhouses in our complex as they go on sale and then kick the HOA out and incorporate us to be the new HOA. We own multiple houses, and my wife was the head of the board of another HOA before we moved to Denver, so we know the game.’

Charles,

And if you ever have an original thought it will die of natural loneliness.

P,

I wouldn't say that Peter doesn't know anything. He may not be up to speed on all the in's and out's of how an Association or Condominium works but I would suspect that most members of Associations and some Board members are not up to speed on that either.

Based on actions by his Board, Peter perceived that his HOA wasn't allocating resources properly. He then, in what I think is an intelligent action, started to do research on the topic. Typically when someone starts researching HOA's on the internet a majority of the sites are horror stories. Those type of stories might strengthen any perception of Association wrong doing an individual might have started with.

Fortunately, Peter came across this forum. He then asked some basic but intelligent questions; What rights do I have to view documents? what documents am I not allowed to see? Should Associations have this or that? etc. Hopefully the responses were positive and helpful in answering the questions and helping Peter understand the process.

I personally believe that it's better to try and assist someone who is seeking information rather than to criticize the way a question is presented or be irked by something within the posting. By doing this I hope I can learn to express my thoughts better than I am currently doing and perhaps the individual I'm responding to will learn things in the process as well.

Irregardless of any personal opinions that might be formed based on the presentation of an individuals post or specific comments used, that doesn't indicate that the individual's concerns are not valid. I believe that those of us who serve on our Boards or Committees serve our Associations best when we remember that and address the issues/concerns vs. the way those issues were presented.

Tim

The numbers won't lie, and because I don't have any ties to them, I will sniff out any attempts to "cook the books" by them trying to pull any Enron/World-Com shenanigans. [Peter]
Tim
I truly honestly resent comments like this. Particularly if there is no prove of any wrong doing. Sorry about that. My opinion.Yryin to pull out Enron? In fact that statement sound sa little childish to me.

“I truly and honestly resent comments like this. Particularly if there is no proof of any wrong doing.” by PetunkaM(Florida) – Grammatically corrected
How hypocritical is this statement?

Observation of the human race; At some point some people should keep their mouth shut instead posting and confirming what an idiot they truly are.

I agree with that suggestion.

Tim, last week I had a lunch with a friend who manages one fairly large community. She said she was scared to increase dues while on the board. People get really angry, she said. I can assure you that was not the case five years ago. I truly cannot figure out what is going on. Many associations suffer.

All I can say is your in for an eye opening experience and one that takes you out of the classroom...A HOA is a small government as well as a corporation. It operates almost simulataneously that way. The members are the stockholders and also have the right to vote/run for office. You don't have "professionals" running the place. You have "Cubscout dad" and "Work aholic single mother" running it. They do the best they can with the resources available. It's VERY complicated.

I am sure you have learned about the "40,000" government hammer concept...That really can apply to HOA's. A lightbulb isn't just a lightbulb...It's a 3 month approval process and can end up costing $50 or more. All of which time people are complaining the lightbulb is burnt out...

It's really best to pay this assessment and then learn how to get more involved. Otherwise, that $100 can turn into thousands very easily...

Well, my wife has the "real world/non-classroom" experience with accounting and finance. She was the #1 budget analyst in the country for the government 3 years ago. Her entire state budget was off by less than $2. That's two dollars, barely enough to buy a bottle of coke, out of hundreds of billions of dollars.
She's also the supervisor now for an accounting firm. She knows her stuff, and is appalled by this as well. She said she'll get involved if she can find the time, and will really try to find the time.
What I'm saying is that we both know that HOAs are a "necessary evil" in most cases, but we also have seen well run HOAs and poorly run HOAs throughout our adult lives. We view this HOA as an extremely poor run HOA, so we want to get to the bottom of it and fix it by any means necessary.
There is no reason why the HOA shouldn't have a reserve fund to cover insurance deductibles. No reason at all. People can give me the "they don't always get dues on time" or "they're afraid to raise dues" till they are blue in the face, but I'm not buying it.
There is no swimming pool, no playground, not amenities at all that suck money out of reserve funds. From what I've seen in the 8 months that we have been here is an HOA that has hired a local guy with a snow plow on the front of his 1980 rusty ford truck to scrape 6" of snow from the parking lot exactly 2 times.
We've seen a maintenance man paint the trim board under the front doors of every unit. They in mid June, not May or anything, but June turn on the sprinkler system, of which MY ELECTRICITY pays for, so yes, I am paying for my entire bank of townhouses sprinkler system's electricity.
I also see a crew of 3 people come out every other week for 2 hours to cut grass if it needs it, and to blow leaves into a pile to throw away. There is also trash service (3 dumpsters) that get dumped twice weekly, and THAT IS IT.
It doesn't take more than a grade-school education to know that that doesn't add up to $93,000/year. Even with I'm sure the overpriced "office manager" (read overpaid receptionist) salary, it doesn't add up to $93,000. My wife just said yesterday "I wonder when the last time they were audited was?"
I said "I have no idea, but it's a good thing I have a minor in accounting auditing." She said "you need to audit their books, you love that type of thing." Basically, we want this HOA that we observe to be run extremely poorly to get up to snuff. We wouldn't mind paying higher dues as long as
we see tangible evidence of our money being put to work. Again, my wife will get involved, and I might be able to after this calendar year, but something has to be done. Someone is either getting grossly overpaid, or the contracts that the HOA has with maintenance people is ridiculous. Either way, something has to give.

Thanks again for listening to my whining/rambling/complaining. Sometimes I need to blow off steam before I confront people in order to not blow that steam off at the people I'm gonna talk to. Because of that, this place is worth its weight in gold.
I'm off to class. Funny, cause I'm in a legal class this morning, so maybe I'll ask my teacher (a lawyer) about this.

Pete

Mellissa,

I agree. It all adds up, like magic. And if the community has to carry more than one delinquent owner that really hurts. He is an example of our regular assessments:

Reserves 10%
Insurance policies 18% (used to be 30%)
Lawn maintenance, mulch, sprinkle system repairs 20%
Tree trimming and vegetation 10%
Utilities 25% (includes cable; water bill is high because we use city water for irrigation)
Bank fees, license fees, IRS tax return, 1%.
Directors’ fees 2%
Road, fences & building exterior maintenance 8%.
Administrative (postage, supplies) 1%
Legal fees 1%-2%
Operating Reserves 3 %-4%

PS: The pool area has a separate budget. Insurance $ are the biggest unknown when preparing operating budget. We carry one delinquent owner.

Brad,

please understand that it is not always as it seems. We had a $400K building damages but the insurance paid only $250K. Our deductible was $9K. We had to do special assessments for $150K. We were actually quite lucky; some communities were faced with much, much higher assessments.
And still, many communities do not have 'emergency reserve funds' because it is not required and members simply vote against it.

I feel for the guys hit by Irene.

I should add that I don't live in Florida, Oklahoma, Kansas, or California. As such, please don't come at me with "hurricane x or Earthquake of 2010 or F5 Tornado ripped us to shreds and caused x amount of damages." That type of thing just isn't applicable.
These townhomes were built in 1975. We bought ours which needed to be gutted cause it was in such poor condition for $76,000. The HIGH price of these places (pre-housing crisis) was $138,000. Do you now kinda get the picture here? I'm not talking about
fantastic places. We are doing this because we buy places and then rent them out. There isn't stucco on the outside, it's siding, which is old and paint is chipped all over the place. The roof isn't tiled, it is normal shingles (non-wood). The lawns in front are about
the size of a king size mattress, so it isn't like there needs to be a huge grounds crew. Is the picture starting to get clearer in some of your heads? This is why I have a HUGE problem hearing that we need to pay for the deductible. It isn't like there are palm trees
or swimming pools, or parks, or anything else that needs upkeep. Because of this, I think that the HOA is being managed extremely poorly, because I just do not see any of the money being put into action, and I surely don't see why they wouldn't have enough
cash to cover the insurance deductible from a hail storm that really wasn't bad and I see very few shingles that were damaged.
Because of the people who wanted to help me know my rights and what I can request, I am going to request all the information I can get my hands on. For those of you who seem to want to point out the exceptions, and far fetched scenarios, just do yourself
a favor and not post. It is because of those posts that this topic has gone so far off the intended and original theme.
Thanks to those who helped, I really appreciate it, and I will be updating with what I find and what happens (if we all pay this $100 and they replace 10 shingles in the entire community, there will be heads rolling, and lawsuits if applicable).

Pete

Yeah, I can see the trap, it's just so hard not to try to make people see your way. lol
And yes, my wife will try to attend meetings starting in September (next month), and I *should* be able to start attending in January. We want to find out what is going on and why things are the way they are.