HOA Management Company Raided by Police

Arizona does not have license or bonding requirement to become an HOA management company. Anyone can declare him/herself a management company with no state oversight. I would like to know if other states have licensing & bonding requirements for their HOA management companies, and what those requirements might be.
There was a story in today's Mesa Tribune about the Chandler, AZ police had raided the offices of a company that manages several homeowners associations with allegations that it was involved in more than $100,000 in fraud. I will try to keep on top of this story as it develops. Harold

Thanks Roger, I know some MCs regulate themselves very well, and that is wonderful, but I really wanted to know if any states regulate management companies. Your statement "management companies defraud HOAs several times a year" certainly surprised me, and seems to indicate some regulation is needed. Harold

Good Day Group----In Florida we have licensing requirements per Statutes.......Very good ones in fact....They even have "code of ethics " and punishments....... We take thievery very seriously here in the South...... LindaC

Good day Harold

Fla State...61-20.503 Standards of Professional Conduct

Fla State Statute 468

Read 468.432
468.431
468.4315

In this game of living in an HOA there is just ssoooo much info we have to be on top of,especially here in Florida... The best Member is an INFORMED Member like I stated in an earlier post...Being a BOD is no easy undertaking ,but if most BOD employed a "human" attitude I think we all would fair better. I guess it falls on the shoulders of all Members to self educate themsleves and contribute what they know to the BOD and be proactive instead of stooping to their level of self dictating....What a wonderful world it would be if we applied good principles in our every day life.....We are less than 24 HOURS away from our Annual Election and am so excited I am beside myself........ Results will be posted on Sunday to the group.....Say a prayer for all of us that we will indeed elect a new BOD .....One for the Members......Linda c

Shari, Contact Cynthia Durham at http://www.theleadershipcentre.org/ She may be able to give you some names. They also have a class coming up on April 19 that may be beneficial to you. I recommend that you change your start date. It will be extremely difficult for you to study several companies and come up with the right company in just a few days.

Selecting a Management Company & Other Vendors

Description: This class teaches the steps in selection a management company and other important vendors who work for the association (landscape companies, pool maintenance, etc.), how to determine specifications, request bids, review and analyze bids and make the final selections.

April 19, 2007, 6:30 p.m.

Outside of Florida, there is no real management oversight by state authorities. And even in Florida, there are questions as to how well the state actually oversees the companies (there have been a number of fraud cases there too, even after the law was adopted).

Even if states were to get involved, they could do little to prevent fraud or embezzlement. They could punish after the fact, but that may not help the association.

The only things any association can do, is to make sure they have their own protections in place: Independent, third party review of books annually and whenever there is a change in people or firms who manage the finances, with a full audit at least every few years; two signatures, at least one a board member, on any check over $xxx ($500 or higher, depending on your budget); board resolution and two signatures, at least one a board member, before moving or withdrawing reserve funds; fidelity bonds and crime policies protecting the association (often the management fidelity bond only protects the management firm against theft by employees - the association should be additional named or have their own); a formal policy for the transmittal of certain documents to a board member - boards should receive copies of "waivers of lien" from contractors working on the premises, prior to payments to the contractor; copies of workmen's comp policies from contractors; independent confirmation of any work done, outside of the management contract, by the management firm, its employees or a subsidiary (this one I know from first-hand experience and it was the Vice-President of the management company submitting the false invoices); as well as original bank statements.

There are other things people can add in, but these are a minimum.

Joe