Bank Accounts

Started by JC7 • 4 replies • 1801 views

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JC7
Posts: 31

Posted:

Our HOA currently has two accounts checks can be drawn from. The first is our general operating (checking) and the second is our Reserve account. The buld of our reserves are tied up in investments and the PM does not have online access to those accounts.
Recenly at the suggestion of our auditor the HOA was advised to set up 2 more accounts similar to the accounts mentioned above. The only difference is these accounts would be specifically for rental income and expenses. The HOA receives monthly rent from the homeowners who board at our stable. In the past this money has all gone into our operating and reserves according to their yearly budget. My question is the PM opened these two accounts without the BOD knowledge or approval? Since I am a signer on the accounts I asked how could they open an account without a signature card for these new accounts.Their response was the bank used our old signature card to open the accounts and since the PM can sign checks in a emergency they said it was okay? Does anybody see a problem with this? I found out by looking at the GL and noticing a new GL account was created.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

JC7,

Your rental income and expenses should be in a separate account as it is considered by the IRS to be non-exempt function income and is subject to income taxes. It would be the same if you, as an individual, were running a business. Your business income and expenses should be kept completely separate from your personal income and expenses. You would "pay" yourself by drawing money from your business account and moving it to your personal account.

In a sense, you would consider the stable renting as a "side business" of your HOA.

TimB4 (Tennessee)
Posts: 21,062

Posted:

JC,

I don't see a problem having the second accounts.

I do see an issue when the PM does something without board approval. Depending on your contract with them, they may have overstepped their authority. If they did, they should be formally told that this is not tolerated.

As a side note, I personally have an issue with anyone other than board members having signature authority on bank accounts.

JC7
Posts: 31

Posted:

Hi TimB4,

I thought the same thing. Why should the PM have signing authority. It was explained to me in case of an emergency that is why it is allowed. PM does not have signing authority for investment accounts. Is it normal for the bank where our operating checking and reserve checking accounts are not to speak to the BOD or treasurer? They will only deal with PM? I asked for online viewing access only for our bank account and after several months was given access but it only shows the monthly statement. After being granted permission to view our statments (LOL) I stopped by the bank to talk to them and they still wouldn't talk to me they said they could only deal with PM. Sounded a little shady but many this is the norm? I have full acess to the large investment account which the PM does not and the Broker won't allow any PM company access.
Thank you

TimB4 (Tennessee)
Posts: 21,062

Posted:

JC,

My understanding is that the bank will speak to the owners and co-owners of the account. Signature authority does not represent ownership. I would specifically ask the bank who owns the account and then go from there.

The Bank may want a document from the Board specifying that you were appointed as Treasurer. A simple memo signed by the President and embossed with the corporate seal (if you have one) should be enough.

Our bank requires a memo from the Secretary and someone already on the account to change signatures on the card.

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