Abuse of HOA Funds

Started by CynthiaL3 • 10 replies • 2846 views

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CynthiaL3 (Florida)
Posts: 20

Posted:

Please give some examples of how to deter abuse of funds by our sitting or past board members. I'm also on this 5 member board. This thinking here is pervasive, I just stopped an abuse of funds by our board President last week. It was only by accident that I knew the details, and could speak up with a scathing response, and hope it stops. See 1. below.

1. Current Board President, wanted new insulation in her 3 bedroom unit, and work done on attic cover paid by HOA funds. However, it's an upgrade, and should be done at owners expense. She went behind the backs of the other board members to try to manipulate or coerce the property manager into doing the upgrade.

2. Board Member, paid himself for doing our financial books and taxes. Paid himself $150.00 a month for this, $100.00 to do the taxes, and $250.00 for clerical. This was stopped, however this past member talked about paying himself to our open board meeting last weekend. He has no concept, or ethics that he has violated our by-laws. So this makes it a breeding ground for other board members to try to sneak other work in on their units paid by our HOA funds.

3. Another Board Member paid himself for other financial services and appearing in court. Not gas money either, a court appearance fee. This member was NOT a lawyer either.

4. Previous Board President, had about $3,000.00 worth of work done in his unit, new sink facet, work on decking due to rain coming in. Which our docs are clear on this, and specifically states the rain blowing in IS NOT our HOA responsibility. This past president, did this behind the backs of his follow board members. We are now considering sending a demand letter, 3 years after the fact to be reimbursed. I was the only one to vote NO on this, waste of time, must find methods to monitor this pervasive behavior going forward.

I have other examples, but this should be enough for you to get the gest of what I'm talking about.

This condo community has 90 homeowners, is now 7 years old. The hostility and tension in the community is palpable.

What do you have in place to monitor or deter this pervasive behavior?

NancyG3 (North Carolina)
Posts: 342

Posted:

Cynthia - Was any of this in the budget? Was the budget ratified? This may be another way to approach this if it was not in the budget. Where does the money come from? Reserves? This is really a misuse of Assn money. If they are volunteers they are not paid for their services, other than mileage to and from the court house. This should be brought out to the other homeowners. Get all the information you can. Search in HOA Talk Forum Search. There is a lot of info there. If you are willing to spend a little money to let these officers know, you could go to an Attorney and ask him to write a letter. Be prepared as you will be branded the trouble maker, etc. Good luck.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

#1 is grounds to remove your board president from the president position, which is often allowed easily. Booting someone completely off the board of directors is usually more difficult.

You're correct to look forward in these cases. Sounds like your community doesn't pay attention to its board of directors.

JonD1
Posts: 2,350

Posted:

Just how does a single Board member arrange to pay themselves?
Who is cutting the checks and who is approving them?

If the MC is writing these checks then you have a problem here.
If the Treasurer is either writing or signing off on these payments you have another problem.

Not sure about the water leak ino the unit who was responsible but after 3 years tough now to demand repayment.

Sounds like someone needs to gain conrol of the finances and if necessary find a few new members to serve.

CarolR11 (Colorado)
Posts: 2,563

Posted:

What we have "in place," Cynthia, is a board that oversees where our funds go. No individual director, officer or not, should have the authority to write checks to anyone let alone to themselves. WE also have a finance committee who watches our financials along with our PM.

You need to get some of your fellow directors aligned with you to stop these abuses. If you cannot, you'll have to go directly to a lot of homeowners for support in order to make changes in your HOA.

The other responses to your topic seem to be good ones. If, in fact, you have a PM, get her/him to help you. If you have access to your HOA attorney, get him/her to help you.

WendyB2 (Florida)
Posts: 1

Posted:

I am trying to find the answer

The treasurer is the only signer on HOA account, and treasure is miss using the HOA funds, who in the HOA can be held responsible of miss use funds, if no one checked behind treasure in months? Who all on board can go to jail or who all is responsible for checking on funds in HOA account

CynthiaL3 (Florida)
Posts: 20

Posted:

Quote:

Posted By NancyG3 on 07/28/2012 3:24 PM
Cynthia - Was any of this in the budget? Was the budget ratified? This may be another way to approach this if it was not in the budget. Where does the money come from? Reserves? This is really a misuse of Assn money. If they are volunteers they are not paid for their services, other than mileage to and from the court house. This should be brought out to the other homeowners. Get all the information you can. Search in HOA Talk Forum Search. There is a lot of info there. If you are willing to spend a little money to let these officers know, you could go to an Attorney and ask him to write a letter. Be prepared as you will be branded the trouble maker, etc. Good luck.

Nancy, No, these items were not in the budget, and YES, the budget was ratified. Funds come from our working account, not our Reserve fund. Which, has been another issue to make sure we fund our reserve every quarter, and NOT use our Reserve funds for special projects etc.

I retired 7 years ago, my only mission was to do my genealogy research, and care for my pets. When I heard story after story of misuse and abuse of our funds, and abuse of power and position by the board members, a fire was lit under me. Spent hours last night reading this site, yes, lots of good suggestions and information. As best I can see it, I'll wear the brand of trouble maker with honors, this place has to get on track. I can't give people morals, ethics, character, or wisdom, but I sure as hell can embarrass them enough to do a little behavior modification. At the right time and place, these incidents will be put on the table.

CynthiaL3 (Florida)
Posts: 20

Posted:

Quote:

Posted By CarolR11 on 07/29/2012 11:35 AM
What we have "in place," Cynthia, is a board that oversees where our funds go. No individual director, officer or not, should have the authority to write checks to anyone let alone to themselves. WE also have a finance committee who watches our financials along with our PM.

You need to get some of your fellow directors aligned with you to stop these abuses. If you cannot, you'll have to go directly to a lot of homeowners for support in order to make changes in your HOA.

The other responses to your topic seem to be good ones. If, in fact, you have a PM, get her/him to help you. If you have access to your HOA attorney, get him/her to help you.

We do have a MC/PM, which NOW handles the finances. We also have a treasurer, in name only, misses most meetings, and has contributed very little to the sitting board. (We have a 5 member board.) Both our last two MC/PM have colluded with the board President. Much to my amazement. The Pres. sends requests by private emails to the MC/PM, requests to do things in the complex, WITHOUT cc'ing the other board members. So, a number of items have been done without the other 4 board members knowledge or approval. On the bigger projects, we do get 3 bids and vote on them.

We have a $500.00 clause, which states the MC/PM can spend money under the $500.00 amount with out board knowledge or approval. The sitting board President has abused this clause over and over again, in spite of my scathing emails to include the entire board. Now, this was brought up for a vote, to lower the $500.00 clause, to maybe $250.00, but was voted down, yes, you got it, my the Pres. and Vice Pres. who both have abused this clause any time they want work done that is under the $500.00 amount.

I have gone to our MC/PM several times in private, with negative results after explaining my concerns in detail. I finally had to go over her head, and talk to her boss, who made her start emailing ALL the board members, not just the board Pres. The management company at the time, was only interested in making money, since we have them do most of the routine maintenance. However, we just went to a new management company, and unfortunately this gal wants to keep the peace at all costs, and does not understand that a HOA board functions by including ALL the board members in any and ALL emails and notifications. So, that means of the 5 board members and 1 MC/PM, we have 2 people making the majority of the decisions, excluding the big job items where we get 3 bids and vote on it. Oh yes, here again, I'm still bringing this up each and every time I can. I see this as a severe "communication" problem, and many just don't understand the importance to include all the board members with dispersed information. All 3 of the MC/PM's we have had in the last 10 months, have erroneously given all the power to the board President, not realizing that's where and how the abuse starts and continues to breaksdown.

CynthiaL3 (Florida)
Posts: 20

Posted:

Quote:

Posted By WendyB2 on 07/29/2012 12:49 PM
I am trying to find the answer

The treasurer is the only signer on HOA account, and treasure is miss using the HOA funds, who in the HOA can be held responsible of miss use funds, if no one checked behind treasure in months? Who all on board can go to jail or who all is responsible for checking on funds in HOA account

Carol, thank you, I addressed some of your comments in a post below this one.

CynthiaL3 (Florida)
Posts: 20

Posted:

Quote:

Posted By CynthiaL3 on 07/29/2012 2:34 PM

Carol, thank you, I addressed some of your comments in a post below this one.

Well, looks like my response is above this one.

NancyG3 (North Carolina)
Posts: 342

Posted:

Cynthia - Good for you. You have made me rethink my position of being a trouble maker. I'm proud of you. This is the way I should be thinking. I've never heard it said the way you said it. I'm going to place your sentence on my computer and keep reading it as we have out annual meeting coming up soon.

Who ratified your budget? Was it voted on by the members? If so these are the people you should talk with. Our year end accounting was sent out in Dec and on the same page was the budget. Budget was not ratified and when the Board was asked they said it will be at the meeting in August. Our dues were increased before the budget was ratified. Both items were not added correctly. The figures for the year end income wasn't added correctly and the expenses weren't for a year. The Budget was $2,000. off. This is what is happening in our Assn. Good luck and wish me luck.

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