HOA Treasurer Abuse of Power

We are the management company for a Community Improvement Association of approx 300 owners. The treasurer has set up three CD's for the reserve account. The statements and all information are sent to his personal residence. When one of the CDs was not renewed the check to close that account was also sent to his residence. He has, in annual meeting announced projects to be completed by him "at no cost to the Association" then invoices are received from companies he has hired to do the job. Now he proposes to personally digitize all the HOA records, he wants complete control of the categorization. This scanning and sorting will be done on his personal computer and at his home. He wants things done by the documents however he doesn't really understand how to read them and interpreters them to suite his needs. The association has been in existence over 20 years the documents are very complex have undergone many amendments and revisions.

We are concerned about the liability created by these actions. The board attorney has instructed this needs to stop. The other board members seem unwilling to reign him in, we do not want to be caught up in the situation and any spill over on the us as the management company. The president has called a meeting of the board without the management company. We feel we should cancel our contract and protect ourselves. Any comments would be greatly appreciated.

Ultimately, the board is responsible for running the HOA, and the treasurer is responsible for the finances. The role of the MC should be to assist the board in carrying out those duties. It appears that you've already communicated your concerns to the board and they are choosing to ignore the issue. If you feel that the way the treasurer is operating is preventing you from carrying out your contracted duties, then "firing" them as a customer is a valid option. Liability is hard to guess, and really would not be determined until after a lawsuit is filed and a court's ruling handed down. Potential liability is always there in any case, pretty much anybody can sue anybody else for anything, whether they prevail depends on the merit of their case.

For some perspective, there are many self managed associations where the treasurer does do all of the work on their own computer, so that in and of itself is not necessarily wrong. Our self managed association does use a PO box, so we don't get mail directly to our homes, but I wouldn't be surprised if some associations just have mail go to one of the board members directly.

Certainly the treatment of the CDs and not knowing where the disbursement funds ended up is a concern. Other than managing the finances, what services do you provide to the HOA? Assuming you are being prevented from having all of the information you need to adequately keep track of the accounts, one possibility would be to re-write the contract to exclude the financial services and keep providing other services.

I'd go with Tim's #2 and #4. It may be the board president is calling a board meeting to address the issue, so you may want to give him/her a deadline when he/she needs to let you know what its intentions are. If you hear nothing by that date or they plan on marching themselves over the cliff, go to #4 immediately. Be sure you're keeping your own attorney in the loop (in fact, copy him/her on your letter).

And may I say with all the stuff I hear on this site about management companies dictating to naïve, incompetent or downright lazy HOA boards, it's great to hear that your company is doing what's appropriate and ethical. However this ends, I hope the homeowners in that community appreciate it. I also hope someone is paying attention and starts a recall to sack everyone on that board, but that's another issue.

Kathy

Candidly, if you all do not know how to handle this issue, how can you call yourselves a professional management company?

Thanks for your input. We do have all those in place, but dealing with the situation we find ourselves sometimes to close and in need of another viewpoint. Thanks again

You are correct the Board is ultimately responsible and in a self managed HOA it is true personal computers and home addresses are used. Where we differ is in self managed as apposed to using a management company. We are the custodians of the HOA records. The perception of wrong doing is always there so why add fuel to any fire with what could be viewed as wrong doing. Thanks for you input.