Spending HOA Money and concealing the spend

Started by DeanK2 • 9 replies • 1270 views

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DeanK2 (North Carolina)
Posts: 7

Posted:

Are any laws broken if an HOA Board purchases a product (ie software, supplies, building pans etc) and then conceals this purchase from the community. And goes so far as to say at more than one public meeting that they have not done so?

KerryL1 (California)
Posts: 14,550

Posted:

By "conceal," do you mean if an Owner wants to review the financials for the month the thing was purchased, requests that in writing, and the board refused to provide them?

And you also mean that at a meeting, an Owner asks the Board: "did you purchase X?" And a director replied "No?"

DeanK2 (North Carolina)
Posts: 7

Posted:

Basically - yes

SheliaH (Indiana)
Posts: 6,964

Posted:

Can you be a little more specific as to your "basically yes" response? How much was this purchase? What did the other board members say, if anything? How did you find out? By "building pan", I assume that's a typo for building PLANS?

If you're wondering about the law, you need to talk to an attorney. If the board is denying that the purchase was made where there's evidence to the contrary, they're being really silly. If the purchase was made to provide a new service or something for the community (and it should have been since association money was spent), they should say so. There should be something in the board meeting minutes reflect the purchase of this stuff and what it was for - if there's nothing of the kind, you're correct in demanding answers.

If the board (all of them) can't or refuse to provide them, it may be time to rally your neighbors together, find people to take their place (perhaps you, since you brought this up?) and recall them according to the directions listed in your documents. As for the money spent, if the items can't be used for something else the association needs, it may be a good idea to have all those board members refund the association accordingly. If they refuse to do that, have the association attorney go after them with a lawsuit.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The Association attorney is the board's attorney NOT individual members. The HOA attorney represents the HOA as a WHOLE. So no the HOA Attorney will NOT be suing any of the board members or HOA...

The HOA can spend money if it's on it's operational costs. If it needs a new accounting software, then I would say that is within it's scope of responsibility. Don't think it needs justified by anyone else outside the board. They of course will have it in the financials as money spent. The board is responsible for the budget because you all as general membership voted for them to do it.

Keep in mind that meeting notes and financials are usually a month behind. Meeting notes are to be approved at the next meeting. Financials usually aren't posted and printed till end of the month. So if your looking for answers, don't expect immediate results.

There is no "HOA police" and the rules/laws broken are just within the HOA. It's most likely just bad business and not jail time. If you think the board isn't doing good business practices, then either get on the board or vote them out.

Former HOA President

DeanK2 (North Carolina)
Posts: 7

Posted:

Sorry for the confusion. The HOA Board bought something that cost a few thousand dollars. They did not budget the item and when asked if they had spent any money on a project this item was related to they said no. Their intention was to use this item to help convince the HOA members of the validity of the above mentioned project. Thank you to all who responded, we did end up getting a legal opinion.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By DeanK2 on 12/08/2016 6:06 AM
Sorry for the confusion. The HOA Board bought something that cost a few thousand dollars. They did not budget the item and when asked if they had spent any money on a project this item was related to they said no. Their intention was to use this item to help convince the HOA members of the validity of the above mentioned project. Thank you to all who responded, we did end up getting a legal opinion.

And what was the legal opinion?

DeanK2 (North Carolina)
Posts: 7

Posted:

They are not supposed to do what they did, but as others have pointed out - there is no HOA police

SheliaH (Indiana)
Posts: 6,964

Posted:

Maybe there is no "HOA police" in a government agency, but you're not necessarily SOL. As we've pointed out, you can rally your neighbors together and demand the board explain itself. Since it appears they can't or won't do that, the homeowners can and should consider replacing them. You could wait until they're all up for re-election and vote them out, but if everyone's really honked off about this, they may be inclined to do a recall. Check your documents to see what they say.

Just remember, removing these guys and gals will also mean other people (including you, perhaps?) will need to be ready to step up and serve in their stead. Then you can put together protocols that ensure that association expenses are properly documented.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

KerryL1 (California)
Posts: 14,550

Posted:

Pay attention to Sheila's post, Dean. Your membership does NOT have to put up with secrecy and deception, but, in a sense all of you Ownrs ARE the police. You must act, though, or the abuses will continue.

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