Possible lawsuit waiting to happen

Krystal,

If your HOA has DOL (Directors, Officers Liability) Insurance, you cannot be sued for acting in a reasonable manner as a board-member.

If your community wants to fire the MC (you stated PM, so I am going to assume that you want out fully of the contract, and not just a different PM for your property), there should be clauses in the M/C agreement/contract which stipulate what MUST be done to end the relationship.

I would agree that having a single name on an account (PM's) is a danger in exposing the HOA's funds. That can be simply cleared up by a board vote to add additional names (President, Treasurer, etc0 to the acount, and to start a relationship with the particular branch manager.

Whether or not you enter the motion, second it, or vote on it - you are doing so as one of "X" number of board-members. Unless you are the "army of one" there must be a majority vote (either up/down) on the motion presented to the body. Not sure what you meant by "President cannot call for it..." - the President holds a single vote as does each board-member, and can enter motions to the body for votes.

There is a thread here (or might be on CAI) called "Selecting a Management Company" while this is not exactly the case you presented - there is very helpful information (reverse engineer) there that can assist your community. I agree with you, the "ducks do need to be in order," and the board needs to fully understand that they will need to "step-up" on some community servies during the transition from one M/C to another.

KrystalA:
First things first... create a new 'signee' card with the bank with
ONLY 1-2 board members names on it, this will supersede the original bank card giving the prop. mgr. ability to access the checking account. This is always a NO-NO.
Next, check your docs and mgr. agreement to define the process of removing her. Usually, the mgr's contract will state a 30-day notice, and it is the Board's decision to fire the mgr., not the assn. of residents. The mgr. contract is usually signed by the mgr./company and a Board member (check the contract). The contract is between the Board and her; she works on behalf of the Board. She is the Board's agent.

Don't know why you believe it 'would be very hard and expensive to fire her...' However, you may want to do your homework to have a new prop. mgr. on the horizon to take over. There are also requirements of the present prop. mgr. to turn over all documents to the Board or new mgr. Network with other communities in the area to learn who they are using and why they are happy or unhappy. Will help you know what to look for.

I am not sure how formal you follow Roberts Rules, but I think most people would agree that HOA boards fall under the exceptions to the formal rules that make things a lot simpler. Under those conditions, RR allows anyone on the board to make motions and doesn't require the president to stay out unless there is a tie. Everyone on the board is treated equally. I have a feeling this isn't the real reason the president wants you to make the motion.

JC3: The start of the problem you noted is because the Board gave away their authority to the mgmt. company by allowing them to 'set up the account' for the assn. The mgmt. company works for the Board as their agent, they are NOT to have authority over the Board which is what you have given them if they are telling you that you cannot access your own accounts.

Why has the Board willingly given over their authority? The mgmt. company is an agent and advisor to the Board for community situations/ethics/documents; they are NOT to run the community, its residents, nor have authority over the finances! Bad move.

Why doesn't the board approach the MC and tell them they would like the account set-up in the association's name. Ask the question first, if they say no, then you pull out the cards of that they work for you, etc...

Krystal, I agree with what has been said here, I also would encourage the president or some other board member (surely you have more than 2?) to make the motion. You don't need a second with a small board, but in theory the second just means that it is a matter worthwhile talking about, not that you are going to vote for it. So, you can second the motion and vote against it (if you can't convince your president she doesn't need a second).

I do think that both Krystal and JC3 should make sure their associations take steps to get control of their own bank accounts. Our association changed signature cards with astounding regularity. Our bank required the minutes to show who was on the board now. In times of turmoil, it seemed like nothing was done but sign cards.

Actually you don't have to have special checks to have two signatures required. You set it up with the bank that it is required, and then two members sign it.

Our insurance company requires that the person who makes out the check does not sign it. So, the bookkeeper/treasurer is not a signature that is allowed on the check.

Two signatures means ACCOUNTABILITY. If you have the account setup so that the issuing party plus one board member signs the checks, then you know where the money is going. No one should say that the MC/Bookkeeper/Treasurer is ripping off the HOA by themselves. There has to be be BOARD knowledge of where the money is going. Vice-Versa.

It's a way to hold the feet to the fire so to speak. The MC/Bookkeeper/Treasurer can't just issue checks without board approval anyway. A good way to prove board approval is by having a board member sign the checks. (Plus meeting notes if necessary to prove a vote). I recommend ONLY the President or Secretary be the board members able to sign the checks. It shouldn't be just a non-office position. You will need 3 signatures altogether if one is out and can't sign.

This is the ONLY way I would business in our HOA. No check went out without my knowledge as President. Although I had an Ex-president who did rip off the HOA. I had to keep a close eye on him until I got him off the signatory list.

As I have posted many times, IMO there are much better checks and balances on monitoring funds than requiring two signatures on checks. Nothing wrong with 2 signers as long as it does not provide a false sense of security.

I agree with that, although it certainly helps we have seen many stories on here about how two board members were in together to steal money. Two signatures just means the embezzlers need to work together and split their profits.

Overall it is better to have 2 signatures than NOT have that system at all. Are there ways to cheat it? Sure there are. However, I'd rather have a double-check system than none at all. With two people signing it tends to come to light faster if there is wrong doing. A single person signing checks, who's going to check up until it's too late?

We did have a President in my HOA that did syphon funds from the HOA. I ran for President and won. He became my Vice-President. So he could still sign checks. However, I took control of the checks and picked them up myself to sign. Unfornately, he did manage to get a few checks from the bookkeeper WITHOUT my permission. So I let EVERYONE know about it. I didn't keep his spending habits a secret. The next election he was out and the next day I took his rights away to sign checks. It took a year to finally get him out of the finances of the HOA.

I will tell you the truth. Most of the checks I signed weren't for "Projects". They were for things as simple as utilities, lawncare, water bill, insurance, garbage pickup, and other monthly bills just like the ones you get at home. Nobody is really interested in knowing the MAJORITY of bills a HOA signs is really everyday bills. Sometimes those bills rise. In the summer the water bill skyrockets for the pool. More people renting the clubhouse or christmas lights runs the utility bills up. These were the areas I was more concerned about. You can't negotiate utilities costs. So do you need to justify these costs each and every month?