Mgt company transferred from reserves without approval

Started by RobertC34 • 5 replies • 656 views

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RobertC34 (North Carolina)
Posts: 5

Posted:

Our management company transferred $10k from our reserves to operating account without getting any approval, authorization, or even letting us know. I saw it when I logged into the system and looked at our bank accounts. We are in the process of switching companies because of continual problems with this company; however, nothing like this. The primary issues that we continually dealt with were a very level of administrative errors, slow response time, not meeting the obligations of contract, etc. To me, this is a different level issue. I would welcome any thoughts/ suggestions as to how to handle.

I should also note that we were low in the primary operating account, but had other transfer options without disturbing reserves, which I would have suggested and authorized had they made a phone call or emailed.

SheliaH (Indiana)
Posts: 6,964

Posted:

Get to your association attorney NOW!!!

And demand a meeting with your property manager and the head of the company to find out why this happened.

One reason it occurred is because they have access to the association's bank accounts - that shouldn't happen regardless of who you move to - or at least you need to put in some internal controls. Go to the bank immediately and get this changed.

You don't say how old your community is, but it may be you and your Board colleagues need some guidance on how to work with a management company. The Community Association Institute website has several educational materials on a variety of HOA subjects including the care and feeding of management companies. Too many boards let the property manager do everything, and as you've found out, oversight is your friend. Those educational materials are relatively inexpensive - buy a few and share with your colleagues. It will guide you as you transition away from this bunch and learn to work with the new company.

Good luck to you - your association will need it.

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

RoyalpitA
Posts: 195

Posted:

Quote:

Posted By SheliaH on 10/02/2018 9:08 AM
Get to your association attorney NOW!!!

And demand a meeting with your property manager and the head of the company to find out why this happened.

One reason it occurred is because they have access to the association's bank accounts - that shouldn't happen regardless of who you move to - or at least you need to put in some internal controls. Go to the bank immediately and get this changed.

You don't say how old your community is, but it may be you and your Board colleagues need some guidance on how to work with a management company. The Community Association Institute website has several educational materials on a variety of HOA subjects including the care and feeding of management companies. Too many boards let the property manager do everything, and as you've found out, oversight is your friend. Those educational materials are relatively inexpensive - buy a few and share with your colleagues. It will guide you as you transition away from this bunch and learn to work with the new company.

Good luck to you - your association will need it.

PRECISELY CORRECT

NO ONE, repeat NO ONE, other than actual corporate directors should be signatories.

KerryL1 (California)
Posts: 14,550

Posted:

It could be, Robert, that your contract with the MC gives them the authority to sign checks from reserves. Sheila and RPain are right. Never let the PM sign checks. See your bylaws too. Many state that only directors and perhaps may even specify certain officer to sign check from reserves. In our HOA, it's two directors.

RoyalpitA
Posts: 195

Posted:

In 'my' HOA, as per the bylaws, it is the Treasurer AND the President (or the President's designee) which in effect becomes the Treasurer + another officer.

The Treasurer signs ALL checks. 'Our' Treasurer (should there be an expected absence) only 'presigns' routine 'utility type' checks with the payee already inscribed then the President will enter the $$$ and countersign.

however

The banks do not, repeat not, require nor acknowledge a second signature. ('We' only allow a signatory to counter-sign)

The second signature is an internal control required by our insurer(s).

The second signature need NOT be a bank signatory.

We actually have 4 signatories with the bank account corresponding to the 4 officers.

That way we only need fidelity bonding for 4 directors.

BillH10 (Texas)
Posts: 1,217

Posted:

I have seen the subject of check signing raised several times in the past.

We have every possible client account (services, utilities, etc.) set up on "auto-debit" to reduce the opportunity for misuse of funds through unauthorized checks as much as possible. In some cases, the only check written on client accounts each month is the check which is sent us.

I'm curious as to why some associations continue to go through the process of preparing checks and the overhead of obtaining signatures--especially in those associations which require two signatures.

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