Missing Records & the Right to Review Records

I live in a community governed by a Florida HOA. We have a number of issues, but the most pressing right now is access to association records. The president had three of the other four directors (five total) on his side in 2018 so he pretty much did what he wanted. Although we had an election in January 2019, only two of the five board members were up for election. We successfully put two of our people on the board, but the president still has a three-person majority.

Here is the issue:
In 2018, two large capital expenditures were made. Each totaled many thousands of dollars. The president paid for the expenditures and asked for reimbursement from the management company. He submitted an invoice for one reimbursement from a company he owns (it’s a corporation). The other large purchase was only documented by a vendor “deposit” receipt and no final invoice. Again, the president asked for reimbursement in an email.

I want to see the invoices and payment receipts. There is no record of the actual vendors ever being paid. There is a rumor that the president paid for the expenditures using a cash back credit card, which is illegal in Florida if I read 720.303 (12) correctly.

At the end of December 2018, I reviewed association records with the 2018 management company. They had no copy of vendor invoices or payment receipts from the president for the purchases in question and said the president of the board did not submit them. The board in 2018 fired that management company as of 12/31/2018. I made another request (certified mail both times) of the new management company in mid-January 2019. The intent was to force the board president to submit the missing invoices and payment receipts. The new management company would not agree to let me see records until more than a month after the formal request. While the HOA attorney, gave me the go ahead within the ten-day period required by law, the new management company simply said they didn’t have the records. I asked the 2018 management company about that and they said all electronic and hard copy records were turned over just after the first of the year. Just recently, the new management company said I could review records, but all that they had in their possession were meeting minutes, financials, and HOA docs, which are all posted on a web site. No payable records, no director certification, no contracts, no bids, etc.

Here are my questions:
1. Who is ultimately responsible for maintaining records – the management company or the board of directors?
2. Can the board be held responsible for missing records?
3. Does the president have an obligation to submit the missing invoices and payment receipts?
4. If you were in my shoes, how would you proceed? Would you just let it lie or pursue legal action? Why?

Thank you for any advice you can give.

1. Who is ultimately responsible for maintaining records – the management company or the board of directors? +++ The Directors

2. Can the board be held responsible for missing records? +++ Yes

3. Does the president have an obligation to submit the missing invoices and payment receipts? +++ No, the HOA, as represented by the BOD, has the obligation

4. If you were in my shoes, how would you proceed? Would you just let it lie or pursue legal action? Why? +++ I would send a 'demand letter' (check with a good contract attorney versed in HOA matters) certified mail to the REGISTERED AGENT for 'your' HOA, Inc. demanding minute meetings authorizing said expenditure AND EITHER viewing of invoices OR repaying of unauthorized HOA funds expended.

Your state's secretary of state will have the name and address of your HOA's registered agent.

ANY legal issue / request MUST be sent to the agent else said request does not exist.

Thanks for the replies so far. Just a little clarification on one point. RoyalP - The two large transactions for which no final vendor invoice or payment receipt to the vendor is in the association records were voted on by the board and approved. That is not the issue. The issue is whether or not the final invoices were accurately represented by the amount of money reimbursed to the president and how the president made the payment

On their own, yes these issues would be a tempest in a teapot. However, there is a lot more going on here, which I did not include in my original posting for the sake of brevity. I could go on for paragraphs about what this president and his supporting board members have done. For instance, they tried to push through a document change, which past community surveys have shown no one wants. That cost us thousands of dollars in attorney and management company fees. We beat the change, but they continue to do things in their own interest and not the community's. Because association records won't be made available for review, we don't know what other potential abnormalities might be occurring.

It is interesting to note, though, that most others in the community have taken a "I don't care attitude." I'm really wrestling with wanting to see the right thing done when no one else seems to care. In other words, should we all just let them possibly do something illegal and adverse to the health of the association or pursue it to learn the truth whether that be "nothing going on here" to "all kinds of illegal and corrupt stuff going on?"

Maybe I am a bit confused. What records are we looking for exactly? That is still a little unclear to me. Did the President do a project for the HOA or for himself? Does he own a company that did work for the HOA? The other vendor not being paid? Would they not have sued or placed a lien on the HOA for non-payment by now?

Not sure why the MC would be reimbursing anyone. The HOA would had to approve the project first then the MC would cut a check. It's weird that any board member would go do a project then ask for reimbursement.

I am asking this because there may not be any "records" you are looking for. Let's say the President owns a company and does work for the MC directly. Like he owns a landscaping business and the MC uses them for other developments. The HOA would not have those records. That was a business deal between the landscaping company and MC. So just trying to figure out the relationships here.

How we to know the benefits of the credit card the President used? Each credit card company offers their own "benefits" for using their card. Some allow you to get credit for airplane miles. Others you may get cash back or discounts etc...

So you get the receipts... How is that to prove the benefits one uses on their credit card exactly?

Well it means that every customer this president company has is earning them mileage points. How does the OP know it was a credit card that paid for this project and what benefits it has? They can't see the records but yet they know this information?

Just saying that the records looking for may not actually exist. The relationship hasn't been determined nor the projects. I wouldn't know your credit card is for mileage randomly would I?

... possibly on the airplane ...

Exactly, although the president's company had no part in providing a service or product in this case. The president just substituted his company invoice for the actual approved vendor invoice, which he never submitted. We don't even know what the vendor ultimately charged us since we don't have an invoice.

Wanted to add some additional credit card issues with HOA's. NO your board members will NOT benefit or get to use the benefits of a credit card of the HOA's. Ya going to vote who gets the airline mileage? The "benefits" go back to the corporation/HOA.

Your HOA's ability to get a credit card isn't as easy as just applying. There are many factors and limits. Our HOA's credit card limit was $2500! So it wasn't like it was something we could use to purchase large items. It was just an emergency back up fund or for those items requiring credit card.

The HOA has to be able to afford the payments of a credit card. The INCOME of the HOA is the dues collections. Depending on how well your HOA collects it's dues, the better the bank may extend credit. The reality is, that it may not be a very high balance.

We allowed our board members to make purchases and be reimbursed IF it was an approved expense prior. Our clubhouse committee was allowed to buy cleaning/party/repair supplies for the clubhouse. So if the HOA approved the expense, then the board member was free to purchase how they wanted with receipts.

A friend of mine has her own business. Which means she doesn't have to pay certain taxes with her tax ID. The HOA may not have a Tax ID. The President having their own business may have used theirs to help reduce the expenses. Which is that such a bad thing? It's not fraud. They used their Tax ID to make a purchase.

So in the end, why doesn't your HOA have a credit card? Why then be out for others who are putting their necks on the line using their own cards for the benefit of the HOA?

You're better off not even trying.

So this is just all over a "Suspicion"? Wow. Plus it is over an approved HOA expense that was approved for the President to arrange? The biggest issue is that the President used his company's credit card that may or may not collect airline mileage on?

Just wanted to get the FACTS out of the way... Witch hunting often misses those...

I was president of an HOA that our monthly water bill averaged $60,000.00. I have to assume you see no problem in me paying that bill with my American Airline Visa card and getting reimbursed by the HOA while accumulating enough airline mileage to travel to Italy on a monthly basis for two people.

If one of the large purchases was from a company he owned. Why wasn't there just an invoice created and a check cut to pay that vendor. Why did the HOA have to reimburse the president?

This would NEVER happen in an HOA I would manage. NEVER!

This was not a recurring bill that's referenced in this post. It was capital expenses that were purchased and reimbursement sought. In your example, there was be a clear dysfunction in the operations of the HOA as the organization would not be paying its monthly recurring costs.

The poster clearly doesn't personally like the legacy board of directors. So, every move is viewed w/ overt suspicion.

Your example is a false equivalency.

... it may fly without you ...

I too cannot support a HOA President receiving benefits from his personal credit card that are a consequence of his doing some kind of business with the HOA. I suppose some would say no big deal. But I would not vote for such a person to be on the board. At a minimum, I think there needs to be way more transparency in this situation.

I think it is way too common for directors to think they should in fact receive some kind of under-the-radar compensation, since others will not step up to do all the work of being a director. I think those who think like this have no business serving on a nonprofit board.