Treasurer or Property Management Company

How big is your HOA and what kind of amenities do you have? If you don't have issues with members paying dues or issues with covenant enforcement, there really isn't much use for a management company if your treasurer is good handling the financials.

Property management companies often have a menu of services, and communities can choose which services they need.

Points in favor of moving the financials to an experienced manager:

* They're professionals (not saying your Treasurer isn't) and can provide a broad array of services that are targeted to community associations.

* You're not dependent on one person. It sounds like you would have issues replacing your Treasurer if he suddenly become ill and couldn't do his job, for example. With a good PM company, if your manager became ill suddenly, he/she would be replaced with someone who has a similar level of knowledge and skills. Bills would get paid and accounts balanced with barely a hiccup.

* It's another set of eyes on your books. It's harder for a board member to embezzle association funds if he needs to collude with the manager. Again, not saying your Treasurer is doing any such thing, but what happens when he's no longer there?

* Experienced PMs will also have contacts for other professional financial services such as auditors, tax preparers, and the like. This is helpful for communities that are trying to do everything in house.

I understand your Treasurer's reluctance to put your finances in the hands of a stranger. However, there are protections against the consequences of getting a bad one, such as fidelity or "employee dishonesty" insurance which already may be required by your governing documents. And having a professional do your books doesn't mean that the board no longer looks at them; the board should always review the monthly statements at a minimum. Finally, you can put controls on the manager's activities (ie, size of checks that can be written or the number of signatures required) that can head off problems before they start.

In short, I think it's smart to move your financials outside when you're a smallish community with homeowners who don't want to get involved. You just need to choose your manager wisely: interview, get references, read what's floating around on the web.

Personally, I don't agree with having someone outside of the Board handle the financials (i.e. having access to bank accounts). If you think it's a good idea, then give me full access to your personal checking/savings and trust me that everything will work out.

However, having served as treasurer, I know it can easily take 20 hours a month to do (self managed, 130 lots).

That said, many MC do handle financials.

There are many levels of financial assistance. Our Association did hire a bookkeeper to track assessments and make deposits (as you don't have to be on the bank account to do that). The Treasurer would still have custody of the checkbook, pay the bills and make the reports.

If the MC won't do the job without the financials, I'd look elsewhere (as that may be a sign of future issues).

If you decide to have the MC do financials, make sure that the accounts are in a bank chosen by the Board and all board members are on the signature card (at the bank). Additionally, the bank statements should go to the board, not the MC.

That is my 2 cents. Had Richard still been part of this forum (as he owns a MC), he would have a different perspective.

This is opposite what we did. We had a paid accounting firm to handle our expenses and be a POC for the board. Our HOA handled all the day to day activities. Did not find the load of finding contractors that unbearable. We had a rule they had to be licensed/insured and had to get 3 bids. We then vote on them at a board meeting. Anyone was welcome to bid if they met the criteria even if HOA member. HOA members could even offer up contractors as well.

Maybe the Treasurer should be President instead? They seem to be the most interested party in your group. For me, reading your post it seemed you all need help more on how to manage than hire management. Seems to be a lack of management skills which may effect your relationship with an MC if you were to hire one. The lines between HOA and MC often get blurred. HOA members later finding a sense of loss of control if not keeping an eye on their store.

Too bad Richard isn't here... He'd had good advice if he'd kept it to his profession.

The only way to protect against embezzlement is to have a policy of checks and balances and actually follow that policy.

An external audit or financial review is also needed every year or two.

Keep in mind, this only catches the embezzlement, it doesn't prevent it.

The lockbox account should be that of the HOA bank account, so why would the money go from the lockbox to the PM account?

It is great that Associations set up checks and balances, but, so it doesn't happen in the first place, how do HOA's vet their directors/officers?

If you funnel money to a PM's account, that is where problems arise, this based on personal experience. Nothing wrong with having reserves in multiples, as long as the Association knows where the accounts are and who has legal access. One account can be really available without penalty, the other generating interest, huge interest at this time!

My HOA is in a county that's not exactly huge but there are a good number of HOAs. When we were shopping for an MC last year the lowest cost provider we found offered 3 tiers: $15, $25 or $35 per door. The $15 tier was anything but "full management". I wouldn't even hazard a guess about what $10 per door would get you.

Thank you everyone for your responses. Fidelity insurance sounds like a good way to go when hiring a property management company. I will bring that up with our board. Thanks!

PERFECT

the association could, in addition, have the mgmt co PREPARE the checks for the treasurer's signature