Annual Audit

We are entertaining refinancing our VA loan, and I have requested our Homeowners Associations annual audit. It is in our bylaws that a annual audit is to be done.

Section 6. Annual Audit. An audit of the accounts of the Association shall be made annually, the cost of which shall be deemed a common expense included in the annual assessments made by the Association, and a copy of the annual audit report shall be available for members to review upon request no later than April 1 of the year following the year for which the report is made. In addition, any holder of a first mortgage on a Lot shall, upon written request, be entitled to a copy of the audit report provided it pays for any reasonable expenses of the Association incurred in rendering such a copy.

Our community has grown double in size without the reserve account growing, other than a payment of 2 monthly assessments when a home sales. The potential risk has tripled in size, as 2 very large detention ponds have been turned over to the HOA. A reserve study has not apparently been done in several years when there was only 55 homes and now there is 106 homes.

I asked for the audit that was due the members April 1. The President of the HOA uploadeda audit. A one page not that said..”After auditing our expenses on a monthly basis throughout the year, I (we) attest that our bills/expenses have been accounted for and properly paid in a timely manner for the calendar year 2018. Signed by the Treasurer, President and Vice President of the homeowners association.

There are no expenses last year 2018, for a 2017 audit and no expenses this year.

I work with one of the largest mortgage companies in my city, and my concern is that if I tell them my situation, concerned about the reserve account and the way the money is being spent on landscaping that was not member approved. I will address this topic under another thread after I get feed back on this one. I am very concerned that the HOA board does not realize they are creating a possible situation in where people may not be able to get a mortgage in our PUD community due to Government requirement guidelines in getting a mortgage in a planned community.

Could I get some feedback on this issue? I am between a rock and very concerned with the issues above and my homes future resale value.

Thanks

Thanks Tim, I felt since the Bylaws stated that the cost would be a common expense. I would look at that, meaning a paid professional was being referenced, since our board members are not paid.

The first Phase was built by a builder that went bankrupt. Land sat for several years and another builder completed that road, known as Phase II. He was then able to buy some adjoining property so he added another 50 PUDS. Our bylaws state that a reserve study should be done also. I would think that Fannie Mae, and the other mortgage types would require certain things.

Sorry Tim, the developer has turned over all completed units to the HOA, as they were sold. That was the agreement the HOA made with the builder.

There are just a few units left in Phase III. The only votes are from current homeowners. The Board was elected by the members. The Board members are not acting in the best interest of our community. Last year, they filed a 1120-h, but under IRC 528, the association can not provide and exterior maintenance and they did. They did the return in house, instead of consulting a professional, and we had $32k in excess assessments, which is a concern if we have to pay taxes on that at 30%, since the homeowners did not elect to rollover the excess or have it returned. Seems they should have filed a 1120. This year they have spent probably $15k in landscaping people’s personal property, not association property, without member vote, which should have been done. It seems to be a big mess and I am very concerned about resale down the road. The starting price of our PUDS are $269k with not upgrades, but most sale with desired upgrades of around $20K added.

LOL... I was nominated last year by some neighbors, and the votes were counted by 2 of the current board members..Guess what, the board stayed the same. Most of my neighbors are seniors and it is no secret that the board bullies my neighbors. Uggg...it has been a strugle to get the board to abide by the bylaws..

Thanks for you responses!
Sheri

Melissa, I never said that my mortgage company wanted this, I want it to make sure that a proper reserve study has been done, and I was hoping that a professional audit would outline to the board about spending $22k in June on landscaping peoples personal property was wrong, and even more so, it calls in our bylaws that anything over $2000 needs members votes. I was looking for a complete Audit for myself, and was concerned because I did not know what the mortgage people look at. I remember calling my mortgage guy telling him I was buying into a planned unit development and he said he would have to check to see if that this community was an approved Va loan property. Apparently, there are many Condo’s that do not meet the FHA, Fannie Mae and those other mortgage types approval for loans.

I need to know if I want to stay here long enough to make sure my loan can absorb the funding fee. With all the problems in this association, I have requested the audit the is referenced in our bylaws, that there should have been a charge for. Our treasure is not in the finance field or does she work at any level of accounting, the President has a bankruptcy that was released a few years ago, and the vice apparently owned a landscape company in his past and he thinks he can have all these elaborate plans and just spend money without approval, so I am finding it hard to find confidence in the paper that was uploaded to our website as the 2018 Financial Audit.

Thanks for your input. I will go back and re-read and reread to make sure that I did not imply that my mortgage company requested.

VA loans do ask for the amount in reserves. I have a VA loan and when I bought the house, it was asked. FHA and VA will ask and require more information than most because the loans are guaranteed by the government, through GinnieMae.