Accounts Collectable & Assoc Owned Units

Tax records won’t show you which house is being rented. A few communities require landlords to register with a city or county agency – but they are few and far between, and even then, people still don’t register. However, the records can help you determine how many are owned by board members – a 455 home community is a lot, and I would think it would be difficult for one or two board members to own over 50%.

If you find these board members AREN’T the majority, you could vote them out or recall them, but that will require everyone’s cooperation. Rallying together the neighbors is a big job, so you may want to start by seeing if there are any neighbors who feel as you do and are willing to work together. Getting rid of this board is probably the only way you’ll be able to get the real story about everything else, so be sure to read your documents to see what they say about special meetings and/or board recalls.

Now regarding the two units owned by the HOA, I suspect some (most?) of the delinquent dues came from the time the previous owners had them, so the next question would be what the board is doing with it right now. If they’re being rented out, how long will it be before the association is fully reimbursed for all the legal fees incurred in taking over the house? That’s a question the board must answer – go to the next board meeting and ask. Bring your neighbors with you so they can also listen in. It’s one thing to blow off one resident, but more difficult to do that with an angry group of homeowners.

As others have said on this site, HOA foreclosures only stop the bleeding and perhaps get rid of the deadbeats. This is why the board needs to consider what the end result will be and what it’ll do if that doesn’t happen. Usually, it’s best to sell the house quickly and hope the sale brings in enough money to reimburse the association, pay off outstanding delinquent assessments and maybe pay off the mortgage company, if there is one. Or tax liens. Sometimes both. If you’ve guessed that a lot of money would be necessary for this, you’re right – and more often than not, the HOA winds up dead last and has to write off the owed amount.

Regarding the financial report, have you asked the treasurer about this? The debt incurred by the previous owners doesn’t go away although they’ve lost the house – usually, that’s considered a personal debt you can still go after? Are there plans to do so (assuming they can be found and have the money to pay?) If not, why hasn’t the debt been written off? Are the rents being applied towards the unpaid amount and if so, how long until the debt is completely paid off?

By the way, this isn’t something that requires a special assessment. A special assessment is usually done to pay for a major Association expense when there isn’t enough money in reserves or the operating budget (or both) and/or insurance payout, such as roof replacement from a tornado.

As for the lawsuits, do you know what those are for? Read the board meeting minutes and find out. If many of them have to do with delinquent assessments, it can take time for those to go through the system, and you still have to worry if you can collect if you win.

Since you’re an accountant, you should be able to take a look at the last few years of income/expense statements and take note of what line items have risen faster than the others. Break down what those administrative expenses are for and perhaps consider if they’re necessary. You might want to offer to take a look on the board’s behalf and get some neighbors to work with you as a special committee – then you can make recommendations on what can be done to reduce expenses.

I agree it’s not a good idea to provide a ton of details on pending lawsuits. Too much yapping can lead to misunderstandings and possibly jeopardize the association’s case, especially if defense gets wind of it. Judges may also have gag orders and the penalties can be stiff if someone shoots off his mouth. That said, you should have a general idea of what type of lawsuits are in play, such as X number involve CCR violations, Y number involve delinquent assessments – and all of that should be noted in board meeting minutes.

To be blunt some of your questions sound like you aren’t familiar with how your association is run at all. Some of that may be due to the board’s lack of transparency, but if you’ve lived there for several years, why haven’t you read your documents – that’s where you start. The Bylaws usually dictate how the association is run, and that’s where you should see what powers the board has, who can call a special meeting and how, association records homeowners are entitled to, etc. You won’t get information on another homeowner, such as his/her account record on paying assessments, but you should be entitled to things like income/expense statements, board meeting minutes (except executive sessions, which should rare anyway), reserve studies, or other general information, including bank statements.

Sometimes the documents aren’t specific because they were written by attorneys who represented the developer and not updated after the homeowners took over. That’s when you’ll need to fire up your Google search engine and see what kind of HOA laws are in your state. Note the effective date – some may only apply to HOAs that were established after a certain time, which may not help if your community is older. If you haven’t found anything so far, remember not everything in HOA land will be addressed in your documents or even state law. You may end up asking a private attorney what your options are.

Thank you, these documents haven't been made available to us, as they are on the 5th property management company in 4 years, and their excuse is those websites were property of that company, and the only need to post this year's items. Therefore, it honestly is impossible to tell what is going on. When it was in person, we would ask something like "What hours are security on property" and the response is that we need to send a letter certified mail for those answers. Now that it is via Zoom, it is automatically muted. Since they do own a majority, we haven't been able to get them off the board because many people who own rent their units out, and don't pay attention. The one year we were able to get enough of a quorum, they were sued by the person who tried running for election fraud, and they used HOA funds in the lawsuit to pay him out into a non-disclosure. The current lawsuits that I can find against them are insurance fraud, and another for slander from the old mgmt company, then we have one out for malpractice against a contractor, but they are countersuing saying they were paid under table.

I am a CPA, so the fact I can't find this stuff upon moving in is crazy. There are no minutes, financials, anything at all dating back from 2005 until 2019. I found last years audit, and everything else is from court records on the county website. When we could ask in person, they would say that they can't disclose since the lawsuit isn't over. Then the new restated rules & regs on the website only includes even numbered pages. I brought this to their attention, but nothing has done (although the management company emailed me back saying it was).

But I can't find anything related to how far back the documents can be requested. I've written several certified mailed letters asking but noticed the address posted online to send it is different than when I went to the state webpage for the signed version. It makes it go to their attorney - but they posted an amendment to us saying they don't need to respond to anything related to the board or it's personal members. Considering they have been the only people on the board since it was built, I'm assuming people gave up caring. Coming from a condo (although in a different state), I am used to there being rules and documents. My curiosity is how to get a hold of them to even ask when they aren't responding certified mail.

I was hoping there was statute specifically stating a number of years each exact document (audits go back 10 years, bank statements - 5 years, etc, Board meeting minutes - 5 years, budgets - 5 years, etc). I can't find anything of the sort though and am having a hard time finding it in the statutes since the signed amendment they posted online is that you can only ask one question every 30 days in certified mail, there can be no follow-up questions, your request is not valid should you ask for something not legally available, and they will not provide more than requested so you need to be detailed. Out of over 20 letters we've tried to send, not one answer has been returned. I don't want to get a lawyer until I know I am out of options, but they are giving us an open mic night for the first time this week. So I want to be prepared since we can't have follow-up questions. I am not sure if it will be the board speaking, or the mgmt company. I don't know how to get ahold of the members at all since they don't live here, and the community managers don't answer.

Thanks!

Who purchased these 2 units? Was it the HOA itself or HOA board member(s). There is a reason I ask and your NOT going to like the answer. It is one of the reason a HOA should NEVER EVER EVER purchase foreclosed property or that they foreclosed on. It is a BAD BAD BAD idea.

A detail that is overlooked when a HOA purchases a property? Who pays the dues? Why it's the owner. Who is the owner? The HOA! Yes, the HOA has to pay the dues on these properties. They are the owners. So the Tax records will tell you who is listed as the owner. It won't tell you if it's rental.

Now your other issue is the amount of rent being charged. Your HOA is most likely a non-profit. So it should NOT be making a profit. That means they should be renting out for around the money they put into it. Which may be the mortgage payments, dues, (tax deductible if rental), maintenance, utilies, water, and other related expenses. It's not a good tax write off for your HOA and may even penalize it.

So go find out the name on the tax records. That is the person you need to contact about who pays the dues. It's time to lien or worse case foreclose. Do NOT sue. that is another bad idea.

Yeah, your going to need more details because basically you and your neighbors dues are paying for these properties...

I asked one of the ladies who has been here a long time, and she knew what units they were. I looked them up and found the deeds, it is held in the Association's name. I attached the public record of one for example. It looks like it was first turned over to the bank, then transferred to the HOA.

So you're right...I am not a fan of the answer, haha. I guess it just sits there; and there is no way to ask them to put it up for sale I assume? Interesting...I wonder if owning it would give them closer to a 50% ownership between everything they hold personally. Otherwise I have no idea why they would've held onto it all this time.

That math doesn't make sense though. They were bought by the HOA in 2012. I have the largest one bedroom (so these are smaller), and my condo association fees are $330. So if this was prior - they would be lower due to inflation. Let's say $330 either way x 12 mo x 8 years x 2 units. That's just over $64k. So I'm not sure why they put on the audit that the AR from those is $157k, that's way more than double... is there something else I am missing here? Would the old AR not be written off at the time attained for some reason for anything prior to 2012?