When your property manager is pocketing funds and getting kickbacks

Has anyone ever caught a property manager pocketing funds or getting kickbacks from vendors?

If so, how did you catch it and what controls did you put in place to stop it?

Thanks.

Thanks but when the property manager drove up HOA dues and there are concerns that the property manager was charging, and getting suppliers to charge, way more than they should have, that affects the sales price of my property.

Let's stop here. In this case, the property manager set the dues. Period. Thanks.

Perfect. Thank you.

In your last post, you said the property manager's error in not forwarding a lawsuit notice resulted in the plaintiff asking for a default judgment. You also said the buyer wasn't concerned about that, so why is this an issue?

You also said the sale closes in two weeks, so unless you or the buyer pulls the plug, its really too late to worry about the sales price now. I agree with Melissa that at this point it appears your best bet is to get out of this association and sell at the best price you can because a major shitstorm is brewing if what you say is true. It will cause a lot of bad feelings and who knows what else. Unless you plan to stay and help fix it, I say get out now and let the buyer and other owners deal with it.

Your posts indicate to me that you haven't paid attention AT ALL to how your community was being run and you're now shocked at what you're looking at. I don't know of you p,an to buy a rental property in another HOA community, but if you do, please take the time to ask some questions before you buy. Someone on this website once commented on communities that are heaven to look at but hell to live in and now you understand there's more at stake than simply collecting a rent check.

So your listening to other people and saying the documents were written by the PM? I highly doubt the PM wrote the documents. They are PUBLIC documents on file at the local courthouse. Most likely filed by the Developer or the HOA. The PM has nothing to do with these documents as they are NOT members of the HOA nor are held to the documents. They are NOT member of the HOA.

It still makes me think that your HOA isn't as owner owned as you portray if the PM is on the board and writing documents....

Plus stop already with blaming everything on the PM. Get over it. Sell the property and stop being a HOA member. Unless your willing to participate in your HOA, then make the HOA business yours. Otherwise, it's the new owner/member prerogative.

So if he is CEO is he CEO of the Property Management company or the HOA? Plus CC&R's and Articles of Incorporation are Public documents. The by-laws are INTERNAL to the HOA. So having a hard time trying to figure out the PM relationship with the HOA in full.

Just sell the property and stop with PM drama. No one benefits.

Excellent. Thank you.

Melissa, thanks as well for your posts. (In this case the bylaws were recorded in land records- maybe that’s a NC thing.)

Thanks again.

Cheaters cheat.

-- Good luck on the closing.

-- Is this latest lawsuit on account of the property manager failing to turn over service of the other lawsuit to the current board and current HOA attorney?

Chris

So what is your question?

Chris

I saw the original question so what I am asking is why are you beating this to death? Close the sale and be gone. Let the remaining owners worry about it.

From where I am sitting, it is not only acceptable, it is welcomed. Seems like I read about a HOA manager embezzlement scenario about once a year in my internet travels. Reporting on such events helps keep directors and Owners alike on the alert.

I personally know of one property manager from the 2000s who got busted for embezzlement. His company managed like a dozen or so HOAs.

Our PM does not work with any specific vendors. They certainly know vendors and when asked, they have given us names of some but we have yet to use any of them. We have always used vendors we found and we always have at least 3 bids. Our major expense is landscaping as we (the HOA) pay for all landscaping. We had the same vendor for 4 years but he raised his price by 30%. We got 5 bids and chose one, which was not the lowest. Our next major expenses are PM and utilities so out association is not financially complex.

I will disagree with David that embezzlement goes on all the time but I do agree with him that it is up to the BOD to keep an eye on things. Our PM handles all our money (except the Reserves) and the BOD gets a 30 page Monthly Financial Report which at least two of us (Pres and me, the Treasurer) review. We see every penny coming and going.

Have I seen cases of embezzlement? Hell yes. One can find anything on the Internet. It is systemic in the PM business? I say no. The usual cries of such are from disgruntled owners with no proof. They only know they are pissed at their BOD.

The only thing that I would suggest might be systemic in the PM business is that property managers won't work as hard as an owner to keep costs low. I've used property management firms for rental properties, and repair bills were generally much higher than the lowest price for the repair that I could find on my own.

In the case in this thread, the PM has been accused of "converting" tens of thousands of dollars from the HOA. The complaint that was filed with the court and mailed to owners includes various exhibits of checks, bank statements, etc. that are designed to support these allegations--e.g., if the property manager was accused of "converting" $10,000, the exhibit shows checks and bank records to support a claim of $10,000.

Question? Does the HOA own or acts like it owns a property? Have seen this occur in some HOA that "think" they can use a foreclosed property as rental. It's not exactly "legal" but some view an empty property as an opportunity to rent it out till bank formerly forecloses.

It is a rare situation but have seen other posters here post similar situations. Sounds great on paper but in reality it's a very very bad thing. The thought process that the HOA can "collect" rent to make up for the loss of unpaid dues. Which isn't being paid by the bank. Once the property is sold at auction by the bank the dues often times are then paid up. The bank if it gets wind of the rent illegal rent collections will then go after the HOA or whomever was collecting the money.

This conversion case doesn't exactly ring "PM stole money from HOA and made it their own". It wants to come out that way but my gut says something else is going on.

UPDATE

Other owners have filed their own lawsuits against the property manager.

I have sent in the documents to the closing lawyer to sell this place at the closing this week so I'm basically done. Thank goodness.

Hell, if I had known this is how we were supposed to be conducting business, I would have cashed in a long time ago.

that is what a board should do. get your three bids with interviewing contractor. then make a decision and have your attorney review it. that is you fiduciary duty

This is why should have a 2 signature system. That is how we did it. The accountant signed/issued the checks but we had to have 2 officers sign the checks. The checks were "special" that accommodated this system. A little more expensive but worth it. That way when looking at the checks there had to be 2 people responsible.

Will tell you that even with the 2 signature line that many banks don't really care. It's really for record keeping and for situations like this. Can see whom was signing the checks and who was approving it. Mind you it doesn't mean the 2nd person is in cahoots with them. Just confirm if it was the same person every time.

So this sounds like the HOA should be suing the CEO of the property management company. It shouldn't be a lawsuit against the HOA itself. The members should be considering firing the property management and suing the CEO as an individual. Maybe even pressing criminal charges.

as a homeowner, i have taken it upon myself to spend up to 8 hours per month reviewing all invoices, contracts for transparancy. yes i have found padding mass mailing with a 25 cents handling charge not listed in the contract. The board received back $1200 from management and all future mass mailing invoices there after no longer show that additional 25 cent handling.
there are many HOA boards who have members without certification with statue 720

board oversee management company and homeowners oversee the board and management company

things have gotten so bad we did a recall on the entire current board and won with lack of fiduciary financial respect along with lack of communication with the homeowners and transparancy