Are POA Members Entitled to See Audit Statements?

SteveL17 (Nevada)
Posts: 11

Posted:

I live in a small community development where the developer has not yet turned control of the POA over to the members. He possesses 3 votes for each lot that he places into the POA and the members have one vote each. He makes sure to maintain a voting advantage at all times. The Board consists of him and two others who are not owners in the development. I believe there are questionable accounting practices , perhaps not illegal but nonetheless not GAAP appropriate taking place. Do I, as simply a member of the POA, have a right to see a copy of the audited statements of the association?

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By SteveL17 on 01/16/2022 4:35 AM
I live in a small community development where the developer has not yet turned control of the POA over to the members. He possesses 3 votes for each lot that he places into the POA and the members have one vote each. He makes sure to maintain a voting advantage at all times. The Board consists of him and two others who are not owners in the development. I believe there are questionable accounting practices , perhaps not illegal but nonetheless not GAAP appropriate taking place. Do I, as simply a member of the POA, have a right to see a copy of the audited statements of the association?

Are you in condominiums or in an HOA/PUD ? It may make a difference.

In general, homeowners are entitled to inspect financial records of their community association, and the board must make these records "reasonably available". Quote from one of the links below:

"North Carolina HOAs must make their "financial and other records" reasonably available for inspection and copying upon the request of lot owners or the authorized agents of lot owners. N.C. Gen. Stat. §47F-3-118. A request for inspection should be made in writing at least five business days in advance. N.C. Gen. Stat. §55A-16-02. An association can impose a reasonable inspection charge, not exceeding the estimated labor and material costs of producing or copying the records. N.C. Gen. Stat. §55A-16-03. A protocol for requesting inspection of an HOA's books and records is often outlined in the community's bylaws."

North Carolina laws governing community associations here

Laws concerning inspection of records here

For honks and giggles, I'm curious why you believe there is questionable accounting going on, especially if you (I assume) haven't been able to inspect the records. What are you seeing or hearing?

When a community is still under developer control, then the developer calls the shots. That's not shady, it's how this stuff works. There will be something in your governing documents that spells on how a community transitions to homeowner control, typically based on percentage of homes sold. The transition can take place over a number of years, with homeowners gaining seats on the board as sales milestones are met (for example on a 3-person board: 25% sold = 1 homeowner on the board, 50% sold = 2 homeowners on the board, 75% sold = 3 homeowners on the board, full homeowner control).

In other words, the transition to homeowner control is not based on developer whim, although occasionally a developer may try to retain control for some reason. But in general, developers want to sell their remaining ownership in communities and get on with the next thing. It's how they make their money, and there are carrying costs for slowing things down and retaining control which will reduce the profitably of that particular community.

SteveL17 (Nevada)
Posts: 11

Posted:

CathyA3….Our development in the mountains of western N.C. consists of 27 lots, 20 of which are privately owned and 7 are owned by the developer. Only 12 structures have been constructed to date with several more in the planning stages. There is only one full time resident. My wife and I live there around 9 months every year and the rest of the owners either rent their homes or stay there periodically.

We have a management company which handles most of the affairs of our community. They pay the bills, arrange and schedule the Annual Meeting and the Budget Ratification Meeting. They also produce the monthly financial statements, file tax returns and audit the books annually.

Hopefully I’m not boring you with this, but here are a couple examples of why I’m questioning the accounting procedures……

In 2021 an annual charge was assessed to 12 residents of an adjoining development for the usage of water from our water system.. One of the 12 did not pay the assessment. On the monthly balance sheet it was carried as an account receivable for the entire year. Also, a late charge was assessed each month, and the late charge was shown on the P&L as revenue, even though it was uncollected. This has happened before, and when the new year starts, this A/R and late charge entries disappear from the financial statements. Where did they go? We’re they charged off? No official record, as far as I know, is made of this.

Here’s another one. ……I’m told that all vendors who do work for our association submit invoices directly to the management company for payment. The only oversight that goes on is if someone at the management company detects something “unusual “, and then they contact a board member. For invoices such as electric bills I don’t have a problem with this, but there are other vendors who could easily pad invoices and no one would be the wiser. Additionally, there is an exception to this process…..certain invoices are sent directly to our developer for payment ( grounds maintenance, for example ). The developer pays the workers directly, then sends an invoice to the management company to get reimbursed. Again, there’s no oversight. Who’s to say whether the developer pads those invoices?

This is why I’m asking whether the members have a legal right to receive a copy of the auditor’s report .

SteveL17 (Nevada)
Posts: 11

Posted:

CathyA3….Our development in the mountains of western N.C. consists of 27 lots, 20 of which are privately owned and 7 are owned by the developer. Only 12 structures have been constructed to date with several more in the planning stages. There is only one full time resident. My wife and I live there around 9 months every year and the rest of the owners either rent their homes or stay there periodically.

We have a management company which handles most of the affairs of our community. They pay the bills, arrange and schedule the Annual Meeting and the Budget Ratification Meeting. They also produce the monthly financial statements, file tax returns and audit the books annually.

Hopefully I’m not boring you with this, but here are a couple examples of why I’m questioning the accounting procedures……

In 2021 an annual charge was assessed to 12 residents of an adjoining development for the usage of water from our water system.. One of the 12 did not pay the assessment. On the monthly balance sheet it was carried as an account receivable for the entire year. Also, a late charge was assessed each month, and the late charge was shown on the P&L as revenue, even though it was uncollected. This has happened before, and when the new year starts, this A/R and late charge entries disappear from the financial statements. Where did they go? We’re they charged off? No official record, as far as I know, is made of this.

Here’s another one. ……I’m told that all vendors who do work for our association submit invoices directly to the management company for payment. The only oversight that goes on is if someone at the management company detects something “unusual “, and then they contact a board member. For invoices such as electric bills I don’t have a problem with this, but there are other vendors who could easily pad invoices and no one would be the wiser. Additionally, there is an exception to this process…..certain invoices are sent directly to our developer for payment ( grounds maintenance, for example ). The developer pays the workers directly, then sends an invoice to the management company to get reimbursed. Again, there’s no oversight. Who’s to say whether the developer pads those invoices?

This is why I’m asking whether the members have a legal right to receive a copy of the auditor’s report .

SteveL17 (Nevada)
Posts: 11

Posted:

CathyA3….Our development in the mountains of western N.C. consists of 27 lots, 20 of which are privately owned and 7 are owned by the developer. Only 12 structures have been constructed to date with several more in the planning stages. There is only one full time resident. My wife and I live there around 9 months every year and the rest of the owners either rent their homes or stay there periodically.

We have a management company which handles most of the affairs of our community. They pay the bills, arrange and schedule the Annual Meeting and the Budget Ratification Meeting. They also produce the monthly financial statements, file tax returns and audit the books annually.

Hopefully I’m not boring you with this, but here are a couple examples of why I’m questioning the accounting procedures……

In 2021 an annual charge was assessed to 12 residents of an adjoining development for the usage of water from our water system.. One of the 12 did not pay the assessment. On the monthly balance sheet it was carried as an account receivable for the entire year. Also, a late charge was assessed each month, and the late charge was shown on the P&L as revenue, even though it was uncollected. This has happened before, and when the new year starts, this A/R and late charge entries disappear from the financial statements. Where did they go? We’re they charged off? No official record, as far as I know, is made of this.

Here’s another one. ……I’m told that all vendors who do work for our association submit invoices directly to the management company for payment. The only oversight that goes on is if someone at the management company detects something “unusual “, and then they contact a board member. For invoices such as electric bills I don’t have a problem with this, but there are other vendors who could easily pad invoices and no one would be the wiser. Additionally, there is an exception to this process…..certain invoices are sent directly to our developer for payment ( grounds maintenance, for example ). The developer pays the workers directly, then sends an invoice to the management company to get reimbursed. Again, there’s no oversight. Who’s to say whether the developer pads those invoices?

This is why I’m asking whether the members have a legal right to receive a copy of the auditor’s report .

SteveL17 (Nevada)
Posts: 11

Posted:

CathyA3….Our development in the mountains of western N.C. consists of 27 lots, 20 of which are privately owned and 7 are owned by the developer. Only 12 structures have been constructed to date with several more in the planning stages. There is only one full time resident. My wife and I live there around 9 months every year and the rest of the owners either rent their homes or stay there periodically.

We have a management company which handles most of the affairs of our community. They pay the bills, arrange and schedule the Annual Meeting and the Budget Ratification Meeting. They also produce the monthly financial statements, file tax returns and audit the books annually.

Hopefully I’m not boring you with this, but here are a couple examples of why I’m questioning the accounting procedures……

In 2021 an annual charge was assessed to 12 residents of an adjoining development for the usage of water from our water system.. One of the 12 did not pay the assessment. On the monthly balance sheet it was carried as an account receivable for the entire year. Also, a late charge was assessed each month, and the late charge was shown on the P&L as revenue, even though it was uncollected. This has happened before, and when the new year starts, this A/R and late charge entries disappear from the financial statements. Where did they go? We’re they charged off? No official record, as far as I know, is made of this.

Here’s another one. ……I’m told that all vendors who do work for our association submit invoices directly to the management company for payment. The only oversight that goes on is if someone at the management company detects something “unusual “, and then they contact a board member. For invoices such as electric bills I don’t have a problem with this, but there are other vendors who could easily pad invoices and no one would be the wiser. Additionally, there is an exception to this process…..certain invoices are sent directly to our developer for payment ( grounds maintenance, for example ). The developer pays the workers directly, then sends an invoice to the management company to get reimbursed. Again, there’s no oversight. Who’s to say whether the developer pads those invoices?

This is why I’m asking whether the members have a legal right to receive a copy of the auditor’s report .

SteveL17 (Nevada)
Posts: 11

Posted:

CathyA3….Our development in the mountains of western N.C. consists of 27 lots, 20 of which are privately owned and 7 are owned by the developer. Only 12 structures have been constructed to date with several more in the planning stages. There is only one full time resident. My wife and I live there around 9 months every year and the rest of the owners either rent their homes or stay there periodically.

We have a management company which handles most of the affairs of our community. They pay the bills, arrange and schedule the Annual Meeting and the Budget Ratification Meeting. They also produce the monthly financial statements, file tax returns and audit the books annually.

Hopefully I’m not boring you with this, but here are a couple examples of why I’m questioning the accounting procedures……

In 2021 an annual charge was assessed to 12 residents of an adjoining development for the usage of water from our water system.. One of the 12 did not pay the assessment. On the monthly balance sheet it was carried as an account receivable for the entire year. Also, a late charge was assessed each month, and the late charge was shown on the P&L as revenue, even though it was uncollected. This has happened before, and when the new year starts, this A/R and late charge entries disappear from the financial statements. Where did they go? We’re they charged off? No official record, as far as I know, is made of this.

Here’s another one. ……I’m told that all vendors who do work for our association submit invoices directly to the management company for payment. The only oversight that goes on is if someone at the management company detects something “unusual “, and then they contact a board member. For invoices such as electric bills I don’t have a problem with this, but there are other vendors who could easily pad invoices and no one would be the wiser. Additionally, there is an exception to this process…..certain invoices are sent directly to our developer for payment ( grounds maintenance, for example ). The developer pays the workers directly, then sends an invoice to the management company to get reimbursed. Again, there’s no oversight. Who’s to say whether the developer pads those invoices?

This is why I’m asking whether the members have a legal right to receive a copy of the auditor’s report .

CathyA3 (Ohio)
Posts: 6,299

Posted:

OK, that makes sense.

The late charges may have been charged off to Bad Debt at the end of the last year, although there should be some sort of transaction in last year's statements that shows this happening. Most budgets will have a category for bad debt, since it does happen.

As for vendor invoices, an auditor is unlikely to offer an opinion on whether or not there is padding going on unless there is a charge that did not match the approved bid. That should get flagged. But if the vendor is overcharging in general, that's not going to show up. The way things are supposed to work is that the board (or management co.) get competitive bids from vendors and select one. These guys are the gate keepers to make sure that the vendor provides the agreed on services at the price that was agreed on - the board or manager should verify that the work was completed according to the contract before a check is issued.

It's very common for an experienced developer to have a set of preferred vendors that they work with in all of their new communities. If the developer is reputable, these vendors will have a track record of doing acceptable work that passes inspections and not cheating. In that case the developer would be the gate keeper, along with the construction manager in that community. It would not be in the developer's interest to allow contractors to pad expenses since at least some of it will come out of his profits - and he may not be able to pass along the increase to buyers if the local housing market is competitive.

Do shenanigans go on? Sure, on occasion, along with sloppy record-keeping. It's why people who buy new construction should make sure they buy from a developer/builder with a good reputation and a track record of doing right by their customers. If you buy from someone without a track record, it's even more important to "trust but verify" in the words of a former US president. (I'd personally lean toward "don't trust and do verify" in such a situation - but if it's that bad I probably would have avoided doing business altogether.)

And yes, you should be able to see the results of an audit, although it may not be all that informative if the auditor didn't find anything out of the ordinary.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Forgot this item that jumped out at me:

We have a management company which handles most of the affairs of our community. They pay the bills, arrange and schedule the Annual Meeting and the Budget Ratification Meeting. They also produce the monthly financial statements, file tax returns and audit the books annually.

The audit should be performed by an independent firm - otherwise you have people providing an opinion on their own work. As far as I can recall, whenever I've heard about embezzlement or other financial wrongdoing in HOAs, it's nearly always been either the property manager or a board member who's been the guilty party - the independent audit addresses this. The one case I can vaguely remember that involved a developer, it was large scale financial misconduct also involving local politicians and others - in other words, well beyond fiddling the HOA's books.

Look to see what your governing documents have to say about audits.

SheliaH (Indiana)
Posts: 6,964

Posted:

As Cathy noted, the developer runs the show for now, so You may not find out the details of this until after the homeowners take over. You didn't say If you asked the board of developer these questions - if so, what was the response and If not, why not? I understand your concern because you don't want the account receivable to remain when the homeowners do take over or for that amount to rise by then, because the longer you have an account receivable, the tougher it may get to collect.

That being said, you don't know if that money was collected (that may explain why it's not in accounts receivable). If it was collected, there may have been some sort of agreement to forgive the late fee, perhaps in exchange for paying the entire amount at once or the homeowner has agreed to automated pages won't be money arrives in real time). The budget should be based on assessments, not late fees. The late fees exist to penalize homeowners for not paying in full and on time, so it should be a deterrent to paying kate.

As for the vendors, is there a particular one you're concerned about? Have you seen any invoices that indicate a charge for something that didn't occur? The management company should be checking to ensure that doesn't happen so if there was a contract with a set price, that contract should specify what's being done and when.

Unless you have a specific concern, you can't assume something's wrong. Remember, it's not about company A charging more or less than your community vendor - any vendor can charge whatever th market will bear. It's up to The developer to ensure it gets what's in the contract

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

SteveL17 (Nevada)
Posts: 11

Posted:

I agree with all of what you said, but here’s a remaining concern……I’ll give you a hypothetical example;

A grounds worker turns in his time to the developer……let’s say 26 hours @$15/hr….That’s $390. The developer sends the worker a check for $390. Then the developer fills out another invoice so he can be reimbursed by the POA…….But this time he fills out the invoice for $546, thereby padding it by $156. The management company makes a check out to the developer for $546 and no one is the wiser. A proper audit would compare the original invoice to the invoice sent to the management company. I don’t believe that happens in this POA.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By SteveL17 on 01/16/2022 9:18 AM
I agree with all of what you said, but here’s a remaining concern……I’ll give you a hypothetical example;

A grounds worker turns in his time to the developer……let’s say 26 hours @$15/hr….That’s $390. The developer sends the worker a check for $390. Then the developer fills out another invoice so he can be reimbursed by the POA…….But this time he fills out the invoice for $546, thereby padding it by $156. The management company makes a check out to the developer for $546 and no one is the wiser. A proper audit would compare the original invoice to the invoice sent to the management company. I don’t believe that happens in this POA.

I agree that this could happen. But you've noted that the audit is done by the management company. To me that a much bigger red flag, especially since the management company may be affiliated with the developer in some way. I wouldn't worry too much about trying to see a copy of the audit - I'm fairly sure that it will tell you nothing.

What you need to think about is what happens when homeowners take control and how to put proper checks and balances into place. You may have some difficulty getting qualified homeowners to serve on the board - HOA residents are notoriously apathetic, and if a large percentage of your residents are snow birds or landlords, you're really going to be up against it. This is another red flag, in my mind.

PatJ1 (North Carolina)
Posts: 568

Posted:

Quote:

Posted By SteveL17 on 01/16/2022 9:18 AM
I agree with all of what you said, but here’s a remaining concern……I’ll give you a hypothetical example;

A grounds worker turns in his time to the developer……let’s say 26 hours @$15/hr….That’s $390. The developer sends the worker a check for $390. Then the developer fills out another invoice so he can be reimbursed by the POA…….But this time he fills out the invoice for $546, thereby padding it by $156. The management company makes a check out to the developer for $546 and no one is the wiser. A proper audit would compare the original invoice to the invoice sent to the management company. I don’t believe that happens in this POA.

Is the grounds worker a contract worker (not likely) or an employee of the developer?

The developer is paying the grounds worker. If he is an employee of the developer, the developer has expenses for the employee. Employment taxes, insurance, administration fees, benefits. The invoice from the developer for $156.00 more is probably the entire cost of that employee expense to the developer. That is what the HOA should be paying if that is the case.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Steve

If the developer is still in control of the association, sorry to say as I understand it all are obligated to give owners is a Yearly Financial Statement and one that does not have to go in depth. After all, right or wrong, it is their business.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By SteveL17 on 01/16/2022 4:35 AM
I live in a small community development where the developer has not yet turned control of the POA over to the members. ... Do I, as simply a member of the POA, have a right to see a copy of the audited statements of the association?

What I am wondering:

Before turnover, is the HOA a nonprofit corporation or is it not a nonprofit corporation?

Before turnover, if the HOA is a nonprofit corporation, then it is subject to the North Carolina Nonprofit Corporation Act. The following sections of the Act give the owner a right to inspect the "accounting records" of the corporation:

https://www.ncleg.gov/EnactedLegislation/Statutes/PDF/BySection/Chapter_55A/GS_55A-16-02.pdf

https://www.ncleg.gov/EnactedLegislation/Statutes/PDF/BySection/Chapter_55A/GS_55A-16-01.pdf

The full act:
https://www.ncleg.gov/Laws/GeneralStatuteSections/Chapter55A

SteveL17, if you want a draft of a letter you can use to ask for the accounting records, post back.

BarbaraT1 (Texas)
Posts: 821

Posted:

Quote:

In 2021 an annual charge was assessed to 12 residents of an adjoining development for the usage of water from our water system.. One of the 12 did not pay the assessment. On the monthly balance sheet it was carried as an account receivable for the entire year. Also, a late charge was assessed each month, and the late charge was shown on the P&L as revenue, even though it was uncollected. This has happened before, and when the new year starts, this A/R and late charge entries disappear from the financial statements. Where did they go? We’re they charged off? No official record, as far as I know, is made of this.

In accrual accounting, income is booked when it is earned. Those late fees are income, earned from the moment they are imposed, so they should appear on the income statement (P&L) as income (revenue). As to why they disappear from future financial statements - I don't know what financial statements you are looking at. An income statement or balance sheet shows financial transactions at a certain point in time. February's income statement won't show income booked in February.

Here’s another one. ……I’m told that all vendors who do work for our association submit invoices directly to the management company for payment. The only oversight that goes on is if someone at the management company detects something “unusual “, and then they contact a board member. For invoices such as electric bills I don’t have a problem with this, but there are other vendors who could easily pad invoices and no one would be the wiser. Additionally, there is an exception to this process…..certain invoices are sent directly to our developer for payment ( grounds maintenance, for example ). The developer pays the workers directly, then sends an invoice to the management company to get reimbursed. Again, there’s no oversight. Who’s to say whether the developer pads those invoices?

This is why I’m asking whether the members have a legal right to receive a copy of the auditor’s report .

This is unfounded speculation on your part. The management company provides oversight of the vendors, the board provides oversight of the management company. If you've decided that none of these people can be trusted simply because you do not trust them, then nothing will satisfy you, except perhaps to be placed in total control of all the association's finances yourself. (Then you can deal with other members deciding that you might be padding the bills just because.)

Yes, you can probably ask to review the audit, but don't expect it to be some sort of gotcha document. The most basic audits simply double check the math. A more comprehensive audit will have some vendors contacted at random to verify their invoices. You are not going to find a scenario in which every single invoice was examined under magnifying glass and determined to be accurate.

By the way, even if there was a third party auditor involved - maybe you can't trust the auditor either. Maybe they are all in on this vast conspiracy to pad invoices.

SteveL17 (Nevada)
Posts: 11

Posted:

Barbara T1…….your sarcasm is not helpful.

SteveL17 (Nevada)
Posts: 11

Posted:

Barbara T1…….your sarcasm is not helpful.

SteveL17 (Nevada)
Posts: 11

Posted:

Barbara T1…….your sarcasm is not helpful.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Helpful or not, Barbara's comment points out one of the realities of owning property in an HOA or condo association.

Individual owners are not 100% in control of their own destinies. By buying into one of these associations, you become the legal and financial partner of a bunch of strangers, and these strangers will affect your bottom line to a greater or lesser extent.

These strangers will also have some degree of control over what you can and can't do with your property.

Some people can live with this reality - others will chafe. The key is knowing which of these you are and reacting appropriately if you discover that you initially were wrong. You wouldn't be the first to think that you could live happily in an HOA, only to discover that it makes you crazy.

CathyA3 (Ohio)
Posts: 6,299

Posted:

FWIW, I'm speaking as someone who has owned condos for over 30 years, served on association boards for almost 15 years, and who works for a new new home builder/developer.

The OP's experience sounds very normal. The only thing I cited as a possible red flag (the annual audit by the management company) is actually not unusual. Many businesses employ internal and external auditors - the internal ones usually catch the stupid mistakes, external ones may flag more serious issues such as inadequate controls. It's only a red flag if people assume that the internal audit will catch signs of financial shenanigans - it may, but it may not depending on who is up to no good.

In my experience it's not unusual for new HOA members to see skullduggery everywhere. They mistake normal business practices for bad behavior because they don't understand that the HOA is a business/corporation with a corporate governance structure - it's not a democracy. If you throw this confusion on top of the loss of complete control over one's property, it's a recipe for conflict.

BarbaraT1 (Texas)
Posts: 821

Posted:

Quote:

Posted By SteveL17 on 01/17/2022 9:25 AM
Barbara T1…….your sarcasm is not helpful.

It is also not helpful to assume that everyone is a bad actor out to get you until they prove otherwise to your satisfaction.

Realistically, what kind of oversight would satisfy you?

One example you gave was that a manager approves invoices unless they notice something unusual. What do you suggest they do instead?

SteveL17 (Nevada)
Posts: 11

Posted:

Barbara, please…….go give your advice to some other poster, please.

BarbaraT1 (Texas)
Posts: 821

Posted:

Quote:

Posted By n/a on 01/17/2022 11:04 AM
Barbara, please…….go give your advice to some other poster, please.

I haven't given you any advice actually, but since you are obviously one of the many posters who come to this forum for validation, and are unwilling to consider any perspective other than their own, I'll end our interaction. Good luck to you.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Elvis has left the building.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By BarbaraT1 on 01/17/2022 9:18 AM
If you've decided that none of these people can be trusted simply because you do not trust them, then nothing will satisfy you, except perhaps to be placed in total control of all the association's finances yourself.

AFAIC this attitude flies in the face of every state legislature that has enacted statutes permitting members of nonprofit corporations to view certain (sometimes, nearly all) records of the corporation. To me these legislatures are emphatically stating that members of nonprofit corporations, who have the right to view certain records, are the best protection against poor management (and more) by the Board.

I think people should just answer the guy's question.

The auditor's report may very well be proprietary and not something a member can view. But the accounting records are documents that AFAICT, the OP should be permitted to view under the law.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I actually did answer his question up here the beginning of this thread. To recap: I believe he should be able to view the audit report but that it may be less informative than he believes it will be, not least because it's an internal audit performed by the management company (who is not going to say "yup, we totally messed up here").

FWIW, my take is that the OP may be new to HOA ownership and *may* be grappling with the loss of control that goes along with this. He's suspecting accounting shenanigans and vote manipulation by the developer with zero evidence of these things and wants to dig up some evidence - even though the information he provided suggests that things are functioning as they should be while the developer is in control. This is not the sign of a person who will live happily in an HOA.

I also believe - FWIW - that he's actually ignoring things are would be more concerning to me:

* He mentioned that there is currently only one full time resident. He and his wife are there 9 months of the year, and other owners are snow birds or landlords. This suggests that electing a functioning board who will provide consistent oversight may be a problem. The kinds of things he's worrying about can fester in such conditions.

* The community is providing water to residents of an adjacent community. There will be costs associated with this (collection of delinquent accounts, resolving potential disputes, etc.), and these costs do not provide any benefit to the OP's HOA that I can see.

* It's also a new community, and things can happen that will change the developer's original plans for a community. Buyers can't rely on the future playing out exactly the way they'd envisioned.

So this HOA has some additional issues beyond all the normal stuff we often see.

AugustinD
Posts: 3,698

Posted:

CathyA3, yes, afaic you answered his query well starting with your first post to this thread. And I tend to agree that the new folks here tend to lash out, without appropriate evidence, about the financials at their HOA. A little digging, like that which you and I suppose Barbara are encouraging, often (usually?) shows these new folks they have a lot to learn, and they are out of line.

I had in mind the Surfside condo collapse. What if owners there had examined the financials and other allowed records carefully early on?

Obviously I am in what-if, woulda, coulda, shoulda never-never land. I know I am dreaming if I think any owner back in the early 1980s would be savvy enough to catch the unlawful, below code-requirements, construction that apparently was going on.

Else I remain in the camp that does not think much of any effort to discourage owners from asking for records to which they are lawfully entitled.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Ya, Surfside is a thing. I'm pretty sure that current buyers wouldn't be able to catch issues with the future Surfsides that are being built even as we speak. It would take someone with construction knowledge who visited the site every day *and* who had some way of learning about the kinds of collusion between inspectors, builders, regulators, politicians, etc. etc. that were allowing shoddy construction to happen. There is no way the typical buyer could know enough.

It's one reason I recommend finding out who built your community. The builder I work for has been around almost 100 years and has a good reputation for building good homes and doing right by their customers. Since the buyer can't know all of the above, the builder's reputation is a proxy for the unknowables. And it's also protection against the kinds of stuff the OP is worrying about - not that the occasional bad actor can't get involved, but the odds are against it if you buy from a reputable builder.