Reimbursement to HOA Board Member

Hello All,

Just want your thoughts on this. Per our bylaws reimbursement is allowed to be paid to a board member, however this is an egregious amount. Reasonable reimbursement for ink cartridges, paper, miscellaneous items of around $500 I can understand, but this was disclosed on our financial audit for the first time this year. Low and behold I was made aware that our CPA has been investigated by the CBA and found guilty for negligent practices on another HOA.

“During 2021, a member of the Board of Directors paid drywall repairs, painting, carport repairs common area maintenance and some legal and administrative expenses in behalf of the association and got reimbursed. The Association paid the Board member total of $88,800 during the year.”

If you read this and are questioning $8,800 or $88,800. The correct amount is $88,800 cash. Again $88,800 in CASH. Please read my thread on failing to have an election, proxies and dropping our quorum requirements. Some say I don’t have what it takes to be on the board, some differ; however if you feel this is appropriate or ill conceived please reply with your comments.

Have a Happy 4th of July!

Where are the receipts? I can understand some of the charges but legal costs. That is something someone should NOT be paying out of their own pocket on the HOA's behalf. This should have been voted on by the board prior to expending if it's not in the typical office supply catagory.

When I was a board member did have to seek some legal actions against my HOA. Because my property was rental, it was a tax break on my taxes. It was about an illegal special assessment the new board was undertaking. Long story but did force them to to do the right thing for the most part. I just got stuck with the legal bill. Even though I was on the board this was not a board expense. It leads me to wonder how this board member justified the expense?

There should be a policy in place about reimbursement on record. Anything outside of office supplies is something that should be scrutinized and discussed.

I would drop you as a client in a heartbeat. I am sure you get no benefit from your credit card company, right?

I have not experienced that the Board spends time discussing the mechanism of payment from the association to the vendor.

However, in our association, every reimbursement is approved at a meeting by a quorum of directors. We approve the overall project ahead of time, but the actual reimbursement is approved after it is made and before receipts are submitted to the property manager.

I don't think you would. I asked the property manager what the reimbursement process was. She explained it to me. I have used it with her approval. Every reimbursement request was approved by the Board.

If you were our property manager and didn't like this, you'd simply explain that before I submitted any and then I would figure out something else to do.

Hello TimB4,

Of course there is something with the entire board. First off we have 2 board members who are partners living in the same household (joint owners) serving on the board together. Moreover, using the management company buy short sale properties while managing them as rentals. Additionally we have 2 board members that live offsite (i know not against the law).

When you have a board who is afraid to have an election even when we met the subsequent quorum, requested IDR, requested a special meeting, disseminated false misleading election material, used proxies to vote not to adjourn the meeting there’s obviously something wrong here.

I'd be concerned about cash payments as well, although more on the vendor side. If someone wants to be paid in cash, that says tax fraud to me. And if someone is dishonest in one area, they're probably dishonest in other areas. Reputable companies that deal with HOAs are used to receiving checks or other forms of payment - and you want to hire reputable companies.

As far as reimbursements go, if the board has authorized one director to spend the money and the director provides receipts, then of course that person should be reimbursed.

If the director goes to the local copy shop to print the newsletter and the copy shop only accepts credit card payments and the HOA doesn't have its own credit card, then of course the director has to use a personal card. Who cares if it's a cash back card? The HOA isn't being charged extra for the cash back - how would the copy shop know what kind of card the customer uses? If anything the director's credit score may be taking a hit because of the amount of charges being put on the card.

Here is something to consider... Our utility companies require an actual address and a name in order to set up an account. Our HOA does not have an official address. We used the clubhouse as an address. Considering how boards change there was no official way to put a name on that account. Apparently someone over 20 years ago did lend their name so we could get our water/utilities set up. This set up does have lend that owner putting their personal credit could be effected if we ever defaulted. It was before my time to know if that person put the required deposit down or the HOA provided the money to them. Which would show up as a "reimbursement".

I would want to find out if there was a similar issue that required an actual name/address. When had my A/C system replaced they offered a payment plan. It was applied for similar to getting a credit card. A HOA doesn't have a social security number. It would have to apply for credit differently than an individual. Maybe the board felt they could do a "shortcut" by using someone willing to put up their money/credit?

Mind you that is really a dumb idea and highly not recommended. However, it is a possibility because not all boards are necessarily "intelligent" in their decision making.

This is about the only way I could think it could be justified in paying back for some of these expenses like legal or vendor construction costs. Otherwise it would be good someone could explain wth?

I thought I would get more responses on CASH reimbursement to a Board member in the amount of $88,800. I guess it didn’t seem all that concerning.

Adding to what JohnT38 said, do your bylaws require a regular audits, and what have the most recent ones said?

Most of the responders appeared to agree that this is concerning, but without details we don't know if this smoke adds up to a fire. That $88,000 would say "fire" in a very small HOA with few or no amenities, but less so in an HOA with a few thousand homes and a number of amenities.

The use of cash certainly needs to be explained.