Bank Card

Started by PeggyB7 • 7 replies • 542 views

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PeggyB7 (Texas)
Posts: 10

Posted:

Can someone please explain to me the rules/and or law for an HOA board having a bank/debit card to use in Texas?

Is this allowed? I have heard conflicting answers on this.

I am on an HOA board for a CONDO complex in Texas. Some of the other board members live off-site and a good distance away from complex which makes it difficult at times to get signatures on checks. We have also found it difficult at big box brand stores to purchase lumber or other items needed for compelx with a check with 2 signatures, so we figured a bank/debit card would be the answer to this issue as long as all members of the board knew/know and agree to what purchase is being made and agree to it via email.

Can anyone explain to me, please the rules and/or law for this? Allowed or not?

Thank you for your time.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

This is why need checks and balances. To trust and verify someone is spending correctly. I would suggest a better option we did is to do a bid process. The person or company doing the work submits a bid for approval. They spend the money and then HOA reimbursement is done based on the bid agreed upon.

Former HOA President

BillH10 (Texas)
Posts: 1,217

Posted:

Peggy

I am not aware of any restrictions in Texas for HOAs and condominiums regarding the use of a bank card other than may be described in the governing documents of an association.

That said, as owners of a management company, and a member of the board of the HOA in which we reside (my wife), we will not allow a client to have a bank card or petty cash fund. Too much accounting overhead and too much opportunity for small to large misuse.

So, what to do:

1. Have the management company make the purchase and be reimbursed on the monthly invoice. We do so monthly.

2. Have a board member or owner use their personal credit card and submit a receipt for reimbursement. We can reimburse for an authorized expenditure in 24 hours or less, if necessary.

3. Drop the two-signature requirement. It is just feel-good overhead. The banks do not compare signatures as they did in 1952, if they did so then. If an expenditure has been authorized by the Board, why is it necessary to obtain two signatures on a check?

MarkM19 (Texas)
Posts: 1,459

Posted:

Peggy,
Sounds to me like your HOA/COA is fairly small. I think that a Debit Card makes sense but must be handled by a very responsible person who understands how to retain records and submits very detailed expense reports. I totally get it that some vendors or stores no longer want to deal with checks even if you could get the second signature to make it a good check. Here are some of the things I personally would require how it is handled.

Assumptions are you are self-maintained with no management involved.

1) Before the card is used the board gets copied from holder what the purchase is going to be used for.
2) Receipts detailing the actual purchase sent to the board.
3) Picture of the items actually installed for board records.

I am sure I have left something off, but this is a start.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MarkM19 on 06/22/2023 9:56 AM
Peggy,
Sounds to me like your HOA/COA is fairly small. I think that a Debit Card makes sense but must be handled by a very responsible person who understands how to retain records and submits very detailed expense reports. I totally get it that some vendors or stores no longer want to deal with checks even if you could get the second signature to make it a good check. Here are some of the things I personally would require how it is handled.

Assumptions are you are self-maintained with no management involved.

1) Before the card is used the board gets copied from holder what the purchase is going to be used for.
2) Receipts detailing the actual purchase sent to the board.
3) Picture of the items actually installed for board records.

I am sure I have left something off, but this is a start.

Good advice.

CathyA3 (Ohio)
Posts: 6,299

Posted:

If you want to go the bank card route, you should use a credit card. Debit cards don't have the protections that a credit card does - they're like carrying cash, and if your debit card is stolen, the thief may empty your account before you even know that the card is missing.

https://www.investopedia.com/articles/personal-finance/050214/credit-vs-debit-cards-which-better.asp

PatJ1 (North Carolina)
Posts: 568

Posted:

We had a debit card when I was President. It was an HOA debit card in my name. It was a separate account labeled Petty Cash and we kept less than $500 in the account to limit any losses. It came in really handy to purchase small items for the community like poop bags without having to reimburse someone. It was especially helpful when we wanted to purchase an item from a home improvement store for the community. They wouldn't take an HOA or bank check. Management Company had no way to pay for it. MC transferred the $ over and made the payment on the debit card. It was a good thing. The HOA signed a contract to have work done by the home improvement store. Don't know what we would have done otherwise. Purchase was $7000 and purchased was linked to a City Grant with no other vendors available.

Be cautious if you go this route.

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By BillH10 on 06/22/2023 9:53 AM
Peggy

I am not aware of any restrictions in Texas for HOAs and condominiums regarding the use of a bank card other than may be described in the governing documents of an association.

That said, as owners of a management company, and a member of the board of the HOA in which we reside (my wife), we will not allow a client to have a bank card or petty cash fund. Too much accounting overhead and too much opportunity for small to large misuse.

So, what to do:

1. Have the management company make the purchase and be reimbursed on the monthly invoice. We do so monthly.

2. Have a board member or owner use their personal credit card and submit a receipt for reimbursement. We can reimburse for an authorized expenditure in 24 hours or less, if necessary.

3. Drop the two-signature requirement. It is just feel-good overhead. The banks do not compare signatures as they did in 1952, if they did so then. If an expenditure has been authorized by the Board, why is it necessary to obtain two signatures on a check?

This is the way we do it in my community, although we still have the two signature requirement for checks exceeding a certain amount.

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

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