HOA documents and financial control

Started by BobbyB4 • 9 replies • 434 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

BobbyB4 (Texas)
Posts: 4

Posted:

In Texas. Our board is removing a board member that has been keeping all of the financials and records in her personal home. Because of this she refuses to let anyone see the books and records. There has been a suspicion of missing funds and the regular maintenance has not been performed while the dues have more than tripled in the past few years. Our roads are washing out in some areas and the maintenance log does not have dates. And there is only 3 pages over the span of 7 years.

Either way the board is holding an emergency meeting to remove 2-3 board members.

Well, the issue is that she has all of these documents in her house and has control of the bank accounts. She refuses to let anyone see the real books and records and tried to retroactively enforce a governing documents after it was filed to keep people from viewing the records unless they pay $1800 for the whole file.

My question is, can she keep control of the bank accounts and records and refuse to release them to the board? And if she does what is the next action the board should take? I am positive she cannot do this but the board wants me to find out for sure and this is a good site for information.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Your governing documents like CC&R and article of incorporation are public. Can not stop from viewing or getting copies from the source.

The HOA should have 2 people at minimum as signing ability at the bank. The HOA needs to verify whom is a signee on the account. May need a new account if can not modify.the bank should tell you what needs to be done.

Keeping records in the house is neither here nor there depending on the circumstances. We had a clubhouse closet. Also the bookkeeper kept financial record. Not sure what record your looking for or think should exist. Should be able to rebuild and start new if do things better.

Former HOA President

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By BobbyB4 on 12/18/2023 9:09 AM
In Texas. Our board is removing a board member that has been keeping all of the financials and records in her personal home. Because of this she refuses to let anyone see the books and records. ...
Well, the issue is that she has all of these documents in her house and has control of the bank accounts. She refuses to let anyone see the real books and records and tried to retroactively enforce a governing documents after it was filed to keep people from viewing the records unless they pay $1800 for the whole file.

My question is, can she keep control of the bank accounts and records and refuse to release them to the board?

I hope you take this to the HOA attorney. For now, my take:

This director is compromising the operations of the HOA in a substantive way. This is one of those rare situations where I feel a board is in fact on solid legal ground removing a director.

The next step is to have the HOA attorney send a C&D letter, saying in so many words: "Either share the records (etc.) and turn control of all banks accounts over to the HOA, or the HOA will sue you, and this will cost you a fortune."

You mentioned the board removing other directors. Tread softly. It is rare for the bylaws to permit removal of directors by the board. If the circumstances are truly extenuating (like I explained above), then IMO the board not only should remove the director but also has a fiduciary duty to do so.

DouglasK1 (Florida)
Posts: 2,046

Posted:

One or more of the remaining directors should go to the bank and find out what they require to change the authorized users on the account.

When our treasurer retired and a new treasurer was elected by the board, our bank told us all they needed was a letter on "HOA letterhead" and signed by the president saying who should be added and removed as authorized users. Honestly this seems to me to be ripe for fraud, but not really sure what else they could ask for. It's possible they checked Sunbiz to verify that the president or other directors matched what was registered with the state for the corporation, but that's just conjecture on my part.

Escaped former treasurer and director of a self managed association.

LizD3 (California)
Posts: 200

Posted:

Here (CA) you can request documents for review and the Board is legally required to comply. Of course, not all Boards do. Bigger concern may be knowing what is happening financially with HOA funds. This is an easier problem to solve. Just take the bank statements and cancelled checks (which you can get from the HOA bank) and vendor invoices (which you can get from the HOA vendors) to a forensic accountant who can tell you if there is any fraud.

BillH10 (Texas)
Posts: 1,217

Posted:

Bobby

You did not say which type of HOA/POA your association is, I will assume it falls under Section 209 of the Texas Property Code.

If so, in Texas any owner has an absolute right to review the records of the association upon request, with a few very limited exceptions. Based on what you wrote, the requests you described are not exceptions. The date, time, and location of the review must be reasonable, 10:00 PM Christmas Eve will not work but 10:00 AM, Wednesday, December 28, 2023 is reasonable. Allow the Treasurer to choose the location.

You may wish to compose a certified letter to the "Treasurer" stating that under Texas Property Code Section 209.005 (c) you and the other owners in the association (name them) desire to review the financial records of the Association, including bank statements, balance sheets, profit and loss statements, income statements, copies of invoices other than for recurring utilities, and, published financial reports, and whatever else you may wish to review from "this date" to "that date". Do not ask for paper copies at this point as charges may be levied for copies. You may make copies when reviewing the records, such as with a cell phone, at no cost. If you have someone with an accounting or HOA financial management background, take him or her along.

Ask the Treasurer to confirm the date and time of the review. If she does not respond, as ElleN suggested above, it will be time to obtain the services of an attorney. Engage an attorney whose specialty is homeowners associations law (not real estate law); the cousin of your sister's brother-in-law who has an ambulance chasing practice will not serve you well.

Good luck.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By BillH10 on 12/18/2023 2:32 PM
Bobby

You did not say which type of HOA/POA your association is, I will assume it falls under Section 209 of the Texas Property Code.

If so, in Texas any owner has an absolute right to review the records of the association upon request, with a few very limited exceptions. Based on what you wrote, the requests you described are not exceptions. The date, time, and location of the review must be reasonable, 10:00 PM Christmas Eve will not work but 10:00 AM, Wednesday, December 28, 2023 is reasonable. Allow the Treasurer to choose the location.

You may wish to compose a certified letter to the "Treasurer" stating that under Texas Property Code Section 209.005 (c) you and the other owners in the association (name them) desire to review the financial records of the Association, including bank statements, balance sheets, profit and loss statements, income statements, copies of invoices other than for recurring utilities, and, published financial reports, and whatever else you may wish to review from "this date" to "that date". Do not ask for paper copies at this point as charges may be levied for copies. You may make copies when reviewing the records, such as with a cell phone, at no cost. If you have someone with an accounting or HOA financial management background, take him or her along.

Ask the Treasurer to confirm the date and time of the review. If she does not respond, as ElleN suggested above, it will be time to obtain the services of an attorney. Engage an attorney whose specialty is homeowners associations law (not real estate law); the cousin of your sister's brother-in-law who has an ambulance chasing practice will not serve you well.

Good luck.

Sound advice.

DeanJ
Posts: 1,786

Posted:

Sounds like a poorly run HOA.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

What I do not like about this approach is it recognizes the treasurer as Thee Spokesperson for the board and HOA when it comes to these records. If the Treasurer declines, and to enforce the records request, now the HOA attorney is writing to -- who? what? -- the HOA (as represented by the treasurer), so this is a HOA v. HOA dispute? No, that's ridiculous. The treasurer, so this is a HOA v. Treasurer dispute? This is better. But the board does not need to make a records request.

The first action should probably be a simple board vote to remove this person as Treasurer. If this person is also a director, then she can stay on the board (as a director). Then the board, using the HOA attorney as needed, should send a letter to this person (the former treasurer), ordering him/her to turn over the records or else.

God willing BobbyB4 knows that an officer position (such as "treasurer") is different from a director position. I am betting not.

BillH10 (Texas)
Posts: 1,217

Posted:

ElleN, I agree with you if he is on the Board. His status was not clear to me in his post.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here