MC keeps owner overpayment dues on books

An HOA member overpaid their dues by a large amount while the developer still had control of the HOA, before the Turnover last fall.

The MC had deposited the overpayment into the HOA operating fund. Our 2024 balance shows our bank balance to be almost $3000 more than the HOA has in funds.

The new HOA board requested the MC refund the overpayment back to the owners and were told that unless the owners asked, they could not/would not do so.
(The owners do not reside in the HOA.)

The board asked that the money be moved to some other column in the books so it would not appear to be part of our operating funds. They replied they didn't have a way to set it up that way.

The board emailed the MC that we should not be using or co-mingling the HOA funds with monies not ours. The MC replied that they knew on their end, to whom the money belonged. This MC purports to manage quite a few HOAs; surely they are aware that co-mingling is not an acceptable practice.

I found a voucher in the HOA's portal that referred to a refund (so there is or WAS a way to issue a refund.) I clicked on the "approve" and "submit" and the voucher disappeared. The MC was told what I'd found and done; Were the owners now getting a refund of almost $3ooo?
MC replied "nothing was sent back to the owners."
MC "We were able to void this voucher as it was just stuck in limbo".
MC "We were able to find a way to cancel the incorrect auto pay set -up." and
MC "their dues are coming out of this credit balance each month until it is used up and then they will start to receive monthly statements again.
MC "using the dues up this way avoids a huge hit on the budget"

Is this overpayment being used as a "slush account" for the MC to pay out the few HOA monthly bills including the MC monthly withdrawal?

The new HOA members and board never saw the developer's bank records before turnover. WE only see what the MC records on the monthly board report. We are worried the HOA has only paid bills because of the overpayment money in the MC account. Hand to mouth, as it were.

Is it legal for the MC to be co -mingling and using money that does not belong to the HOA?

This works for me too. Although the $ is in the checking, an asset, on the Balance Sheet. It is also a liability on the balance sheet. Prepaid dues or a negative accounts receivable.

It stays on the HOA books until it's used up in paying dues or the owner requests it. We have had owners do this frequently.

Perhaps the owner is unaware. Can the MC sent a statement of account to the owner to remind them of the credit balance?

The owner may be a snowbird or travel a lot for business. It may be easier for them to pay a large sum and let the assessments be deducted from that, rather than worrying about it when they're out of the country and risking coming home at the end of the year and finding themselves in collection/foreclosure.

If the owner had an issue with it, they'd be complaining.

I agree that there is nothing to see here.

It is typical to have pre-paid assessments

It is typical to keep pre-paid assessments in the operating fund. It is not co-mingling.

We simply have a line item showing Pre-paid assessments.

Commingling means keeping money with different purposes in the same place. You are describing money that is all used for the same thing. As others mentioned, your balance sheet should show, under Liabilities, a line item for “prepaid assessments” so you aren’t confused by your excessive amount of cash. Anybody reviewing your books with an eye on your financial position will know how to read them.