Investment CD titling

Started by RS10 • 4 replies • 225 views

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RS10 (Florida)
Posts: 2

Posted:

1. Should HOA money be invested in CD titled XYZ HOA and Tim Smith (Treasurer Board Member)?
2. Should HOA money be invested in Cd titled XYZ HOA or Joe Smith (Board Member)?

HOA has 3 or 4 directors on each CD as having authority to move money, renew CD, etc.
Tim Smith would be one such person listed as authorized. Joe Smith is also authorized to sign.

Seems #2 could make misappropriating funds very easy and #1 would only take forgery to do the same.

Not a question of if money can be invested but rather should the investment documents be titled in such a way.

I'm of the opinion these CD's are at danger as titled and should be immediately redone and only listed with the HOA title (no ors and no ands) with 2 or more board members required to authorize renewal/cashing.

Thanks.

SheliaH (Indiana)
Posts: 6,964

Posted:

I wouldn't put this in the name of any board member - the association will likely last long after Joe Smith leaves the board. Usually if a co-owner of an account or CD passes away or ceases to exist, the other(s) would split the proceeds, although you can change the names on the item.

So....did you ask the board why the CDs were named this way? Is this a bank requirement (unlikely?) Did they consult with the association attorney (probably not) or one who specializes in securities? Are there any policies or procedures in place to protect against misuse and embezzlement (be it a property manager, board member or anyone else? Is there anything in writing (bank policy?) to support what the board did?

I suspect nearly everyone who responds to this will agree, but what you really need to do is go to the next board meeting (several, really) to get these questions answered. Bring your neighbors so they can hear the responses and it's harder for the board to blow you off. If they can't or refuse to answer, you know your next steps. You'll need to rally your neighbors together and demand a response and if you don't get it, you may need to organize a recall. That will require work, starting with reading your documents to see how a special homeowners meeting is called for this. You may also need to pass the hat for your own attorney to guide you yo ensure you do this correctly.

Someone on this website had a recent conversation on how his community managed to sack a rouge board- read it and other older articles for ideas on strategies. Bring your questions back to this conversation so you'll get updated suggestions. Good luck!

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

LetA (Nevada)
Posts: 2,679

Posted:

It is not necessary to put any board of directors name on the CD, it may cause unintended consequences for both parties.

A signature card with the bank with attached accounts will be more than enough. an ID with a printout from the secretary of
states office notating the directors names, copy of the articles of incorporation is just about all you should need.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I agree with the other responders that this is inappropriate and should be corrected promptly. Does your HOA have regular audits? I would think that an auditor would flag this.

I'm actually surprised that the bank went along with this since the two directors/officers are clearly NOT owners or co-owners of the funds. When we move money around, we have to jump through a number of hoops with signature cards and whatnot. Banking regulations have tightened up to deal with money laundering and other financial shenanigans, and there is a clear distinction between business accounts (ie. for HOAs) and personal accounts (with individuals' names on them).

I recommend an audit and maybe consider finding a new bank because I question the current bank's expertise.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By RS10 on 07/01/2024 12:33 PM
1. Should HOA money be invested in CD titled XYZ HOA and Tim Smith (Treasurer Board Member)?
2. Should HOA money be invested in Cd titled XYZ HOA or Joe Smith (Board Member)?

Do the CDs total more than $250,000? Are these CDs at the same bank? If so, then I suspect the reason the HOA is doing this is for FDIC (insurance) reasons.

The alternative would be to have CDs at multiple banks. Which is a royal pain but increasingly, HOAs are doing this.

Until you google and read up on this subject, leave this alone.

A start:

The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. Deposits held in different ownership categories are separately insured, up to at least $250,000, even if held at the same bank.

I would provide more citations, but people here tend to be google-illiterate, so I am resisting doing so these days unless asked by the OP.

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