GROUNDS FOR REMOVING TREASURER

I have been serving as President of our HOA for almost 2 years. Over the past couple of months, I have requested the Treasurer add me to the HOA account and sign us up for on-line banking. I thought this should be done as a "checks and balance" since the account and books have remained in his sole possession since he took over as Treasurer in early 2007. We recently learned that the signature card held the names of the original officers, and the former president informed me of this and took the initiative to go by our local branch to have his name removed and mine added. As it turned out, a new signature was never filled out and the current Treasurer was not listed on the account.

By last week, I was becoming a little frustrated with his lack of progress and decided to go to the bank and have my name added, and also requested on-line access be established. The first time I logged onto our account, I noticed several checsk the Treasurer had written to himself. Some of these were office supplies although his expenses at best should be a minimum since he said he was running any mailings through his company's meter rather than paying for postage. A couple of the checks are without any explanation. Our Bylaws state that any expenses have to be approved before he can disburse funds. He never approached me or the other board members about purchasing supplies and mulch for our entrance, and since we are on a very tight budget we have refrained from using funds carelessly.

In addition to the checks, I noticed an on-line bill payment to Home Depot for $503.00 withdrawn from our HOA account. We do not have an account with Home Depot, nor have we purchased any materials from Home Depot. The board sent a letter requesting receipts for the out-of-pocket expenses and approval for the checks he wrote to himself, and an explanation for the Home Depot payment. The board members also asked him to return the checkbook, and post office box key which he has failed to do.

I know we can remove him with or without cause, but want to make sure we are handling this the correct way. We had hoped he would resign quietly, but he has not done this and we would like to make the community aware of his actions with their HOA funds. Some residents even want him prosecuted, but I would prefer he resign and then close the current account. We have already secured the account.

Thank you for the advice. Unfortunately, we do not have a fidelity bond and I agree it is something we need. I wanted to handle this matter fairly, and give him adequate time to respond to our letter and requests for the return of HOA property. He informed the VP he would return the checkbook and post office box key tonight. I am unsure why he refused to return it within the deadline requested in our letter; however, he also informed the VP he has or is hiring an attorney. We simply wanted him to resign without embarrassment, but he has forced the issue and some residents have heard some of what is going on and are demanding full disclosure. When he informed our VP he would return the checkbook to him tonight, our VP asked about the checks and Home Depot bill payment, but he refused to answer.

I have already obtained approval from the BOD to request our bank statements from the time he assumed the position of Treasurer, and we will be reviewing these, as well.

Hi Susan

1. One big issue is that he never provides any regular treasurer's report. When I beg for something to submit at meetings, he usually provides a pie chart showing what percentage of expenses go where. He provided 1 profit and loss report last year.

2. NO materials were approved for any repairs or anything else. We are having financial struggles now and were advised we did not have enough money to make repairs to some street signs in the community hat are in dire need of repair. Also, we are a community of 45 homes and have absolutely no amenities. We do not have a Home Depot account. The Vice President and Secretary have no knowledge of what the expense is for. Also, when he did provide a P&L report last year it was after the Home Depot on-line bill payment and NOTHING regarding Home Depot was shown as a budgeted or non-budgeted expense during the month when the on-line payment occurred. We do not have a budget for office supplies; however, if he had provided receipts for legitimate expenses that would satisfy everyone. The bigger problem is a couple of identical checks written on the same date for office supplies and then another check written to himself where he entered "dues" in the "for" line.

I think we have more than enough reason to request his resignation. The other BOD want him removed with cause. This HOA has operated so loosely in the past that I can promise none of the other BOD know what Executive Sessions is, but even so, is that necessary to remove him from office?

Thank you.

Mary -

I've checked the Bylaws regarding removing an officer, and the BOD can remove an officer with or without cause. The officers also serve as the BOD since we couldn't generate enough interest to form a separate BOD.

Here is where the nightmare begins. When I was elected to fulfill the role of President, I was only elected by the members in attendance at that meeting. The former President wanted to resign after 5 years of serving in that capacity. The Treasurer (who we are trying to remove) was elected the same way. Mostly, he submited his name for nomination and it was essentially turned over to him. Our Developer had no Bylaws for the HOA (and therefore there were no term limits, no means of holding elections and voting, etc.). Big surprise! I contacted the Developer, and he was almost clueless about Bylaws. Last year, we attempted to amend the CC&R's and have a draft set of Bylaws accepted by the members. The amendment did not pass, and so the Bylaws were only accepted by the officers. Not sure how much of an issue this poses. There has been a great deal of apathy in our community, but it seems to happen nearly everywhere from past experience.

So, the Treasuer was neither elected as an officer or board member by the HOA members. Our SC Code does have Bylaws for the operation of a non-profit corporation, and mostly our Bylaws are in agreement with those. We do not have a SC State HOA Act that applies to communities, only one specifically addressing condiminum associations. I believe it is called the Horizontal Property Act

Last night he forfeited HOA property, and provided a cover letter with a list of bogus receipts for over-inflated office expenses. In addition, he stated that the Home Depot on-line payment from the HOA account was a "mistake" when he inadvertently looked at the HOA checking account and routing numbers instead of his own. He also provided a contact name for an attorney he has sought legal advice from, and we have just learned from the SC Bar Assocation (after being unable to reach this attorney via the phone number provided)that this "attorney" is not a member of the SC Bar Association and therefore unable to practice law in SC. I am in total disbelief since he's fully aware I have 25 years paralegal experience.

So, the BOD/officers have decided to send a letter to the Treasurer via certified mail asking for his resignation. The remaining BOD/officers also want to retain an attorney to look over the paperwork, and then turn it over to our solicitor's office if there is sufficient cause. This is not what I wanted to see happen, but I believe the BOD/officers believe there is a breech of trust and possibly some criminal wrong-doing with the Home Depot situation. I believe the BOD/officers believe we have to fully disclose everything to the HOA members.

Any more advice/suggestions?

Thanks!

In case you didn't notice, banks don't check signatures. They don't check the signature. They don't check if you require 2 signatures, etc.

As far as the Home Depot, why not just give him a call and ask him?

As for removing him? If you have decided to remove him, just do it. Just make sure not to spread rumors about the home depot receipt until you get the real story.