legal questions

Is it legal for a committee to have their own e-mail address and send out a newsletter (i.e. upcoming events etc)? Is it legal for an HOA treasurer to buy things out of a personal account and then reimburse themselves with money from the HOA account?

Re: treasurer reimbursing him/herself for expenses.

Receipts are a must and I'd encourage a second set of eyes on this. I always had another person initial my receipts (ensuring that the items did indeed exist and were purchased for the HOA) and verify the amount reimbursed. An audit will require a back tracking for the paperwork, anyway.

Better be safe than sorry.

I was told by an attorney that it can be considered commingling of funds. anyone agree?

What types of things exactly are you talking about? Things such as office supplies and postage or are you talking about something else? How much money are we talking about here?

By the way, when I think of "co-mingling," what comes to mind is something like this:

1) Assessment checks arrive made out to the association --

2) Treasurer deposits assessment checks in his/her own, personal checking account --

3) Treasurer then writes a single check to the association in the amount of the deposit --

Wow. Just typing that out made me feel all yucky and unclean.

Dwight, obviously, what you are describing is most likely correct, though it might not technically be "co-mingling" since the Events Committee IS a valid committee of the HOA. I can see where keeping their "funds" (no doubt budgeted from the HOA assessment funds) in a separate account would be cleaner all the way around.

But I was under the distinct impression that this is what Darrin was referring to regarding the term "co-mingling."


Darrin, if it is not, then it would be helpful if you could provide us with a bit more information -- and some clarity regarding what sort of reimbursements you are talking about.

Sorry, I wasn't clear. Our current PM also told us that we didn't need to have a separate account. And I guess I shouldn't say that we disallowed donations. The real hassle was in trying to solicit donations, so the Events Committee just limits their activities to what they can manage with their annual budget amount. If anybody does ask to donate we won't turn it down.

When Darrin mentioned that an attorney said that "it can be considered commingling of funds", I wasn't sure what "it" he was talking about.

But you still don't say what the reimbursements are for.

They may have lax policies, but it's not illegal.

Then again, you say now that the president signed the check, so the Treasurer has to answer to someone at least. The impression you first gave was that he was signing his own checks.

Have you ever worked for a company in a position that reimburses you for expenses you incur out of your own pocket (you own personal bank account or by credit card)?

If you had, it seems to me that you wouldn't even be questioning that portion of it.

What you would have been focusing on is that the reimbursements may be being made without receipts.

But you don't have a clue if they are or not, since you're not part of the expense report/reimbursement loop. Apparently only the president is.

Do you think the Treasurer should NOT be reimbursed for association expenses that he pays for out of his own pocket?

Where do you think the money should come from?

While we try to limit what sort of items board members pay for, it's not always possible.

One more question, when you say from "last year's budget" the amount was a few thousand dollars, I'm confused on how you deduced that.

How is your budget written?

Ours has categories, like "Landscaping/Lawn care," "Utilities," "Postage," "Office Supplies," "Operating Supplies," "Legal," "Other Professional Services," "Insurance," etc etc etc.

Are you saying that there is a budget category "Treasurer John Doe" ? And the amount is listed for the year?

Even if the Treasurer were purchasing items/materials/services and then reimbursed, those amounts would STILL go under the appropriate category.

I dunno, Glen. I think we're dealing with a different scenario here.

What strikes me is that he somehow thinks that a board member using the board member's own money for an HOA expense and then getting reimbursed is somehow illegal.

I don't think he cares if it's supported by any kind of receipt or invoice or documentation.

If he did, I think that would have been part of his original post.

I really do want to know why he thinks board members (or committee members, or even association members) who spend their own money making a purchase for the Association should not be reimbursed for that.

Every few years, we have a board member who purchases annuals for the subdivision. We reimburse the board member for that purchase.

I would much rather do that than give a board member a blank HOA check with the president's signature on it to take with him to the nursery. Is that what he thinks should be done instead?

I think (and I could be wrong) that this person is very inexperienced in general and somewhat naive about a variety of things (example: asking if a COMMITTEE having its own EMAIL address is "illegal" Really?! and he still hasn't answered why he thought that was illegal).

I don't mean that to be mean or harsh. It's just an observation.

Michele, not everyone is the wordsmith that you are, try re-reading his original post but substitute the word proper for illegal. I too have a very acute nose for smelling out bravo sierra and I just don't get that vibe here. He states he is new to the BOD and his third post states the reason for his concern and if you have read any of the news articles about theft in HOA's I can see his reasoning.


Now more than likely it is just sloppy bookkeeping practices passed down from treasurer to treasurer but I have been on the other side of the table twice. First was as a trustee for our local life squad, the treasurer would bring checks to another trustee and myself, explain what they were for and after we signed them (she couldn't) would change the amount and payee.

The second was when our COA was changing bank accounts and we temporarily parked some of the money in the petty cash account (I know but it wasn't my decision)and the treasurer went on a spree paying bills from that account. Well, buried in all of the checks were ones he couldn't produce receipts for. We sat him down and gave him the option of reimbursing the Association or we would file charges. The money was paid back and he was allowed to quietly step down.

Glen, I totally get where you are coming from.

And your post to him to just ASK was right on. (shades of the '60s, sorry!)

We had a treasurer pay HOA BILLS (for things like electric bills and water bills) out of his OWN checking account and then wrote himself a check for the amount, and signed the check for the amount, and FORGED MY SIGNATURE on the check for those amounts.

That was back when we required dual signatures and that's when we discovered dual signatures only provide false sense of security.

We've never had any board member pay monthly bills like utility bills out of their own pocket then get reimbursed for them.

It's usually things like flowers, a ladder, deposits on equipment rentals, etc.

In this treasurer's case, the bills he claimed reimbursement for were missing. Surprise surprise. There were only a couple over a couple years' time, but still.

When we requested a copy from the utility (I guess he figured we couldn't or wouldn't do that??), the numbers didn't match up.

Granted, it wasn't a HUGE amount, all told the variance was something like $180 -- but, like you we asked him to reimburse and quietly resign.

Plus, I'm still pissed that he forged my signature. Didn't even spell my name right!

Michele,

Your "Plus, I'm still pissed that he forged my signature. Didn't even spell my name right!"

Man, that guy must have been dumb, you mean to tell me he couldn't spell "GOD".

Cheezeeeeeeeeeeeeeeeee!

Darrin,

As someone else suggested,why not just ask what the procedure is for reimbursing expenses paid out-of-pocket? From what you've described, it appears the procedure is a bit lax as there should be receipts to prove the expenditure was made. And, of course, the expense should be assn related, i.e. the treas cannot get reimbursed for having her hair done just because she wants to look nice for the board meetings. A board member being reimbursed for out-of-pocket expenses is not an unusual procedure -- especially in a small, self-managed assn; and it certainly is NOT illegal or improper. Was the expense for stamps, office supplies, etc ????

OK I remember you now:

I think we explained it in your other thread but just in case we were not clear; I'll try again. While the developer (Board President) is in control and running things, he can pretty much do as he pleases as long as he doesn't violate the law.

Sorry, Glen, just saw your most recent post.

That adds considerably more clarity. Thanks.

It appears that the developer/builder (president) doesn't feel the need to have the entire board "sign off" or "approve" the treasurer's reimbursements.

It appears that the developer/builder (president) feels the only approval needed is his own.

It appears that he is granting that when he "approves" (signs) the checks made out to the treasurer.

As Glen stated, since it's all under his control right now, he gets to pretty much do that.

It's perfectly legal, at least until turnover to the residents. Though I would hope that he is still keeping receipts and/or backup documentation for everything, regardless.

But it is also clear that the treasurer isn't the "control freak." It seems to be that the president (developer/builder) owns that moniker, and, as a result, he has placed a loyal representative (of his interests) to be guard/watchdog on the board.

That's also legal, though very frustrating indeed, at least until turnover to the residents.

On reflection, would all agree that if Darrin is unhappy and the other owners are unhappy with their standing in the heirarchy, there is nothing to prevent them from forming some organization outside the Developer appointed and control BOD.
In particular, certainly any social or community activities they wanted to undertake, there is nothing that would keep them from doing this. They could even record all expenses and re-imburse them when they have control of the association.........nothing to stop that, I don't think. Just don't represent yourself as the Developers association.

Darrin,
I second all the above and Mary raises an issue that you might like to contribute for informational purposes. The make up of your Developers
Board?
We know you are an owner and I think you mentioned the developer appointed you and other Board members. Who are they?

Michele,
I agree, this kind of reimbursement could lead to a slippery slope. So the best advice is not to do it. But......if this association is one of the rare ones that can get through the transition in tact and they end up with Reserve money and a positive cash balance, maybe that indicates they can handle this trick. Darrin seems to indicate they do have some active interest in the management of the association and in will take a huge effort to sustain it and make some progress while the developer controls.

But if they do as we suggest and set up some organization, do communication any way to bring results and have meetings, the developer has to look at these folks as someone/thing to be respected......of course that is why we say, take the high road, and be very smart.