How can we check whether expenditures are proper?
06/21/2014 12:00 AM
09/12/2014 4:01 PM
Q: I live in a developer-controlled homeowner association. I’ve noted on the financial reports certain expenses that I cannot confirm. I’ve asked questions in our meetings and have sent emails to the association manager concerning my concerns. There has been no response to my question or the answers have been unsatisfied.
What recourse do we have to make sure that expenses are properly documented? It appears to me that the developer board is misappropriating the funds collected by the members. If this is true, where do I report the matter?
A: Any time you have questions as you’ve indicated concerning expenses, you should write a letter addressed to the board of directors (possibly in care of the manager). If it’s necessary, you should send a letter by certified mail. I do not recommend phone calls or emails and definitely not face-to-face conversations.
Your questions need to be specific as to what information you are seeking. Owners have a right to review financial records; if they want copies, the board can charge a copy fee or cost for each page.
The problem with misappropriation can be as simple as a posting error or a criminal theft. The posting error can be corrected by an adjustment to the financial records. Criminal theft should be reported to the police with evidence of the missing monies.
It is good that you are reviewing the financial records but walk easy before you make a claim against the board for misappropriations.
Q: One of our board members, a director, is a real estate agent. She gets most of the sales in our condominium. She uses the manager and other resources of the association and her processing of the sales.
Would this be a considered a conflict of interest as she is on the board and receiving commissions from the sales? I feel the manager is reluctant to say anything as she is a board member as well as an owner. Could you comment if this is a violation?
A: It would be a conflict of interest if the director is going into the association files to obtain information. Chances are that she is not using that information. Realtors have many sources where they can obtain information such as county property appraiser’s office records, courthouse records, public records and private fee sources.
Most of those records are available to citizens including you. Some of the recorded sources cost a membership fee and those would be available to the average citizen if they’re willing to pay the fees. Most property records are available to view online from your county courthouse.
The question of a conflict of interest is somewhat excused if the director was known to be a real estate agent and making sales in the condominium before the election. If the director hid this information and used condominium records, then that could be considered a possible conflict of interest.
Q: I read in your column an article stating the board does not have the right to vote for a unit that has been foreclosed by the association. It was my understanding that the board cannot vote for this unit in the proceedings. Can you tell me who has the powers of the board concerning foreclosure?
A: If I read your question correctly, the association has foreclosed on the delinquent unit and now has title to that unit. In this case, the title to this property and the rights of this unit are controlled by the board of directors. Therefore, the board has the right and responsibility to vote for this unit.
If they do not have title, and closure resulted in an investor purchasing the unit, the board would not have the right to vote for the unit.
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