Taking over as Treasurer, finding books in mess.

Hi

At our HOA's last annual meeting, end of September, I volunteered and was confirmed as our HOA's new Treasurer; a new President took over as the former was in the position since 2004. I'm beginning to think I may have made a major mistake in doing so. I'm sorry if this is long, but I want to give us much detail as possible.

Our HOA is a subdivision of 62 homes and we have been charging $100 per year in dues since 2004.

The books are an appalling mess which began about 2007. We have homeowners who have not paid their annual $100 dues since then, more adding each year. Our former President was handling the books as well as two former treasurers and eventually our Secretary. No one talked and so now I'm trying to get things in order. I've got a handle on who owes what and am waiting to hear how we will approach this; charge interest retroactively, just for this year, etc.

As I started going through the checkbooks, I realize that there are checkbooks missing, no one ever did a check register, no financial statements/budgets were ever created and maintained, etc. What I really need your help with is this: there are a few checks made out to former/present Board members with no receipts or other documentation to indicate what the charges were for.

1. The now former President made out a bank withdrawal for $650 back in September, just before our annual meeting. I think this is for pizza and soda she had supplied at the meeting to try to entice residents to come. She did this without the other Board members approval. There is no documentation such as receipts to account for this money. Am I going to be held responsible for this? Besides sending a letter that irregardless of how nice I try to approach this, how do I get her to give me documentation? What do I do if I cannot get this?

2. Our current Secretary is the wife of one of the former treasurers. I see he wrote her two checks, one for over $80 and another for almost $100 in 2010 for supplies, as is noted in the check copy on the bank statement. Here again, there is no documentation anywhere.

How do you handle these kinds of situations? Any and all help is greatly appreciated.

Thank you!

Mary

PetunkaM

As the new Treasurer, I also would not spend any un-authorized funds and if and when I am approved to do so, will have documentation for the records.

I agree the monies are huge amounts, although the $650, is quite a chunk. I don't want to be held responsible for what happened before me. That is why I'm wondering if I should be asking for some kind of documentation in case someone in the HOA does get a wild hair and start asking questions. We have to produce a financial statement each year and these expenses will be shown on the statement. I doubt much will be thought of the supplies but a miscellaneous charge of $650 is more of a concern.

Basically, I'm asking how deep do I need to dig to cover my butt.

Thank you.

Mary, I do not think $650.00 is quite a chunk. You are not responsible for it. I'd let it go.

Mary:

ok, first things first, if you were not treasurer at the time and on the bank account you can't be held responsible for previous bad doings. Even if you were and the president took it out without your knowledge it would be hard to be held accountable.

Having just gone through a similar situation this would be my advice. Get past bank statements, as many as possible and look over everything. If you see expenditures that don't make sense or checks made out to board members without receipt or explanation or even cash withdrawals flag it and tally it up. We did that and over the course of 3 years time had about $2,800 in expenses that were questioned. To some that isn't a lot of money but when you talk about $650 when it appears your annual revenue is only $6,200 it is a lot of money. Once you get all the evidence gathered you have a couple options...1) let it go, 2) ask the offenders for receipts and explanations or 3) go to the police.

As to the issue of back assessments, I would do something similar to what we did...offer residents an amnesty program, either they pay or set up payment plans by a certain date or all back late fees and interest will be applied. We did that and had a lot of success with it.

Mary:

as a side note I think it is unfair to punish folks who are late with fees and interest without offering them an opportunity to catch up penalty free. We discovered in our episode that a lot of folks never got bills or at least claimed they didn't. I think as a goodwill gesture since the HOA was messed up they need to offer some type of amnesty program. Now, if folks don't want to participate that is their issue!

Hi

I am working on getting missing statements to see what was done. The past President admitted, when she turned over the books, as she has been doing one set and the former treasurers, there own, that no one was keeping a register. There's been no budget, nothing. Unfortunately, our new President is not cooperating with me or the Secretary at all and won't go to the bank to finish paperwork so that I can get full access to everything. He also thinks I should forget about the $650 but I do feel that is a lot, its over 10% of what we bring in in a year. If we are going to budget for the next year properly, I would need to know how that money was spent otherwise budgeting could be a problem.

As for past dues, I don't want to bill anyone interest unless we absolutely have to. The board was irresponsible for all these years and to go after people now and hit them with this and interest just would not be fair.

Our HOA never sends out bills, that's a real problem. The Secretary and I have developed a new bill but can't get a buy-in from the new President.

In fact, he's asking for our resignations because we don't feel that he, as President, should be making all the decisions on his own, as he sees fit. He canceled our 1/3 vote.

Thanks, I appreciate your help.

Mary

I agree but I don't think I'm going to get a chance to continue, the new President doesn't like me questionning things and has asked for my resignation, the Secretary's as well. He doesn't like that we are balking at his negating our 1/3 vote each on things, he thinks he can make all decisions on his own. I'm hesitate to do so because that means he'll appoint whomever he wants. He has big expensive ideas which means the dues will go through the roof.

I don't want to screw people over with the dues; no bills have ever gone out from the HOA. They relied on folks to remember.

Hi Jon

We have three officers, President, Secretary and Treasurer. If I am reading the by-laws correctly, we each have a vote.

I was asked by the former President to serve as Treasurer. I was a bit reluctant but thought things would be ok. The past President has since warned me about the new President that he has alot of ideas and expensive special projects planned.

As for the dues, as a resident of the HOA now since its founding nine years ago, I'm really not happy about the appalling condition of things and that we and the vast majority of residents have paid our dues every year. For the Board to have decided in 2009 that they were forgiving everything prior to that, is just not fair. But, I can't reverse that decision, my 1/3 vote didn't work. The new President and current Secretary told me to let it go.

I told the new President that the majority of the residents think the HOA is a joke and tried to disband a few years ago but can't because of the common grounds and their upkeep. So, none of this will go over with any of them.

What a hornet's nest.

Thanks

Mary

Before you get too upset over the state of the books in your association, may I suggest that you and the secretary thoroughly read your state's HOA laws. I don't believe that the president or any previous board can make a unilaterial decision to "forgive" deliquent dues. If state laws are vague on the issues then your by-laws, ccrs, rules, etc, must have some form of action to be taken. Doesn't the HOA have to provide some document to owners who are selling their homes that states that this owner doesn't owe the association any money?

If your board is only three members and you and the secretary are on the same page, then the president can't just "cancel" your vote. The two of you have a quorum. It may be helpful to have a sit-down with your personal attorney and go over this stuff. You don't want to expose yourself to any liability.

Good Luck

Thanks MoM

Unfortunately, our state does not have any laws specific to HOAs, only condo associations. I checked in the capital at the state law library as well as the reference bureau and there is nothing.

I did talk to our personal attorney and he will look over the by-laws, articles of incorporation as well as the CC&Rs. Our Secretary and I plan to talk tonight and she was also going to contact an attorney so since we make up 2/3s of the board, we have a quorum we might go that route to say the HOA is going to pay the legal fees because everyone is going to benefit from this.

As for the dues, the CC&Rs don't say anything about forgiving dues, only what to do to collect them. That will be a question on the list for the attorney. That will settle that.

Both of us will refuse to resign based on advice from the attorney and other residents. We instead are going to see about removing the new President altogether.

I feel so much better after talking to the attorney.

Thanks

Mary

You sound like a very small homeowner's association with a small common area to maintain.

If I were you, I would deal with the present UNLESS you are in a deficit spending mode, and need more money than your budget requires.

The cost of collecting all that past dues will outway the income. And watch your legal fees.

Send out a newsletter and tell the homeowners that the HOa is being revitalized. State what the board is working on and what the costs are.

It sounds like you don't have too much support, so better to not overwhelm your members with talk of strong-arming past due accounts.

At $100 per year, it's just not worth the bad feelings.

Susan

I respect your opinion but in this case I would disagree. We experienced something similar and are weeding our way through it. If you forgive past dues what do you do with the homes that paid dues in that timeframe? I heard quite a few comments from people who wanted us to wipe the slate clean and conversely heard from homeowners who paid in the timeframe who said I better get a refund if you do that. Ultimately we decided that the money was due and collectable and that needed to be done. I would be careful "forgiving" past debts.