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Subject: Can the HOA directly to the Bank.....
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MarkT8
(Maryland)

Posts:9


04/09/2017 3:59 PM  
Our new treasurer requested a copy of our bank statements and canceled checks from our management company a few months ago and basically had been getting the run around from the management co and the President of our HOA who also was the previous treasure. I am the VP of the HOA and not very knowledgeable on actually what we can or can not do. However it seems perfectly legit to be able to see our own bank statements and canceled checks. Long story short, I became suspicious a while ago and took an opportunity to elect a new treasure. My question is , what would it take to go to our bank request our bank statements going around our President and management co? This is in Maryland.
LarryB13
(Arizona)

Posts:4099


04/09/2017 5:52 PM  
Mark,

This will depend upon whose name is on the account at the bank. Ideally, your management company should have separate accounts for each client but I suspect that your management company may be co-mingling funds. If that is the case, the bank will be unable to assist you.

If there is a separate account, your bank will want some sort of proof that the treasurer has the authority to review. I have found that the level of proof varies greatly from bank to bank, so the best approach is to go to the bank, verify that there is an account in your corporate name, and find out what proof they need to allow access.

BTW, the surest way to be defrauded is to allow a management company to control your accounts. Yes, your account may be small potatoes but if there are enough accounts there may be a target for theft.
DouglasK1
(Florida)

Posts:735


04/09/2017 7:25 PM  
I agree with Larry, and will add that it is best if the board acts as a whole rather than individual members each going their separate way. Ideally the board should direct the MC to provide the records to the treasurer (or the entire board) rather than just the treasurer making that request.
LarryB13
(Arizona)

Posts:4099


04/09/2017 9:44 PM  
Yes, see if you can get a majority of the board to approve a resolution to demand an accounting from the management company within ten days. When the MC fails to deliver, the next step is to file an action in civil court to compel an accounting; let the MC explain under oath to a judge what has happened to your funds.

TimB4
(Virginia)

Posts:14072


04/11/2017 8:55 AM  
Mark,

To restate and paraphrase what others have said:

When new Officers are elected, a memo should be delivered (vs. mailed) to the bank identifying the new Officers.
Often the memo is signed by someone who is already on the account.
Once this is done, new signature cards are established with the account.
It's best that everyone (or as many as possible) who is to be on the new card go at the same time.

If your name is not on the card/account you will likely not get anything from the bank except what is mailed to the Association.


Now, some management companies (and I don't agree with it but others have no issue with it) will hold the money within an account they establish at the bank. When this happens, it's not the Associations account, it is the MC account and the treasurer will only be able to get the documents through the MC (one of the reasons I don't agree with doing accounts this way).

Hope this helps.

Tim
RichardP13
(California)

Posts:1854


04/11/2017 9:56 AM  
Tim

You make reference to MC's holding money in an account they establish at the bank, and that is not the association's account. I believe that is illegal as it is co-mingling funds.

What a management company will do, or at least it is what I do, is have all operating accounts for the HOA's I manage with one bank of whom I have a relationship with. I also open a reserve account they could use, ONLY if they choose to do so. Each account, whether operating or reserve have their own bank signature cards. Each person on the card has access to the statements 24/7.

In addition, I do not have a business or personal account with the same bank as the HOA's.
SueW6
(Michigan)

Posts:173


04/11/2017 11:50 AM  
What do you hope to find out seeing bank statements and cancelled checks?

Your management company can run a Register Report in a matter of minutes. This lists the check, number, amount and lists the payee and account the funds came out of. (Assuming they use an computer accounting program)

But the request to see the bank statements and cancelled checks baffles me.


DouglasK1
(Florida)

Posts:735


04/11/2017 1:49 PM  
Posted By SueW6 on 04/11/2017 11:50 AM
What do you hope to find out seeing bank statements and cancelled checks?

Your management company can run a Register Report in a matter of minutes. This lists the check, number, amount and lists the payee and account the funds came out of. (Assuming they use an computer accounting program)

But the request to see the bank statements and cancelled checks baffles me.


A common method of hiding fraud and theft would be to deliver bogus check registers or other reports. Seeing the bank statements and also checking to make sure checks are actually made out to who the register says they are made out to are ways of detecting that fraud/theft.
MarkT8
(Maryland)

Posts:9


04/11/2017 1:54 PM  
Thanks for all the advise. All the board members are on board with getting the bank statements. The only two that were not thrilled were the President/treasure and the MC. I spoke to the Attorney General for Maryland and we were perfectly in our rights to request the bank statements. Things have been to relaxed for the past few years and some of us were a little worried that money was being spent without getting approval. We are trying to get back to having a treasure and quarterly financial reports attached to bank statements. As of today the President and MC have agreed to make the statements available. That being said we don't have them in hand yet so we have to see how it plays out.
GenoS
(Florida)

Posts:1169


04/11/2017 6:42 PM  
Posted By DouglasK1 on 04/11/2017 1:49 PM
A common method of hiding fraud and theft would be to deliver bogus check registers or other reports. Seeing the bank statements and also checking to make sure checks are actually made out to who the register says they are made out to are ways of detecting that fraud/theft.

Yep. In Florida bank statements are considered official records of the association and must be available for inspection by any owner who requests to see them. Failure to make the official records available in a timely fashion is the single biggest complaint owners bring against their associations. In a Florida HOA an owner does not need to state any reason for wanting access to the official records. "I want to see them," is all the justification any owner needs. Any director or officer who asked me what I hoped to achieve by looking at the bank statements would set off all kinds of alarm bells in my head. To my paranoid way of thinking - there are hundreds of thousands of dollars in those accounts - only someone with something to hide would question my motives to look at something.
JanetB2
(Colorado)

Posts:2849


04/11/2017 11:05 PM  
Posted By TimB4 on 04/11/2017 8:55 AM
Mark,

To restate and paraphrase what others have said:

When new Officers are elected, a memo should be delivered (vs. mailed) to the bank identifying the new Officers.
Often the memo is signed by someone who is already on the account.
Once this is done, new signature cards are established with the account.
It's best that everyone (or as many as possible) who is to be on the new card go at the same time.

If your name is not on the card/account you will likely not get anything from the bank except what is mailed to the Association.


Now, some management companies (and I don't agree with it but others have no issue with it) will hold the money within an account they establish at the bank. When this happens, it's not the Associations account, it is the MC account and the treasurer will only be able to get the documents through the MC (one of the reasons I don't agree with doing accounts this way).

Hope this helps.

Tim


I agree with Tim and I do not agree with holding HOA money within a Management Company account. The reason being is if you ever decide to change or fire your Management Company ... this makes it more difficult to transfer money. I would recommend the HOA having their own separate accounts.
MarkT8
(Maryland)

Posts:9


04/18/2017 2:26 PM  
Here is an update. Looks like the management company fell asleep at the wheel. While pulling our bank statements he came across some unexplained charges. This didn't come out of our regular expense account but one of our investment accounts that he didn't pay much attention to. Apparently our President managed to get a credit card from that account and has been on a spending spree since last June totaling $46,000. We have a meeting tonight and the management company will be bring our complete records and had them over to the police.
TimB4
(Virginia)

Posts:14072


04/18/2017 4:02 PM  
Mark,

If the spending spree was for personal items, then that is a crime.

If the spending spree was for Association items, then that would likely be a civil action of exceeding authority vs. a criminal action (as Association money was used for the Association).
DouglasK1
(Florida)

Posts:735


04/18/2017 4:37 PM  
Thanks for the update, update us again if you can. If this turns out to be embezzlement, it might be best not to discuss in a public forum since both criminal and civil proceedings could be in the cards.
JanetB2
(Colorado)

Posts:2849


04/19/2017 12:07 AM  
Posted By TimB4 on 04/18/2017 4:02 PM
Mark,

If the spending spree was for personal items, then that is a crime.

If the spending spree was for Association items, then that would likely be a civil action of exceeding authority vs. a criminal action (as Association money was used for the Association).


Agree ... In my opinion Tim hit the nail on the head. While we are not attorney's most of us have been around the block and seen over many years certain circumstances.
MarkT8
(Maryland)

Posts:9


04/20/2017 2:42 PM  
Out of roughly $47,000 about $100 was spent on the HOA. Somehow he managed to get a debit card on our money market account. How he managed this without the Management co knowledge is a mystery so far. The Management co was really the only one that was authorized to manage those accounts.
TimB4
(Virginia)

Posts:14072


04/20/2017 2:54 PM  
Posted By MarkT8 on 04/20/2017 2:42 PM

How he managed this without the Management co knowledge is a mystery so far. The Management co was really the only one that was authorized to manage those accounts.




Being authorized by the Board and authorized by the bank are two different things.

If an individual is on the banks signature card, they have access to the money and may request additional services/conveniences from the bank.

Has anyone actually read the agreement with the bank?

Here is a small example:

When you complete our account opening documents (as an example, you sign our signature card), request an account, or keep your account open, you acknowledge that you have reviewed and understand the terms of this Agreement and you agree to be governed by these terms. You understand that these terms, as we may change or supplement them periodically, are a binding contract between you and us for your deposit account and your deposit relationship. Our deposit relationship with you is that of debtor and creditor.

This Agreement and the deposit relationship do not create a fiduciary, quasi-fiduciary or special relationship between us. We owe you
only a duty of ordinary care. Our internal policies and procedures are solely for our own purposes and do not impose on us a higher standard of care than otherwise would apply by law without such policies or procedures.

Later in the document [emphasis added]:

If the account owner is a corporation, unincorporated associa tion, limited liability company, limited liability partnership, fiduciary, partnership, sole proprietorship or other entity holding an account in any capacity other than an individual capacity, each person signing the signature card or completing other account opening requirements represents and agrees that they:

• are fully authorized to execute all documents
or otherwise complete our requirements in their stated capacity;
• have furnished all documents or other information necessary to demonstrate that authority; and
• will furnish other documents and complete other requirements as we may request from time to time.

We may refuse to recognize any resolution affecting the account that is not on our form or that
appears to us to be incomplete or improperly executed.
MarkT8
(Maryland)

Posts:9


05/07/2017 6:01 AM  
AS we discovered why the former president didn't want the board to see the bank statements now we discovered why the management company didn't want us to see the bank statements. Going over 2016 statements we came across checks made out to a tree company totaling about $7000. Tree work that was never approved and the work was never done, none that we are aware of. We haven't confronted the management company yet about these unexplained expenses. My question is what is the best way to handle this? I would think the management company for one should be able to produce an invoice on the work that was done, and could the management company have authorized this work with only the president(former)of the HOA given the authorization? Its seems that the management co and the former president of the HOA may have been cover each other while robbing our HOA funds. We are in the process of hiring a new management company and will be most likely getting a lawyer.
TimB4
(Virginia)

Posts:14072


05/07/2017 2:15 PM  
Bypass the MC.
Contract the vendor directly and ask for copies of invoices. location of the work (should be on the invoice) and when the work was accomplished.
AloceJ
(California)

Posts:4


05/10/2017 12:48 AM  
This is a happy tour for me to read on this post. After reading the whole post, we can get solutions to deal with the trouble quickly and safely. Thanks for your nice sharing.
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