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Subject: management company fiduciary
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LaskaS
(Texas)

Posts:100


10/24/2018 12:04 AM  
hi,, we have a management company that basically only does our accounting.. they handle the accounts payable, and owner assessments(through strongroom) etc.. and keep our books..

In the course of investigating payments that were made that were not approved by the board..

We have discovered,,

there was a large amount of payments that were requested last year $150,000+.... the owners were questioning the validity of the invoices etc.. it was right after hurricane harvey,, the owner of the management company sent an email to the board.. informing them that the president had informed him that there was massive cleanup being done and the payments must be made in order for the cleanup to continue.....
the management company in the next paragraph stated that he would need unanimous consent in email from all of the board members in order for him to pay the payments,, or there would have to be a meeting where a quorum was present and a vote was taken..


ok... so he knew what was required.. he received emails from board members.. and thus, released the payments..

it turns out,, he never had the unanimous written consent of the board.. 2 of the board members refused to consent because there were questions about the amounts of the invoices.
apparently the owner of the management company didn't bother confirming that the email approval contained all of the board members consent,, you know how email correspondence can be hard to read because everyone is responding etc.. well there is even a board member that states in one of the numerous correspondences that there was no unanimous consent..

however,, apparently the owner wasn't very thorough and he didn't catch this..

now that a new board is being elected.. does the management company have any liability?? i know it depends on the agreement of course.. but i'm just wondering if management companies are indemnified from any errors they make..

I will be livid if that is the case.. what's the point of having a third party company that does the books and manages the accounts if they aren't even responsible when they screw up?? If some of you have knowledge in this area, please let me know... we're not talking chump change here.. this is over 150,000.. The board never voted to approve the agreement, and they also never unanimously consented to the payments...

any thoughts?


SueW6
(Michigan)

Posts:531


10/24/2018 1:17 PM  
Sounds like it was a procedural error - but what was the alternative?

Looks like the cleanup work was already started and this was permission to pay this company to keep on doing the work.

What was the alternative? Remember, this was a crisis time and contractors were hard to find to stay on the job, much less complete it.

At any time, any board member could have insisted on a duly-called meeting instead of a motion passed by electronic vote. (there was the major passage, right? just not unanimous)


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