Violation of Bylaws

Started by HanhN1 • 14 replies • 1738 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

HanhN1 (California)
Posts: 64

Posted:

A lot of checks of my Association were signed by one signature instead of two. What should I do to remove the Board and PM? Moreover, fund of Association was managed by two different Property Management companies at the same time. This is a serious red flag.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Hahn,
First of all, I would slow down. Removing the Board? How can you do that by yourself and how about removing the P.M? What position do you hold in the association? Get to the bottom of this first before you start to remove people. It sounds like there is no correct system that anyone is following and the question is why not? Boards have checks and balances that keeps everyone on an even power level and your does not seem to either have one or is not following your own documents.

TonyM3 (Arizona)
Posts: 170

Posted:

An audit would be good. Nice to have some proof of wrongdoing before we call out the lynch mob.

HanhN1 (California)
Posts: 64

Posted:

I have been a new Board members and my position is Secretary. There was a lot of violation. My association bylaws shows that annual audit required, but there was no AUDITS.

DonnaS (Tennessee)
Posts: 5,671

Posted:

HAhn,
If there have been no audits, then get one done. Insist at an open meeting that the ByLaws require one . Also check the Davis Sterling Act for HOAs in California and see what they say about audits. And what does "THERE WAS ALOT OF VIOLATION" mean?

KirkW1 (Texas)
Posts: 1,665

Posted:

I think the first order of business is to get an audit. While perhaps two signatures should have been there, the bigger issue is were all expenses properly approved by the board? But an audit is the best thing to root out all the problems and the extent thereof.

HanhN1 (California)
Posts: 64

Posted:

Thank you.

NancyL4 (California)
Posts: 60

Posted:

Hanh
Davis-Stirling doesn't require an association to have an audit. If the gross receipts exceed $75,000, your HOA is required to have a review. An audit is significantly different and much more expensive than a review. I would ask for the general ledger and examine the cash accounts if you are suspicious as to how money was spent. The general ledger is one of the documents specifically mentioned in Davis-Stirling that you have a right to see. There is a website davis-stirling.com with a lot of helpful information.

HanhN1 (California)
Posts: 64

Posted:

Thanks, but my bylaws requires independent annual audit.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Removing a board for using only one signature on checks instead of two is a little bit of an over-reaction, barring any other issues, don't you think?

Our bank account was initially set up to "require" 2 signatures.

Somewhere along the line, it because a 1 signature ordeal.

We took the checks to the bank and asked "what gives"? They told us they do not even look at the signature lines.

Naturally we changed banks, but still.

NancyL4 (California)
Posts: 60

Posted:

If the bylaws require an audit, you should be sure to get one. They are usually due within 120 days of your associations year end.

HanhN1 (California)
Posts: 64

Posted:

Thanks and my Bylaws requires it is due within 90 days.

NancyL4 (California)
Posts: 60

Posted:

MicheleD
We can't find a bank that requires 2 signatures. Withdrawals from our reserves are supposed to require the signature of 2 board members. We make due because I hold our reserve checkbook, but am not a signer on that account. If a check needs to be written on the reserve account, I write out the check and get it signed by one of the two authorized signers on the account(although only one signature is required). It works for us because we are small. I also provide all homeowners with monthly financial statements and I include a copy of the check register.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Hahn - what is your annual budget? An audit can be very expensive. Maybe that's why it has not been done. When was the last audit done?

There are many pieces of information that can signal distress for an HOA. The year-to-date revenues and expenditures vs. approved budget is revealing. The balance sheet should also tell you much.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By HanhN1 on 08/19/2008 6:04 PM
Thanks, but my bylaws requires independent annual audit.

Hanh,

The CA Davis-Stirling Act may supercede your bylaws. I would suggest reviewing the state law for that determination. As another individual pointed out, an audit is much more costly than a review. Even if you suspect some wrongdoing a review may be sufficient. Contact a CPA for a determination, fully explaining the situation beforehand.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here