Month: September 2016
Unfortunately, community associations—regardless of how well they are run—can fall prey to embezzlement or purposeful misuse of funds or resources. Association managers and board members should be aware of common ways that fraud is perpetrated and how to prevent—or in the worst case scenario, deal with—this white-collar crime, which has the potential to happen on two levels: the management company or the board.
If you’ve noticed that your management staff employees’ productivity has gone down while their online activity unrelated to work has gone up, it’s probably related. And you need to get the problem under control as soon as possible. Take a two-step approach by first holding a meeting with staff members explaining what you’ve noticed and that you feel there is a connection between personal online activities and decreased productivity.
It’s not uncommon for a member who hasn’t paid assessments or other fees to claim that he's withholding funds because of a perceived problem. But the good news for associations is that the obligation to pay assessments isn’t absolved because of alleged bad behavior by the association or management company. In a recent Washington case, a trial court ruled—and an appeals court agreed—that allegedly fraudulent condo sales didn't excuse assessment nonpayment.
Unfortunately, community associations—regardless of how well they are run—can fall prey to embezzlement or purposeful misuse of funds or resources. Association managers and board members should be aware of common ways that fraud is perpetrated and how to prevent—or in the worst case scenario, deal with—this white-collar crime.
A well-funded reserve account is a clear indication of how prepared a community association is to deal with its long-range maintenance needs. Without a well-funded reserve account, most associations’ only option to pay for repair needs that arise is to impose a special assessment on their members. Unless your state law or governing documents specify how your community’s reserve is to be funded and managed, it’s up to the board to create a policy that will bind future boards, so that the community remains protected.
Association members have agreed to abide by governing documents, which provide for payment of assessments that the association relies on to run the condominium building or community. But a member might feel like this gives him leverage when he’s upset. That is, by withholding his monthly assessment because of a grievance he can force the association’s hand in rectifying it. But grievances don’t change the fact that the association must pay bills, management fees, and the cost of other services that keep things up and running.
Facts: A planned community was developed in the 1990s. Prior to development, the developer recorded declarations and covenants that provided for the formation of a homeowners association. It stipulated that certain owners of multiple lots would be required to pay dues on only one lot. Several years later, a dispute arose concerning whether the association acted within its authority when it amended the declaration in 2012.