How to avoid being ripped off by your homeowners association
1. Demand that all books and records be AUDITED annually - includng the reserve accounts, by a reputable, licensed CPA who carries insurance.
2. Do not accept a "review" of the books and records, or any "opinion based on inquiries of the property manager" about anything. Property managers are uneducated and thus are not "experts" in anything, especially financial matters.
3. If your reserve fund disclosures are labeled "Un-Audited", check your CC&R's, By Laws and other governing documents to see if an "AUDIT" is required on an annual basis.
4. If your reserve funds are "Un-Audited", demand an explanation from your Board members - in writing - if they ignore you, demand an answer.
5. If your reserve funds are "Un-Audited" realize that the statements are not worth the paper they are written on, and unless a formal "AUDIT" occurs, your HOA could be in desperate trouble (ie. RED INK) and you would never know.
6. Monitor closely if your HOA is borrowing money from reserves to pay operating expenses, and whether any such borrowing is done properly and lawfully by providing written notice to owners of any such borrowing and of plans to repay the money within the statutory time periods.
7. Monitor closely if your HOA is squandering money on legal or professional fees, including unnecessary "updating" of CC&R's and other governing documents - and or unlawfully spending money on litigation without providing written notice to the HOA members.
8. Monitor if your HOA board transfers all budgeted reserve funds to reserve accounts during the fiscal year.
9. Review any special assessment history or dues increase history at your HOA - neither of which are necessary if any HOA is being properly, diligently and prudently run - as required by State Law.
10. NEVER - under any circumstances - should any property manager be named as an additional insured on your HOA's insurance policy. This is a commercial insurance underwriting RED FLAG and no no.
11. NEVER - under any circumstances - should any property manager ever be permitted to sign checks, or to transfer money into or out of reserve trust funds accounts. This is the cause of much financial loss in HOA's.