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Just an anecdotal note: in Israel, where almost everyone lives in condos, all HOAs have been self-managed. Having a PMC is a relatively new trend over the past 20 years. Different places, different lifestyles...
Check with CAI - Community Association Institute - CAI Homepage
This is a nationwide institute that offers all sorts of resources for HOAs. If they can't answer your questions about meetings and access to the books, they will likely direct you to an attorney in your area who deals with HOAs. They are a terrific organization.
As others have pointed out, your founding documents/covenants will likely spell out meetings and access to the books and likely there are state laws that apply.
Your situation is typical of aging communities. As things deteriorate and fall apart, there is a faction that doesn't want to do anything because it costs money. Generally, an assessment is required for larger projects as there is often not enough in reserve to cover them.
However, your documents will spell out the responsibilities for exterior upkeep.
As a last resort, you can proceed with legal action to insist that your neighbors follow the law.
I would insist that you see the books, ASAP. No ifs, ands, or buts.
I agree with former CPA above. This situation is suspicious.
Last edited by GotHereQuickAsICould; 09-19-2014 at 05:14 AM..
Your story is almost exactly the same as my brother-in-laws. Then a fire broke out in the top unit.
Something like this is what ramped up my concerns. A second-floor neighbor casually tossed a burning cigarette butt off his back porch one breezy night in June. The wind carried it into a sackful of mulch under the porches, unnoticed. It was, shall we say, disconcerting be greeted at about 3:30 AM to the sounds of hurrying footsteps and then an axe striking wood. Earlier that night a foul burning smell had filled the air - and one of my cats had even been running in and out of the house, meowing as if to sound an alarm. But whenever I looked outside I saw nothing, due to the smoke being diffused sideways by breezes. In a densely built neighborhood where people often grill with whatever's trendy no matter how it stinks (remember mesquite?) I'd thought nothing of it. Had it not been for the lady next door looking in on her sleeping grandchild and catching sight of the developing cloud from his window it's all too scarily clear what would have happened after not much longer. TMI perhaps, sorry.
Sinister implications are being made based on how I described the association's bookkeeping. My fault. Although she stays well occupied in a lucrative profession and is doing a fine job raising a young daughter alone, the neighbor handling finances has a long track record of being a scatterbrain. She's so bad at procrastinating and not remembering things that I only rely on her for watching the cats when I go away as a last resort before boarding them. I feel confident that there's no malfeasance taking place because the norm is for me to turn in payment for the monthly fees and then have it show as outstanding in my bank account for "ages." NOT reconciling a check is not the behavior of an embezzler. She can also easily justify putting off association meetings; I worked from home for several years and saw firsthand how hectic her days are. The second-floor guys also stay busy, but in their case it's plain apathy working against their being amenable to a session. Some tension between me and them was resolved only when they finally called in a plumber after I complained multiple times about water leaking from a ceiling. They (two brothers, one being the mortgagee) are just your typical Millennials, scrambling to make a living and guilty of self-absorption. But between them and the spacy overworked other owner the impasse I've described is in effect.
I have friends in real estate and am also personally acquainted with an attorney, so it's not as though I lack a sounding board of knowledgeable people. But I thought that before I "aired dirty laundry" I'd do the 21st-century thing and put it out there for input. Thanks to all who've responded!
First off, having an overwhelmed scatterbrain in charge of the finances is a poor idea. Time to change that.
Is she paying the insurance bill on time, filing tax returns...? You are entrusting your home to a person you have reservations about entrusting your cat to. What if she forgot to pay the insurance bill and the place had burned down in June?
As to using an attorney that you are personally acquainted with as a sounding board, unless that person is versed in HOA law, she/he will probably recommend that you meet with someone who is. Ditto your real estate agent friend.
You don't have to make a big confrontational thing over it with your neighbors. Invite them over for a BBQ. Say you've just realized that you are legally required to have a meeting and keep minutes. Offer to relieve her of the worry and bother of handling the dues and the bills. She will probably resist as it is likely she and/or possibly The Dude upstairs are not paying in a timely manner.
Whatever. Offer to straighten them out and see to getting some of the things fixed around there. Managing projects, getting bids, overseeing work takes time and energy. It is likely that neither one of them is up for it.
If they refuse your friendly overtures, then get more serious about it.
At some point you may decide that continuing to live there is too much of a financial risk and it is time to seek out alternatives.
A major issue in HOA's or even self-managed condos is 'Reserve Accounts.' You didn't say how much you paid in dues or how that was allocated, but, does that include a 'reserve account' for large, long-term, common expenses such as a new roof, paint, resurfacing parking areas, elevator?, etc.? Are these things simply divided among the three owners when they occur? -- What happens if an owner cannot come-up with their share of a major expense?
Since your 3-unit condo is obviously over 30-years old, it's likely you have dealt with large common expenses. Also, if you do have a 'reserve account', it is also likely that represents a large amount of money. Having independent oversight is not entirely a trust or malfeasance issue, but, more one of transparency and accountability for timely, effective management.
With all of the 'busy-ness' of the owners who mind the store, it would seem that the practical, responsible (and not very costly) approach would be to hire a CPA or PMA to manage your books, report as necessary and be responsible for seeing that expenses are expediently paid and that savings for large items are properly managed.
I have a 30 unit building and even being that small is a big headache. One family bought two units and default on both which means over night we had 7% arrears extra. We were already at 12% which men building became unwarrantable "no mortgages" overnight. In a larger building you can absorb things better.
I also have a lot of older folk in building who dont want any long term projects. Stuff like blacktopping parking lots or powerwashing moldy fences is too much to bear. So we sit and sit. Crazy though I have as building treasurer started grieving taxes like crazy using buildings shabby shape and fact our financials are poor and being a cash only building with some distress sales are comps and resales in building are low.
Crazy the laws of unintended consequences has led our incompetance to being the lowest taxed building in town.
Ah, the "joys" of living in a small condo building. It consists of three units, all owner-occupied.
I'm by far the veteran of the bunch, having moved in back in 1992. The current owners of the other apartments joined me in 2003 and 2005, respectively.
Both of the two units besides mine are now on their third owners since I arrived. For the first time there's never been drama between the other people. (I was perpetually the neutral party between the warring factions previously. ) However, I'd almost prefer skirmishing neighbors over the cordial and even friendly relationships all of us have enjoyed for the past nine years. Reason being, the house's physical plant as well as the building itself are starting to fall apart. Prior to this the other tenants might not have gotten along, but we rose above that and GOT THINGS DONE. Now exterior shingles are working loose and falling, the concrete front steps are a crumbling mess, the back porches could be more structurally sound (if not replaced outright), the electrical system sorely needs updating, a large portion of the basement floor stays damp, on and on the litany goes.
One of the other owners jealously guards the books, but I have no suspicion of there being any kind of financial shenanigans. We all pay our fees into an association account and the money stays there - which is where the issue lies. Liability insurance and the water/sewer bills are consistently covered. But the remainder of the funds sits there drawing laughable interest instead of being put to good use. Over and over my pleas for an HOA meeting fall on deaf ears. We haven't gotten together for business purposes in probably five years. The other people apparently have no concern about what could happen if the steps give way under a visitor's feet or a shingle falls three stories onto the head of a passerby. Similarly, they don't seem to care that this house is by far the most rundown-looking on the block (though this is literally a superficial matter.) Property taxes here are so low that the higher assessed values which would result from the building's looking halfway decent are no excuse for not addressing the problems at hand.
In advance of suggestions that I underwrite at least the most urgent projects and deduct my share of the costs from the condo fees - I'm not in a financial position to do so.
Thanks for all the good "been there" words I know I can count on, on C-D.
This is a three unit building?
Most states exempt associations with less than X units, from regulation.
Since you haven't seen the books you have no idea what is going on. Where is the property management company? A HOA has to have a PMC.
Absolutely untrue.
I live in a 400+ home SF HOA that 50 years old. We have never had professional property management, despite a pool, tennis courts, a private lake and substantial common grounds.
I've never come across a HOA that did not have a PMC. Granted that doesn't mean its not possible. But none of the houses I own that have HOAs are self managed. Nobody I know who lives in a HOA is self managed. Those are some huge liabilities. And not getting monthly statements of financials would be a HUGE red flag. I doubled be looking into seeing a lawyer to get a look at those books. There is NO reason to not show the books to the other HOA members
What's happening here is a great example why a HOA should have a PMC. How do you know your neighbor isn't paying for his personal stuff with association money?
Most states have laws that apply to HOAs with more than X units. Most require an HOA to publish an annual financial statement and specify owner's rights. Some states require a CPA certified annual statement and some do not. The association's bylaws typically prescribe the protocol for meetings and financial statements.
I have not come across any HOA that publishes a monthly statement to all owners.
Professional property management is no guarantee against financial shenanigans. Some of the more juicy cases of long term financial fraud have been committed by property managers in associations with little to no internal controls. A well managed , either self or professional, association will have adequate fidelity insurance to transfer the risk of fraud to an insurer in exchange for an annual premium.
Having said all this, a Treasurer who declines to " open the books" to any owner is scary stuff. That the books agree with bank statements is also critical. In cases of financial fraud, the property managers also created bank statements to support their fabricated financial statement.
A major issue in HOA's or even self-managed condos is 'Reserve Accounts.' You didn't say how much you paid in dues or how that was allocated, but, does that include a 'reserve account' for large, long-term, common expenses such as a new roof, paint, resurfacing parking areas, elevator?, etc.? Are these things simply divided among the three owners when they occur? -- What happens if an owner cannot come-up with their share of a major expense?
Since your 3-unit condo is obviously over 30-years old, it's likely you have dealt with large common expenses. Also, if you do have a 'reserve account', it is also likely that represents a large amount of money. Having independent oversight is not entirely a trust or malfeasance issue, but, more one of transparency and accountability for timely, effective management.
With all of the 'busy-ness' of the owners who mind the store, it would seem that the practical, responsible (and not very costly) approach would be to hire a CPA or PMA to manage your books, report as necessary and be responsible for seeing that expenses are expediently paid and that savings for large items are properly managed.
Our accountant produces a monthly financial statement which is supported by invoices and the check register. All monthly bank statements are mailed directly to the accountant who is responsible for reconciliation.
The person disbursing funds should never be the person reconciling bank statements or producing financial statements. Internal controls 101.
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They (two brothers, one being the mortgagee) are just your typical Millennials, scrambling to make a living and guilty of self-absorption. But between them and the spacy overworked other owner the impasse I've described is in effect.
) However, I'd almost prefer skirmishing neighbors over the cordial and even friendly relationships all of us have enjoyed for the past nine years. Reason being, the house's physical plant as well as the building itself are starting to fall apart. Prior to this the other tenants might not have gotten along, but we rose above that and GOT THINGS DONE. Now exterior shingles are working loose and falling, the concrete front steps are a crumbling mess, the back porches could be more structurally sound (if not replaced outright), the electrical system sorely needs updating, a large portion of the basement floor stays damp, on and on the litany goes. 
