I get you represent the Board of the HOA for however they last ( because the HOA is the community the shareholders). Have a good day!

The root problem is their not being transparent so you don’t know how the money was spent. I was told by the treasurer that they listed things the board had done in the community newsletter and I guess he thought maybe somehow that was a sufficient answer from him, the Treasurer, or just a way to evade the issue I’m inclined to beleive the latter.

I checked up on this property managment co because they have done the same type reports for our Master HOA too, so this is not an isolated HOA case. I found they advertise how they will customize financial reports, so it’s looking deliberate now. Another Property managment co said the HOA can create two sets of Financial reports; one with less detail for the members (shareholders) and another with more only for the eyes of the board! This is alarming some property mananagment companies are promoting this lack of transparency in creating financial reports which the members can’t see and I wonder if this is what is going on! The State needs to do more to regulate this. We’re also paying a special assessment right now in installments that I am told by the Treasurer is perpetual (never ending) not according to CC&R’s, which was to shore up the Reserve account, but we’re not allowed to see how they are spending it. We are having a new study done, which I’m sure they will use to justify the continuation of the current special assessment. Last meeting they just passed about $20,000.00 in new expenditures such as commercial exercise equipment (3 machines) a previous board member wanted, new gas fireplace for the sitting room the social committee chair wanted with electronic ignition, a purgelo sitting area for the dog area to replace a tree that blew down, and the treasurer wants to approve a maintenance contract to inspect roofs regularly that will all come out of the reserve bam in just one hour, while we are scheduled to resurface asphalt this year and painting 4 more 2 story buildings too which is big bucks in itself. We have over a 550 mil a year in revenue to include setting aside 98,000 for Reserve and they have spent all of that each year with only the special assessment installments adding to the account according to the balance I can see. We now have less reserve health than when we agree to the special assessment. This is so out of control it’s not funny!

Darlene,
While the accounting practice is amateurish the real issue is are they transferring reserve account money to the operating account to pay for operating expenses or are they doing this transfer to pay for approved reserve account work like long term maintenance projects outside of the normal operating account.
If the latter is happening all is good but if they are using reserve account to pay for operating expenses because they overspent their budget than they are violating IRS rules for account separation for these communities. They could be fines and could lose their non-profit corporation status for violating and failing to report income to the IRS for taxation purposes. A simple letter to the IRS could generate an audit of the association for the last three years by the IRS.

Dennis

Tracy;

This question was actually raised in the Senate committee review of this bill and the conclusion was that the Confederate flag was never and is not now an American flag. The Confederate flag represented a group of states that declared separation from the United States of America.
Dennis

Dave,
The law specifies “reasonable” request to view records. I will tell you exactly what I would have told this individual if they had asked me beforehand. This request is totally unreasonable and overly burdensome. It is clearly a fishing expedition with no clear purpose and mission. I would state with certainty that any association faced with this same request would refuse to provide the request and if challenged in court would prevail in any court in Arizona.

If the individual has a specific concern, they can ask for focused request for record review. You are required to do either an audit, review or compilation of your finances on an annual basis. This is for a reason. The report of that review must be provided to any homeowner upon request. Even if the homeowner is on a fishing expedition, they can ask to see the monthly budget comparison reports for one year, or one years’ worth of bank statements, and that would be appropriate. But when you add the transaction ledger entries for one year or the checking account register for one year that throws it over the top. Even with a CPA present such a forensic review could take a weak or more. No association can be reasonably expected to babysit such a blatant fishing expedition. If the members starts with a high level review, and a specific concern arises, they can then focus down to transaction histories for a budget line item for one or two months. This systematic approach financial review starting with a high-level review then focusing down to individual transactions is both reasonable and of limited burden for the association. What I tell all homeowners if first to look for smoke at a very high level, then drill down to find the fire if any exist.
The homeowner has the right to designate a representative to view the records, you would be hard pressed to defend denying both the requestor and the CPA from reviewing the records. But the other homeowner would have to request to view the same records, and they can do that together. While her time is her time and what she pays for the CPA is up to her, what you believe the impact of your resources to satisfy such a broad based and open ended request.

You have every right to reject this request as both unreasonable and overly burdensome. I would take a clear and objective review of why any homeowners would make such a request, is it based on a true and real concern for mismanagement or misappropriations of funds. Is this request based on a legitimate concern or a clear vindictive attack by a member with an agenda. Have other homeowners expressed concerns over financial management? Has the board truly been objective and challenging on the financial statements from the community manager? if not why not? If in doubt you would be best served as would your community if you and the board ordered a forensic audit of your own financial records. and let everyone know of your actions. Embezzlement and misappropriation of association funds do happen, not often but they do happen and while criminal prosecution is possible restitution of lost money is seldom achieved and the homeowners are left to restore the embezzled funds.

Dennis

Thank you that is helpful info. I just made a formal presentation to the board this last HOA meeting and gave them copies of a monthly Financial Report I/E and Balance sheet report too that was done correctly by a different property management co so they don’t even have to figure out what a complete and transparent one would look like. I also contacted the Master HOA and received a response from their property management co, which is the same as ours too. I also recorded the meeting and had a witness present too. It’s up to both the HOA and property management to resolve this reporting problem and insuring transparency, I am not going to have to beg to see invoices because they won’t provide a complete account of how the money has been spent, etc. The property management co has closed their office doors and if you call they will tell you you can’t come to the office, so requesting to see documentation is another problem. It’s in their court now because it’s looking like they don’t want members to see where the money has gone!

Darlene

You are allowed by law to view any reasonable request on financial records of the association including bank statements and all reports made to the board by the community manager. You are also allowed to request to view the accounting ledger of the association for all transactions in the month or quarter. Failure of the association to provide access to those records within 10 business days is a direct violation of the law that can be reported to ADRE in the dispute resolution process.

Dennis

John
The answer that I give you as truth will not be the answer that your association will give you. Any and all alleged violation of community documents is public information because it is observable by anyone with a knowledge of the governing documents simply walking down the streets of the community. Fines applied by any association based on this public information is also public information of significant importance to the community members. The association will claim that both of the alleged violation and the associated fines are personal information and not subject to records request. This is being denied to hide the actions of the board or the community manager plain and simple. It allows selective enforcement and retaliation for any opposition to the official positions of the board. It is nothing but a true abuse of power.

Having said all of that what you asked for is a complete listing of these occurrences. The problem is very few if any association maintains such a list and because of that the association is allowed to deny that request. Records of the association are what they actually have as a record they have no obligation to create a document that does not already exist. Because most association maintain all such information electronically does not require then to produce the report that does not already exist in use by the association. If the board requested such a report and it was provided to them than any individual could then ask for the report as a record of the association. The single most litigated section of the Condominium or planned community statutes is the record request. For many reasons, that I’ll not go into here.

Dennis

One more thing. There is an important point here to make. Written consent under ARS 10-3704 is essentially a petition that is walked around door to door until they get sufficient signatures. You do not get an opportunity to vote no on a petition you either sign the petition or don’t. If people have voted no, then what they have done is sent out a written ballot and simply called it a written consent. Written ballot without a meeting is addressed by ARS 10-3708. While signatures can be changed under written consent, the votes submitted under written ballot cannot be changed. While written consent can go on indefinitely, under written ballot the association must establish an end date by which all votes must be received to be counted.

If you were all sent a ballot and asked to vote yes or no than that is a written ballot without a meeting under ARS 10-3708 and if more than 33% of the votes of the community have been returned as “no” than the ballot initiative is dead and cannot be extended by the association.

The distinction between written consent and written ballot is very significant. The law allows amendments to the CC&R’s by vote or written consent. The section in the law relative to voting technically excludes the use of ARS 10 3708 for absentee ballots, so again technically the use of 3708 is illegal, but that has been ignored for years and most if not all CC&R’ amendments have been voted on by written ballot without a meeting. I’ve tried to clarify this statute for years to allow both written consent or written ballots under certain conditions and will continue to do so until we can finally get this law right and clear.

When the statutes are not clear the lawyers have a field day and tell associations they can do whatever they want.

Dennis

The written consent process is legal, and that statute does allow members to change their vote until the final target is achieved. You are entitled to post signs in your community to urge the community to keep their no votes, and not to succumb to the pressure of the association to change their vote. You are also entitled under the law to call for informal meetings of the members to organize the opposition for this change until the association finally recognizes the truth and that their initiative failed.

Be strong and urge everyone to do the same.

JUST SAY NO.

Dennis