Prosecutors: HOA board members stole millions from residents...

VodkaSam

HR All-American
Gold Member
Sep 28, 2013
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Our HOA went through the "shed wars" a few years ago.
It also became known that one board member secretly had a backyard shed, but there was no way to see it unless you were actually in his backyard.
If only there were a way to see if there was a shed in the yard, without entering his property…
drone up&go aerial camera GIF by Product Hunt
 
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artradley

HR Legend
Apr 26, 2013
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Again: in some states you are REQUIRED to carry it. It is not an option.

You are not following me. What would happen if a board did not purchase the required insurance? Who would notice? When somebody noticed, what would they do?
 

Joes Place

HR King
Aug 28, 2003
127,533
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Then they're SOL.

I'm not sure if it's required in Fl. It's required in California. There's no civil penalty for not having a policy, but there's liability for failing to obtain it as it's considered a fiduciary duty.

Yep

If it is a state requirement, and you, as a fiduciary, intentionally or unknowingly "skip" buying it, you've just signed up for something known as "personal liability". It's why you DO NOT violate bylaws in your HOA as a Board Member. Unless you want someone else to end up owning your house...
 
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Joes Place

HR King
Aug 28, 2003
127,533
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You are not following me. What would happen if a board did not purchase the required insurance? Who would notice? When somebody noticed, what would they do?

The management company (required by the state of CA) would notice. And would notify the HOA members of that gap.

But, since FL does not require independent management companies in their state, then maybe that's something they should consider "plugging the holes on"....
 

The Tradition

HR King
Apr 23, 2002
114,762
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The management company (required by the state of CA) would notice. And would notify the HOA members of that gap.

But, since FL does not require independent management companies in their state, then maybe that's something they should consider "plugging the holes on"....

An easier fix is to outlaw HOAs.
 
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artradley

HR Legend
Apr 26, 2013
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Then they're SOL.

I'm not sure if it's required in Fl. It's required in California. There's no civil penalty for not having a policy, but there's liability for failing to obtain it as it's considered a fiduciary duty.

If you are are saying "the homeowners" are SOL you are correct.

This is my point. Nobody is actively policing any of this. If the board didn't purchase required insurance, there is an excellent chance that not a single homeowner would even know. And if some homeowner took the initiative to look into it, and discovered the problem, unless they hire an attorney then nothing else will happen.

Just because there are laws and rules, doesn't mean they are being followed. IME a significant number of rules and laws are ignored with zero repurcussion. Certainly some state are worse than others, and some associations are better than others. But when you see a story like this, it would not make sense to assume the HOA has insurance to protect the homeowners.
 

artradley

HR Legend
Apr 26, 2013
30,846
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The management company (required by the state of CA) would notice. And would notify the HOA members of that gap.

But, since FL does not require independent management companies in their state, then maybe that's something they should consider "plugging the holes on"....

No way a PMC would skip the board and communicate directly to the homeowners. That's not how it works. PMC's take their direction from the board. They have neither the authority or the duty to notify the homeowners when the Board is doing something wrong. All they can do is remind the board of its duty.

And that is IF (a big IF in this industry) the PMC (or, more precisely, the local manager at that association) is competent.
 

VodkaSam

HR All-American
Gold Member
Sep 28, 2013
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An easier fix is to outlaw HOAs.
Nothing wrong with a well run HOA. Keeps the neighborhood from becoming a lawless, anything goes hell hole.

I’ll take a good HOA over “no rules” all the time. Keeps property values up and when you buy in, you know what the rules are. If you don’t like it, go buy into a neighborhood with no rules and see how you like getting along with your neighbors.
 

Joes Place

HR King
Aug 28, 2003
127,533
124,918
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An easier fix is to outlaw HOAs.

There go all your community amenities.
We have a nice park, that folks from other communities come to enjoy. Props up our home values, quite nicely. Huge curb appeal, which is why people like that we maintain it.
 

Joes Place

HR King
Aug 28, 2003
127,533
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No way a PMC would skip the board and communicate directly to the homeowners.
Yes, they will, if the Board is violating it's own rules AND state laws. In fact, they may be REQUIRED to do so if they learn about it, to avoid their own liabilities.
 

Joes Place

HR King
Aug 28, 2003
127,533
124,918
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And that is IF (a big IF in this industry) the PMC (or, more precisely, the local manager at that association) is competent.

AGAIN: This is WHY California has standards and licensing in place as a requirement for people who work for/with management companies for HOAs. They have required training.

Our HOA manager has this training, even though it may not be legally required in our state. We view that as an asset and a worthwhile expenditure so that our community is properly and correctly represented.

No one on our Board is trying to be King Of The Neighborhood. We want a well-maintained community that retains it's property values. It's why we invested in a new playground structure a few years ago, when the old one needed painting/work done on it.
 
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IACub

HR Legend
Sep 25, 2009
22,749
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Iowa City, IA
Regarding the fidelity bond and/or employee dishonesty insurance, if it's a condo a bank would typically require proof before financing a unit, especially on the secondary (fixed rate) market. It's not a coincidence that Freddie Mac and Fannie Mae have one set of guidelines for condos in 49 states and the only overlays they have are in Florida.
 
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bhawk24bob

HR Legend
Jul 8, 2001
18,104
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I’ve learned my lesson owning in an HOA but on principle, why would you purchase property where others can dictate your use thereof?
 

noStemsnoSTICKS

HR All-American
Feb 16, 2006
3,779
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Sactown
If you are are saying "the homeowners" are SOL you are correct.

This is my point. Nobody is actively policing any of this. If the board didn't purchase required insurance, there is an excellent chance that not a single homeowner would even know. And if some homeowner took the initiative to look into it, and discovered the problem, unless they hire an attorney then nothing else will happen.

Just because there are laws and rules, doesn't mean they are being followed. IME a significant number of rules and laws are ignored with zero repurcussion. Certainly some state are worse than others, and some associations are better than others. But when you see a story like this, it would not make sense to assume the HOA has insurance to protect the homeowners.
Again, this all depends on where you live.

In California, HOAs are required to disclose annually what insurance coverages they have in place, the carrier information, as well as the broker contact. So it's pretty easy for a homeowner to know if there's insurance, as well as how to verify it.

And a lot of HOA attorneys (homeowner attorneys) will only charge a contingency fee where you only pay if you win. Suing an HOA is extremely easy.
 
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Titanhawk2

HR Legend
Jul 14, 2011
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Weird coincidence here how residents in a Red State that supports a party which actively tries to remove oversight and whistleblower protections would have this happen....

Remember that much of "less government" means "less oversight" and a bigger opportunity for things like this to happen. And you have an entire HOA Board of people doing this, because they could not launder the money if other Board members were doing their jobs in getting competing bids on things.

I guess if you elect grifters and idiots to your HOA Board, you should expect the same results as when you elect them as your State and Federal representatives...
Yes less government means less to oversee, Mr. Obvious
 

artradley

HR Legend
Apr 26, 2013
30,846
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Yes, they will, if the Board is violating it's own rules AND state laws. In fact, they may be REQUIRED to do so if they learn about it, to avoid their own liabilities.
Yes, they will, if the Board is violating it's own rules AND state laws. In fact, they may be REQUIRED to do so if they learn about it, to avoid their own liabilities.

The PMC is not the board’s legal representative. Their contract with the association requires them to take direction from the board. Further, their fiduciary responsibility is to the association (ie: the corporation) not to the individual members. If the PMC informs the board of the problem they have fulfilled their duty within their authority.

I have never, ever, heard of a PMC reaching out directly to homeowners outside of direction from the board. It would be a violation of their contract.
 

artradley

HR Legend
Apr 26, 2013
30,846
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Again, this all depends on where you live.

In California, HOAs are required to disclose annually what insurance coverages they have in place, the carrier information, as well as the broker contact. So it's pretty easy for a homeowner to know if there's insurance, as well as how to verify it.

And a lot of HOA attorneys (homeowner attorneys) will only charge a contingency fee where you only pay if you win. Suing an HOA is extremely easy.

And who would know if they did not disclose the information? If a homeowner found out, then what would happen?

Saying that all HOA’s follow every law and rule is a bit like assuming nobody ever exceeds the speed limit, because we’re not allowed to. The difference is that there are no cops looking to make sure HOAs follow the law.
 

andrewrayhons

HR All-State
Gold Member
Jul 19, 2012
842
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Olathe, KS
Similar thing happened to the wife and I in Olathe, KS. We sold the house and moved to an area that did not have an HOA. Love it so much more.
 

PoopandBoogers

HR All-American
Mar 29, 2002
4,269
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What happens if the board doesn’t purchase it?
Then the granny Karen will yell at you while taking photos of your wrong color pool noodle at the undersized community pool. After peeling out in triumph, she'll hop her golf cart, sipping a wine spritzer from a bedazzled, yeti tumbler, unsuccessfully hiding a menthol Virginia Slim. A brief grin of a job well done quickly transforms into a squint of determination, as she swerves on towards her next victory.
 
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Joes Place

HR King
Aug 28, 2003
127,533
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The PMC is not the board’s legal representative.
The PMC serves the Board AND the constituents.

And LEGALLY must follow the laws and bylaws of the HOA. If the Board gives them tasks that aren't legal or are ethical breaches of their covenants, they can quit, too. AND notify the entire community. In fact, if they suspect fraudulent activity going on, they'd be remiss in NOT informing the community.
 

artradley

HR Legend
Apr 26, 2013
30,846
55,147
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The PMC serves the Board AND the constituents.

And LEGALLY must follow the laws and bylaws of the HOA. If the Board gives them tasks that aren't legal or are ethical breaches of their covenants, they can quit, too. AND notify the entire community. In fact, if they suspect fraudulent activity going on, they'd be remiss in NOT informing the community.

You are simply out of your depth on this subject.
 

NoleATL

HR Legend
Gold Member
Jul 11, 2007
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Let’s just hope that the Board actually obtained the insurance package and paid for it.
For such a large HOA, would an insurance company require audits? If so, the chance they have it is slim to none because those in control wouldn't want the exposure.
 

NoleATL

HR Legend
Gold Member
Jul 11, 2007
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I think the "home value" argument for HOAs is dubious.
We live in a townhouse community and I wouldn't live here without an HOA. The first house I bought was in a first time buyer type neighborhood and we didn't have an HOA. I about cry when I drive through there now because of how crappy it looks.
 

goldmom

HR Legend
Mar 29, 2002
21,232
24,883
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Then they're SOL.

I'm not sure if it's required in Fl. It's required in California. There's no civil penalty for not having a policy, but there's liability for failing to obtain it as it's considered a fiduciary duty.
It’s required.