Condo Association Management Blog

We are a 36 unit POD in California. At present, unable to keep a functioning Board with Officers, as everyone is moving away/selling, etc, so it all falls upon our paid Treasurer to hold things together...what can we do, since no one wants to be on the Board, let alone hold office?

I want to leave the word "profit" aside. Your suspicions concern "expenditures" to "charities, gulf club, etc." To address the problem, I think you first need to demonstrate that specific payments were made, the amount of each payment and the ostensible reason for each payment. At that point, you'll be talking about a real issue. Right now, your focus is on "profit" in general, and I don't see how that issue can be addressed based on what you've said.

Let me ask you this. You have an association which are comprised of a BOD (Board of Directors) which is the governing body. They alone have the authority disburse funds along with a Management company, if you have one. Who are these officers? are they separate from the BOD. Do they answer to the BOD?

Your year-end financial report should make it crystal clear where there are any “profits” Generally year-end profits are placed in reserve…..Donations???? Whatever…....these condo boards act as if these funds are theirs to do what they whatever they want. Request year-end report from the treasurer and/or accountant.I don't believe the board would have the to authority disburse funds for donations without approval of the membership. Why not donate to your poor neighbor who can’t pay their assessments? Ridiculous right? What is the difference? This is your money and you will decide to whom you wish to make a charitable donation.

The annual budget is only an estimate of the annual expenses. Although an association might have a surplus at year's end, they generally are chartered as a "nonprofit organization". Many states require that the surplus be "given back to the owners". Often the surplus is rolled in to the following years budget, or reallowcated to the reserve etc., which may reduce the following year's fees to owners etc. 
 
 
 
 
 
 
 
I'm curious about any association that has the authority to make donations to any charitable organization. Is this permitted in the governing documents? If not, there may be a real problem.  
 
 
 
Does the budget contain a line item for "contributions" which is disclosed to the owners? If so, is the charity decided by committee or the entire association? I'm sure that eeryone has a different cause that they would like to support. Which bears the question, "why is his charity more important than mine?". Does it include political contributions?  
 
 
 
I'm not saying that the association could not hold an event intented to raise money for a particular cause, but using funds that are meant to pay for upkeep of common elements doesn't sound kosher.  
 
 
 
If the association pays taxes, and there is some tax benefit gained by making donations, I suppose that making contributions as a tax strategy might have some significance in this equasion. 
 
 
 
I assume that your financials are prepared by a CPA. I can't imagine than any auditor would agree not to show how the association's money is spent. Have you spoken to the property manager? Perhaps he/she will be able to assist you in obtianing information. 
 
 
 
In the event that you are confused by the financial statements, it may be beneficial to have a CPA look at them. Please note that associations often use "fund accounting" which should not be confused with "charitable funds".  
 
 
 
Florida is one of the most regulated states with respect to HOA and condo associations. The laws are specific. You may wish examine the statutes to see what is and is not permitted.  
 

I agree that any charitable funds be returned to the owners. Apparently there is a surplus because people are paying their fees.They deserve it. Why not have a meeting and allow everyone to decide what is to be done with the surplus 
It sounds as if there is some secrecy as regards where the charitable funds are going. In an association everyone should know where the funds are going. So it sounds a bit shady. Someone needs to ask quiestions and get answers.

If I read this correctly, the actions taken by the officer(s) is clearly illegal under Florida and probably Federal laws regarding HOA's. 
 
My question is that if this is proven, aside from hiring a lawyer or doing a recall election, are there any State or County or Federal agencies that would step in and rule on this issue or take any actions to remedy this? 
 
Thank you in advance.

The OP's msg is really confusing and it's apparent this person has no handle on accounting and may not even know what he or she is talking about. For starters I don't know how the Activities Fund can be both an asset and a liability! And to say the officers are not board members but they are making charitible donations and not telling the members or even the board makes no sense whatsoever. And what any of this this has to do with being a nonprofit corp is lost on me. Non profits can make charitible donations and can actually realize a profit. 
 
 
 
With regard to an HOA making charitible donations, on the surface this should not be done. However there may be circumstances where it is warranted. My former assn made a charitible donation to a Church because that Church allowed us to use their meeting room for our monthly board meetings but would not allow us to pay them. So at the end of the year the BOD decided to make a small charitible donation.

Because of the horrid state of condo law, DONT sweat the little stiff....

Under Florida law for condos, 718.111, the association must keep a record of all transactions and allow inspection of financial records or else pay you damages (but there are plenty of conditions for this to happen). Ask the BOD in writing to see the charitable contributions and the activities fund transactions.