R-E-C-O-R-D-S! Release the Records!
guest blog by Nila Ridings
Recently, I have talked with HOA members locally and across the country who are frustrated because they cannot see the financial records in their HOA.
One homeowner requested to see ONE financial document and was told by the Associa management operation that a $200 advance payment was required to see it! Others have gotten the same old song and dance about paying to see the HOA records.
Back in 2007, it was discovered after much stalling and excuse making by the board president that Quivira Falls had $10,000,000.00 unaccounted for. Yes, that figure is TEN MILLION DOLLARS!!! And the audits had not been performed for years, as required per the by-laws. A homeowner filed a pro se lawsuit to see records. Five months later, I filed a lawsuit to recall the board and gain access to the records.
At that time, I was fairly new in the neighborhood. But my corporate experience helped me recognize I was dealing with some shysters. Shifty eyes, mumbling and bumbling, couldn’t give me a straight answer, nervous, cocky, stalling, and quickly trying to dismiss my questions always with “we’ll take that under advisement.”
Before the homeowner filed the pro se case he told the board members, “If we find embezzlement somebody is going to jail!” The response was a finger pointed at us and a booming angry voice from the HOA president, “If you think there has been any embezzlement or malfeasance, you’ll never find it!”
This guy had been the Quivira Falls Community Association president for 26 years! Homeowners had made no efforts to question anything he did. One of the board members, Jody Lamping said he put her through “mental masturbation” but never answered questions with legitimate answers.
Ongoing investigation was revealing more and more eye brow raising information. One being this Quivira Falls HOA president was running for the board of an HOA in Carlsbad, California. He had just purchased two places in that community. His bio read like Mr. Magnificent in the world of homeowners associations. Several residents of Quivira Falls contacted the manager of the Carlsbad HOA and his name was immediately pulled from the ballot. Ryan Rader died a few days later.
When Johnson County Judge Thomas Sutherland, ordered the records be turned over to me Rader’s successor, Jody Lamping, under oath, proclaimed, “there are no records!” Judge Sutherland gave her fair warning of perjury charges should records turn up at a later date. That did not deter her one iota, she threw her nose in the air and declared, “there are no records!” The board treasurer, Bill Reavis claimed Quivira Falls Community Association had no bank accounts, either.
I contacted the Johnson County District Attorney’s office and was instructed to file a “suspicion of embezzlement” report with the Overland Park Police. The detective ultimately hit dead ends because current and former board members claimed no knowledge of anything, stating only Ryan Rader knew about the inside workings of the HOA. What he did find was thousands of dollars in cash logged onto the ledgers but not one dime was ever deposited into the numerous bank accounts that Quivira Falls had established around the Kansas City area. The detective had no way to obtain information from a dead man so the case was closed, but he advised me to contact him if anything changed.
A year later, a homeowner that was very familiar with the details walked into the clubhouse and caught Jody Lamping with another board member and a former board member shredding records. I was called and my attorney instructed me to go immediately to the clubhouse with witnesses and cameras which we did. Jody Lamping was so nervous her mandible was flipping back and forth like a pendulum on a one hundred year old grandfather’s clock. The former board member was hiding on the staircase behind a wall, while the other was pretending to be on the phone to the HOA attorney letting him know the HOA records had just been found. Thinking we hit a goldmine, I called the detective. It was no surprise when he said that was not true because two months after the judge ordered the records turned over to me he was given access to those records!
There are more stories to this “new” board that promised Quivira Falls homeowners they could be trusted, but I’ll share those at another time.
For now, it’s best to say, DO NOT HAVE A BLIND FAITH AND TRUST IN YOUR HOA BOARD MEMBERS!
Do not allow anyone to be the president of the HOA for decades. I would suggest limiting that position to 1-2 years.
Do not allow 1 or 2 board members to be signers on HOA checks. Have 3 people and be sure they are all qualified to be bonded and do background and credit checks on them. If they have a criminal history or financial problems they are not good candidates to be handling your HOA funds.
Do not allow the HOA property manager to have exclusive access to bank accounts and checks. If your by-laws require yearly audits, demand they be done!
Do not allow cash payments to be made to the HOA for any reason.
Do not give the HOA president carte blanche to spend thousands of dollars without board approval. A $1,000 limit should be sufficient.
If the HOA operations have been “shaky” and you manage to land a position on the board, insist on a forensic audit during a board meeting and double check to be sure it was recorded in the minutes. If you are a homeowner, submit a written request for a forensic audit. Retain a copy of your request.
If your by-laws allow for more than 5% of your annual budget to be spent by a property manager without board approval, suggest a change to the by-laws. It would be most beneficial to require a vote by the homeowners for any spending that will exceed 5% of the annual budget.
Regarding audits: The statement has been made on many occasions that honest board members don’t need audits. I strongly disagree. Audits work both ways; keeping thieves from stealing from an easy target and protecting honest people from being accused of stealing.
Never forget that people who have nothing to hide, hide nothing!
Great suggestions Nila! Changing of board members is a doubled edged sword. If you have a decent one, Great! If you do have a decent one, then he/she is replaced with a bad one, not so great. Sometimes it’s like letting the wolf watch the henhouse.
All of your suggestions are awesome! Homeowners need to be actively attending those HOA meetings and asking as many questions as they can. If you can’t get a straight answer, send that question to the association by certified mail. Ask for a response in writing. Documentation is just one way to lock a shady HOA into their story or their lie.
Thanks, Dave. There is one catch. If the HOA refuses the certified mail what’s the next step? If you walk into the meeting asking questions many HOAs end the Q & A session. If you persist they call the police.
I should have suggested for every homeowner in an HOA to get an alphabetical file. Date every document and keep it.
We had one homeowner that lived in here for over twenty years. She sold and moved to your part of the country and left all of her files with me…all the way back to the early 1990’s. It’s comical to read how clueless this place has always been with their business practices.
I have heard of people involved in lawsuits having their records stolen from their houses or their attorneys claiming they have lost them. I suggest keeping a copy at home and the originals in a security box at the bank. And NEVER give the attorney your original documents. If you give them the memory stick from your camera have them download it while you wait and take it with you. Keep it at the bank with your original documents.
You are correct, make all contacts with the HOA in writing and request a response in writing. Expect just about any return response. I’ve learned these HOA office managers hired by these property management companies are severely lacking in clerical skills. And don’t expect them to respond by mail. It could be thrown on your front porch, taped to a door, or hand-delivered by a maintenance worker. If you dropped something at the office have the person you hand it to sign a note of receipt.
You have to cover every base very closely because the one you don’t is the loophole they jump through!
Owners shouldn’t have to sue the HOA to get records, to get HOA biz done properly etc. It seems the only rights are recall, elections, and suing. More legislation needs done to protect homeowners. It’s ridiculous.
Having tried a recall…it’s next to impossible.
Elections all across America in HOAs are so corrupt it’s a joke.
Putting laws on the books are no easy task and cannot be accomplished without educating the legislators. Which means first you have to convince them that the CAI isn’t who they think they are. After that, it’s a long hard road and needs to be done on the federal level next.
Most of all, the more people who are educated about HOAs the less of them who will buy into the nightmares. When they aren’t selling and developers refuse to build them because they don’t sell….the whole world of HOAs will turn around and go away. The power is with the people but education is the key to changing the future.
One comment the the hoa could refuse to accept certified mail thus causing a problem learning what should be public record. Do these organizations not file taxes? Are not fines put into personal use bribes thus income to the person who abused the system. Civil lawsuits make the hoa members tax information available and if they did not pay the tax on money they took then you can claim your money back from the IRS when you turn them in. I really do not understand how the hoa ever got the way that they are. No legit business could ever get away with what they do.
Tom Dee,
HOAs do not operate like legit business for the most part. They have no oversight. Homeowners have no place to go for help in most states. When you sue an HOA you are suing the non-profit corporation not the individual board members unless you are suing for breach of fiduciary duties. And board members will claim they are just volunteers and just not sure what they are doing, and come across to the judge like saints. (They are great actors!)
HOAs are non-profit corporations so they don’t pay taxes on the dues. They do pay taxes for clubhouse rentals and anything that generates a profitable income.
You and millions of others really don’t understand how HOAs got the way they are. I think it started with too much money, no oversight, blind faith and trusting homeowners, and an organization called the CAI that convinced the legislators that they were going to be the caretakers of all good things for the HOA home buying suckers…opps I meant the misled home buyers. Lots of deceptive practices got us into this mess! And of course, homeowners must take some of the responsibility for not keeping their eyes on what was going on. Like I say, never put the word trust in the same sentence with HOA.