Being a member of your community’s HOA is a big responsibility. As the homeowners trust you to do the work, you must do your best to perform your duties. However, no matter how stringent you are with your tasks, there will still be homeowners who find you lacking. Some residents could be critical of HOA performance, especially when it involves finances. They could accuse you of embezzlement when they doubt how you use the HOA funds.
Pitfalls that could lead to embezzlement accusations
An embezzlement accusation is a grave matter often stemming from a lack of trust. It could mean that the homeowners have observed instances where you could have misappropriated the HOA funds. Here are three common pitfalls that could ignite accusations:
- Mediocre maintenance and repairs: The quality of the communal areas’ maintenance and repairs is not worth the funds dedicated.
- Biased vendor selection: HOA repeatedly selects vendors closely related to the board members.
- Misaligned financial reports: There are unrecorded expenses, unusual reimbursements or other suspicious financial records
The HOA fund constitutes the residents’ financial contributions and should benefit the whole community. As part of the HOA board, you must use the fund well.
Actions HOA could take
When faced with such a situation, the HOA must address the accusation carefully. Understanding your legal responsibilities could help you with your next steps.
- Investigate the case promptly: Check if the allegation is valid through an impartial investigation.
- Take confidentiality seriously: Protect the parties involved and prevent the dissemination of premature information by keeping matters confidential.
- Seek professional guidance: Third-party professionals, such as financial auditors and legal counsel, could help investigate the case.
- Communicate with homeowners transparently: Take accountability and inform the residents regarding the investigation and the resolution through proper communication.
The HOA should not take embezzlement accusations lightly. You should respond to this quickly to demonstrate that you have the community’s best interest in mind. However, you must also recognize your rights as part of the HOA. The support and guidance of a legal professional experienced with HOA litigations could help protect your rights in this critical situation.