First Half 2016 Condo Association Horror Stories


Over the past six months, there have been several major Condo Association news stories of note.  These First Half 2016 Condo Association Horror Stories offer tales of caution for Owners, Board members, and Management alike.  Today we’ll be recapping some of these stories and what can be learned from them for your Association.  The bottom line in all of these stories is that by being proactive and not reactive, you’ll lead a better Condo life.  

HOA Embezzlement

No one will mind if the Association's money goes missing... right?
No one will mind if the Association’s money goes missing… right?

Covered in the January news roundup.  Original story from the Daily Journal.

An HOA community manager in a large community – almost 1,000 units and a $5M annual budget – conspired over a decade to steal $2.8M.  That’s more than 5% of the HOA’s annual budget on average siphoned off to this alleged criminal.  

How to Make Sure it Doesn’t Happen to You

Make sure that your Board has appropriate financial controls in place – here are two links to get you started. some great resources to get you started.  The bottom line is you need to make sure you don’t have a single point of failure or responsibility – make sure someone, such as your treasurer, is watching your Management, and make sure someone is watching your watcher.  

Condo Association Election Fraud

Covered in the March and April news roundups.  Original stories from the Miami Herald here and here.

Condo Association election fraud seems rampant in Florida.  Not only are there cases of fraud reported in many Associations, processes to combat that fraud appear to be compromised, as well.  When you consider the apathy in many Associations, it makes you wonder why people want to lead them so badly.  Then you consider the previous story of embezzlement, and you have to wonder if people view these jobs as opportunities for corruption.

How to Make Sure it Doesn’t Happen to You

FIGHT APATHY!  The single greatest way to combat fraud is to have active and engaged Owners.  You don’t need huge numbers of Owners, but at least 20% need to care and give a damn – enough to lead a resistance movement.  There have to be enough active and engaged “watchers” who can keep an eye out for really fishy activities.  You also need a trustworthy Board.  Board members need to remember their fiduciary duty to the Association and not be corrupt.  You’d expect that to be the norm, but it is very clear there are bad apples out there.

Condo Association Defect Issues

That's aesthetic cracking!
That’s aesthetic cracking!

Covered in the May news roundup.  Original story from First Coast News.

Buying a new Condo can be risky – whether it’s a brand new Condo or a conversion.  Battles over construction defects – where the Association that takes control of the building alleges improper or substandard building from the Developer – are common.  These battles can be over minor aesthetics or major structural issues.  This story captured a large high-profile case where a nearly $10M judgment was awarded.  

How to Make Sure it Doesn’t Happen to You

If you’re a Board, make sure that you are carrying out preventative maintenance and inspections from qualified technical representation.  If you’re a new Board, make sure you are inspecting every inch of the Condo with representation that you pay for.  If you’re a prospective Owner, make sure you have your realtor ask the hard questions for you.  Find out when the building’s major systems were last inspected and when they’re due for refurbishment.  Make sure that the Association has sufficient reserves and isn’t in danger of a Special Assessment.  Do this, and you can avoid having your life look like one of these First Half 2016 Condo Association Horror Stories.  

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