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That sounds like a plan. I lost some of the formating cutting and pasting it into JustAnswers text box.
I could send you a MS Word document or PDF if there is some way to attach it.
Try this link:
Here's one of the items puzzling to me.
The association attorney offers to write up a special code of ethics for our association. She not only writes up a code of ethics, she writes her own resolution and comes to the closed board meeting unannounced to present her resolution and recommend approval. It passes with a majority vote.
Two years later, at the yearly open election meeting, a homeowner who has proof that the board members have violated the code of ethics that was passed asks if the signed agreement can be used to remove these board members. The very same attorney says it has no contractual standing and cannot be used to remove board members.
What was the point of the whole exercise and money spent?
I understand your frustration - that should be enough for the board not to retain that attorney's services in the future. If they make that kind of effort and blunder - who should/would want them.
However, I would demand my money back because they basically were "churning" and advising knowingly that their advice was meaningless and unenforceable.
That's actually a violation of the Rules of Professional Conduct in PA - I'd have to see exactly what rule though. You could file a complaint with the PA Disciplinary Board against the attorney for such.I'm sorry. I got preoccupied with my daughter's return from college - I had to go get her and bring her back from Penn State.I will try to have an answer for you shortly on your question.
It's certainly not a problem; family certainly comes first. Penn State is in a beautiful part of Pennsylvania and it looks like you had wonderful weather for the trip.
These issues that I have asked about are rather trivial in the bigger picture, I suppose I'm hoping to get some sort of closure on issues that have been going on for years.
Is the attorney's ethic's statement really "meaningless and unenforceable"?
Not sure I want to take on any attorneys. Here's what could happen:
The current Board appears satisfied with her services; I know of other communities that have dropped her but she is one of the recommended attorneys of the management company which is how she came to our community.
To get back to my original questions just to make sure I understand your answer:
Has she put constraints on who can run for the Board position by making this signing this document mandatory?Is there any basis for not allowing expression of one's perspective on issues to general members, even if the majority of the Board disagree? "..it becomes the policy of the Board and is not to be criticized outside of the Board setting"How can one research a past bad decision if "Moreover, I will not use Association resources to perpetuate matters already decided". All records are kept at a management company office, it is impossible to research anything without using "Association resources"What does this mean: "a violation of any of the standards below shall constitute sufficient reason for my resignation." ? Is this "Code of Ethics" a contract?
Lastly, a new question based upon your response: if a complaint is filed against the attorney and it is found to be not valid, could the individuals who filed the complaint be at risk for the attorney's defense fees?
Thank you for your answers. There is more to this story; the association was also missing money from one of its accounts in the tens of thousands of dollars. The auditor wrote a warning letter that for whatever reason the money was missing, it needed to be paid back.
The lawyer wrote a resolution around the same time, part of which reads:
"...The Board of Directors is not desirous of assessing owners with a special assessment, which would be the required action to abide by the governing documents to refund the sums immediately. Rather, will prefers to resolve to repay the sums in a term not greater than the same rate the same were used by the Association for legitimate purposes. The Board recognizes if any challenge to this resolution is made, a special assessment will likely result and the Board prefers to avoid that in light of the challenging economic circumstances, a review of the upcoming reserve needs and in the interest of the owners."
It has never been proven what the money was spent upon.
The resolution passed by a majority as the same board members who were in office when the money went missing were the same ones who approved the resolution.
The lawyer then implied that the new mandatory code of ethics would preclude any other Board member from researching past decisions; if they did, it would be grounds for their resignation. Another tactic the management company has implemented is to put the records in remote storage and then charge regular members and Board members attempting to research past history to pay for the retrieval costs of boxes. You don't pay up front, you don't get to inspect the documents.
The Board of Directors is not desirous of assessing owners with a special assessment, which would be the required action to abide by the governing documents to refund the sums immediately. Rather, will prefers to resolve to repay the sums in a term not greater than the same rate the same were used by the Association for legitimate purposes. The Board recognizes if any challenge to this resolution is made, a special assessment will likely result and the Board prefers to avoid that in light of the challenging economic circumstances, a review of the upcoming reserve needs and in the interest of the owners.
Here's the text of part of the letter. What is mis-leading is that the budgeting reports received by the Board members by the management company had any mention of a deficit or "loans" redacted from the worksheets. How the money was transferred has never been identified in the General Ledger; the management company has simply refused to provide any verifiable information.
Due to the Accumulated Operating Fund Deficit, the Operating Fund has been required to borrow funds from the Replacement Fund in order to meet daily obligations. The Board of Directors should note that the Bylaws require, in Article XX, Section 3, Budget and Reserves Procedures, part c:"Loans from the reserve funds to the operating fund may be made from time-to- time, as authorized by vote of a majority of the Board, but such loans must be repaid to the reserve fund in full within six (6) months, or by the end of the next fiscal year of the Association after the fiscal year in which the loan is taken, whichever shall be the first to occur."We have found no documentation that the Board of Directors actually had a vote on this issue and it is clear the loans were not repaid within six months. This clause in the By-Laws was likely inserted to discourage the Board of Directors from approving a budget that incurred a deficit and to require future Budgets to remediate any deficit that occurred.We have taken the position in the financial statements that the Board of Directors inherently approved the loans by approving a budget that did not remediate the prior deficits nor prevent future deficits from occurring. However, this does not address the technical violation of having a vote on the matter of Interfund Loans and it does not address the requirement to repay any loans within six months.The Board of Directors needs to consider this issue and take steps to get the governance of the Association into compliance with the By-Laws.
If you would like to review the entire letter, I can provide you a link.
I read the auditor's letter the same way. What the board has refused to reveal is how the money was transfered in terms of identifying the transactions. In other words, money was either taken out of or never put in the Reserve Account and is in the Operating fund.
In other words, there are no "loan" transactions.
At one point, the management company CEO claimed it was due to special assessments for repairs. Her explanation was as follows:
Repairs were made to a homeowners' homes by the Association. The vendor was paid in full from the Reserve fund. The Board then assessed the homeowners for part of the repairs. The money the homeowners paid was to go back into the reserve fund but instead stayed in the operating fund. A number of homeowners over the years were assessed for repairs and the reserve fund deficit increased.
You can listen to the explanation here:
Sounds reasonable until you examine the annual reports to see that the money paid by the homeowners as repair special assessments are not recorded as revenue during any of the years.
Another more minor problem with the CEO's comment that it was a choice of telling people there was no money or making repairs to their homes. The budget shortfalls were for legal expenses due to lawsuits, not repairs. Whatever the cause, the obvious action would have been to notify the Board and take appropriate actions (a loan, deferred payments to vendors, etc.) and document the action in the minutes.
But the question is, what happened to the special assessment money received by the association?
A complaint was filed with the State Attorney General. The lawyer for the association had the issue dismissed by stating in a letter:
"I was present at the Public Meeting when the explanation was provided to the ownership that the report received by the Auditor was not accurate. Mr. X's recitation of what was told him is not accurate. There were no special assessments involved but rather an issue of categorizing expenses made from the reserve account which required review of work orders, work performed and the like. This explanation was provided fully to Mr. X and all other members of the Community. It resulted in the audit being available in final form in November, 2012."Something is rather odd about this conduct, why not simply show the transactions that resulted in the "loan" from the Reserve Account general ledger over the five years and move on? Perhaps harder to explain is why the special assessments are not reported as income (the special assessments were paid to the association, not directly to the contractors) and whether these issues are related.
Apologies for taking so long to rate your answer. You provided a lot of useful information.
The issue behind the unauthorized "loans" may not so much be the loans but why the special assessments that were made against homeowners to repay for repairs and paid to the association are not reported as revenue in the financial statements.
Without knowing the reason, I am hesitant to use words such as embezzlement; perhaps it is sloppy accounting. But whatever the reason, an explanation should be provided.
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