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Detecting if the HOA for your home is misappropriating funds

On Behalf of | Jun 28, 2023 | HOA Law |

Living in a community managed by a homeowners association can offer many benefits, but it also comes with responsibilities. One of those responsibilities is to ensure that the HOA is managing funds appropriately. Misappropriation of funds by an HOA can lead to increased dues, special assessments or a decline in property values.

Suspecting that your Texas HOA is misappropriating funds can be concerning. Here are some signs to look out for and what steps you can take if you believe this is happening.

Signs of potential HOA fund misappropriation

Watch out for signs of potential misappropriation:

  • Lack of financial transparency. HOAs should provide regular financial statements to homeowners. If your HOA is unwilling to share these documents or if the statements are consistently late or incomplete, this could be a red flag.
  • Unexplained increases in dues. While it is normal for dues and assessments to increase occasionally due to inflation or unexpected expenses, sudden or excessive increases may warrant further investigation.
  • Poorly maintained common areas. If your community’s common areas and amenities are not well maintained despite paying regular HOA fees, this could be a sign of a financial problem.

Paying attention to these signs can help you be aware of any issues.

What to do if you suspect fund misappropriation

If you suspect that your HOA is misappropriating funds, there are several steps you can take.

  1. Request a copy of the HOA’s financial statements and review them thoroughly. Look for any unusual or unexplained expenses.
  2. Consider attending HOA board meetings and asking questions about the financial management of the community. The board should be able to explain how they are using the HOA’s funds.
  3. If these actions do not resolve your concerns, you may want to consider running for a position on the HOA board yourself. This can give you a more direct role in overseeing the financial management of the community.

As a homeowner, you have a vested interest in ensuring your Texas HOA is managing funds appropriately. It is your right to know how your HOA is using your funds and to expect them to manage those funds responsibly.