HOA board moving money from one bank account to another

5 Replies

I am a new Board member and need advice. Two months ago, the Board decided to get into the charitable business. There was money donated from lot owners in a fund and they chose to pay off two lot owners debt in order to keep them out of foreclosure (total $4000). I voted no because our purpose is the upkeep and maintenance of our common properties. At the last meeting, we were informed that $400 had been donated into the charitable fund. The Board decided there was excess money in a fishing derby account and transferred $500 out of it and into charitable fund. After contacting board president with my concerns. I was denied access to our HOA attorney for his guidance. Now, the President has contacted a retired CPA asking her if the two accounts can be merged into one and she said yes. I am one person fighting 10 others on this. Am I off-base in thinking this is wrong? Advice appreciated!

@Paula Ratcliff it sounds like there was already an account with "money donated from lot owners" - is that correct? If so, what was the money originally donated for? How is that particular account titled and how is it listed on the balance sheet? 

@Teri S. Three accounts are not part of our budget. Money from fishing derby tickets have a separate bank account called LP fishing derby. People purchase tickets to be able to fish in our salmon derby. Money donated by lot owners to help other lot owners in need is in a separate bank account called Neighbor Helping Neighbor Fund. The other is a bank account called key account. People who want keys to boat launch purchase them. The President has now informed me he wants to put all the money in one account now. If he does that, there would be $11,000 in it.

@Paula Ratcliff

Lawyer - you can't have board members randomly calling the lawyer or it gets expensive fast - and this isn't a lawyer issue - it is a CPA question. When you need legal advice it should be discussed openly at the meeting and a motion made to contact the lawyer.

Fishing Derby Funds - a set amount (say $1000) should be left in the account from year to year as seed money. If the HOA is taking in more than it needs to properly host the event then a vote should be make to move the monies to another account. Keeping the account separate is a good idea.

Neighbor Fund - sounds like the money to pay off the accounts in arrears was a win-win. The neighbors got to stay and the HOA got to essentially "keep" the money. Again, this account should be separate.

Key Fund - this bank account could probably go away and just become a line item in your day to day fund account and the monies co-mingled with HOA dues, etc.

IRS - CPA  You guys are probably a non-profit entity. Income from sources other than regular operations is taxable. You need to talk to your accountant about proper segregation of funds and bookkeeping.  Many times boards have good intentions but make serious errors in handling the money. You are wise to question these moves without proper advice. 

Thank you for getting back to me and being so thorough in your answer.

Hi again Teri:

We are not a 501C3. Does that change any of your advice to me?

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