10 Signs Your HOA May Be Stealing From You

You want to avoid money-wasting habits by giving the homeowners' association board (HOA) the responsibility of hiring trusted vendors and keeping excellent bookkeeping records.

However, when you leave this responsibility to others, you may find yourself in the dark, which could be a problem. Most people responsibly steward the HOA's funds, but occasionally, there's a rotten egg who can do everything from making financial mistakes to committing actual crimes.

Here are the ten signs that indicate your HOA might actually be misusing your money and even stealing from you.

It's rare a check would be made out from an HOA to an individual unless it was a reimbursement for a repair that was deemed the responsibility of the association.

Anytime it appears checks are being made to individuals with no clear or verifiable reason, it raises questions about whether or not there is a chance that fraud is being committed.

A lack of an outside HOA annual review could simply mean that the board doesn't quite have their processes in tip-top shape. But, if they're resistant to implementing one, you should start raising your eyebrows — and maybe even insist that an annual financial review ASAP.

Humans make mistakes. As such, sometimes, issues with bookkeeping are honest errors made by people who are not professional accountants.

But, other times, inaccuracies in bookkeeping are being used to intentionally cover up financial crimes like embezzlement or fraud.

For example, one mistake is probably something that should just be corrected, while a pattern of mistakes could mean there's something to investigate.

Smart Drivers, Smarter Savings

Compare car insurance rates in your area

See if you qualify for a lower rate in less than 2 minutes

Check Rates

By clicking the button above, I understand and agree that this site uses site visit recording technology (provided by Trusted Form, Jornaya, and Microsoft Clarity) Privacy Policy

The board of an HOA has the inside view into what's going on in the association's finances. If it seems that the board elections are being rigged to keep a specific group of individuals in power, then there's a possibility that they're doing so to keep curious outsiders away from their shady business dealings.

Most HOAs will go through a bid process each time they have a project that requires hiring an outside vendor. They'll get bids from several vendors, compare the pricing and scope, then choose the best vendor for that specific project.

But, if it appears that your HOA is skipping that process and going with the same vendor time after time, there could be something more going on behind-the-scenes. There may be vendor kickbacks where the vendor pays an HOA board member to hire them, or an insider connection.

There should be transparency around where HOA funds are going each time they're used.

Whether it's for utilities or landscaping, the board has to be clear with the owners how their money is being dispersed. If HOA funds are disappearing with no explanation, there's a chance that there's something nefarious at play.

Request a look into your HOA's bank statements and records if you're worried. If the board is reluctant to share, you may need to escalate the matter by following your organization's bylaws, or even by getting outside counsel involved.

Nobody wants to think their neighbors are capable of falsifying documents, but if the HOA's bank statements aren't matching up or appear inaccurate, there may be someone pulling the strings when no one is looking.

This is another time when you need to request access to view the statements, as well as an explanation, then look into further investigation if you believe there is illegal — or negligent — activity occurring.

Anytime a vendor changes its pricing, that should be flagged by the HOA board so the contract can be reassessed. If it becomes clear that vendors are being paid amounts significantly higher than their original contracts, you have good reason to wonder whether there's some type of kickback or bribe being skimmed off the top.

When someone deposits a check, there is a possibility that they can deposit part of it in the account and take the rest of it in cash.

If you see a discrepancy between the checks being written to the HOA and the amount being deposited, you should raise an immediate red flag. That extra cash could be lining a board member's pockets.

If your HOA is making payments to Sam's Tree Service, but there's no Sam's Tree Service in your area, you may have reason to be alarmed.

That's because sometimes bad actors can use fake companies — like Sam's Tree Service in this example — as a pseudonym for someone on the HOA board who is looking to get a payday using the HOA's funds.

If you're looking for a savvy way to eliminate some money stress, then serving on your HOA board could be a way to make some extra money. While most associations do not pay their board members, there are some that issue a small stipend for the work they do to manage the HOA.

The time commitment can be significant, depending on whether there are major projects or assessments going on in the community, but it can be an unexpected way to help pay for your mortgage and get ahead on your financial goals.