image concept of businessman about to enter a maze

Could your HOA be the victim of fraud?

| Dec 30, 2020 | Firm News

A good homeowners’ association (HOA) can be a blessing to your community. HOAs can protect your property values, preserve  the culture of your neighborhood and make sure that disputes between neighbors are quickly settled.

A bad HOA, however, can be destroyed from within by acts of fraud and theft.

What are the most common types of HOA fraud?

Fraud is only limited by human creativity, but some kinds are more common than others. In HOAs, you may see:

  • Kickbacks: When an HOA’s contracts with vendors and builders are worth a lot of money, some members of the board may decide to award those contracts only in exchange for a little financial consideration in return.
  • Embezzlement: A lot of money can pour into an HOA over time. A trusted member of the HOA board may quietly bleed those funds to pay for a gambling addiction or other personal needs.
  • Lying and deceit: HOAs are largely governed under the laws that apply to corporations. If members of the HOA lie on loan papers about their finances, hide assets, fabricate records or do anything similar, they may be subject to criminal charges.
  • Rigged elections: When there’s money and power involved, people seldom want to give up their positions. Rigged elections in HOAs may be more common than most people realize.

If you suspect your HOA board of fraud, what can you do?

If you suspect some kind of fraud is occurring in your HOA, the odds are high that you aren’t alone. It may take experienced help, however, to get a clear picture of the problem.

An attorney who understands HOA law can help you review the organization’s records and governing documents to see what’s happening. Then, you can determine the next steps to take to find a resolution that works for the community.