HOA Secrets Exposed: How does your HOA spend the money collected?

A group of homeowners in Douglasville is waging war against their HOA board after

DOUGLASVILLE, Ga. -- Whether you love or hate your homeowner's association (HOA), you know that when the dues are due, you have to pay. But how much do you know about how that money gets spent? 

A group of homeowners in Douglasville, Ga. said they’ve been trying for years to answer that question. They said that for years their dues have been going up with little explanation why.  They asked to see their bank statements and receipts for spending but the board, through its attorney, repeatedly said no.

Four years ago, Iva Wilmott said he was hired by HOA treasurer Kevin Sanders to fix a fence for the neighborhood and paint some of Sander’s personal furniture.  He said both jobs were paid with one check from the HOA account.  

 “I didn’t feel too good about it but he paid me, so I said okay,” said Wilmott.

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Wilmott reported it to a friend he knew in the neighborhood but didn’t tell law enforcement.  When concerns started to grow on other issues, the story of the “check” surfaced.

The Douglas County Sheriff’s Office agreed to look into it and subpoenaed 5 years of bank records to help in the case.  In his interview, Sanders told Detective Skinner he paid cash for the personal projects and adamantly denied doing anything wrong.

In the recorded interview, you can hear Skinner ask, “Has there ever been any time, any occasion with the HOA account, where you have siphoned money to, let’s say, $5 or more off the account?”  Sanders responds, “No.”  “No circumstances whatsoever?” the detective asks again.  Sanders repeats his answer, “No.”

Sanders goes on to tell the detective why he believes the allegation was made.  He claimed a homeowner, Sherry Adams, was disgruntled over her HOA dues and wanted to get him removed from the board, believing that would absolve her responsibility to pay.

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At the time Adams was defending herself against a lawsuit regarding her past due HOA fees and violations posed against her property, as well as a court order demanding she stay away from Sanders.  Adams filed her own lawsuits raising questions about the board’s behavior.

Adams said that while her personal frustration with how the board handled her case started her quest for answers, she quickly found other homeowners that shared her concerns. 

Regardless, Douglas County, unable to find proof of criminal wrongdoing in regard to the check in question, closed the case.  It’s unclear why they even subpoenaed the bank records since the sheriff’s office admits investigators never examined them specifically for red flags.  They were focused on the check.  But the fact that bank statements were now in the hands of someone other than the HOA board meant 11Alive and others in the community had another opportunity to file an open records request to get them. 

THE BANK STATEMENTS

11Alive’s Investigator Rebecca Lindstrom did receive a copy of the bank statements, but they came redacted to protect the identity of private individuals.  The statements only show the businesses where debit card purchases were made through the HOA account.   They do not show any information regarding checks written or received.  But for many homeowners, it’s enough.

The bank statements started in December 2011 and went through November of 2016 - nearly 5 years of bank history.   In that time, Lindstrom added that the board had spent more than $9,000 at Best Buy, more than $16,000 at Office Max/Office Depot and more than $17,000 with Verizon.

There were charges to Chateau Elan, Chick-fil-A, Comcast, three flower companies, Macy’s, Marriott, Olive Garden, Outback, Voice Nation, Vistaprint, and Zaxby’s - just to name a few.

State law gives HOA boards the right to decide how their dues are spent.  Community covenants vary on how much input they allow from homeowners.  So certain expenditures in one community may not be allowed in another.  Deciding whether any of these charges are inappropriate really depends on the specific community’s covenants and board discussions.

Lindstrom tried to talk with Sanders and sent an email to current and former board members serving when the purchases were made.  None would speak directly with her. Some warned her to stay off their property and never contact them again.

So Lindstrom went directly to the homeowners asking if they knew anything about the items purchased with their money. 

Some costs were justified as expenses for security, gifts for the Christmas parties, catering for social events or flowers for community members that had died. 

But there were plenty of expenses no one could explain, such as why the HOA had spent so much money on what appear to be cell phone bills, postage or office supplies.

An attorney for the HOA sent Lindstrom a copy of a letter passed out to the community once 11Alive shared the bank statements and questions were raised.  It asserted homeowners had actually saved money by having the HOA managed by homeowners instead of hiring a property management company to do it. (See the full letter at the bottom of the story)

If that was the board’s justification, homeowners want to know why the board was not upfront in its budgeting process.  Each year homeowners receive a one-page budget.  In 2014, the budget given to 11Alive by a homeowner makes no mention of phones.  The 2015 budget lists the expense at $465.  One homeowner did have a Statement of Activity from 2016 that listed the telephone expense at $2,929.  In its letter dated May 19, 2017, the board admits to spending $3,600 a year with Verizon.  If the cell phones were intended for board business, homeowners want to know why they were never been given the numbers to call.

Similar questions arose around postage.  The neighborhood has 238 homes in it.  There are two communications homeowners say are sent each year, an invitation to the Christmas party and a notice of the dues.  At current postage rates, those mailings would cost $224 a year or $1,120 for the 5 years currently under review.  But according to bank statements, the Greythorne Community Association spent more than $6,550 at the United States Postal Service.

“I had heard rumors, but you can’t believe a rumor.  You have to see it with your own eyes,” said one homeowner after reviewing the bank documents.

FIGHTING FOR CHANGE

Homeowners have again contacted the Douglas County Sheriff’s Office and District Attorney about their concerns.  A new criminal investigation has been opened - this time focused on the charges listed in the bank statements.

“Definitely.  Most definitely it should be investigated,” said a Greythorne homeowner, who asked not to be identified for fear of retaliation by the board.

Investigators again point out that boards have a lot of latitude in how the money is spent.  If the charges are HOA-related and approved by the board, they may seem questionable to some homeowners, but that doesn’t make them criminal.

In the board’s written statement, they call of the rhetoric around their actions a “smear campaign” that has cost the community social activities and events as board members are forced to spend HOA dues to fight litigation instead.

The board has now hired a property management company in hopes of restoring trust within the community and quelling critics, but homeowners wonder why it had to come to this.  Why did the board not just answer their questions or step down years ago?

In response, the board writes: “It would have been easy for many of the board members to resign during these extremely challenging times, which have caused so much personal grief and headaches.  However, doing so may have implied something was wrong and would allow a handful of residents to feel they were rewarded for their false allegations.  The board will continue to serve our community and act in the best interests of the residents, until such time as a voting majority no longer want us to sit on the board.”

Several homeowners are working to gather signatures on a petition to force that vote later this summer.

Since a court order in March limited Adams ability to question board members and rally homeowners, others within the community have taken up the fight for transparency.  One group has gone as far as meeting with an attorney to discuss the possibility of a class action lawsuit.

When we spoke with Adams in November, she told Lindstrom that homeowners shouldn’t be forced into court.  She believes rules should be in place to empower homeowners to hold their boards accountable if needed.

Adams says she’s still passionate about the subject and feels something needs to be done to hold community boards accountable.   She has created the Georgia Homeowners Council to help homeowners do just that.  The first meeting will be Saturday, June 24 at 10 a.m. at the Douglas County Library located at 6810 Selman Dr. in Douglasville.  The meeting is open to any homeowner, regardless of where they live.  She hopes to see council chapters eventually expanded to every county where HOA’s exist.

State Senator Donzella James said she has also been networking with homeowners and lawmakers to draft legislation for the upcoming session.  She plans to have a public forum to discuss the problems and potential solutions in September.

© 2017 WXIA-TV


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