WHAT HAPPENS WHEN AN ASSOCIATION IS ABANDONED BY A PROPERTY MANAGER,
AND/OR RECORDS ARE DESTROYED? Nobody wants to think about the unthinkable, but what if a property manager abandons your association? What do you do? You have relied on the property manager to take care of association business; now it is apparent that s/he has clearly failed to act on your behalf over a period of time without your knowledge, even though you have been paying her/him to do so. Help is not readily available; therefore, you must be prepared to quickly address the predicament. Immediately hold an emergency Board of Directors meeting to address the situation. FIRST : Contact your bank or banks and inform them of what happened. Depending on your situation, open a new account or transfer funds to a new account. Have new checks issued with new signature cards. If you have a loan, secure copies of your documents. SECOND : Notify employees, in case there is a delay in payroll. THIRD : Contact vendors and notify them that all bills must be sent to a new address. FOURTH : Notify association members by providing them with a new temporary contact number. FIFTH : Contact professionals who could assist you - your accountant and attorney. SIXTH : Emergency situations may require a special assessment or an increase in assessments (Civil Code §1366). SEVENTH : If fraud is suspected, once bank records are obtained, conduct an audit. EIGHTH : If embezzlement or other criminal activity is suspected, contact your local district attorney. RECORD RECONSTRUCTION What if your property manager has purged all of the documentation for your association? Or a natural disaster strikes and your records are destroyed? Unfortunately, fire, earthquakes or floods can obliterate records unexpectedly. What should you do? A. Developer: A good source for governing documents, some Board minutes, the original budget, correspondence, maps and/or plans. B. Attorney: Your association's attorney may also have copies of your governing documents and pertinent legal information about your association. C. Governing Documents: If your association was established long ago, and you do not know who the developer is, or do not have any attorney for the association, you may want to contact Board members or a homeowner, who may have copies of some of these documents. If you do not obtain them from any of these sources, then the Articles of Incorporation are filed with the Secretary of State. Try contacting a local title company; they are often helpful in locating documents. Your CC&R's are recorded at the county recorder's office (Bylaws are generally not recorded) and copies may be obtained from them. D. Minutes and Disclosure: Your most likely source would be a member of the Board of Directors or a homeowner. E. Insurance Policies: Contact your insurance agent. F. Financial: Budgets may be obtained from another Board member or homeowner. Your bank can help reconstruct bank accounts. Audits may be obtained through your association accountant. G. Reserve Study: Contact the entity that did your reserve study. PREVENTION Although rare, beware of identity theft from the property manager who abandoned your association. It never hurts to be cautious. Have a central document depository (off-site) for your records in a secure place, which is locked, well ventilated and not subject to extreme temperatures. A safe should be used to hold important documents and data. Documents can be scanned and saved to a computer with back-ups. Suggestions (a board member should be responsible for this): 1. Keep a copy of vendor list with all current contact information. 2. Keep a copy of signature cards. 3. Keep a copy of insurance policies. 4. A year's worth of minutes and financials should be kept. 5. Keep a current member list. 6. Personally deliver signature cards to the bank (it is too easy to add a signature). 7. Order microfilm copies of checks. 8. Keep a copy of all contracts. 9. Maintain a website (it is a good source for archiving documents). 10. Maintain an "Historical Resolution Book." This is a collection of important resolutions to remember. 11. Deal with vendors and banks on-line, so a record is kept elsewhere. 12. Keep all bank accounts in the association's name. 13. Require two signatures on all bank accounts. 14. Keep unsigned checks in a secure place. This is not an exhaustive list, but will help organize you when the time comes. Designate a board member to be your "disaster" point person.
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