What if the HOA does not do any audits of the accounting records? How can a member request this action be done by an outside 3rd party, without paying out of pocket to do so?

ANSWERS:

Generally, unless state law requires otherwise, community associations are not required to have their accounting records audited.

In Minnesota, the Minnesota Common Interest Ownership Act, Chapter 515B of Minnesota Statutes requires an annual review by an outside CPA, unless waived by the members of the Association.

A member can certainly request an audit, but the Board and/or management company, may not need to do an audit unless there is some legal requirement in the state where the community association is located.

David G. Hellmuth
Attorney at Law
Direct dial: (952) 746-2107
dhellmuth@hjlawfirm.com
8050 West 78th Street
Edina, MN 55439
Phn: (952) 941-4005

There is no surefire way to compel an audit without incurring expenses. Surely the matter can be brought to the Board’s attention, but if they will not acknowledge the duty then further action to compel performance will require legal assistance. 

In Michigan, you can try taking the complaint to the State Attorney General’s office. If they show interest in the matter they might contact the governing Board to raise the issue.

Our current administration in Michigan has not shown a willingness to commit funding for the support of consumer issues. While there is some chance that it might take some action through the State Attorney General’s office, don’t be surprised if that effort does not yield results. In such a case you will need to carry the issue forward with your own resources. There may be a way to recoup your legal expenses under the Michigan Non-Profit Corporation Act. You need to consult with an attorney to pursue such an avenue.

Edward Zelmanski
Zelmanski, Danner & Fioritto, PLLC
Attorneys at Law
44670 Ann Arbor Road, Suite 170
Plymouth, Michigan 48170
(734) 459-0062    Fax: (734) 459-5313
ezelmanski@zdfattorneys.com

If the HOA does not have financial audits performed, but is required to by the Governing Documents, then an owner’s recourse is to file suit against the HOA for breach of duty and ask that the Court order an audit to be performed.

Sara A. Austin
Austin Law Firm LLC
226 E. Market St.
York, PA 17403
717.846.2246 phone
717.846.2248 fax
saustin@austinlawllc.com