In this week's tip, we provide you with two questions you should ask your HOA management company to be sure your association's finances are safe and soundly managed.

1. What level of detail are we receiving on delinquencies?

   "I'd want to see a delinquency list, and if we've given our manager authority to pursue collections, I'd want to know the status of those collection activities," says Lisa A. Magill, a shareholder and association attorney at Becker & Poliakoff PA in Fort Lauderdale, Fla. "How many letters have been sent? Has the matter been sent to the attorney? Has a lien been filed?"

2. Are we receiving original copies of invoices and checks?

   "Your board should have financial reports prepared every single month, and those should have the actual backup attached to them," says Magill. "There should be a check with an invoice attached so you can see what bills have been paid and the payee on each one."

   "We recommend at least one board member—and we think it should be the entire board—do a review of the invoices and checks," agrees Kristen L. Rosenbeck, a partner at the Mulcahy Law Firm PC in Phoenix, which represents associations.

   "You might allow your manager to issue checks up to a certain amount, say $500. But at least on a monthly basis, review the checks and your account statements to provide a check and balance on the financial distributions that have taken place."

"It's good to rely on your manager, who has the experience and should be able to give you guidance on budgeting and finances," says James R. McCormick Jr., a partner at Peters & Freedman LLP in Encinitas, Calif., who represents associations. "But not asking questions and overseeing your manager results in what we've seen—managers who've bled their associations blind."

For Five Questions to Ask Your Manager about Your Homeowner Association's Finances see our new article!

Best regards,

Matt Humphrey

President