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Q&A: Using Board Money for Repairs?

Q I belong to a small self-managed condo of six units. There are two serious  concerns: 1) Recently, I discovered that two of the board members used fund  money to repair their boilers so that they could pass inspection. They led us  to believe that all the boilers had failed inspection but there is no  documentation to back this up. I have made some inquiries with the inspector  and the plumber and have their report that clearly shows only two boilers were  in need of repairs to pass inspection. 2) Since I have begun to distrust them,  I looked back for several months and noted various checks paid to the board  members for “waiting around” for service and repairmen, as well as large “reimbursements” ($500-750). I don’t have access to any personal checks they presented for reimbursement. Do you  have any suggestions as to any legal course of action? We are a very small  condominium, and everyone else seems just “happy” that they don’t have deal with the problems. However, isn’t this illegal? Isn’t this embezzlement? Can one individual in the board have any power to bring  charges against them if they refuse to put the money back?  

 —Financial Fiasco  

A “There are a number of concerns raised by the unit owner based on a possible  violation of condominium documents and the board’s use of funds,” says attorney Charles Perkins of the law firm of Perkins & Anctil in Westford, Massachusetts. “As a preliminary matter, you should determine if the boilers are common area or  unit owner responsibilities. You should also check the remuneration provisions,  if any, in the condominium documents. Many condominium documents prevent a  board member from receiving compensation as a board member without a vote of  either the board and/or the unit owners.  

 “As to the main issue, it would be important to determine how many board  positions exist at the association. Again, we have many small condominium  associations whereby each unit owner may appoint a board member. If this  exists, then a majority of the remaining board members should be able to take  control of this matter and conduct an investigation as to the two board members’ alleged unlawful conduct.  

 “Assuming that the two trustees are, in fact, the board and/or control the same,  the issue may be more difficult to resolve. The unit owner may make a request  to see the invoices and checks executed during the year those trustees  controlled the board and review the same. However, the two board members may be  reticent and/or reluctant to allow any investigation for fear of their guilt.  The records themselves may be nonexistent. If this is the case, the unit owners  are left with the process of removing those board members under the provisions  of the condominium documents and if this is not possible, then litigation,  including an appointment of a receiver, to resolve the same.  

 “This is an expensive proposition and many small condominium associations have  arbitration provisions within their documents which may also be utilized. The  theft or misuse of an association’s funds often occurs when there are no checks and balances and in associations,  which are self-managed. If this problem is able to be resolved, the entire  board would be well-served in utilizing an accountant to provide a written  procedure and process in the collection procedures and accounting for all  condominium association funds.”