From the Daily Progress:
A man who was the treasurer of the Mill Creek Homeowners Association for about 10 years has been charged with embezzlement.
Kevin O’Connor was arrested earlier this month, police said.
Neal Grandy, president of the homeowners association, said the organization hasn’t determined exactly how much money was taken over the years, but at least $10,000 is missing.
Update 23 November 2009: This is a timely post from the Richmond & Fishburne blog:
One of the underreported stories of the housing downtown, to date, has been the increasing difficulties facing homeowners associations.
More than 60 million Americans live in subdivisions or condominiums which are governed — to one extent or another — by homeowners or property owners associations. These associations can be surprisingly influential in regulating people’s lives – they are not government entities per se, but they certainly exercise powers that can look and feel like government. Unfortunately, many homebuyers pay little attention to the rules or structure of their property association at the time they make the decision to purchase.
In an article in yesterday’s Washington Post (here), Derek Kravitz reports that more and more associations in the DC-area are struggling. The problems can be divided into two main categories: financial difficulties (especially related to collecting assessments) and disagreements regarding governance.
This is one reason that homebuyers should always review the balance sheets and budgets of homeowners’ associations. I always tell my clients to pay particular attention to HOAs’ budgets and planned capital expenses.
This is the clause in the Blue Ridge Homebuilders’ New Construction Contract (it’s essentially the same in the standard Virginia Association of Realtors’ contract) that describes the homebuyer’s right to cancel the contract based on the homeowner’s association packet. Translated, it says that a homebuyer can, upon receipt of the homeowner’s packet, cancel the contract for any reason whatsoever. As I tell my clients – if a buyer gets the packet four days prior to closing, sneezes three times and deems that to be a bad omen, she can cancel the contract, ostensibly based on the homeowner’s packet.
Property Owners Association Disclosure. SELLER represents that PROPERTY (check as applicable) is is not X located within a development which is subject to the Virginia Property Owners’ Association Act (Section 55-508 through 55-516.2 of the Code of Virginia). If the PROPERTY is within such a development and PURCHASER is buying the PROPERTY for own residence, the Act requires SELLER to obtain from the Property Owners’ Association an association disclosure packet and provide it to the PURCHASER. The information in the disclosure packet shall be current as of a date specified on the disclosure packet. PURCHASER may cancel this Contract (i) within three (3) days after the date of the Contract: (ii) three days after receiving the association disclosure packet or being notified that the association disclosure packet will not be available, if the packet or such notice is hand delivered or delivered with the consent of the PURCHASER by electronic means and a receipt obtained; or (iii) within six (6) days after postmark date if the packet or notice that the packet will not be available is sent to PURCHASER by United State mail. PURCHASER may cancel this Contract at any time prior to settlement if PURCHASER has not received the association disclosure packet or notice that the packet will not be available. Written notice of cancellation shall be hand delivered to or sent by United States mail, return receipt requested, to SELLER. PURCHASER’s right to receive the association disclosure packet and the right to cancel this Contract are waived conclusively if not exercised before settlement. For an additional fee to the Association, PURCHASER may request from the Association, an update of the disclosure packet specifying any material changes to the information previously furnished, which update shall not give rise to Contract cancellation rights.
This makes me wonder – is embezzling from homeowners’ associations a rising trend nationally?