Condo President Refuses to Relinquish Association Checkbook

T.C. from New Haven County writes:

Dear Mister Condo,

We recently changed management companies because they violated CT laws. Our President dragged his foot for 4 months before receiving a letter from the state ordering us to change companies. He was given the check book until we found a company. We found a company and he refuses to turn over the check book. Is this legal?

Mister Condo replies:

T.C., I am not an attorney and offer no legal opinions here. If you are asking me what I think of the President holding on to the checkbook and refusing to turn it over to the management company, I would say that is not a very friendly gesture and not stepping off on the right foot with the new management company. Is it criminal? Not in my book but it isn’t very sportsmanlike either. The great news is that your Board President can be voted out of office at the next Annual Meeting. Why don’t you and a group of like-minded unit owners volunteer to serve on the Board? That way, after you are elected, you can determine who will hold the various offices of the Board. If, on the other hand, the Board President has held the checkbook because there is evidence of missing money or such in there, and he has done something criminal, it is time to call the police. Stealing from the association is a crime. Work with your new management company to see what, if any, wrongdoing has occurred. If there is no harm, there is no foul. Either way, it sounds like it is time for a Board President who will act in the best interest of the association. Good luck!

6 thoughts on “Condo President Refuses to Relinquish Association Checkbook

  1. It’s worth noting that the President serves at the pleasure of the Board. If the Board is upset, they can elect someone else on the Board as President; just don’t make your current President the Treasurer…

    1. Moving forward the new management company can set up the bank account using the assessments collected. Not having access to the old account does mean they can’t process deposits and bill payments for the association. The board president should be contacted by the Associations attorney who can send a strong letter requesting the bank records. It will be difficult for the association to report complete financial activity until all the records are available. The association can go to the bank and get copies of the bank activity to give to the management company to use. Good internal controls dictate that the bank accounts should have had new authorized signers anyway due to the changes in Board and Management. As an association tax preparer and auditor, it is hard not to think that not turning over the bank information is not a red flag, but maybe the president just doesn’t like change. Try not to say guilty until proved guilty for your community’s sake.

  2. Call the bank and let them know the situation. They do not want any problems and will shut down the account. Then see what the board President does. Also call your insurance carrier and advise them about the situation. They will be concerned because there is a chance that there will be a D & O claim. Don’t speak to the insurance sales agent because all he cares about is his commission. Call the carrier direct. Stir the pot if you want results.

  3. Here’s another option: from your CC&Rs, find the section about calling a Special Meeting of owners. A percentage of owners can call a special meeting, publish an agenda, give notice, and use owner votes/ proxies to remove the president…sooner than the next annual meeting.

    Call your association counsel, or hire your own counsel to guide you through this process if no owner feels/ is qualified to read the CC&Rs, establish an execution plan, and has the bandwidth to carry it out.

    Owners can be bullied by boards, only if they allow it.

    And…follow the other posts’ excellent advice, too.

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