How to do a Financial Review of Condo – HOA Finances


Civil Code 5500  Unless the governing documents impose more stringent [definition] standards, the board shall do all of the following:

(a) Review [examine or assess (something) formally with the possibility or intention of instituting change if necessary. “the company’s safety procedures are being reviewed”  from Google definitions  ♦  Plain Meaning Rule ♦ Georgetown University 21 pages on how to read, interpret and apply statutes] on at least a quarterly basis

a current reconciliation of the association’s operating accounts .

(b) current reconciliation of the association’s reserve accounts

(c) the current year’s actual reserve revenues and expenses compared to the current year’s budget.

(d) the latest account statements prepared by the financial institutions where the association has its operating and reserve accounts.

Quicken & Online Banking

(e) income and expense statement for the association’s operating and reserve accounts

Under Corp. Code 7231(a) “A director shall perform the duties of a director . . .”

Under the Davis-Stirling Act, he has a further duty to monitor the association’s finances (Civ. Code 1365.5).

His failure to attend meetings means he is missing the treasurer’s report, not reviewing financial records, and not asking questions about finances–a further breach of his fiduciary duties.

A person who consents to being a director and then refuses to participate loses the protections of Civil Code 1365.7(a). As such, he may face personal liability if something happens.

What is Fiduciary Duty?

A duty to act for someone else’s benefit, while subordinating one’s personal interest to that of the other person. It is the highest standard of duty implied by law (e.g., trustee, guardian). Black’s Law Dictionary

Links & References



Harvard Law

California Jury Instructions 4100 et seq

Public Report

In all common interest facilities …a public report issued by the DRE is required. The public report is a detailed statement, which discloses to prospective buyers pertinent facts about the subdivision. ….For more information on the public report, click here.

In the event that you use the services of a real estate licensee and believe he/she mishandled your purchase transaction, you should file a complaint with the Department of Real Estate.

DRE – Trust Funds – Required by Broker Regulation 2831

Disclosures Upon Transfer of Residential  Property ……………………………… 1102-1102.17
Disclosure of Natural and Environmental Hazards, Right-to-Farm, and Other  Disclosures Upon Transfer of Residential  Property …. 1103-1103.14

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