AUDIT LETTERS: WHY ARE THEY IMPORTANT?
While it might seem like a mundane piece of communication that comes out annually from a homeowner’s Association, or HOA, audit letters are a required piece of public information that highlights what an HOA has been doing with all of its fees and members’ funds each year. Unlike public companies, HOAs generally don’t need to disclose their activities day to day. When a homeowner buys into an HOA by purchasing a home in an HOA zone, they agree to abide by the rules of the HOA, via the purchase contract. Florida HOA laws require HOAs to disclose their financial activities annually for the benefit of the membership. This is where the audit letter becomes valuable.
Why Audit Letters Matter
Typical HOA annual audit letters are going to detail categorically how the HOA has spent its funds over the past year and what financial goals it has for the coming year. The beauty of the audit letter is that it has to be prepared by an independent third-party company doing the financial books review and certifying their condition as well as the statements and commitments included. This makes the HOA annual report about as objective as it can be. Another way a member can have any insight into what is going on with member funds would be to attend the HOA Board meetings and/or get involved with the HOA subcommittees, something not everyone has time for in their busy schedule.
Where a problem is found, however, then it takes a bit of additional help from Florida HOA attorneys to get answers. HOAs generally tend to be run by a small council of members who are only elected once every few years. While they do have to run for a majority vote in their neighborhood, few people usually vote, so those who can garner enough support among friends oftentimes sit on HOA Boards for an extended period of time. No surprise, they are usually not keen in answering detailed questions about choices and decisions that seem to run counter to the official role of the HOA. Many think they are beyond a legal response as required by the Florida HOA laws. Again, the audit letter forces an HOA to disclose balances and major aspects of activities it has engaged in for the year and those can be signals to the right eyes on where to seek additional questions. Sometimes that requires the assistance of an HOA attorney to pursue.
HOAs are Not Above the Law
While an HOA has the legal authority to govern its neighborhood, they are not above state law. If there is a question of misappropriation of funds or fraudulent activity, which is always a risk with collected funds, a Florida HOA attorney can pursue disclosure of the matter through legal proceedings under Florida HOA laws that requires an HOA and its Board to respond, even if they have to be deposed.
South Florida HOA Attorney Help is Available
If you’re running into headwinds with your HOA and not getting straight answers about where your membership dues are going, don’t forget to take a closer look at the annual audit letter that has to be released. Start with that document and share it with a qualified legal expert like the Ferrer Law Group. You’ll be surprised by what’s possible in getting down to real answers and a responsible explanation of membership dues utilization by a Broward County HOA lawyer versus being given the brush-off or an attitude.
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