Preventing Embezzlement in Condo Associations

embezzlement in condo associationsImagine you entrust in a property manager to oversee the finances in a condo association only to find that the money set aside has not been used for the upkeep of the property. Instead, the manager seizes your assets leaving you with a big gap in the budget. Maintenance goes unchecked and a lot of condo owners are upset for they have paid their dues with nothing to show for it. You sue the property manager and wait for the courts to grant you access to the bank accounts so you can recoup funds…if there are any left.

Sadly for many, condo associations in Massachusetts are no strangers to embezzlement. Just last month, a property manager stole $200,000 from a complex in South Boston. The year before that, a Waltham woman embezzled $350,000! We acknowledge that the vast majority of property managers have the utmost integrity, and a rare few act outside of both the moral and judicial laws. However, the association needs to be prepared in the case that is not the circumstance.

The Warning Signs: Embezzlement in Condo Associations

  • Suspicious expenses
  • Ignored emails and phone calls
  • A reluctance to share financial records with association’s accountant

How to Prevent Embezzlement in Condo Associations

  • Always have access to financial records
  • Require more than one signature on approved purchases
  • Appoint a treasurer or accountant to regularly review financial records
  • Make sure your condo association insurance policy covers losses due to embezzlement

Embezzlement Insurance vs The Courts

Embezzlement insurance, also known as crime or fidelity insurance protects your property in times like these. Many associations mistakenly think that crimes are fully covered under their general liability policy, but you’ll be surprised to find out that this coverage may not be sufficient for their association.

While you can wait for the justice system to pay you back, it’s no guarantee that you’ll get the desired outcome or if your case will be heard in good time. Furthermore, even if the person is ordered to pay restitution, those payments can cease based on circumstances. A former property manager in Lowell paid back half of what he owed before losing his job and payments stopped altogether.

How much coverage do you think an association should have for lost and stolen condo fees? Contact H&K Insurance at 617-924-5600 to find out!