Question:
Mortgage companies have required buyer to pay HOA annual assessments for the life of the mortgage. The HOA gets the payment for the total assessments. Can the HOA use all the income for operating funds in the current year? If not, how should the funds be accounted for. If the board has spent the money, what is the law governing the mismanagement.
– Dewayne
Answer:
Hi Dewayne,
It is likely that the mortgage company itself does not have this requirement; rather, the home the buyer bought is a part of an HOA, and the purchase comes with the obligation to pay assessments to the HOA. The HOA uses these assessments to fund its operating and reserve accounts. It is important to clarify this with both the mortgage company and the HOA.
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