I believe I have found a way for Property Management Companies to steal their customers HOA Funds indirectly via construction and maintenance projects. I wanted to get some input from other people from this industry on my following theory on how this is being done. <br /><br />
In California it only takes 3 bids on any given project and if the HOA Board members sign off on the proposed price it's perfectly legal, regardless of the price being 2-3 times the average price. This is perfectly fine for HOA Boards that check the average prices, or even care, for any given project but most don't in my experiences. Seems that most HOA Board's allow the Property Management Companies to find or recommend the companies to bid on these projects and this is where I believe the potential for fraud arises. <br /><br />
I know of several Management Companies that handle 50+ Condo complexes or more with an average of $400k+ per year collected in HOA dues. Most of this money is spent on construction/maintenance of the buildings themselves in a condominium complex where the HOA maintains the buildings for the homeowners. That's $20+ million a year a good portion of which is going to be spent. <br /><br />
I believe there are many Property Management Companies that simply get their friends-colleagues (3 of them) to over bid these projects and then get construction kickbacks when they are completed. The lazy HOA Board members may be getting scammed by simply relying on the 3 bids to get the average price for any given project. Regardless of overcharging the projects or not a corrupt scam artist Property Management owner is in a perfect situation to become a construction kingpin providing his own painting, roofing, black-top and construction crews to bid on these projects and then get part of the profits. This would also be an incentive to neglect maintenance to the point that a major more expensive repair is needed. <br /><br />
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Anyway I'm just a homeowner who suspects my current HOA Board is being scammed in this manor and I'm wondering if anyone else out there feels this is happening to them or has any input to offer. Seems to me this could be going on more than anyone realizes and no one knows because it's "legal"?