The Connecticut General Assembly tried to do a good thing by putting limits on how much money property managers can write checks for without prior approval from the board of directors or for requiring the signature of a board member.
Our legislators trusted the boards of directors to set reasonable limits. Big mistake in some complexes where boards of directors went along without questioning why property managers should be able to write $10,000 checks, eliminating a critical safety check.
And that took place as police, courts and accountants attempt now to unravel how a Westport property management employee made off with more than $1 million from at least nine Fairfield County condo complexes.
The $10,000 issue was brought to light by Linda DeNoia of Norwich, who read the minutes of the New Concord Green condo association, which said that based on the request of its property manager it was giving him approval to write up to five digit checks.
In fact the minutes went further, stating that the General Assembly had required the $10,000 limit.
DeNoia, the former president and former property manager for New Concord Green, had trouble believing that the General Assembly would pass such legislation, especially considering the fact that this complex's total annual assessment is only $200,000. Twenty one checks and the year's assessments are gone.
"I live in a condominium of 48 units and I have a question. The current manager where I live just met with the Board and told them that he must put an amount of $10,000 into his contract. This is the amount he can spend on behalf of the association should the need arise. He stated that this is part of the new law that was just passed. IS THIS CORRECT?"
I had never heard of it and I contacted two condo attorneys who advise the Connecticut Condo Owners Coalition: Patricia Ayers of Glastonbury and George Coppolo of Hartford, both of whom said the General Assembly only passed a law stating that a LIMIT had to be placed on how much money a property manager could sign a check without prior approval.
Here is the significant part of the statute:
Sec. 20-458. (2) Provides that the person contracting to provide management services shall not issue a check on behalf of the association or transfer moneys exceeding a specified amount determined by the association without the written approval of an officer designated by the association.
Both the property manager, Josh Parsons, and officers of the board of directors said the minutes incorrectly stated that Parsons claimed the General Assembly required the $10,000 limit. However, they all said that the $10,000 limit was adopted as there was no objection.
In fact, Parsons, who also manages nine other condo complexes, said he recommended the $10,000 limit to all of them and to this day has heard no objections.
Parsons of Readco Management of Old Lyme said his associations trust him and said he provides full financial reports monthly and yearly.
Instead of charging unit owners for researching and copying financial documents, Parsons said he provides free electronic copies. Most property managers make a profit from providing unit owners with their own financial documents.
If anyone had objected, Parsons said he would have reduced the $10,000 and would reduce it now, even though it is in his contract, if there are objections.
Christine Steliga, president, and June Owens, treasurer, defended their decision at New Concord Green to permit Readco to write $10,000 checks. However, Steliga seemed surprised that their authorization was for EACH check, not for a total of $10,000 for all checks in a month.
"My focus is transparency - we have had 100 percent transparency since Josh took over, our treasurer and board get copies of checks and everything, every unit owner can get all the financial documents," Steliga said in a telephone interview. "We have a paper trail every month, what we get in, where it comes from, and where it is spent."
"This was all done at an open board meeting," she said, adding that if a unit owner objects they will reconsider their votes.
Steliga said there are three board members at the 48-unit complex, and the board members are almost in daily contact with the property manager. That to me raises the question of why the property manager needs to be able to spend up to $10,000 without checking with the board.
The contract will be challenged at least in New Concord Green. DeNoia, who manages five small condo complexes and requires $100 check authorization, said she will challenge it.
Good for her. If I were an insurance company providing a bond for a property manager, I would insist on a more reasonable number than $10,000.
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