HOA Embezzlement: Can legal actions be taken?

There is a famous saying that goes: “Trust everyone, but cut the cards”.  In Mexico when it comes to money, distrust is part of our culture. This is because if we trust someone with our money and this person steals or misuses our money, it will be very hard to get that money back, even through legal means. For us, this distrust is just a way to protect our patrimony, especially if this patrimony is managed by someone else. Here in Puerto Vallarta, many homeowners’ associations manage a significant amount of money and it has been the case that due to the lack of supervision, some administrators have used for their own benefit the funds available in the HOA.

There are several ways in which an administrator can profit from the funds and goods belonging to the HOA. Some administrators use the staff, the goods and the premises of the HOA, as well as their working hours to provide property management services and rentals, or just for their own personal benefit (such as do renovations in their own home). In worse cases and because of the accessibility to all the funds available in the HOA (including the reserve fund), the administrator can be prone to dispose of these funds for his own personal benefit.

So what can I do if the Administrator of my HOA is stealing money?

Both the use of the HOA goods and staff for personal benefit, as well as the embezzlement of funds, can be typified as a criminal offense under the Jalisco Criminal Code which establishes that a crime called “Fraudulent Administration” is committed when someone who has been delegated with the administration of goods and funds, uses them improperly or in a way different to the purpose of the entity that owns those goods and funds. Therefore, in case there is evidence of the misuse of goods and funds belonging to the HOA, criminal charges can be pressed against an administrator who is committing this criminal offense.

And what if the Administrator of my HOA is the same developer?

Some HOAs are still managed by the same developer who constructed the building some years ago. This can represent a serious situation because of the lack of transparency. In this case, both homeowners and board members have the legal right to obtain information from the Administrator regarding the financial situation of the HOA, even if this Administrator is the same developer.  Criminal charges for Fraudulent Administration may also be filed in this case provided there is evidence of misuse of funds.

Protecting the patrimony of an HOA from an untrustworthy administrator requires both preventive and corrective measures. Some administrators may think that they are untouchable, but they are not, and now you know there are legal ways to deal with this situation.