We think our HOA treasurer took association money. What should the board do?

By OurHOA · General information · Revised November 9, 2026

What an HOA board does after finding theft by a treasurer, director or manager: cut off access, notify the crime insurer, report it, and tell owners.

Part of the HOA board handbook: treasurer and money.

The short answer

Do four things in this order. Cut the person off from the money and the records. Notify the crime insurer in writing. Report it to the police. Then have someone independent work out the full loss. Start all four within days, before anyone discusses a quiet repayment. This applies to a treasurer, another director, a volunteer or a manager, whether you hold proof or only bank records that do not add up. Call the association's attorney on day one. Rules vary by state, by your governing documents and by your policy, and this guide is education, not legal advice. If you are still deciding whether anything is wrong, start with our guide on responding when an owner demands a forensic audit.

The first 24 hours

1. Send two uninvolved directors to the bank in person with the minutes or a signed resolution. Remove the person from every account, end their online login, cancel their cards and ask for two approvals on every payment. 2. Change the passwords on the accounting file, payment system, shared email and vendor portals. Collect checkbooks, keys and bank tokens. 3. Get records straight from the bank: statements, check images front and back, deposit detail and transfers, as far back as the bank keeps them. 4. Copy the accounting file as it stands today, before anyone fixes an entry. Save the related email. 5. Have the attorney send a short written demand to preserve and return all association records and property. Keep the circle small until this is done.

Take the title now and handle the seat separately

A board can often remove an officer by its own vote, but usually cannot remove a director. So take the treasurer title today. Florida section 617.0842(2) lets a board remove an officer at any time, with or without cause. Colorado section 7-128-303(4) says the same unless the bylaws provide otherwise. In Texas, Business Organizations Code 22.232 leaves officer selection to the certificate of formation and bylaws, so read those. The seat is another matter. Texas 22.211 follows the certificate or bylaws, and otherwise leaves removal to the people who elect the director. Florida 720.303(10) allows recall by a majority of the total voting interests. Colorado 7-128-108 gives it to the voting members. Florida adds a rule of its own in 720.3033(4). A director or officer charged by information or indictment with theft or embezzlement of association funds must be removed. While the charge is pending, that person cannot have access to the official records without a court order. They return to any remaining term if the charge ends without a finding of guilt or a plea. A written resignation is often the quickest exit. Accept it, and give nothing in exchange. A motion the board can adapt: "Moved, that [name] is removed as treasurer effective immediately, and that [director] and [director] are authorized to change the signers and online access on all association accounts." Keep accusations out of the minutes. Texas 209.0051(c) allows a closed session on personnel, threatened litigation and attorney communications, with decisions summarized in the minutes. Colorado 38-33.3-308(4)(c) names "investigative proceedings concerning possible or actual criminal misconduct." Florida 720.303(2)(b) lets the board meet privately with its attorney on proposed or pending litigation, or on personnel matters. Ask the attorney how to handle the accused director's attendance.

Notify the insurers before you know the number

Crime policy deadlines usually start at discovery, not at the end of your investigation. The standard ISO sample forms require the association to notify the carrier as soon as possible, give a detailed sworn proof of loss within 120 days, produce records and sit for examination under oath. They also require any suit against the carrier within two years of discovery. Read your own policy today, because carriers change these terms. Send written notice through your agent even if the amount is a guess. Two clauses catch boards off guard. In the sample loss-sustained form, employee theft coverage ends for that person as soon as the association, or any director not in collusion, learns of a theft or other dishonest act. If the person keeps bank access after that, a later loss may not be covered. The form also says you must secure your rights of recovery and do nothing to impair them. A release or a repayment deal signed in the first week can do exactly that, so show it to the attorney and carrier first. Check too whether the policy's definition of employee reaches volunteer directors. Our guide on buying crime or fidelity insurance explains what to look for. Tell the D&O carrier as well, since owners may later claim the board failed to supervise.

Report it and prove the loss

File the police report in the association's name, after a board vote. Bring a one-page chronology, the suspect transactions and the bank records, and describe what the documents show. Put the board's wish to proceed in writing. Fox 13 reported that police in Hurricane, Utah, stopped looking into the Lava Bluff HOA treasurer after the HOA president chose not to press charges. They reopened the case when a new president gave permission. The new treasurer said the admission covered about $159,000. A forensic audit estimated $248,269. That gap is the reason to hire an independent CPA or forensic accountant, ideally through the attorney. Have the accountant go back to the start of the person's access and test every check, transfer and card charge, every deposit against the dues ledger, any credits posted to owner accounts, and whether tax returns were really filed. Hold late fees on any owner account the review puts in doubt. Criminal court may add restitution. Texas Code of Criminal Procedure article 42.037 lets the court order it and requires stated reasons if it does not. Florida 775.089 requires it unless the court finds clear and compelling reasons otherwise. Colorado 18-1.3-603 requires the court to consider it. Give the prosecutor your documented figure, and budget as though the money will be slow to arrive.

Two deadlines for getting money back

The bank. A check the treasurer signed with real authority is usually not a forged check, so a bank claim may be weak on those items. A forged director signature or an altered check is different, and the clock is short. Texas 4.406(f) and Colorado 4-4-406(f) bar claims not reported within one year after the statement was made available. Florida 674.406(6) allows 180 days for an unauthorized signature or alteration and one year for an unauthorized endorsement. Your deposit agreement may shorten these. Report every suspect item in writing as soon as you identify it. The person. Texas Civil Practice and Remedies Code 16.004 gives four years for fraud and for breach of fiduciary duty. Florida 95.11(3) gives four years for fraud, and 95.031(2) runs that from when the facts were or should have been discovered, with a 12-year outer limit. Colorado 13-80-101 gives three years for fraud and for breach of fiduciary duty, and 13-80-108(3) starts the fraud clock at discovery. Ask the attorney when the clock started on a long-running theft. If the carrier pays, the sample forms transfer your recovery rights for that amount to the carrier.

What to tell owners

Tell owners within about two weeks, once access is locked down and the insurer and police know. Have the attorney review this before it goes out: "On [date] the board found transactions in the association's accounts that we cannot explain. The person with access to those accounts no longer has it, and every payment now needs approval from two directors. We have notified the police and our insurance carrier, and we have hired [firm] to review the records. We do not yet know the amount. We will report what we can at the [date] meeting. Because the matter is under review, we will not name anyone or discuss details now. Please keep paying dues to [address]. If you think a past payment was not credited, send a copy to [contact]." Hold off on a special assessment until you know the loss and the insurance position, unless bills will otherwise go unpaid.

Mistakes boards make

- Letting the person help clean up the books. Questions go through the attorney. - Trading silence for repayment. Florida 836.05 makes it a crime to maliciously threaten to accuse someone of a crime with intent to extort money. Colorado 18-8-108 makes it compounding to accept money for not reporting or not seeking prosecution, though repayment up to what you reasonably believed was owed is a defense. Never put repayment and the police report in the same conversation. - Waiting for the next meeting or the annual review. The insurance clock may already be running. - Going back to the old routine. Afterward, send bank statements directly to a director who cannot write checks, and require two approvals on every payment.

A 30-day timeline

- Day 0 to 1: bank access removed, passwords changed, records copied, attorney called. - Day 1 to 2: officer removal vote, written notice to the crime and D&O carriers. - Week 1: police report filed, bank records ordered, suspect items reported to the bank. - Week 2: accountant hired, owner notice sent. - Day 30: first accountant report to the board in closed session and owner meeting set. - By day 120, or sooner if your policy says so: sworn proof of loss filed.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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