The Question Most HOA Boards Never Think to Ask
When your HOA hires a management company, you probably ask about fees, response times, and reserve planning. Here’s a question that rarely comes up in the interview, but should: whose bank account is your association’s money actually sitting in?
For most Texas HOAs, the answer is uncomfortable. It’s not the association’s account at all. It’s the property management company’s.
The Industry Standard: The Management Company Holds the Keys
Across the property management industry, the default arrangement is for the PM company to open a bank account under its own EIN and pool it with funds from other HOA clients it manages. The company controls the deposits, the disbursements, and the decisions. The board is often “consulted,” but in practice has little real authority over its own money.
This is such a common structure that most board members assume it’s the only way things work. It isn’t – but it’s rarely explained clearly during onboarding, and it’s buried in language most volunteer board members don’t have time to parse.
Why This Matters More Than Boards Realize
When an HOA doesn’t legally control its own bank account, two things tend to follow. First, if money goes missing, gets mismanaged, or simply isn’t tracked well, the board still takes the blame. Homeowners confront board members directly – “You’re spending all our money,” or worse – even though the board never had real signing authority or visibility into the account.
Second, the arrangement creates real legal exposure. It’s part of why the property management industry sees so many disputes and lawsuits: when funds sit in a company’s own account rather than the client’s, accountability gets murky fast, and boards are left defending decisions they didn’t actually control.
The Clause That Can Hold a Board Hostage
The risk shows up most clearly when a board decides to switch management companies or bookkeepers. Because the outgoing company holds the account, some management agreements give that company up to three months to return the association’s funds – with no obligation to hand over the banking history that goes with them.
That means a board trying to leave a bad relationship can lose access to its own money for months, and lose the historical record entirely. We call this what it is: the association is being held hostage by its own bank account.
A Different Model: The HOA Keeps Control
At Slaton Financial, we set HOA accounts up the opposite way. The bank account stays in the HOA’s own name, under the HOA’s own EIN, at a bank the board chooses. Slaton Financial – or our affiliated property management entity – is added only as a sub-user, with permission to initiate deposits and payments on the board’s behalf.
The money never passes through or sits in our accounts. The board can see every transaction in real time, retains signing authority, and never has to wonder who’s actually in control.
We apply the same principle to payroll for every client we serve, not just HOAs. We never collect a client’s payroll funds into our own account and then pay employees and the IRS from there. Instead, we initiate those payments directly from the client’s own account. It’s a small structural difference that eliminates the “the bookkeeper ran off with payroll” risk entirely, because we’re never holding the money to begin with.
What This Means If You Ever Need to Make a Change
Because the HOA owns the account and the banking relationship from day one, switching bookkeepers or management companies later doesn’t require negotiating for the return of funds or begging for transaction history. The board already has both. There’s no three-month hostage clause to worry about, because there’s nothing to hand back – the account was never anyone else’s to hold.
What Your Board Should Ask Before Signing (or Renewing) a Contract
Before your next management or bookkeeping contract is signed, it’s worth asking directly: whose EIN is the account under? Who has signing authority? And if we ever wanted to leave, how long would it take to get our money and our records back?
The answers tell you a lot about how much real control your board actually has – and how exposed individual board members might be if something goes wrong. If you’d like a second opinion on your current setup, or want to see how the sub-user model works in practice, we’re happy to walk through it.