Is your community association properly protecting its funds against theft? Today’s newspapers are riddled with stories of trusted property managers and Board members embezzling large sums of money over long periods of time. Do not be the victim of a false sense of security just because your community has Fidelity coverage. Community associations are non‐profit organizations governed by volunteers, therefore they need unique coverages. Take a closer look at your Fidelity policy.

This type of insurance was created for businesses, which have employees. Most community associations do not have employees. Therefore, you should be sure your Fidelity policy is endorsed to cover dishonest acts by your non‐compensated Board members. An association often outsources the community management or accounting functions. In that case, the policy must be modified to protect against theft by that company’s employees.

Below is a checklist to make sure your community association has the appropriate coverage to protect their funds.

EMPLOYEE THEFT is a confusing term for community associations since they typically do not have employees. Yet, this coverage is essential to protect the funds from dishonest acts by first parties who are known to have access. This coverage should be endorsed to cover the association’s: 1) BOARD MEMBERS, 2) COMMITTEE MEMBERS, 3) PROPERTY MANAGER,4) ACCOUNTING SERVICES i.e. City & Village Tax Office.
of your own checks by third parties such as someone stealing your check from the mail, and then cashing it.   
is for a third party that uses a computer to obtain money from your account. An example is a third party using a computer to create imitation checks in your name.
is needed by all communities to protect against others impersonating you to manipulate your funds. The person could assume the Board member or manager’s identity to make a transfer through computer hacking or other means. Imagine a person using the transit number at the bottom of your checks to make telephone purchases.

Determining your Fidelity insurance limit can be difficult. How much could be embezzled before you detect it? The limit in place at the time you discover the theft has to be enough to cover funds stolen over an extended period of time. Fannie Mae will not approve a loan in a condo association unless the Fidelity limit is at least 3 months assessment income plus reserves. Some governing documents require certain limits such as 150% of the operating budget plus reserves. Most Fidelity losses involve small sums stolen over long periods of time and can easily exceed the amount in the accounts at any given time.


  • St. Peters on‐site manager accused of embezzling over $250,000 over several years. $80,000 was stolen via falsified checks and credit card payments. The Board was not suspicious until a change in accounting software was made.
  • Chapel Hill Estates in Town & Country lost more than $50,000 over 2 years to their Treasurer.
  • Fall Creek Condominium in Branson Missouri employed an on‐site manager from May 2011 to September 2012, during which time the manager allegedly issued multiple checks, transferred funds, created cashier’s checks in her name, and made deposits into her personal bank account or her company bank account called, “ME”. The allegations exceed $300,000.
  • Maryland House Condominium in the central west end had a bookkeeper who pleaded guilty after being accused of embezzling more than $70,000 over a 2 year period.
  • $109,000 was stolen from a condominium in the DeBaliviere place neighborhood. A volunteer diverted association money for his personal expenses over 2 years.
  • For over a decade, the President of Doral Manor Condominium in west county converted over$300,000 in association fees to his own use.
  • Two owners of a property management company stole over $2 million from multiple communities to pay off a debt on a real estate project.
  • $1.3 million stolen from 12 community associations by management company VP to keep management company from bankruptcy.
  • Management company had over 400 communities. Over 2 years, the owner embezzled over$2.2 million by transferring the funds to himself or to a business in which he had financial interest.

Courtesy of Karen O’Connor Corrigan, CIC, CIRMS