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New Condos and Old Tricks

Creating and Protecting Communities

Article written by Jack Carr, P.E., R.S., LEED AP, Criterium Engineers
Published in Condo Media, September 2014

Mainer’s have a love - hate relationship with September.  It is a time of the some of the best weather of the year with the anticipation of the fall colors soon to come but it also reminds us of the yard and building maintenance work undone before the early winter begins.  September is a time when the tourists give us back our roads and we start planning for our Halloween costumes for next month, but before we start discussing the scary things going on let us comment on the good things in the condo world. 

Maine’s condo and apartment market continues to be hot.  Portland multi-family buildings for sale are attracting investors from all parts of the country due to the attractive high rents and lending deals.  Even the slower markets in Biddeford and Lewiston are seeing spin-off effects of more wide spread interest into those locales.  These higher rent rates pushes more renters toward renting or buying condominium units. 

For this reason more condo developments are on the drawing boards for both ends of the Portland peninsula.  In Munjoy Hill’s new trendy neighborhoods two new condominium developments are on track for opening next year.  These include the Munjoy Heights with 29 luxury townhouse units with garages and elevators is scheduled for opening early next year and shortly there after the Marquis Lofts complex is scheduled to be available for occupancy.  This complex features loft-style units of three levels over indoor parking. 

The long last development of Thompson’s Point has finally been approved by Portland allowing the creation of a highly anticipated Fore River complex on 30 acres at the gateway to the city.  In addition to the two 120 foot tall condominium towers, the facilities host a sports stadium for the Red Claws basketball team and a covered amphitheatre for a variety of outdoor performances including supporting the new circus school, Circus Conservatory of America.  Other planned tenants are a hotel, restaurants, sports medicine lab, an art studio, and commercial offices.     

Now for the scary stuff.  I remember when Halloween was not such a big deal.  Perhaps next month’s holiday is meant to remind us to be wary of the unknown and be prepared.  Trust comes with a price, as seen in recent news articles about condominiums facing the real fear of embezzlement and fraud. 

A Hampton Beach condominium president pleaded guilty this past June to mail fraud for allegedly embezzling hundreds of thousands of dollars from his New Hampshire condo association’s account over the last four years. reported he is accused of forging board members’ signatures; creating fake invoices and association statements; and siphoned off money from a reserve fund roof repair project.  He will be sentenced next month in U.S. District Court. 

You may recall Southern Maine was shocked in the recent past by two cases of condos being allegedly robbed by trusted custodians of condo funds.  The first case involved a Berwick, Maine woman who was the bookkeeper for two condominiums in Portsmouth.  She allegedly stole over $30,000 while maintaining the condo’s financial records.  The second case involved the embezzlement of funds from a Biddeford condominium. 

The news came as a shock.  But it should not have.  Theft from non-profit organizations and profit making companies happen more than we think.  Often it is not reported due to the board’s fear of embarrassment or worried about bad press jeopardizing reputations.  Small non-profits are perhaps the most vulnerable to this type of crime due to their size and lack of qualified personnel to provide adequate internal controls. 

Perhaps this latest news of embezzlement activities close to home should be wake up call to board members to be more vigilant on noting irregularly high maintenance costs, odd equipment purchases, or other unusual repair item histories. 

As difficult as this issues might be to put on a board’s agenda for discussion, it is necessary.  Probably the greatest cause of embezzlement is loose financial controls providing too much temptation in hard economic times. 

So, where to start?  The condominium’s CPA could certainly provide workable guidelines to install simple financial controls with an annual audit of the financial systems and a protocol for having multiple eyes see periodic monetary documents. 

Associations should avoid one person being solely responsible for recording/ depositing checks; requesting, authorizing, and recording expenditures; opening mail; and reviewing transfers of funds between bank accounts.  Bonded property management companies can perform many of these duties.  Your insurance package should include fidelity insurance to protect the association when the worst happens. 

Further steps to protect cash include requiring all check expenditures to have two signatures and two authorizations over each cash disbursal and no pre-signed checks.  Contracts should be completive bid and reviewed and approved by the board.  We should remind ourselves of President Reagan’s famous quote, “Trust, but verify.”