ONLY ON 3: Townhome owners: ‘It’s just not adding up’

WINNABOW, NC (WWAY) — If you move into a neighborhood in the Cape Fear, you'll probably be part of a homeowners association. While there are benefits, like a pool or trash removal, there are also downsides, like nit picking and bad decisions.

Some townhome owners in Brunswick County think something criminal is going on with their HOA. WWAY investigated. It's a story that's only on three.

Sheet after sheet, number after number, month after month, it took a lot of time and work for Tom and Melissa Modafferi to come to this conclusion.

"It's just not adding up. There are no approvals, There are street addresses that aren't in our neighborhood that we're paying for. It just looked kind of fishy,” Melissa Modafferi said.

The father and daughter, who each own townhomes at Mallory Creek plantation in Winnabow asked for their homeowners association's financial records from 2007 through 2013 when they noticed their reserves kept dropping every year.

"We only have $24,000 in there,” Melissa Modafferi said. The Modafferis said they should have about $59,000 in their reserve account. They said that means $35,000 is missing.

But, the HOA’s attorney, Alex Dale, said that is not true.

"They [the HOA] showed us their audit, and yes, the numbers did match up,” Tom Modafferi said.

But, the Modafferis said their HOA property manager could not provide all the documents to support those numbers.

"There are invoices that say work performed and an amount. It doesn't say what work was performed, where it was performed, what date it was performed. There's no information. That doesn't tell me anything,” Melissa Modafferi said.

Some of the invoices they did see show maintenance work done on condos in Sunset Beach, and water bills for service at Princess Court entrance. Their charts also show bad debt write-offs that equal more than $6,000. The Modafferis said the Sunset Beach condos, and Princess Court entrance are not in Mallory Creek Plantation. They added that they think the bad debt is too high for the number of townhomes in their association.

"So, there's a big difference, and nobody can give us an answer,” Melissa Modafferi said.

WWAY talked with the HOA's attorney, Alex Dale, to get some answers. Dale said the bill for the maintenance work at the condos in Sunset Beach was a wrongful withdrawal that was paid back, the water account was for the Mallory Creek Plantation clubhouse, and the bad debt was for bankruptcies and foreclosures at a few properties.

Dale also explained the $35,000 the Modafferis said is missing. In an email, Dale wrote, "The accounting from the [townhome] owners group is in error or, at best, misleading. It tries to use real expenses against income that is not real. To put it in accounting terms, the expenses are shown on a cash basis, but the income is shown on an accrual basis. This will never balance. The expenses are shown as actual expenses (cash basis accounting), but the income is shown as what may have been billed (accrual). This always will give the false impression of more money being in the account, as associations do not collect every dime they bill out (same as most businesses).”

When told what each side was saying, both the Modaferris and Dale claimed what each other was saying is false. "I'm afraid WWAY has been given misleading information in an attempt to create a story here," Dale wrote in an email. "He [Dale] has given you false answers," Tom Modafferi wrote in an email.

These kinds of issues happen a lot, according to Ole Madsen. “The biggest complaint of all is where are the financials, I can't get financials,” Madsen said.

Madsen is with HEAR4NC, a non-profit that advocates for homeowners. Madsen said more homeowners should be like the Modafferis. He said they should ask questions and get answers.

"Really, this [the HOA] is actually a democracy. It's a hard thing to get used to, but you can make your own rules. You can change them,” Madsen said.

Madsen said that's not as easy, however, when the developer and builder are still on the HOA board, as Tom Modaferri said is the case at Mallory Creek Plantation. "So, they have their own school, their own tricks and then you get the gospel from them, their way, and it's wrong,” Madsen said.

Madsen and Dale said the biggest takeaway from all this is to know exactly what you're getting yourself into when you move into, and sign up with an HOA. "We don't have to have a revolution. All we need to do is have some knowledge,” Madsen said.

In the end, the Modafferis said that's what they want. They want to know where their money is going, and they want to have enough of it in their reserve account for a rainy day. "I would rather somebody put a gun on my back. This way, I know where it went,” Tom Modafferi said. "Wilmington hasn't been hit by a major hurricane in forever,” Melissa Modafferi said.

The Modafferis contacted the Brunswick County Sheriff's Office about this issue. But, investigators told them and WWAY that the Modafferis must order a forensic audit before they can look into it. The Modafferis said that could cost between $800 and $30,000. Accountants WWAY spoke with could not give a specific quote saying the costs can vary greatly depending on the case.

If you need help in dealing with your HOA, go to hear4nc.org.