Where, oh, where has my HOA's CD gone?

A manager recently told me about an association that lost some money. Specifically, one of the association’s long-term Certificates of Deposit was turned over to the State of Colorado. In this situation, the bank had apparently sent correspondence to the association’s former management company and then turned over the account to the State when no response was received within 30 days. The property manager was totally baffled and not sure how to get the money.

The Great Colorado Payback website shows that the State is holding funds for this particular association, and the manager will need to go through a claims process to get the money. Unfortunately, the association won’t get interest that accrued during the time the State has held the funds. I don’t have all the details – and haven’t heard yet if there’s a “happy ending” – but other associations may benefit from knowing that their accounts can get transferred to the State.

After learning about the situation, I spoke with an investment advisor who works closely with community associations. He had never heard of this happening with association accounts. We agreed that it certainly seems like an unusual scenario. But perhaps it’s not as unusual as we think.

Curious, I decided to search the names of a few other associations in the Denver metro area. I quickly found that the State is holding funds for other associations that may not even know the accounts were turned over. The online information does not say how much the State is holding; it only says whether the amount is less or more than $50.

The Great Colorado Payback website gives some guidance on when accounts may wind up with the State. The site’s Frequently Asked Questions state:

What about my CD or IRA?
Certificates of Deposit (CD) become inactive five years after the date of maturity if your financial institution is unable to find you. 

If my account “sits” collecting interest or dividends, isn’t it still active?
No. Even if interest or dividends are automatically deposited into your account it is not considered active unless you have contact with the financial institution or business.  To keep an account active, you must contact the financial institution, insurance company or other business by phone or mail, or just cash or deposit a check in the accountA financial institution or business may even cross-reference an inactive account with an active one to keep it open. (Emphasis added.)

Is the State of Colorado holding any of your association’s funds? Have you previously dealt with funds turned over to the State of Colorado? Let us know what you’ve learned about how to avoid this situation, or how the situation resolved.
 

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