Fidelity Bonds and Property Management Companies

Start with the path of the money

Document where assessments are deposited, who can initiate and approve payments, who can change vendor instructions, and whether reserves sit in accounts controlled by the association, the manager, or both. Titles such as property manager or bookkeeper do not answer those operational questions.

The map should include online banking administrators, lockbox providers, payroll processors, and anyone able to alter payee data. This exercise identifies people and systems to compare with the covered-person, ownership, custody, and loss provisions in the actual policy or bond wording, which controls.

• List every association and manager-controlled account.
• Record payment initiation, approval, and reconciliation rights separately.
• Identify who can add users or change banking and vendor credentials.

Separate the association's coverage from the manager's coverage

A manager's bond and an association's fidelity or crime policy are not necessarily interchangeable. They may name different insureds or obligees, protect different property, apply different deductibles, and respond to different conduct.

Ask for current evidence and the relevant forms or endorsements rather than relying only on a certificate. Confirm whether the association is protected for acts of the management company and its employees and whether the manager's arrangement protects association-owned funds.

Read the contract beside applicable requirements

State rules differ. California, for example, requires a Davis-Stirling association using a managing agent or management company to include that organization and its employees for dishonest acts. Colorado instead has a parallel requirement for certain independent management contractors unless the contractor is included as an insured employee under the association's contract.

Those examples should not be generalized nationwide. Entity type, community age, unit count, who controls funds, governing documents, and the management agreement can change the analysis.

Make verification recurring

Revisit the arrangement when bank authority, reserve balances, management firms, payment platforms, or contracts change. Retain the policy forms, endorsements, certificates, management agreement, account-authority records, and the board's review notes.

Operational controls remain important even where coverage applies. Dual authorization, independent statement review, and prompt access removal may reduce opportunities for unauthorized transactions, but no control or coverage arrangement eliminates every loss.