Mississippi HOA managing agents and association money.

Six sections that most Mississippi owners have never heard of

Mississippi has no planned-community act and no general homeowners' association statute. What it does have — enacted in 2021 and amended in 2022 — is a short run of sections at the very end of the nonprofit corporations chapter, titled Regulation of Homeowners Associations Managing Agents and the Management of Association Assets.

They are financial-controls law. They do not touch architectural review, fines, elections or covenants. What they govern is money: who may hold it, where it must sit, who has to look at it and how often, and what may not be moved without a vote.

Whether these sections reach your association at all

Two definitions in § 79-11-751 decide the scope, and both are narrow. For §§ 79-11-751 through 79-11-759:

• “Association” means a homeowners association duly organized as a nonprofit corporation under the Mississippi Nonprofit Corporation Act (§ 79-11-101 et seq.) and exempt from taxation under the federal Income Tax Code. Both limbs must be satisfied.
• “Managing agent” means any person who, for compensation or in expectation of it, exercises control over the assets of a homeowners association. It expressly excludes a regulated financial institution acting in the normal course of its regulated business.

An association that self-manages, with no paid person controlling its assets, has no managing agent, so § 79-11-751's trust-account machinery has nothing to bite on and § 79-11-761 has nobody to make responsible. The rest still binds the board. §§ 79-11-753, 79-11-755, 79-11-757 and 79-11-759 impose their duties on the association and its board whether or not it employs anyone — the review of the statements, the ratification rules, the $10,000 board approval and the fidelity bond.

Where the money has to sit

Under § 79-11-751(1), a managing agent who accepts association funds must put anything not already in an escrow account or an account controlled by the association into a trust fund account at a bank or savings association, FDIC-insured, held there until disbursed in accordance with written instructions from the association.

The board may instead ask — in writing — that funds go into a checking or interest-bearing account, but only if all six conditions in § 79-11-751(2) are met. Among them: the account is in the name of the agent as trustee or of the association; everything in it is FDIC-insured; the funds are kept separate, distinct and apart from the agent's own money and from anyone else's; the agent discloses how interest is calculated, who pays service charges, and any withdrawal penalties; and no interest may inure, directly or indirectly, to the benefit of the managing agent or its employees.

§ 79-11-751(5) states the rule the rest of the section is built around: the managing agent shall not commingle association funds with its own money or with money it holds for others. Agents who were already commingling when the law took effect on 1 July 2021 had until 1 September 2021 to separate the accounts.

The ten-thousand-dollar line

§ 79-11-757 is short and blunt: notwithstanding any other law to the contrary, a transfer of more than Ten Thousand Dollars ($10,000.00) of an association's total combined reserve and operating account deposits may not be authorised from those accounts without prior board approval. The same limit is repeated as a condition of the optional account in § 79-11-751(2)(f).

The threshold is a flat ten thousand dollars, not a proportion that scales with the size of the accounts. What total combined does is close a gap: the reserve and operating deposits are treated as one pool, so a transfer cannot escape board approval by being drawn from whichever account is smaller.

The board has to actually look

Under § 79-11-753(1), unless the association's governing documents impose more stringent standards, at all regularly scheduled meetings the board shall review the latest account statements prepared by the financial institutions holding the operating and reserve accounts. § 79-11-751(4) requires the managing agent to hand that information over before every regular meeting, and at any other time the association asks.

§ 79-11-755 offers an alternative: every individual board member, or a subcommittee of the treasurer plus at least one other board member, may review the documents outside a board meeting — but only if the review is ratified at the next board meeting and that ratification is reflected in the minutes. The paper trail is part of the requirement, not an afterthought.

§ 79-11-753(2) separately allows the board to meet, and members to meet, by electronic transmission or other remote communication — unless the governing documents prohibit it.

The fidelity bond, and the vote that can switch it off

§ 79-11-759(1) reads as a firm duty. Unless the governing documents require greater coverage, the association shall maintain fidelity bond or comparable insurance coverage for its directors, officers and employees, in an amount at least equal to the combined total of the association's reserves and total assessments at the highest balance during the previous year. The coverage must also include computer fraud and funds transfer fraud (cyber coverage is not required). If the association uses a managing agent, the coverage must additionally extend to dishonest acts by that agent and its employees.

Then subsection (2) takes it away. If a majority of the board of the association, at a regular or special meeting of the association, votes not to maintain fidelity bond coverage for its directors, officers or employees, subsection (1) does not apply to the association at all — including its “comparable insurance coverage” alternative.

This is worth being clear about, because a summary that quotes only subsection (1) is accurate and misleading at the same time. Mississippi requires the bond by default and lets a simple majority of the board vote the requirement away — the members do not vote on it, though the forum the statute names is a meeting of the association, and no minimum coverage is left behind. If you want to know whether your association carries this coverage, the answer is in the board's minutes, not in the statute.

Who is on the hook

§ 79-11-761(1) puts responsibility in one place: the managing agent shall be solely responsible for ensuring compliance with §§ 79-11-751 through 79-11-761, including the handling of the trust fund account. Subsections (2) and (3) then insulate the bank — nothing in these sections creates additional requirements or liability for the depository institution, and it is held harmless from costs and attorney's fees arising out of an action brought under them.

There is a real remedy attached, though a narrow one. § 79-11-751(6): the prevailing party in an action to enforce this section is entitled to recover reasonable legal fees and court costs. Read it precisely — the fee provision sits in § 79-11-751, the trust-fund and commingling section. It is not written across the whole article.

One drafting wrinkle worth knowing. The definitions in § 79-11-751(7) and (8) are expressed as applying to “Sections 79-11-751 through 79-11-759”, while § 79-11-761 — added a year later — speaks of “Sections 79-11-751 through 79-11-761.” The definitions stop one section short of the compliance section that refers back to them.