Finance Articles from the Web

Finance & Reserve Videos

 

Accounting

  • HOA Accounting | Understanding Different Methods Available May 9, 2017 There are three main methods of accounting that HOA’s use. These are GAAP accounting (accrual accounting), cash-based accounting and modified accounting. As an HOA board member, it is important to have an understanding of the three methods that are used, their effects on financial reporting and the advantages/disadvantages of each method to your HOA.    Read the article…………..
  • Cyber Risk – Your Data is Safe, Until It’s Not… March 28, 2017 You’ve undoubtedly read about the high-profile hacks and data breaches that have occurred over the past few years – millions of accounts compromised and credit card numbers stolen from Target, Home Depot, TJX, Yahoo, and other large companies. While big companies make big headlines, no business or organization is too small to be hacked – and hackers often find smaller businesses to be easier prey. That means community associations, property management companies, association banks, payment processors, and other community support ...
  • Condominium audits uncover four common issues February 14, 2017 With few exceptions, the Condominium Act of Ontario (the act) requires an independent auditor to perform an annual audit of the financial statements of a condominium corporation. Sections 60 and 71 underline the rights and responsibilities of an independent auditor.  It’s important for unit owners to understand that an independent auditor does not prepare the financial statements, nor is he or she responsible for the daily bookkeeping and management activities. These activities are the responsibility of management and the board. ...
  • New HOA Board Members – Get up to Speed on Your Community Finances October 28, 2016 Congratulations, and thank you for stepping up to serve your community on the board of directors! As an HOA or community association board member, you get to run a business and make key decisions that will impact your community now and in the future. While you may feel a little overwhelmed at the moment, serving on your community association board can be a very rewarding experience, and a great way to meet neighbors.       Read the article………….
  • HOA Funds Transparency August 12, 2016 Just about any situation can deteriorate when there is no transparency. This is true in any business setting, including an HOA. With good transparency, homeowners know exactly the direction in which their neighborhood is heading, which leads to less problems.   Read the article……………..

Accounting Archives

Audits

  • Condominium audits uncover four common issues February 14, 2017 With few exceptions, the Condominium Act of Ontario (the act) requires an independent auditor to perform an annual audit of the financial statements of a condominium corporation. Sections 60 and 71 underline the rights and responsibilities of an independent auditor.  It’s important for unit owners to understand that an independent auditor does not prepare the financial statements, nor is he or she responsible for the daily bookkeeping and management activities. These activities are the responsibility of management and the board. ...
  • Community Associations Countdown to Year-End! December 5, 2016 The end of the year is approaching and before long we will be setting New Year’s resolutions for 2017. But before that new beginning, we need to wrap up 2016. For those associations whose year-end is December 31st there are financial and tax items that need to be addressed by the board and/or management. Let’s count down the top 10:    Read the article…………..
  • 4 Things Every CAM Manager Should Know About Auditing June 3, 2016 A good audit can help identify and prevent fraudulent activity. It can prevent small mistakes from becoming big ones. It can provide peace of mind to the association members that their community’s financial security is in good hands.    Read the article…………
  • The “Rep” Letter: the Biggest Little Three-Letter Word in Your Annual Audit February 26, 2016 Before the accountant completes the annual audit of your co-op’s or condo’s financial records, the board and the managing agent will be asked to sign a letter acknowledging that they, not the accountant, have primary responsibility for the financial statements and that to the best of their knowledge the statements are correct.   Read the article………….

Audit Archives

Budget

  • How to pass a special assessment with less pain June 13, 2017 In the language of community associations, the words “special assessment” are among the most heated. No one enjoys being commanded to come up with extra money, but few associations can avoid the occasional levy.  A special assessment is an amount owners must pay in addition to their regular monthly or quarterly dues. Such assessments typically are used for big-ticket items like new roofs or boilers, to make up for budget shortfalls or to earmark for future expenses. Owners sometimes protest ...
  • Four Condo Association Special Assessment Questions To Determine Project Cost June 5, 2017 Having determined the timing of a Special Assessment through your incredible detective skills (powered by http://Bettercondolife.com), the next logical question you’ll want to ask is how much will the Special Assessment cost. Knowing it’s coming is one thing, but its cost is quite another. Similar to the previous article, these are Condo Association Special Assessment questions you have a right to ask. Whether or not your Board answers is another matter, but many of these questions should be answered by ...
  • Understanding the Why’s Behind an HOA Special Assessment May 30, 2017 An HOA special assessment is a fee that is charged to each housing unit within a development, to be used to cover an unexpected expense or other short-term occurrences. Special assessments are charged separately from your HOA fees, and they usually arise due to a shortfall in the reserves of the HOA.  This article will explore more about HOA special assessments.      Read the article……………
  • Three Condo Association Special Assessment Questions To Determine Project Timing May 22, 2017 An informed and involved Owner will often attend monthly Condo Association meetings. If your Board has been discussing big projects during meetings, you might start to wonder if things are going well or not. Sometimes work is routine, but other times there might be a rough road ahead. When a Condo Association Special Assessment is looming, there are several things you need to do as an Owner. Asking your Board of Directors several pointed questions is key to getting all ...
  • Understanding Special Assessments April 18, 2017 There’s no way to sugar-coat it: everyone hates special assessments. Getting a notice that you owe more money to the association can not only put a damper on your day but also a dent in your wallet, both of which the board is sympathetic to. In a perfect world, there would never be a need for special assessments—or any other type of assessments for that matter—but sadly, they’re sometimes a necessary evil.     Read the article………….

Budget Archives

Collections

  • Condominium Association Cannot Collect Unpaid Fees from Lender’s Assignee (NJ) June 15, 2017 On June 6, 2017, the New Jersey Appellate Division ruled that a foreclosing mortgagee is not liable for unpaid condominium maintenance fees simply because it winterized the unit and changed the locks.  In the published decision Woodlands Community Association Inc. v. Mitchell, the Appellate Division reversed a trial court verdict in favor of the condominium association. The three-judge panel went onto offer guidance as to what specifically constitutes a “mortgagee in possession” of a property, a determination the judges noted ...
  • Understanding HOA Fair Debt Collection Practices: Practice Tips June 13, 2017 If you work for an HOA, serve on its Board of Directors, or own a property covered by one, there are a few things you should know about debt collection practices. So, to help you develop a greater understanding of HOA Fair Debt Collection Practices, we put together a few tips. Read on for the most useful tips you may get this year.      Read the article……………
  • What NC Community Associations Need to Know about Fair Debt Collection June 9, 2017 Nearly all Community Associations (“Associations”) must cope with owners who fail or refuse to pay their periodic assessments (also known as “Dues”). When this happens, the Association, typically acting through its property manager, may first attempt to collect the delinquent dues themselves, rather than referring the matter to an attorney. In such cases, Associations should be aware of the federal Fair Debt Collection Practices Act (the “FDCPA”) and its North Carolina counterpart, the North Carolina Debt Collection Act (the “NCDCA”), ...
  • Riverview family wins foreclosure battle with HOA (FL) June 7, 2017 A Riverview family has won a yearlong fight with their HOA to save their home from foreclosure.  10News has been following the Lopez family’s emotional battle, after their Riverview HOA foreclosed on their home, all over a missed $150 homeowners association payment. In May, a judge told the family they’d have to pack up and get out. But the Rivercrest Community Association’s attorney agreed to a deal. Now, The Lopez’s can stay put in the place they’ve called home for ...
  • What NC Community Associations Need to Know about Fair Debt Collection June 2, 2017 Nearly all Community Associations (“Associations”) must cope with owners who fail or refuse to pay their periodic assessments (also known as “Dues”). When this happens, the Association, typically acting through its property manager, may first attempt to collect the delinquent dues themselves, rather than referring the matter to an attorney. In such cases, Associations should be aware of the federal Fair Debt Collection Practices Act (the “FDCPA”) and its North Carolina counterpart, the North Carolina Debt Collection Act (the “NCDCA”), ...

Collections Archives

Reserves

(Association Reserves has a list of state laws regarding reserves at this location;  Capital Reserve Analysts has an interactive map regarding state reserve requirements)

  • HOA Homefront: Can we skip the reserve account? May 6, 2017 Dear Mr. Richardson: I am wondering, are HOAs required to have a “reserve” account or it is just recommended?      Read the Q&A…………….
  • Protecting That Nest Egg Called the Reserve Fund May 3, 2017 Is an investment-policy statement right for your board?  Like any co-op or condo board, you keep a reserve fund for capital projects and emergency repairs. In fact, the New York Cooperative Corporations Law requires that boards “periodically set aside reasonable sums for reserves,” while the Reserve Fund Law requires it of buildings converting to condominium.  Most boards, wisely, don’t gamble with the stock market but keep their reserve funds in FDIC-insured money-market accounts and certificates of deposit (CDs), as well ...
  • The Homeowner Association’s Future Forecast April 25, 2017 Preparing for and overseeing a homeowner association’s finances are perhaps the most important board responsibilities. It takes money and careful planning to maintain and preserve common area property. One of the best forecasting tools is a “reserve study” is needed to identify common element components, their useful lives and cost of repair or replacement. Unlike the weather, this is one forecast that actually happens pretty much as predicted.  Reserve plans cover a 30 year projection period so that roofs, decks, ...
  • Association Deficits Don’t Excuse Developer From Funding HOA Reserves (FL) March 17, 2017 For the developer of the Sullivan Ranch community in Mount Dora north of Orlando, it appears that its decision to stop funding reserves after it established the account and began funding it in 2007 has significantly backfired. The Fifth District Court of Appeal recently overturned a lower court’s summary judgment, which concluded that the developer was excused from funding reserves while it remained in control of the association and was funding deficits in its operating expenses.    Read the article……………
  • Ensuring You Don’t Over Plan Condo Association Major Projects March 16, 2017 Planning for a major project in a Condo Association is a big deal. You have to bid out projects, work with vendors, educate Owners, and execute. You want the project to go as smoothly as possible, of course. And an ounce of prevention is worth a pound of cure. However, there is such a thing as going too far when you are preparing. If you spend hours and hours trying to plan every possible permutation of every possible problem, you’re ...

Reserve Archives

Banking & Lending

  • HUD secretary hints that housing agency may ease terms for condo mortgages May 25, 2017 Could condos financed with low-down-payment government-backed mortgages stage a surprise comeback under the Trump administration, which generally seeks to reduce federal involvement in housing? Would this be promising news for millennials and buyers with moderate incomes looking to purchase their first homes?     Read the article………….
  • When It Comes To The HOA/COA Lien Process, Misconceptions Abound May 24, 2017 Working with homeowners associations (HOAs) and condo owners associations (COAs) often leads to confusion among servicers – and that confusion may lead to problems during the lien process.   uring a recent interview with MortgageOrb, Damon Paxson, vice president of HOA solutions at LRES, a national residential and commercial real estate services company providing valuations, real estate owned asset management, HOA, and technology solutions for the mortgage industry, discussed why it is so important for mortgage servicers to fully understand the ...
  • Wait…We Need Lender Approval On Our Amendments? May 16, 2017 So you’ve gone through months, if not years, of hard work with board members, committee members, and the owners to finally amend the declaration for your community, and owners have finally approved those amendments. Celebration time, right? Well maybe, or maybe not so fast.  Unfortunately, many communities (particularly condominiums) have declarations that require a percentage of, or sometimes all, mortgagees (i.e., lenders) to approve amendments. This is in addition to owner approval. How does an association obtain this mortgagee approval, ...
  • Co-op and Condo Financing: A Market Overview April 17, 2017 Today, some eight years after the economic devastation of the Great Recession first began to gather steam, financing for co-op and condominium buildings and individual unit purchases is again widely available. The market is overall quite healthy, and though there have been some systemic changes to this part of the financing world as a result of that financial meltdown, today’s co-op and condo financing instruments are remarkably similar to what was typical before the bursting of the housing bubble sent ...

Banking & Lending Archives

Taxes

  • New Jersey Superior Court Holds Condominium Association Was Not Entitled to Redeem Tax Sale Certificate on Condominium April 5, 2017 The Superior Court of New Jersey, Hudson County, Chancery Division-General Equity Part recently held that a condominium association’s attempt to redeem a tax sale certificate on a condominium on which it held a lien was not valid because it was neither a mortgagee nor the owner of the property. See JNH Funding Corp. v. Ayed et al., F-8704-14 (N.J. Ch. Div. March 21, 2017). In the case, plaintiff purchased a tax sale certificate on the subject property in 2006.   ...
  • Paris Meadows, LLC v City of Kentwood: Objecting to the Taxation of Common Elements (MI) March 29, 2017 In Michigan the question of whether the common elements of a condominium are taxable appears to be well-settled. In Paris Meadows, LLC v City of Kentwood, 287 Mich App 136; 783 NW2d 133 (2010), the Michigan Court of Appeals held that pursuant to Section 131 of the Michigan Condominium Act, MCL 559.231, property taxes may only be assessed against individual condominium units, not the total property of the condominium project. Paris Meadows, supra, at 149. Accordingly, common elements may only ...
  • Taxes and Your HOA Community – To File or Not March 4, 2017 If you live in a planned community, there is a good chance questions have come up about taxes and if your community needs to file them. We’ve heard many people admit that they didn’t realize their community needed to file tax returns. Even though it isn’t an uncommon problem for self-managed associations, depending on how your community is legally organized, it can lead to problems with the IRS. We know no one wants problems with the IRS, so we’ve put ...
  • IRS Revenue Ruling 70-604 and MCL 450.2541(2)(b): The Value of Expert Advice February 16, 2017 Many individuals and corporations, including community associations, are currently preparing their tax returns. For associations with excess revenue this process most likely involves a determination of whether to exercise an election under IRS Revenue Ruling 70-604. A proper election under Revenue Ruling 70-604 can be used to reduce an association’s taxable income by deducting from taxable income any excess assessments refunded to members or carried over to the next year’s assessments. In making such an election, however, an association should ...

Taxes Archives

General Financial

  • How to pass a special assessment with less pain June 13, 2017 In the language of community associations, the words “special assessment” are among the most heated. No one enjoys being commanded to come up with extra money, but few associations can avoid the occasional levy.  A special assessment is an amount owners must pay in addition to their regular monthly or quarterly dues. Such assessments typically are used for big-ticket items like new roofs or boilers, to make up for budget shortfalls or to earmark for future expenses. Owners sometimes protest ...
  • Four Condo Association Special Assessment Questions To Determine Project Cost June 5, 2017 Having determined the timing of a Special Assessment through your incredible detective skills (powered by http://Bettercondolife.com), the next logical question you’ll want to ask is how much will the Special Assessment cost. Knowing it’s coming is one thing, but its cost is quite another. Similar to the previous article, these are Condo Association Special Assessment questions you have a right to ask. Whether or not your Board answers is another matter, but many of these questions should be answered by ...
  • Three Condo Association Special Assessment Questions To Determine Project Timing May 22, 2017 An informed and involved Owner will often attend monthly Condo Association meetings. If your Board has been discussing big projects during meetings, you might start to wonder if things are going well or not. Sometimes work is routine, but other times there might be a rough road ahead. When a Condo Association Special Assessment is looming, there are several things you need to do as an Owner. Asking your Board of Directors several pointed questions is key to getting all ...
  • How can my condo fee be too low? May 11, 2017 I often hear the question “Why is this condo fee so high?” by both potential buyers as well as agents. But I ask the opposite question of some condominiums, “Is this condo fee too low?”   It shows me that the uneducated buyer as well as their agent does not understand what the condo fee covers as well as what happens when that fee is not high enough to run the condominium complex over the “long haul.”     Read the ...
  • Understanding Special Assessments April 18, 2017 There’s no way to sugar-coat it: everyone hates special assessments. Getting a notice that you owe more money to the association can not only put a damper on your day but also a dent in your wallet, both of which the board is sympathetic to. In a perfect world, there would never be a need for special assessments—or any other type of assessments for that matter—but sadly, they’re sometimes a necessary evil.     Read the article………….

General Financial Archives

Fraud & Embezzlement

  • HOA Secrets Exposed – Criminal Investigation Reopened (GA) June 22, 2017 Whether you love or hate your homeowner’s association (HOA), you know that when the dues are due, you have to pay. But how much do you know about how that money gets spent?  A group of homeowners in Douglasville, Ga. said they’ve been trying for years to answer that question. They said that for years their dues have been going up with little explanation why. They asked to see their bank statements and receipts for spending but the board, through ...
  • Investigators try to gauge extent of alleged condo fraud across Twin Cities (MN) June 20, 2017 Investigators are looking at more than 30 condominium and townhouse associations across the Twin Cities to determine the extent of alleged theft by a recently fired executive at a South St. Paul property management firm.  Residents of a property in Falcon Heights learned last week that the ousted employee of Durand & Associates was alleged to have embezzled “a large amount of money.” The man hasn’t been charged and the Star Tribune generally does not identify suspects until charges are ...
  • Senior condo complex for U retirees is reeling from suspected embezzlement (mn) June 15, 2017 The president of a Twin Cities property asset and management company fired a senior executive amid a criminal investigation into allegations that he stole from at least one of the firm’s many clients, an independent condominium complex where retired University of Minnesota faculty and staff live.  One resident of 1666 Coffman in Falcon Heights informed other owners in an e-mail Thursday that the ousted executive for Durand & Associates management company in South St. Paul embezzled “a large amount of ...
  • Palmer woman indicted for allegedly defrauding homeowners’ association (AK) June 9, 2017 A Palmer grand jury handed down a seven-count indictment Wednesday against a 63-year old Palmer woman who allegedly defrauded the Mountain View Homeowners’ Association out of almost $29,000.  According to the Alaska Bureau of Investigation’s Financial Crimes Unit and charging documents, Kimberly Kirby had written herself almost $29,000 in unauthorized checks over a 7 1/2 year period. Police state between April 1, 2007, and Dec. 3, 2015, Kirby had authorized checks tallying almost $37,000. Based on authorized stipends and reimbursement ...
  • Ex-Boynton Beach HOA treasurer admits to embezzling over $50,000 (FL) June 7, 2017 A former treasurer of a Boynton Beach homeowner’s association admitted Tuesday that he embezzled over $50,000 from the HOA, court records show.  Norman Glavas, 70, of Boynton Beach, pleaded guilty to one charge of grand theft over $20,000 and will serve 10 months in jail, 70 months of probation and repay $48,179.26 in restitution to the Quail Run Homeowner Association. Glavas committed the crime from 2012 to 2014.    Read the article…………..

Fraud & Embezzlement Archives

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