Finance Articles from the Web

Finance & Reserve Videos

 

Accounting

  • Accounting changes will likely be an added expense (IL) December 9, 2017 As I noted in the Nov. 18 column, new Section 1-45(h)(i) of the Common Interest Community Association Act and new Section 18.10 of the Illinois Condominium Property Act provide that: “An association subject to this Act that consists of 100 or more units shall use generally accepted accounting principles (“GAAP”) in fulfilling any accounting obligation under this Act.” This new law is effective Jan. 1.  I’m not an accountant, so I reached out to Mark Cantey, owner of Cantey Associates ...
  • 4 HOA Accounting Principles Board Member Should Know November 1, 2017 One of the fundamentals of community management is the HOA accounting. As a Board Member, you may or may not have a background or experience in reading and understanding financial reports. Here are some things every board member should know about HOA Accounting.    Read the article……………..
  • Homeowners association and property management group in legal conflict over financial agreement (PA) August 23, 2017 A local homeowners association believes its former management company did not live up to a monetary agreement both parties agreed to be bound by, and seeks to obtain a number of related financial records through the lawsuit it has filed.  Middletown Crossing Homeowners Association of Gradyville filed suit in the Delaware County Court of Common Pleas on June 14 versus East Hill Property Management, LLC of Media.     Read the article…………..
  • The Condo Association Board Accountant Profile July 20, 2017 This week’s Condo Association Board personality is on the Condo Association Board Accountant. The Accountant loves numbers and money, specifically making sure your Association has plenty of it. This is an important consideration for most Associations, as money makes the world go ‘round! Having an Accountant will make sure you’ve got the green, but don’t let them forget about the human element of your community.    Read the article……………….
  • What is the role of a CPA in a Homeowners Association (HOA) ? July 6, 2017 Both board members and homeowners have an interest in the money end of an HOA’s business. After all, it’s the owners who have to pay higher fees when the homeowners association goes over budget. And it’s the Board who is responsible for hiring the right people to run the HOA’s financial business. The good news is that when to understanding the role of an HOA CPA, you don’t have to go it alone. Read on for tips for handling it. ...

Accounting Archives

Audits

  • Don’t Be Afraid of HOA Audits October 30, 2017 Let’s face it. The thought of an audit can strike fear into the hearts of even the most experienced property managers and property management company owners. You start thinking about storm troopers and bright lights shining in your face. Just reading the beginning of this article will probably cause a few nightmares. Take a deep breath, relax, and read on. You’ll do just fine.    Read the article……………….
  • How often is the board required to perform an audit? (FL) October 29, 2017 Q: I received my annual meeting proxy in the mail and there is a question asking me whether I want to waive the audit for this fiscal year. I can’t remember the last time we actually had the audit performed. Isn’t the Board required to have the audit performed to make sure the financials are in order?   Read the Q&A…………….
  • What board directors should ask condo auditors July 20, 2017 An independent Chartered Professional Accountant (CPA) prepares, audits and issues the financial statements of a condominium corporation. In doing so, he is reporting to the owners of the condominium units the state of the financial position of the corporation. However, before issuing the final report, he needs the approval of the board of directors, who represent the owners.   Read the article……………
  • 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. ...

Audit Archives

Budget

  • Condo Conversations: “Be prepared” is common-interest communities’ best bet when budgeting (VA) November 25, 2017 When it comes to budgeting, condominium and property owners associations should remember the Boy Scout motto: Be prepared.  Autumn is the traditional time for associations to prepare their budgets for the following year. But as you crunch the numbers and calculate owner dues, don’t just focus on costs in the year ahead. You also must set money aside for big-money projects that may be many years down the road.     Read the article………………
  • How are Homeowners’ Association Fees Determined? (TN) November 19, 2017 One of the important things to remember about the determination of Homeowner Association (HOA) fees is that no two associations are alike. Which means their regular assessments will be different, since they are based on the specific needs, obligations, and objectives of the homeowners’ association. Don’t fall into the trap of comparing your assessment with another association’s assessment, because another HOA will have vastly different factors driving its budget. Assessments are not set (or at least, they shouldn’t be), in ...
  • Why Keeping HOA Fees Low is a Terrible Idea November 17, 2017 Working for one of the largest HOA management companies in Northern California I get a lot of phone calls from distressed HOA board members. I hear the same story emerging from these different homeowners association. It’s a sad pattern that is all too common. The story goes something like this:    Read the article…………….
  • Ask Eli: Finding Savings in Your 2018 Condo/HOA Budget October 31, 2017 Question: I’m the Treasurer at and we’re working on the 2018 budget. What’s a good way for us to save money in the budget without compromising the health and maintenance of the building?    Read the article…………….
  • Creating an HOA Budget Committee October 24, 2017 Your homeowners association has set up a board of directors that will help govern the HOA. Not every responsibility, however, must rest with every member. To work alongside and within your board of directors, you need a budget committee that will help control the finances of your homeowner’s association.     Read the article…………….

Budget Archives

Collections

  • Persistence Can Lead to Dollars: Preserving the Community Association’s Lien for Delinquent Assessments – Part One (VA) December 13, 2017 One of the most common questions we receive from Community Association clients is how do we preserve our lien for and recover delinquent assessments?   The frustrating reality is that some owners in Community Associations fail to pay their assessments in a timely manner. These delinquencies can create serious financial issues within the community. There are a few ways for Community Associations to pursue delinquent assessments. In part one of this series on collection remedies, we will discuss one method of ...
  • What Foreclosure Means to Your Homeowners Association December 12, 2017 Foreclosure is a bit of a dirty word. Nobody wants to see anyone thrown out of their home – but it happens.  There are basically two different kinds of foreclosure homeowners association need to worry about: Foreclosure by the bank and foreclosure by the association itself.  When a bank forecloses on a home in the development there are three things the association is concerned with – getting the unpaid HOA dues, keeping the property maintained if it is standing vacant, ...
  • FEMA Hold On, They Aren’t Going for the Home November 27, 2017 For community associations, when an owner goes into foreclosure, the best-case scenario is that the bank or mortgagee moves the property swiftly through the foreclosure process, and a new owner then takes possession and begins paying the assessments as they come due. In the absolute best cases, the foreclosure process will take around a year; in the worst case, the foreclosure can take two years or more, during which time the owner is unlikely to be paying his or her ...
  • Can a Condo Association Recover Past-Due Amounts After Owner Files Bankruptcy? November 20, 2017 When a condo owner in arrears on assessments declares bankruptcy, a condo association often expresses concern about the effect of the bankruptcy on its ability to collect pre- and post-bankruptcy assessments.  The bankruptcy code states that fees or assessments that become due and payable after filing for bankruptcy protection are exempt from discharge. Any amounts owed prior to the filing the bankruptcy case are included in the discharge but may be reduced to liens against the property.   Read the article……………..
  • Measuring the health of your community collections process November 3, 2017 Collecting money from delinquent homeowners is by far one of the least popular aspects for community association management. For boards, it’s right up there with raising dues and levying special assessments in terms of undesirable duties of the board.  The unfortunate truth is that collections always come down to the people. These usually aren’t deadbeats who have plenty of money but just refuse to pay. Most homeowners in arrears on their assessments come complete with a sad story. They may ...

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)

  • Picture Perfect HOA Reserves December 5, 2017 A reserve study identifies a homeowner association’s future repairs and replacements like a snapshot in time. Imagine that you could picture the buildings and grounds as they would be in five, ten, even thirty years. A reserve study acts just like that by estimating the useful life of the common elements and the cost to replace them in the future based on current cost adjusted by inflation.   Read the article………….
  • 6 cash-saving strategies for costly repairs, replacements (IL) November 14, 2017 In any community association budget, capital projects such as roofs and balconies are the scariest. They are the most expensive and require the most expertise to get right. That’s why boards must carefully tread each step of the way.  Wrong turns can result in unnecessary spending, higher assessments and owner unrest. Before you launch your next big-ticket endeavor, consider these strategies for controlling the dollars.   Read the article……………..
  • Community Next: Homes of the Future November 13, 2017 Community Next: Homes of the Future is the latest milestone in CAI’s Community Next series, which offers industry insight to empower community association volunteers, managers, and business partners with a strong understanding of how to preserve, protect, and enhance common-interest communities.  This Fall 2017 report will provide you with a better understanding on topics like: Integrated technology Government partnerships Banking and internet security Global access to information The future of reserve studies Electric vehicles Read the PDF………………
  • Ask An Expert: About Your Condo, HOA Rules (FL) November 6, 2017 I am a resident in a community governed by a condominium association. I recently attended the board of directors meeting at which the annual budget for next year was discussed, voted on and approved by the board. For as many years as I can remember the unit owners were allowed to vote to waive reserve accounts. However, at this year’s budget meeting unit owners were not permitted to vote to waive reserves. Many of the unit owners in attendance objected ...
  • Earmarking Reserves In Your HOA October 17, 2017 Most homeowner associations are entrusted with substantial common elements which must be maintained, replaced or renewed. All of this costs a lot of money. Borrowing said money is a very bad idea because it comes at a very high price in the way of interest and fees which must be repaid along with the principal. The cheapest and fairest way to pay for these expenses is to earmark a portion of the monthly, quarterly or annual fees and hold this ...

Reserve Archives

Banking & Lending

  • Condo Smarts: Borrowing for needed repairs not without risks August 10, 2017 Dear Tony: Our strata corporation is trying to attempt a major project that includes our roofing and/or balcony deck renewals.  We have had the project detailed and prepared by an engineering company and the estimate of costs will be around $2.7 million. We have $1 million saved so the owners will have to pay a special levy of $1.7 million or an average of $24,000 per unit.    Read the Q&A…………..
  • It’s all about the Planning! – Tips to getting an Association Loan July 20, 2017 The key to obtaining an association loan is to be prepared and follow best practices. The planning that is done two, and even three years before the association actually needs the loan, is critical to getting a loan approved by a bank. This is not to say that there will be unexpected maintenance and repairs that may occur, but if you plan, you can avoid a financial strain on the association.    Read the article……………
  • 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 ...

Banking & Lending Archives

Taxes

  • Tax Watch: Ossining is ground zero in condo property tax fight (NY) November 8, 2017 The New York law that lets condominium owners pay propertytaxes up to 65 percent less than similarly priced single-family homes is under attack in Ossining.  That’s where single-family homeowners want the town to adopt the homestead option, which would put condominiums on equal tax footing with single-family homes.  At stake are millions of dollars in taxes that now rest on the shoulders of single-family homeowners.    Read the article……………..
  • GOP Tax Proposal a Nightmare for Co-ops and Condos (NY) November 3, 2017 Republican lawmakers released a $1.51 trillion tax plan on Thursday that slashes corporate taxes, gives more modest tax relief to the middle class – and, as written, will hurt most owners of co-op and condo apartments in New York City.  Legislators from high-tax states such as New York and New Jersey have already expressed strong objections to the tax package. So has the National Association of Realtors. Michael Esposito, a CPA at the New York accounting firm Kleiman & Weinshank, ...
  • Proposed tax changes cause concern (HI) October 29, 2017 Last week the budget committee recommended a bill to the full council that establishes a new property tax category for short-term rentals. Currently, short-term rental permit holders fall in the commercial classification.  Others facing reclassification to the new category include short-term rentals in hotel-zoned areas and condominium units where short-term rentals are allowed. Those owners currently fall in the hotel and resort classification.    Read the article…………….
  • Are HOA Fees Tax Deductible? October 27, 2017 If you have purchased a home or condo, you are likely paying a monthly fee to cover repairs and maintenance on the outside of your home or in common areas. You may be wondering whether this fee is tax deductible. The answer regarding whether or not your HOA fees are tax deductible varies depending on the situation. A few common circumstances are listed below.   Read the article……………..

Taxes Archives

General Financial

  • 5 Tips For The Best HOA Financial Management Ever December 14, 2017 The range of fiduciary experience between volunteers and elected HOA board members can vary drastically, which is why it helps to implement the same annual process with Quickbooks, TurboTax, and so on.  However, if you use a community management company or in-house accounting subcommittee, finances could be a new territory to you. If you use one of these services, it’s still important to understand HOA financial management and how you can potentially improve it.     Read the article………………..
  • How To Tell If Your HOA Needs Financial Management Improvement (MD) December 7, 2017 Many HOA boards like to stick with tradition due to the round robin of volunteers and elected members every year. This means that it can take a huge mistake to shake up the routine, and many hope that it doesn’t hit where it really hurts: Financial management.  Here’s how to tell if your homeowners association needs to improve their financial situation before it’s too late:     Read the article…………….
  • 3 Reasons Your HOA Should Offer Online Dues Payment October 19, 2017 I know it’s hard to believe, but in 2017 there’s an 88 billion dollar industry that still processes millions of payments by check. Less than 50% of the corporations in this industry even offer online payments. It’s not some obscure industry that nobody has ever heard of, it’s your homeowner’s association. A recent survey by Billing Tree found that while all HOAs accept checks, only about half accept online dues payment via credit cards or automatic recurring payment. One friend ...
  • Associations, good financial health pays off in spades September 19, 2017 Community associations have good reasons to maintain healthy bank balances: It allows them to keep up with maintenance and curb appeal. They don’t annoy owners by repeatedly tapping them for more.  Here’s another one: Financial stability leads to speedier sales and higher selling prices.  “Buyers definitely want to know how much money is in the bank, and they definitely want to know what the planned improvements are for the next few years,” said real estate agent Jane McClelland at Re/Max ...
  • Tom Kelly: Condo financing taking dead aim on renters September 17, 2017 But the big question behind condo and alternative housing is financing. Will lenders bend their conservative outlook toward condos to support growth? In order to obtain financing, the percentage of owners in many buildings must equal 50 percent.  That’s what Fannie Mae and Freddie Mac, the largest suppliers of mortgage money in the country, often require, and it is one of the main reasons condo associations are pushing for owner-occupants.  A court case, however, sent a message that condo associations ...

General Financial Archives

Fraud & Embezzlement

  • Fraud and Embezzlement in Your Association-How to Spot It & How to Avoid It December 14, 2017 We aren’t the only ones that have seen this in the news week after week! It has happened; there are funds missing from the checking account. Figures do not line up and you cannot get in touch with anyone. The board always sees a financial statement at each board meeting, so what went wrong? Any organization that believes it is immune from the fraudulent use of funds is destined to become a victim.    Read the article………………..
  • Ex-manager at Sun City retirement complex in Indio arrested in embezzlement investigation (CA) December 7, 2017 The former general manager of a massive Indio retirement community was arrested on Dec. 6 on suspicions of embezzlement.  Ceasar Larrach, 46, was an employee of the housing management company Associa working at Sun City Shadow Hills in Indio, a 3,450-home development for people ages 55 and over.    Read the article…………….
  • Former HOA president accused of stealing nearly $10K from association (TX) December 5, 2017 Nathaniel Hurt, the former president of the Cole’s Crossing Homeowner’s Association in Cypress, is accused of stealing nearly $10,000 from the HOA.  According to court papers, Hurt had the HOA’s management company reimburse him directly for nearly $10,000 he claimed to have spent on eight new security cameras and power cords.  The cameras were for the areas behind the gate at the community center.
  • Home Sweet Home November 15, 2017 Sunset Villas is a condominium complex with fifty units on the shores of Lake Michigan. Owners pay $550.00 a month in dues towards neighborhood and maintenance, including the upkeep of the pool and common areas. When the owners hired a property management company, they didn’t realize Sunset Villas was a tempting, lucrative target. Homeowners associations are often victims of misappropriation by property managers, due to having relatively large amounts of monies and lax, volunteer boards responsible for accounting and control. ...
  • Community Next: Homes of the Future November 13, 2017 Community Next: Homes of the Future is the latest milestone in CAI’s Community Next series, which offers industry insight to empower community association volunteers, managers, and business partners with a strong understanding of how to preserve, protect, and enhance common-interest communities.  This Fall 2017 report will provide you with a better understanding on topics like: Integrated technology Government partnerships Banking and internet security Global access to information The future of reserve studies Electric vehicles Read the PDF………………

Fraud & Embezzlement Archives

Download the PDF file .