Finance Articles from the Web

Finance & Reserve Videos

 

Accounting

  • 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. ...
  • 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. ...

Accounting Archives

Audits

  • 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. ...
  • 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…………

Audit Archives

Budget

  • What You Should Know about Why Homeowner Associations Have Fee Increases August 15, 2017 Why homeowner associations have fee increases is not mysterious; here are a few things that everyone should know about it.  The short answer to fee increases is that the cost of goods and services in general increase so naturally the HOA ends up paying more for goods and services, too. Still, some HOAs are better at keeping fees low than others. The way they do that is by maintaining control over the annual budget. The following paragraphs describe some of ...
  • Budgeting Best Practices August 15, 2017 Preparing the annual budget is one of the Association’s most important responsibilities. The Board has the fiduciary role in establishing a well prepared budget that’s main purpose is to determine what the assessments will be for the upcoming year. Preparing a budget often comes with many challenges as the Board may encounter unanticipated expenses and the need to consider providing for reasonable reserves.  Here are a few of the budgeting best practices to consider when preparing the budget:    Read ...
  • What an HOA Board Should Do Now at the Start of the New Fiscal Year July 31, 2017 If your homeowners association operates on the fiscal year, then you’re already a month into the new year – Happy New Fiscal Year! Have your fellow HOA board members asked this question: how did we do last year? If not, then now’s the time to re-evaluate and ask the following questions so your Board sets the Association up for success.     Read the article…………….
  • The Importance of Preparing (and Sticking to) an Annual Community Association Budget July 26, 2017 It’s budget season! Budgeting can be one of the most tedious tasks for property managers and association board members. Most covenants require a budget and budget disclosure, but there is a vast difference between a hastily assembled and subsequently ignored budget versus a well-planned and regularly reviewed budget.  A realistic and effective budget can be one of your association’s most important management tools now and for future boards as well. Whether you’re a property manager or association board member, here ...
  • 5 Tips about How HOA’s Determine HOA Assessment Rates July 18, 2017 There is a lot about the question how are HOA assessment HOA rates determined that you may not know; indeed, here are five tips that everyone should keep in mind regarding this topic.    Read the article………………

Budget Archives

Collections

  • Unhappy Property (Manager) Loses in South Carolina August 16, 2017 “If you think hiring a professional is expensive, try hiring an amateur.” – Anonymous In South Carolina, as in most states, there exist various consumer protection and licensing laws, intended to protect the public from the unauthorized practice of law (or “UPL”, as it is often referred). Of course, only lawyers licensed in the state in question can practice law in that state, but the question sometimes arises as to what actually constitutes “practicing law”.    Read the article…………….
  • Constantly Changing Condominium Laws (IL) August 16, 2017 A recent opinion from the Illinois’ First Appellate District, Country Club Estates Condominium Assoc. v. Bayview Loan Servicing, LLC, 2017 IL App (1st) 162459, provides that “prompt” payment of assessments is required to extinguish presale assessments under the Condominium Property Act. This ruling not only puts a new wrinkle on condominium association lien extinguishment, but also clashes with an opinion out of a different division of the same Appellate District issued just months ago.    Read the article…………….
  • Fourth DCA Confirms Association Lien Foreclosure Valid Despite Pending Mortgage Foreclosure (FL) August 15, 2017 Despite a slowing in the number of Florida mortgage foreclosure cases, many community associations still face situations where a foreclosing lender fails to timely complete its foreclosure resulting in the property sitting abandoned and not contributing financially to the community. As a result, many community associations are faced with a decision of whether to proceed with their own foreclosures for non-payment of assessments or simply wait out the lender’s mortgage foreclosure.    Read the article…………….
  • 28 suits filed against La Bota Ranch homeowners over unpaid HOA dues (TX) August 7, 2017 Since May 11, the two homeowners associations of La Bota Ranch have filed 28 lawsuits against homeowners who have not paid their HOA dues, threatening to foreclose on their homes if the dues are not paid.  Hearings for six of these cases were scheduled for Monday, but neither HOA board members nor their attorney showed up for court, according to records.    Read the article…………….
  • HOA Super Lien — What is it and Why Should I Care? August 2, 2017 In an HOA, owners who fail to pay assessments and other charges owed to the condo or homeowner’s association, will likely have a lien placed on the home by the association. A lien is a legal tool used to protect a creditor against default. When a home sells, the creditor with the lien must be satisfied using the proceeds of the sale. A mortgage is a common example of a lien. It’s not uncommon for a property to have more ...

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)

  • Inadequate Reserves: The Risks of Not Keeping Up July 12, 2017 There are few feelings worse than encountering an unexpected expense and finding the piggy bank empty. That is why reserve funds and reserve studies are such important elements in the financial well-being of co-ops, condos and homeowners associations. It pays to keep a close eye on those numbers and adhere to the planning available through reserve studies to ensure that when a leaky roof develops or a boiler goes kaput, there will be enough cash on hand to tackle the ...
  • Funding Your Future: Predicting & Budgeting Your Association’s Repairs & Improvements June 26, 2017 All community associations require routine maintenance, repairs, and replacement over time to ensure they remain in good condition. The task of ensuring the Association retains sufficient funding to pay for this maintenance, repair and replacement work falls squarely on the shoulders of the Board of Directors. Balancing the Association’s financial and maintenance needs is a critically important responsibility every Board grapples with.          Read the article…………..
  • 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, ...

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

  • Failing to Pay Taxes on Common Areas Can Have Dire Consequences (AZ) August 11, 2017 A recent article in the Washington Post chronicled the plight of an upscale San Francisco community, which failed to pay its common area property taxes, and the savvy investors who took advantage.  We are aware of Arizona communities who have faced similar issues. All property owners in Arizona (including individual parcel owners and community associations who own common areas) who are subject to property taxes, could potentially lose their property pursuant to a tax lien foreclosure if they fail to ...
  • Tax Reform and Community Associations July 19, 2017 U.S. Congress has been talking about Tax Reform for several years and President Trump has now turned his focus to Tax Reform by asking Congress to deliver a plan. This week, CAI submitted comments to the Senate Finance Committee to consider as they discuss Tax Reform.    Read the article………….
  • 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 Archives

General Financial

  • Real Estate Advice: The conundrum over condo assessments August 3, 2017 Q: I am on the board of a 40-unit condo association. We need to put a new roof on and have voted to special assess each owner $5,000 to pay for it. This has proved very unpopular. Owners are complaining. I get stopped all the time, and owners complain they don’t want to pay the assessment. They call me at all hours of the day to complain. What should I say?   Read the Q&A………….
  • Five Financial Mistakes That Can Be Devastating to Your Community August 2, 2017 Being part of an HOA board is a job that comes with a lot of difficult responsibilities. When it comes to the financial side on an HOA, there are so many moving parts that it can get overwhelming. Avoiding these five financial mistakes can help protect your HOA from getting into a difficult position financially.   Read the article…………
  • Surefire Ways to Drive Your Association to Financial Ruin July 25, 2017 Common interest communities are non-profit businesses and just like any business budgeting and financial planning are essential to the success and longevity of the business. What is everyday common sense with respects to businesses is often ignored for common interest communities. While this may seem like a harsh assessment of many Boards out there it is an unfortunate reality as is evident by the high number of special assessments and loans being taken out by Associations to cover expenses that ...
  • Sometimes Rentals Work FOR Associations July 25, 2017 One of the topics that confound community associations and their boards is what to do about renters. Many times, the question is what can be done to limit them, prohibit them or somehow control them. The goals of a landlord can be different from the goals of a resident owner, and there are plenty of opportunities for conflict. But is there a time when it pays for the association to be a landlord? What if a zombie house – a ...
  • 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……………….

General Financial Archives

Fraud & Embezzlement

  • Fort Collins accountant sentenced for felony theft (CO) August 17, 2017 A Fort Collins accountant who pleaded guilty to felony theft in June was sentenced to community service and probation this week.  Meredith Kanter, also known as Molly Hoff, pleaded guilty to felony theft in June after two criminal cases alleged she stole money from a Fort Collins nonprofit and a condo association.   Read the article……………..
  • Former property manager gets jail time for Collingwood condo fraud August 15, 2017 A Springwater woman was sentence to about four-and-a-half years in jail for defrauding condominium corporations in The Blue Mountains, Barrie and Collingwood of more than $909,000.  On Monday, Justice Nancy Dawson sentenced Springwater Township native Rhonda McCarthy to 30 months for 18 counts of fraud over $5,000 and two years less a day for two counts of fraud under $5,000.  Read the article…………..
  • Prosecutors Drop Charges in Westbury HOA Theft Case (MD) August 4, 2017 A litany of theft charges filed against the former property manager of the Westbury Community Association has been dropped by prosecutors, online court records show, but officials in State’s Attorney Richard Fritz’s office say Torya Nicole Timms is still under investigation.  All 16 counts against Timms were dropped mid-July, online court records show.     Read the article……………
  • WRAL INVESTIGATES Man who bought HOA-foreclosed homes faces federal fraud charges (NC) August 2, 2017 A Wake Forest man made more than $1 million by swooping down on homes in foreclosure and using an intricate shell game involving fraud, forgery and offshore companies, according to federal authorities.  Xavier Milton Earquhart faces 14 counts of bank fraud, five counts of engaging in monetary transactions involving criminally derived property and one count of aggravated identity theft. He is being held without bond in the Harnett County jail.    Read the article…………….
  • Woodbury HOAs impacted by alleged embezzlement case (MN) July 12, 2017 A senior executive at Durand & Associates, a property-management firm in South St. Paul, was recently fired after being accused of taking client money.  Members of Woodbury’s Eagle Valley Homeowners Association, Wedgewood Association and Woodbury Crossing received notices telling them an employee had allegedly embezzled hundreds of thousands of dollars by funneling money into newly opened bank accounts.    Read the article……………

Fraud & Embezzlement Archives

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