Finance Articles from the Web

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Accounting

  • 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. ...
  • 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 ...

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

  • The budget process and determining your condo fee October 12, 2017 I often hear buyers proclaim that a condo fee is “too high” yet these same buyers seem not to know exactly what determines a condo fee. It is impossible to assess if the fee is “too high” without knowing the history of any “special assessments.” A community that defers maintenance and keeps the fee artificially low will eventually have a large special assessment.  The condominium budget is planned annually to cover both operational expenses and payment to a reserve fund ...
  • “You Simply Can’t Get Away Without Maintenance Increases.” October 10, 2017 Yesterday we heard from co-op and condo board members who rigorously resist raising monthly charges; today we hear from counterparts who believe that regular raises, though unpalatable, are the only responsible way to handle a board’s fiduciary duties.  “In this day and age, you simply can’t get away without maintenance increases,” says Stanley Greenberg, an accountant who is president of the 1,024-unit Le Havre co-op in Queens. The Le Havre board raises monthly fees between one and two percent every ...
  • What to do When Condo Association Assessments Increase October 5, 2017 There are only two things certain in life – death and taxes. Unfortunately, Condo fees – also known as assessments – are a form of taxes. They pay for the maintenance and operation of your Association. The key with assessments is to try to keep them as low as possible while still properly funding the necessities. When Condo Association assessments increase, Owners want to know why. Here are the steps you should take to figure out if those increases make ...
  • 9 Budgeting Tips for a Smoother Financial Planning Process October 4, 2017 Community associations are constantly facing the challenge of doing more with less. Quality maintenance services, communication tools, insurance coverage, opportunities for engagement and more always need a place in the budget – but as homeowners demand high levels of service, maintaining low assessments becomes increasingly difficult. That’s why we asked our community management professionals from across the world for their go-to budgeting advice for boards. Here are their best tips for a bulletproof budget.    Read the article………………
  • Community Association Budgets: The Art of Guesstimating September 29, 2017 It’s that time of year again! Budget season is in full swing in the Community Association industry.  No one likes building a budget, let alone one as complicated as a community budget. The many moving parts of community budget planning will always seem daunting and painful, but it’s still something you’re really going to want to get the jump on sooner rather than later.  This article will be an easy explanation of why you need to get your budget started ...

Budget Archives

Collections

  • We’ve Got a Problem: Statute of Limitations on Long-Term Notes (FL) October 13, 2017 A Florida Supreme Court justice Thursday issued a nearly five-page opinion to point out “the latest symptom of a more serious problem”—a misunderstanding over when the clock starts in foreclosure litigation with multiple defaults and suits.  The confusion centers on whether the date of each missed payment carries any legal significance when calculating lenders’ deadline to bring suit on mortgages and other long-term debt.  The answer: A missed payment does not start the clock on the five-year deadline. But new ...
  • Aggressive Collection Strategies: Using Proceedings Supplementary to Get Paid (FL) October 11, 2017 In Florida, Proceedings Supplementary are begun utilizing the procedure found in Fla. Stat. 56.29. The Proceedings Supplementary statute was enacted prior the adoption of the Florida Rules of Civil Procedure. In the recent past this created a lot of confusion with lawyers and the Judiciary as the procedure set forth in the initial Proceedings Supplementary statute was so bare and so different from the process in the Florida Rules of Civil Procedure for initiating litigation that many attorneys and Judges ...
  • Bankruptcy 101: Chapter 7 vs. Chapter 13 October 10, 2017 We have been asked on numerous occasions recently to provide guidance to our community association clients about the effects that bankruptcy has on their collections cases. The most common forms of bankruptcy by owners in the community association context are filed pursuant to either Chapter 7 or Chapter 13 of the United States Bankruptcy Code. Because of the confusion surrounding bankruptcy, many boards see bankruptcy as a negative for their community. Though the filing of bankruptcy certainly can have negative ...
  • Nevada Supreme Court Rules HOA Super-Priority Liens Can Be Revived after Release October 3, 2017 Homeowners’ associations have a more robust tool for forcing mortgage lenders to pay delinquent assessments following a September 14 decision by the Nevada Supreme Court. Nevada HOAs have enjoyed a super-priority lien under NRS 116.3116 for nine months of unpaid assessments preceding institution of foreclosure proceedings, in addition to certain charges for maintenance and nuisance abatement. In Property Plus Investments, LLC, v. Mortgage Electronic Registration Systems, Inc., the court found that this super-priority lien is not a “one-shot offer,” but ...
  • Case Alert: Emailed Notices of Foreclosure Under In Re Ackah (NC) September 28, 2017 In re Ackah: Must Planned Communities Now Serve Notices of Foreclosure Hearing Via Email?  The North Carolina Court of Appeals issued an opinion on September 5, 2017, that appears to add an additional requirement for foreclosure trustees regarding the due diligence necessary to properly serve the homeowner in an HOA foreclosure proceeding.   Read the article…………….

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)

  • 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 ...
  • Ask the HOA Expert: Proper Funding Levels October 10, 2017 Question: Our HOA recently had a reserve study update which the board is evaluating to ensure that we are adequately funded. What is a proper funding level? I have heard numbers from “30% Funded” to “80% Funded”.    Read the Q&A…………….
  • Why Does Your HOA Board Need to Maintain Reserve Funds? September 28, 2017 You probably receive your HOA’s annual budget for review and notice the line item called “reserve fund.” You probably wondered: why does the Board need to maintain reserve funds? Well, this post will answer that question for you. Let’s start with a few basics.    Read the article…………….
  • How a Strong HOA Reserve Fund Effects Home Prices! September 7, 2017 Reserve contributions are often relegated to “what’s left” status in the budget process, regularly characterized by Board members and homeowners, as a problem for future owners. We’ve been challenging this way of thinking for over 30 years, and finally, there’s proof that we hope will change the way HOA Reserve Funds are perceived – redefining them from a resented expense to a wise investment.   Read the article……………..
  • 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 ...

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

  • Appeals court rules in favor of condo owners in Pensacola Beach property tax controversy (FL) October 11, 2017 An appeals court has ruled that condo owners of two Pensacola Beach developments do not have to pay property taxes on their condo developments’ land as it is owned by Escambia County.  The Florida First District Court of Appeal ruled in a 2-1 decision Wednesday that the county can only tax improvements on the land, and not the land itself, if the 99-year lease on the land is not automatically renewing.   Read the article………….
  • HOA Taxes | What Tax Forms Are HOAs Required to File? September 19, 2017 In the United States, there are more than 351,000 Homeowners Associations (HOAs). They represent about 40 million households, or 53% of the owner-occupied homes in the country. Said differently, if you own your own home, there’s a good chance that you’re part of an HOA. Given how widespread HOAs are, it’s surprising that most people know very little about how HOAs operate. For example, are HOAs corporations, are they required to file tax returns and, if so, what kind of ...
  • Wiped-out properties are due to be taxed as if still standing (TX) September 5, 2017 As a result of Hurricane Harvey, Rockport’s mayor released a statement that approximately 30 percent of the community’s housing was destroyed, 30 percent to 40 percent was so badly damaged it was not salvageable, and only 30 percent to 40 percent was habitable.  Similar or even greater percentages of housing stock destroyed by Hurricane Harvey exist for Port Aransas and Mustang Island in Nueces County. A significant portion of the housing stock in San Patricio County has also been destroyed ...
  • A Cautionary Tax Tale for Homeowner Associations September 2, 2017 Imagine, if you will, that you are a board member of a homeowner association, where all common elements are owned by the association. One day your board discovers that all of the association’s common elements, including all of your privately owned streets, parking areas, green space, gardens, and other amenities are now owned by complete strangers.   Read the article…………….

Taxes Archives

General Financial

  • 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 ...
  • Can a Special Assessment Be a Good Thing? September 13, 2017 When you hear the word “special” you usually think of good things — special events, special features, special offers, special pricing, just to name a few. The word “special” generates feelings of anticipation and excitement. It’s even used in the name of a popular cereal to make ordinary flakes seem… well, special. But when it comes to your HOA, there is one kind of special that nobody likes — the special assessment.  To homeowners, a special assessment means writing a ...
  • Avoid Misunderstandings about Dues September 2, 2017 Across the country people are wondering how and where their HOA dues are being used. It’s a good question to ask, but it also one that an HOA board should be able to answer quickly and easily.  To reduce miscommunication with homeowners, the board first needs to understand these things about HOA dues and openly and effectively communicate this information with residents:    Read the article………….

General Financial Archives

Fraud & Embezzlement

  • Former HOA treasurer indicted on theft, fraud charges (AZ) October 19, 2017 A former HOA treasurer was arraigned Tuesday after being indicted on 16 counts of fraud, theft, forgery and computer tampering.  Wendell Odean Byram, 80, is accused of stealing more than $204,000 from the Canoa Seca Estates II homeowners association from January 2001 to April 2017, according to the indictment handed down Oct. 9 by a Pima County Superior Court grand jury.    Read the article……………..
  • Scam overbilled companies in downtown’s SunTrust Tower, ends in fraud guilty plea (FL) October 18, 2017 A Ponte Vedra Beach businessman pleaded guilty Wednesday to collecting hundreds of thousands of dollars in kickbacks on maintenance fees charged to businesses at the SunTrust Tower in downtown Jacksonville.  Ashish Bahl, 52, could theoretically face up to five years in prison for cheating companies that bought space in the building at 76 S. Laura St., across the street from the Jacksonville Landing.     Read the article……………
  • Rockville HOA Under Investigation After More Than $100K Missing (MD) October 17, 2017 A homeowners association in Rockville, Maryland, is under investigation after a report of more than $100,000 missing from their coffers.  Rockville police said they opened an investigation in August into the King Farm HOA and want to talk to a former employee. No arrests have been made, and the general manager of the HOA did not want to comment.    Read the article………………
  • Egg Harbor Township man accused of stealing $350K over seven years (NJ) October 12, 2017 An Egg Harbor Township man is accused of stealing more than $350,000 from The Club at Galloway Condominium Association.  Galloway Township Detective Kerry Baerman arrested Ira Binder, 60, Oct. 5 for allegedly stealing a total of $352,620 between Jan. 2010 and Feb. 2017, said Sgt. Eric Hendrickson.   Read the article……………
  • I-Team: South Boston Condo Property Manager Accused Of Taking $200K In Missing Funds (MA) October 12, 2017 The trustees of a South Boston condo association are scrambling to pay the bills after they say a former property manager disappeared with an estimated $200,000 of funds.  The Channel View Condominium Trust has now filed a lawsuit in an effort to recoup the missing money and Boston police tell the WBZ I-Team they are also investigating.     Read the article……………

Fraud & Embezzlement Archives

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