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On August 24th at 12 Noon (Webinar)
Est, Allison Hertz, Esq., BCS of KBRLegal will teach “Conflicts of Interest: What You Need to Know”
this webinar hosted by GRS Community Management. It’s free to enroll and happens via Zoom.
Jeffrey Rembaum, Esq. is a Board Certified Specialist in Condominium and Planned Development Law and a community association lawyer with the law firm Kaye Bender Rembaum, in its Palm Beach Gardens office. His law practice consists of representing condominium, homeowners, and cooperative associations, developers and unit owners throughout Florida. He can be reached by email at JRembaum@KBRLegal.com or by calling 561-241-4462.
The right of the people to carry and bear arms without governmental infringement is a right which stems from both the United States Constitution and the Constitution of the State of Florida. The State of Florida recently adopted new gun legislation, effective July 1, 2023, which allows the everyday citizen to carry a concealed weapon without first obtaining a concealed weapons permit. This raises interesting questions for community associations such as, is the right to carry a concealed weapon absolute? Can a community association adopt a rule that prohibits the carrying of concealed weapons in the clubhouse or other common area facilities?
Before we get too far in our analysis, it is important to point out that the intent of this article is not to advocate for gun control or the right to carry. Rather, the intent of this article is to examine the rulemaking authority of a board of directors of a community association to prohibit concealed weapons in the clubhouse and other common areas. In short, is it possible for a community association to adopt such a rule? Yes, subject to the cautions and explanations explained below. Is the adoption of such a rule risk free? No!
As the starting point, in order for a board-made rule of this nature to have validity, we must examine whether it violates either the United States Constitution or the Constitution of the State of Florida. As to when constitutional protections apply within a community association, this is an interesting question. In prior cases, courts have found that recorded covenants restricting home ownership based on race will subject the covenants to a constitutional examination, and in the end, such covenants were deemed to violate the equal protection clause of the Fourteenth Amendment to the United States Constitution.
Another method by which courts may find application of constitutional protections to community associations is if there is significant governmental action associated with the community association. For example, an argument would exist that if a community association were built with federal monies, the covenants of such a community association would be subject to all the protections afforded by both the United States Constitution and the Constitution of the State of Florida. Often, multiple community associations that exist within a sprawling master association are built in community development districts (CDD). The CDD is a quasi-governmental entity established to govern and control what would otherwise be the common areas of the master association. The creation of the CDD allows many of the hard costs associated with the community’s build-out, such as the roads and drainage systems, to be immediately passed on to the first-time home buyers. By utilizing a CDD, long-term bonds can be issued, which are paid back through ad valorem tax obligations allowing the costs to spread out over a significantly longer period of time. As quasi-governmental entities, constitutional protections which limit powers of government would likely apply to CDDs. Therefore, should a CDD adopt rules to prohibit concealed weapons in the common areas, such a rule would likely be found to violate constitutional protections. However, the same analysis is not applicable if the community association itself adopted such a rule.
It should be remembered that courts have long held that owners give up certain individual rights and liberties when living in a community controlled by a community association. In 2002 the Florida Supreme Court held, in Woodside Village v. Jahren, 806 So. 2d 452 (Fla. 2002), that certain individual rights must be compromised when one chooses to live in a condominium association (and by analogy, in a homeowners’ association, too). But, on occasion courts have found that certain constitutional protections apply within a community association; however, such application is somewhat rare.
Thankfully, we do have some limited guidance. In 1989 the Florida Supreme Court held, in Quail Creek POA v. Hunter, 538 So. 2d 1288 (Fla. 2d DCA 1989), that neither a homeowners’ association’s recording of its covenants in the public records, nor the enforcement of its covenants in state court, created a sufficient nexus to evidence “state action” such that the First Amendment and the Fourteenth Amendment of the United States Constitution would apply. By analogy, such logic could be applied to defending the right of a community association to adopt a rule prohibiting concealed weapons in the clubhouse. Thus, there is no reason to believe that such arguments would not also apply to the application of the Second Amendment of the United States Constitution within community associations. That said, it would not at all be surprising for an owner to challenge such a rule; so, any association that adopts such a rule should be prepared to be a possible test case, which could have national implications associated with it.
Let us assume that the board understands and accepts such a risk and is ready to move forward to adopt a rule prohibiting the carry of concealed weapons in the clubhouse. Certainly, we recommend that counsel for the association be consulted prior to adopting these types of rules. For the purposes of our analysis, let us also assume that the community association at issue does not have a sufficient nexus to the federal or state governments that would, in and of itself, render such a rule unconstitutional. Under these circumstances, the analysis can then shift to the ordinary rulemaking criteria necessary to withstand judicial challenge, as follows:
Of course, even if the association adopts such a rule, enforceability is an entirely different issue. Assuming the association is not using some type of full body scanner, then so long as the possessor of the concealed weapon does not brandish the weapon, and thus it remains fully concealed, no one will be the wiser. In addition, such a rule would not apply to certain individuals who have an absolute right to carry a concealed weapon, subject to very few limitations, such as an off-duty police officer.
As an aside, just because a person may not need to have a concealed weapon permit to carry a concealed weapon, this does not mean that the still-available concealed weapon permit does not have value. It certainly does when it comes to traveling outside the State of Florida to one of the many states, over 26, that have reciprocity with Florida, meaning that the other states recognize Florida’s concealed weapons permit. With that in mind, obtaining a concealed weapons permit may still make sense.
While a properly drafted rule prohibiting guns in the clubhouse stands a decent chance of validity, remember that even if your association
i) fully analyzes whether it has any type of federal governmental nexus which would provide for clear application of constitutional protections and such analysis is answered in the negative, ii) meets the rule adoption criteria listed above, and iii) consults with the association’s lawyer who helps draft such a rule, the association could still find itself as a defendant in a lawsuit seeking to have such a rule invalidated by the court.
Last week was a primer on how foreclosures generally work and how banks get off the hook when they get back a unit when they foreclose on an owner’s unit or home. We learned that the banks are protected by the law because they only owe a few bucks to the association when they get title to the unit or home despite the fact that the owner owes a fortune to the association. That’s called a “safe harbor” and it’s provided to the banks because the banks claim that if you make them responsible for paying unpaid assessments, they simply won’t loan money to buy a condo or a home in an HOA.
But there is some good news……….suppose the bank does not buy the unit at their foreclosure sale and a third party winds up becoming the successful bidder and the owner? What does that new owner owe the association if that unit owes thousands to the association in unpaid assessments? And the answer under the law is EVERYTHING! They owe it all. Florida Statute 718.116 states:
Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title.
So, when a bank forecloses on a unit, or when the association forecloses on a unit, the association hopes and prays that a third party purchases the property at foreclosure sale because that guy owes everything to the association. UNLESS………………….
Remember last week that I said that some of you have language in your governing documents that allows the bank to get off the hook even though they would owe money to the association if they wind up foreclosing and owning the property? Well…..some of you have language in your governing documents that allow third party purchasers off the hook if they buy the property at a foreclosure sale. So…..even though the association gets lucky and a third party purchases the property at foreclosure sale, your own docs kill you and lets the third party purchaser off the hook. They owe nothing. Disaster.
So……over the past two weeks we learned that it is vital for the board to check their governing documents to make sure that neither the bank nor a third party purchaser is let off the hook should they purchase a unit or home in your community. Make sure your docs don’t kill you. If they do, amend them immediately!!!!!!
What can taxpayers do?
Start by letting the payment originators know to mark the payments that are not business related (should not be income and subject to tax) as personal on the chosen platform. If you end up picking up the lunch tab and being reimbursed through Venmo or Zelle be sure to remind your friends to mark the transaction as non-business. This also holds true for gifts, reimbursements, and other non-taxable payments.
At tax time be sure to share these documents, like all tax forms you receive, with your tax professional, so they can see that income reported on 1099-Ks is properly reported on your tax return.
One thing we as tax professionals are sure of is that these 1099-ks are going to generate a lot of confusion for taxpayers in addition to a lot of IRS notices that will need to be delt with long after the 2023 returns are filed.
Find other fantastic articles and Accounting information:
Looking for a wet look, gloss appearance that brings out the colors in your pavers? Do you want something that holds up to sun and weathering for 2 to 3 years – or more?
You’re in the right place. To get the results above, it’s important to understand how to seal pavers… and why. We’ve got your answers below.
After 18 years of dealing with the question of how to seal pavers the right way, my best recommendations are as follows:
Let’s expand on these 3 guidelines a little further. (And here’s a quick video to show you what we mean.)
While roller applying a sealer is easier than spraying, roller application does not work as well on pavers compared to something like concrete.
The biggest drawback when rolling sealer on brick pavers is that the roller can pick up the joint sand and roll it over the top of the brick paver surface. This is especially true if the joints are wide. Furthermore, the amount of sealer that soaks into the sand joints is difficult to control when rolling.
Apply a flood coat to the paver surface including the joints. This method will apply the sealer very generously while allowing the sealer to soak into the sand joints as well.
As long as you apply the paver sealer on a windless day, the coverage can be generous and effortless.
If you really can’t get a pump up garden sprayer, opt for a sponge-type roller to apply the sealer. A nap roller is more likely to grab and trap your joint sand.
Solvent based sealers are bad for the environment! Manufacturers are gradually moving away from these type products.
Regardless, solvent based sealers are more difficult to spray apply than water-based sealers, and they don’t really seal the joint sand, as well as the water based products.
The solvent based sealer tends to seal only the top surface of the sand compared to the water based, which soak down deeper into the sand.
From our lead chemist:
” While solvent-based sealers can produce a nice high gloss surface, they can also make the surface slippery if applied too thick.
Also the gloss finish, typically burns off after 6 months of exposure to the sun. “
Water based acrylic sealers eliminate the issues with using solvents and are better at stabilizing joint sand to prevent sand loss.
However, it is important to use a high solids acrylic sealer or a urethane modified acrylic sealer, otherwise they fade and lose the glossy appearance after 6 months to a year.
Water based polyurethanes are a tougher sealer than acrylics and are more UV resistant and chemically resistant.
They don’t yellow, perform better outside and they are more resistant to chemicals oil, brake fluid, and chlorine.
The best water based polyurethanes are 2-part products (Part A and B requiring mixing). These 2-part polyurethanes when mixed together chemically cross link to form a paver sealer that is highly durable and long lasting when exposed to sunlight and/or freeze thaw.
A big plus is that they are much less sensitive to moisture. You can apply a 2-part polyurethane water based sealer as soon as you finish pressure washing. We call it “same day” sealing.
” The down side of using 2 part polyurethanes to seal pavers is that they are more expensive. And once you have mixed them, you have to use them. There is no shelf life or coming back the next day to seal pavers, with left over mixed product.
This Summer there were only a handful of Member Companies that were sending us industry articles. We republish the articles you send to SFPMA and they go out to over 236,000 email addresses we send to. What this means for your company is, through your membership you can get more eyes on your articles, promotions, sales and products.
Social Media is only one part of your marketing, If you are posting only on SM how many eyes are viewing your information? One of our goals is to get the word out about our members, let the Managers and Boards learn from you the experts – we feel when they have a problem they know who to call for help.
Interesting research on the community association industry. Especially, given that seventy-eight percent of new homes for sale are located in community associations. There are 358,000 associations across the country, and it’s estimated that 5,000 more will be formed in 2023. Here presented are six trends that CAMs and boards are likely to see, including the absence of new board members. However, I think it is less to do with apathy than before Surfside and more to do with risk associated with a voluntary, unpaid, thankless job.
As part of our cross communications with other groups we are posting this for our industry – SFPMA
Wondering what 2023 holds for the community association management industry?
We were, too. That’s why Buildium asked 240 community association managers and board members about the challenges and opportunities they foresee for the industry this year.
They told us the community association sector is more popular than ever among developers, residents, and management companies—but there are several key challenges that community association managers and leaders need to address head-on, so they continue to thrive.
From shortages of team members, vendors, and volunteers to increasing competition among management firms, here are the six trends community association management companies should be aware of in 2023.
1. Staffing is a top priority as the labor shortage continues to strain teams’ resources.
Smaller community association management companies are competing with larger companies and developers for full-time team members and high-quality contractors, leading to higher staffing costs and smaller teams.
According to Buildium’s research, this is a leading challenge for the 85% of companies that plan to expand their portfolios throughout 2023 and 2024, prompting community association management companies to name staffing as their second-highest priority for the coming year.
2. Efficiency is a primary area of focus as teams search for ways to do more with less.
Technology is the X factor that allows community association management teams to take on more clients, even as their teams remain smaller than in the past. Streamlining processes like payments, communications, and accounting frees up time for the most impactful areas of the business, such as customer service and business development.
More than half of community association management companies told Buildium that leveraging technology to drive efficiency is a key aspect of their revenue generation strategy for 2023.
3. Competition for clients highlights the importance of high-quality customer service.
The Foundation for Community Association Research estimates there are 8,000 to 9,000 community association management companies in the U.S. In certain areas, smaller companies feel they’re being edged out by larger firms that can charge less for their service due to economies of scale.
Association board members told us they can feel the difference between customer service that’s personalized to their needs, and service that’s one-size-fits-all. This is where smaller companies have a competitive edge.
4. New development means new potential clients for community association managers.
Seventy-eight percent of new homes for sale are located in community associations. There are 358,000 associations across the country, and it’s estimated that 5,000 more will be formed in 2023.
This creates new opportunities for 88% of community association management companies that plan to recruit new clients over the next two years, with growth named as companies’ third-highest priority for 2023, according to Buildium’s survey.
5. Profitability is a challenge as companies balance the pressure to increase prices with the need to stay competitive.
Inflation has increased the cost of running associations across the board, from materials and labor (on the management side) to insurance and taxes (on the association side). Association boards are feeling the strain of pulling together sufficient reserves and funding for capital projects without raising dues or requiring special assessments.
Association management companies are under pressure to keep prices low to stay competitive—but 70% of companies feel it’s necessary to raise prices to cover their costs in 2023 and 2024. Our research found 43% of companies plan to expand the services they provide, potentially opening new revenue streams.
6. Community associations are struggling to recruit engaged, knowledgeable board members.
According to Buildium’s research, 38% of association board members said finding the people and resources necessary to keep their community running as a primary source of stress in 2023.
Current board members—80% of whom are 60 and older—feel frustrated with the lack of participation from newer homeowners; and boards that experience frequent turnover struggle to find members who have the knowledge to make important decisions for the community.
Overall, association boards and management companies feel more involvement in the community from homeowners is needed, in addition to greater awareness of their responsibilities as residents of an association.
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These are some of the challenges and opportunities that association managers and leaders will face in 2023. For a deeper dive into 2023 community association management trends, download our 13-page report, which shares additional data and quotes from real community association management professionals and board members. Download your free copy now.
Tags: Management News, Management Tools, SFPMA Articles
There would be no Condo Control without Brian Bosscher. Brian had no professional property management experience, but he did understand the frustrations that plague condo communities after purchasing a unit in 2006. Looking to help improve operations, Brian joined his building’s finance committee immediately. He started volunteering on the Board of Directors as Treasurer the following year, and then became the Board President.
It was through volunteering that he learned about the challenges and roadblocks that property managers encounter on a day-to-day basis, and witnessed the inefficiencies that prevented them from reaching their goals. It was this experience that inspired Brian to build a long-term solution, and Condo Control was born.
When residents pay their fees or fines, these payments are documented under accounts receivable (AR). Vendor credits are also logged under AR. This element of accounting tracks the money coming into the corporation or association.
But like most things related to community finances, it’s much easier to talk about accounts receivable than manage them. Collecting payments is always a challenge because they come in at different times, and in different formats. Documenting this information is equally tedious and time consuming.
While we can’t eliminate this responsibility for you, we can suggest some ways to simplify the AR workflow for you and your team.
Table of contents
Without structure, rules, or established expectations, anything goes. But spontaneity isn’t exactly ideal when you’re trying to get money from 200 owners. That’s why it is so important to implement consistent billing practices. Not only does this create a routine for you and/or your staff, but residents aren’t left wondering when they might receive their invoices or how they should make payments.
By creating a sustainable AR workflow, condos and HOAs will find that late payments become less common. By sending billing statements in the same format, at the same time each month, your residents become familiar with a routine. As a result, they’ll become more accustomed to making payments the same way at the same time.
Online banking has become almost ubiquitous in North America. Mobile apps make this option accessible to all age demographics, and the convenience cannot be overstated. So doesn’t it make good sense to offer online payment options to residents?
Not only does it make the payment process far easier for the people who live in the community, but it creates less work for you.
Teams that are still documenting accounts receivable payments manually are more prone to making mistakes. Between writing down payments, updating balances, and creating receipts, it’s understandable why someone might forget to fill in a field or add an extra “0.”
But even a small mistake can lead to bigger problems, and can even create conflict between residents and staff. Furthermore, time is wasted when someone has to go back and review the numbers.
Then there’s the issue of storing and locating physical records. Paper can easily be misplaced or lost, and aside from the obvious problems associated with losing documents, missing information can lead to costly compliance violations.
Electronic billing and online payments reduce manual data entry work for staff, and create records automatically. If you decide to use a cloud-based system, you’ll have the ability to access records from any computer. That way, you aren’t tied to the office.
It’s important to note that not every resident will want to make online payments. Your condo or HOA could install a secure lockbox so that you don’t have to arrange a meeting with these individuals to receive a payment on time.
With a digital AR system, you can also create automations to bypass some of the most tedious AR tasks. This typically includes email automation (late payment reminders, confirmation of payment) as well as sending out invoices.
A cloud-based AR system ensures that anyone who needs access to accounts receivable information can get it, no matter where they are working from. Conversely, when team members have to wait for information because it is siloed off, it slows down the entire process.
Inevitably, there will be residents who are consistently late with payments, or who avoid them altogether. Instead of having to figure out what to do next each time this happens, follow the condo or HOA’s rules/ procedures laid out in the governing documents.
Make sure all actions are in accordance with local laws. For example, you are probably required to give residents written notices and a reasonable amount of time to pay fees before more severe actions are taken.
Corporations/associations do have the power to pursue residents for unpaid fees, and to recover any legal expenses incurred while trying to collect money owed from delinquent owners.
These are some of the actions that communities are permitted to take while trying to secure outstanding fees:
Accounts receivable is an ongoing responsibility that requires a great deal of time and resources. The less you and your team have to do by hand, the happier you’ll be.
It is recommended that condos and HOAs look into AR software to simplify and speed up workflows. The money you invest in this solution will be less than the costs associated with conducting this process manually. Not only can it help keep processes more consistent, but you will probably find that you make fewer errors.
Your time is valuable; spend it wisely.
Tags: Management News, Management Tools, Members Articles
Board membership can be a lot of fun socializing with neighbors and contributing ideas on how to improve the communities. But it also involves serious work with budgets, required by Florida Statutes (FS) and, generally, by the association’s by-laws for many the fun is over when its time to prepare the annual budget.
Budgets are typically approved on an annual basis during the months of October or November, but many smart boards start the budgeting process late in the summer months.
Some associations’ fiscal year does run with the annual calendar, so they should prepare their budget 4-5 months before the start of a new fiscal year. Regardless of when your fiscal year begins and ends, board members should begin the budget process by identifying operational needs and estimating expenses for the coming year.
“Who Is Responsible for Preparing the Budget?
The requirements for the preparation of the annual budget for condominium associations are set forth in Section 718.112 (2) (f) FS; and for homeowners’ associations, in Section 720.303 (6) FS.
Generally, the community association manager (CAM) is charged with the responsibility for preparing the preliminary draft of the budget and presenting it to the budget or finance committee for its review and approval. The budget committee, as appointed by the Board of Directors, and, ultimately, the Board itself, is responsible for the adoption of the association’s annual budget.”
A budget also helps to:
* Create proper reserve funds. Measure performance throughout the year.
* Determine the amount of fees to be assessed to each unit owner for the upcoming fiscal year.
Will homeowners be paying a little more, a little less, or about the same as last year? A well thought out budget supplies the answer.
-Association Budgeting Rules in Florida
Whether you serve on a condominium association or an HOA, Florida Statutes have a slew of legal requirements that affect the way budgets are presented and what they must contain. Longtime board members may be familiar with the state’s budgeting requirements under Statutes 718 and 720. If you’re a new board member, it helps to know what’s involved before diving in. Here’s a brief overview.
* All associations, whether a condominium or HOA, are required to prepare an annual budget.
* The budget must show the estimated revenues and expenses for the budget year.
* An estimated deficit or surplus for the end of the current year must be reported.
“Working Capital
As a generally accepted guideline, a community association should maintain its operating fund balance (“working capital”) at a minimum of two months’ maintenance assessments. If this guideline is not met, the Board should consider including a line item in the budget to increase working capital. However, if the working capital shortfall is significant, or if there is an accumulated deficit, a special assessment may be the more conservative alternative. The amount of the budget line item or special assessment should be determined after considering the current year’s expected results of operations.
If the current working capital is sufficient and the current year’s operations are projected to have an excess of revenues over expenses (“operating surplus”), the Board can take advantage of this situation by including line items for special projects or improvements in next year’s budget. Alternatively, that surplus can be applied as a credit to the following year’s assessments to the owners. There are generally income tax considerations in applying this credit and therefore, the Board should consult with the Association’s income tax advisor.”
-Preparing a Budget for your Condominium or HOA
The budgeting process really involves preparing two components: an operating and a reserve schedule. The objective is to determine what homeowners will be charged for maintaining the common areas.
* Operating budget ensures that all operational costs and expenses are identified. They assist in approximating expenses for the upcoming fiscal year.
* Reserve schedule determines the amounts needed to be set aside for capital expenditures and deferred maintenance.
Florida Statute regulations may be complex, but that doesn’t mean preparing a budget has to be complicated or overwhelming. In fact, once you understand the basics of calculating expenses, the process becomes clear-cut.
-Budgeting Tips & Considerations
Unlike a personal household budget where you figure out what you can spend based on your income, a condominium or HOA budget must begin by estimating costs first, which will then determine the amount an owner will be charged.
-Operating Component
1-Compile the current year’s year-to-date expenses. They will serve as the basis for the new budget year.
2-Analyze these expenses carefully and factor out any that are non- recurring, such as plumbing or storm-related emergencies.
3-Review your current contracts for escalation clauses and/or scheduled increases.
4-Request estimated costs for non-contractual expenses like general repairs and maintenance, utilities, and certain administrative expenses.
“Reserve Schedule
Reserve funds are used for two expenses: capital expenditures for common area components, such as roof replacement, pavement resurfacing, and elevator upgrades; and deferred maintenance that generally refers to interior and exterior painting. The funds for these big-ticket items are generally collected over years, not just in the year they’re expected to occur.
The condominium or HOA board may also have certain projects it wants to do that are not covered by reserves. This can include things like pool re-tiling, termite treatments, landscape improvements, and costs to maintain tennis, racquetball, or pickleball courts.
The projection of these fees must be as accurate as possible. Remember, condominiums and HOAs are not-for-profits so it’s important that they do not have a surplus; of course, you don’t want a deficit, either.
Budgeting is a big job, but if you break it down in these easy steps should take the stress away. Preparing an accurate budget keeps your condominium or HOA thriving financially now and in the years to come.”
“Reserves
Chapters 718 and 720 of the Florida Statutes both require the funding of reserves in the association’s annual budget (with specific waiver provisions for condominium and homeowners’ associations). The use of reserve funds is restricted for capital expenditures and deferred maintenance. A capital expenditure is the use of funds for the replacement or major repair of a common area component. Examples of capital expenditures are roof replacement, pavement resurfacing and elevator upgrades. The term “deferred maintenance” generally refers to interior and exterior painting. Reserves are included in the association’s budget so that funds are available for the eventual replacement of common area components and deferred maintenance. The alternative to funding reserves is the use of available operating funds or, more likely, the adoption of a special assessment. Sound financial management dictates that, concurrent with the adoption of a special assessment, a detailed budget should be established. Include a provision for bad debts commensurate with that of maintenance assessments.
-Financial stability including accounting, collections, and accounts payable services are the core to a Condo and homeowners association’s strength and future success.
Boards and their Property Management company work hand in hand providing a checks and balances system. where payables for buildings services are entered by the community manager, processed by the Payables/Accounting dept, reviewed by senior management. These are put in place for protections for all owners of the community.
Having a Management Company to aid Board Members is important. unlike self managed community associations, no one person or Board member has total control with the financial responsibility for
Online payables processing
Electronic signatures
Accounts receivable collection process
Effective internal controls
Financial statement preparation
Annual Budget preparation
This way the Management Company and Boards can work together on everything from The Communities:
“Here are some other guidelines to consider when preparing the Association’s budget:
*For contractual expenses, read the related contracts to identify any increases that are anticipated in the following year.
*Contact your insurance agent as early as possible to determine insurance premiums. If financing insurance, try to obtain favorable rates.
*Request estimated costs for non-contractual expenses such as general repairs and maintenance, certain administrative expenses, trash removal, and utilities.
*Include a reasonable amount for bad debt expense.
*Avoid a “Contingency” line item if possible.
*Look at revenue trends for fee-for-service charges to unit owners such as work orders, laundry, parking, etc. Be sure to consider possible increases.
*If loan repayments will be required, include the entire payment amount (i.e., principal and interest) in the budget.
There are other concepts to keep in mind in preparing the annual budget: Be realistic. It is generally difficult to keep maintenance assessments at last year’s levels. The role of an association’s treasurer or president is to run the association’s business. It is not to win a popularity contest. That role should be treated with as much, if not more, respect than the association’s officers’ own businesses.
The budgeting process doesn’t end with the adoption of the annual budget. Careful and routine monitoring of budget-to-actual results of operations is a vital part of the effective management of a community association.
-Balance Sheet
One of the reports included in the Financial Reports presented to the Board of Directors is the Balance Sheet. The Balance Sheet is a statement of the book value of all of the assets and liabilities (including equity) of the association. It provides a “snapshot” of the association’s financial standing as of the end of that particular month.
-Collection Status Report
By far one of the most popular and most important reports is the aging report or the Collection Status Report. This report provides the Board with a listing of the owners that are past due. There are many variations of this report, however, the sample shown is the most concise. This report provides a glimpse of the names of those owners that are past due, the total amount past due, and at what stage in the collection process the account is in.
-Check Register and/or Accounting Software
A Check Register its a monthly report. This report is a list of all of the checks written by the association during a given period, typically each month. Among other information, it lists, the check number, the vendor’s name, the invoice number, brief description of the payment, and the check mount.
-Profit & Loss Report
The second page of the Financial Report summarizes the revenues, costs and expenses incurred during a specific period of time. The Income and Expense Report follows a general format that begins with an entry for Income and subtracts from Income the costs of running thebusiness, including operating expenses, insurance, contracted vendors, and repairs. The bottom line, literally and figuratively, is net income or loss.
Because we know Associations depend on their budget, our P&L reflects the Actual Expenses vs. the Budget Amount. This comparison is done for the current month as well as year-to-date. You are also provided with the variance (if any) between the actual expense and the budgeted amount.
-Monthly Ledger
The Monthly General Ledger is the main accounting record of a business which uses double-entry bookkeeping and is a summary of all of the transactions that occur in the company. It is built up by posting transactions recorded in the general journal. The Balance Sheet and the Income and Expense Report are both derived from the general ledger. The general ledger is where posting to the accounts occurs. Posting is the process of recording amounts as credits and debits in the pages of the general ledger. Because each bookkeeping entry debits one account and credits another account in an equal amount, the double-entry bookkeeping system will ensure that the general ledger will always be in balance.
In the end Board and Management Companies should upload these reports to the Secure Association website where Owners can view the financial records each year. This avoids Questioning and sometimes fighting by owners in the association regarding fees being paid with the new budgets.
SFPMA has many of the top companies ready to help condo and HOA communities with everything from Accountants Attorneys, Collection Companies, website design and Building software(CRM) and Service Companies where estimates and Bidding are always asked during budget season. If you require a RFP (Request For Proposal)Search our Members Directory Business and Service Companies and ask them to help with cost savings for your Budgets.
Property Maintenance is an integral part of managing the day to day operations for every type of property. Search the Members Directory for Companies working with Property Management, Condo and HOA properties in Florida. Search companies for RFP’s in this Budget Season.
Tags: Budgets, Management News, Reserves
SFPMA works throughout the State of Florida, we are a multi-member organization for the Condo, HOA and Property Management industry. Through knowledge based Articles, Events and our Members Directory, Clients find the right information to make an informed decisions for their Florida properties.