What is an HOA master insurance policy?

A homeowners association master policy, often referred to as simply HOA insurance, is a form of insurance designed to protect HOAs. Standard master insurance policies typically cover two things: Property damage to any structures or shared spaces that the HOA owns; and, liability expenses that the HOA is responsible for, including if a guest becomes injured in a common area.

What are some Easter community outreach ideas?

Here are the best HOA community Easter outreach programs you can organize: ask for cash donations, plan a canned food drive, organize a clothing drive, host a fundraiser, and offer free services.

What are some Valentine's Day ideas for seniors?

Here are some ideas to get you started: send a Valentine's Day card, send flowers or a houseplant, share homemade pastries, send a care package, hold a movie night, host a tea party, organize a walk, arrange a game day, or give back to the community.

admin, Author at HOA Management Software

HOA Debt Collection: Is The HOA Taking Advantage?

admin on May 6, 2022

Consumers are protected by certain laws when it comes to debt collection. Chief among them is the federal Fair Debt Collection Practices Act. But, does this law apply to homeowners associations, too?

Fair Debt Collection Practices Act Definition

The Fair Debt Collection Practices Act (FDCPA) is a federal law governing the collection of debt. The law was passed by Congress in 1977 and aims to prevent deceptive, abusive, and unfair debt collection practices. According to the Act, debt collectors are not allowed to harass consumers or employ deceptive tactics when attempting to collect on their debts. In addition to what debt collectors can’t do, the Act also defines what debt collectors must do when attempting to collect a debt.

Are HOA Collections Governed by the FDCPA?

Homeowners living in HOA communities have an obligation to pay monthly dues to their association. The HOA then uses these dues to fund the many expenses required to keep the community in operation. These expenses can include but are not limited to maintenance costs, insurance premiums, and management fees.

Like any payer-payee relationship, though, HOAs are not immune to delinquencies. It is not uncommon for homeowners to default on their monthly fees. Usually, these delinquencies result in late fees, the suspension of privileges, and even lawsuits. In some cases, HOAs will also attach a lien to the delinquent owner’s property and even initiate foreclosure proceedings. Associations do all of this in an effort to collect the debt delinquent homeowners owe.

Sometimes, though, an association will also transfer the bad account to a third-party agency as part of its HOA debt collection policy. This is where the FDCPA comes into play.

In general, the FDCPA does not recognize homeowners associations as debt collectors. As such, the Act does not typically apply to them. The FDCPA only applies to debt collectors, i.e. any entity or individual whose primary business is to collect debt on behalf of third parties. So, while the FDCPA may not apply to HOAs, it does apply to the collectors HOAs employ. Many courts have also ruled that the FDCPA can apply to attorneys if it collects debts or unpaid dues on the association’s behalf.

Communication Standards for HOA Collection by Third Parties

According to the FDCPA, debt collectors must use any communication that even the “least sophisticated consumer” can understand. This standard is in place so that debt collectors don’t use fancy or complex language in an attempt to confuse or deceive the consumer. It offers protection to even the least experienced individuals. Additionally, using simple language also eliminates vague terms, which can lead to misunderstandings.

Adhering to this standard, the FDCPA requires debt collectors to provide the following communication to a consumer, either in oral or written form: “This communication is from a debt collector in an attempt to collect a debt. Any information obtained will be used for that purpose.” Every succeeding communication should then include either “This communication is from a debt collector,” or “this is an attempt to collect a debt.”

Following the initial communication, the debt collector must then provide the following within five (5) days in written form:

Amount of debt owed;
Name of the creditor;
A statement saying that the consumer has 30 days to dispute the debt’s validity or else the debt will automatically be deemed valid by the collector;
A statement saying that, if the consumer disputes the debt’s validity within the timeframe, the debt collector must then secure verification of the delinquency or a copy of the judgment. The collector must then mail a copy of that document to the consumer; and,
A statement saying that the debt collector will provide the name and address of the original creditor if the consumer supplies a written request to do so within the 30-day period.

Prohibited Acts Under the FDCPA

In accordance with the FDCPA, banned acts include but are not limited to the following:

Talking about the debt with any party other than the consumer
Calling the consumer before 8 a.m. or after 9 p.m.
Talking to the consumer when an attorney already represents them
Any acts of harassment or abuse, such as:
- Threatening the consumer with violence or other illicit acts
- Using profane or obscene language
- Making incessant calls
Making false or misleading statements, such as:
- Falsely introducing themselves as an attorney
- Implying or stating outright that the consumer will face criminal charges upon failure to settle the debt
- Threatening the consumer with consequences that the debt collector can’t legally do
Attempting to collect an unauthorized amount

Who Handles Fair Debt Collection Practices Act Violations?

Debt collectors have been known to abuse their position and employ illegal tactics. Consumers who don’t know the law well enough will sometimes fall prey to these unfair practices. If a consumer or homeowner believes they are a victim of FDCPA violations, they can file a complaint with one of the following agencies:

Federal Trade Commission. The FTC is the main agency inc charge of enforcing the Fair Debt Collection Practices Act.
Consumer Financial Protection Bureau. One of the CFPB’s many responsibilities is enforcing the FDCPA.
State Attorney General’s Office. For state-level complaints, consumers can reach out to their State Attorney General’s Office. Go to their website for more information.

As per the FDCPA, consumers can file a federal claim for actual damages as well as additional damages up to $1,000. The claim can also include coverage for attorney’s fees and other reasonable costs.

Are HOA Management Companies Debt Collectors?

While all courts recognize HOA dues as consumer debt, there is some debate as to whether or not HOA management companies count as debt collectors. There is no universal answer to this, as situations should be evaluated on a case-by-case basis. That said, it really comes down to the primary purpose of the management company.

If an HOA management company’s primary services consist of collecting unpaid fees, then courts may deem it a debt collector. In that case, the FDCPA does apply to the management company and its practices. In contrast, if a management company’s primary focus is maintaining common areas, it might not fall under the FDCPA or what counts as a debt collector.

Something to Think About

The Fair Debt Collection Practices Act exists to prevent debt collectors from using unfair, deceptive, and abusive tactics when attempting to collect a debt. At face value, the FDCPA may not seem like something HOAs should worry about. But, considering the legal implications of associating with a non-compliant third-party collector, HOAs would do well to carefully select a collection agency.

Don’t want to outsource your collection efforts? Condo Manager makes dues collection and delinquency tracking easier with automated processes. Call us today at (800) 626-1267 or contact us online for a free demo.

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HOA Master Insurance Policy: How Does It Protect An HOA?

admin on April 28, 2022

One thing that every homeowners association should have is comprehensive insurance coverage. Insurance, of course, comes in several forms, though one of the most important is an HOA master insurance policy.

Understanding an HOA Master Insurance Policy

A homeowners association master policy, often referred to as simply HOA insurance, is a form of insurance designed to protect HOAs. Standard master insurance policies typically cover two things:

Property damage to any structures or shared spaces that the HOA owns; and,
Liability expenses that the HOA is responsible for, including if a guest becomes injured in a common area.

This type of policy differs from homeowners insurance in that it covers things owned by the association itself. Individual homeowners or condo owners will generally still need to purchase their own insurance to cover their personal residence and belongings.

An HOA master policy is essential to homeowners associations because it offers financial protection. For instance, if a guest slips and gets injured on HOA property, insurance can cover the cost of the guest’s medical expenses. If that guest decides to sue the association, the HOA will not need to tap into its own funds. Instead, the master policy can pay for the cost of legal fees and attorney’s fees as well as any monetary damages the HOA is ordered to pay (if any).

Similarly, if an HOA building becomes damaged due to a covered peril, a master policy can cover the cost of repairs or replacement. This means HOAs won’t have to use their own funds or levy special assessments to pay for the expenses.

Types of HOA Master Insurance Policy

There are three kinds of HOA master policies: bare walls in coverage, single entity coverage, and all-in coverage. Let’s break them down further below.

1. Bare Walls in Coverage

As its name suggests, a Bare Walls in Coverage policy provides bare minimum protections. This policy usually only covers the structure of the building, specifically the drywall, insulation, and studs.

2. Single Entity Coverage

A Single Entity Coverage policy includes the same protections as a Bare Walls in Coverage policy but with additional protection for the interior structure. It can also extend to the outside of the walls, top flooring, bathroom fixtures, and cabinets. Other names for this type of master policy include walls in coverage and studs in coverage.

3. All-In Coverage

The third type of master policy, the All-In Coverage policy, is the most comprehensive. It offers the same protections as the single entity coverage policy but takes things up a notch by covering built-in appliances as well. An all-in coverage policy can also cover unit improvements and modifications.

Who Pays for HOA Insurance?

While the homeowners association technically pays for HOA insurance, the funds really come from the owners. Homeowners have an obligation to pay regular dues or fees to the association as determined by the annual budget. This budget includes projections for insurance premiums, including premiums for the HOA master insurance policy. Because homeowners share the use of common areas, it makes sense for homeowners to share the expenses needed to maintain these areas as well.

How to Get HOA Master Insurance Policy

Taking out a master insurance policy may seem easy on paper, but there are a few things that go into it that not many people know. Whether you’re on the board of your HOA or are involved in HOA management in any way, here are the steps for getting a master insurance policy for homeowners associations.

1. Determine Needs and Budget

First of all, it is important to assess the needs of the association. What type of coverage is the HOA looking for? Obviously, a more comprehensive policy will cost more, but it does offer better protection. Conversely, some board members or managers might feel tempted to save a buck and go for the cheapest option. This will not bode well for the HOA, though, once a risk occurs and it is not covered by the association’s insurance.

2. Scope Out the Market

Once you have determined your needs and set a budget, it is time to examine your options. Don’t be afraid to shop around for a good deal. You can search online for the best insurance providers or ask around for recommendations. Again, cheap does not always mean good, and an insurance provider’s low prices can very well reflect the quality of their service.

3. Ask for a Quotation

Reach out to your list of prospects and ask them to provide you with a quotation. Make sure to let them know what type of coverage you want for the HOA, the target coverage limit, and your budget. Providers will be able to come up with a proposal with these details in mind. But, make sure to standardize your request for a proposal so that you can compare apples to apples.

4. Check Reviews and References

Cost is not the only thing you should take into account when searching for an insurance provider. Some may offer great deals but fail miserably when it comes to customer service. Be sure to do some research and check the company’s reviews. If they have any references to give you, contact them as well. Ask about the provider’s claims process and if clients had any negative experience whatsoever.

5. Evaluate Yearly

Insurance is not something you can just set and leave behind. As an HOA community grows and evolves, its insurance needs may change. And you don’t want to be stuck with inadequate coverage. Therefore, make sure to review your insurance needs and policies every year. The process should include re-evaluating your needs as well as your insurance provider. If your provider has not performed well, don’t hesitate to make a switch.

What Other HOA Insurance Policy Should You Get?

Besides an HOA master insurance policy, there are other types of coverage all homeowners associations should have.

Property Value and Replacement. Buildings that belong to the HOA must be insured for the property’s full replacement cost. There are three building ordinance coverages: contingent liability (coverage A), demolition (coverage B), and cost of construction (coverage C).
D&O Insurance. Another essential form of HOA insurance coverage is D&O insurance. This applies to directors and officers and provides coverage for indemnity, defense costs, liability claims, and errors.
Workers’ Comp. Whether your HOA employs workers or not, workers’ comp is vital. It can cover the employees of vendors and contractors as well as volunteers in the event they are injured on the job.
Crime and Fidelity. This type of insurance protects the actual money in the association’s operating and reserve accounts. It covers check fraud, false invoices, embezzling, wire fraud, and computer fraud.

A Lesson to Be Learned

Insurance is something that no homeowners association should ever go without. One of the most important types is an HOA master insurance policy, which offers coverage for property damage and liability expenses. If an HOA does not have proper or sufficient coverage, it will, without a doubt, eventually find itself in financial trouble.

Tracking your insurance policies can be hard, especially if you’re doing it manually. Automate your process and know when your insurance has expired with the help of Condo Manager. Call us today at 800-626-1267 or contact us online for a free demo.

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What Is An HOA Fee? What Are Homeowners Paying For?

admin on April 18, 2022

Living in a homeowners association comes with benefits, but it also comes with financial obligations. Here, we discuss what is an HOA fee and everything else you need to know about it.

What Is an HOA Fee?

Potential homeowners have to do a lot of research before they buy a home. When that home is located within a homeowners association, there is twice as much research to do. You need to check that the association is in good financial condition, review its governing documents, and familiarize yourself with what your obligations will be once you become a member. After all, membership is normally automatic in HOAs once you buy the home.

One of the financial obligations you have to fulfill is paying HOA fees. What are HOA fees? Otherwise known as HOA dues, these are the fees that HOAs collect from homeowners on a regular basis. The fees are used to pay for the various expenses associated with the maintenance and upkeep of the community. Fees are collected monthly, quarterly, and annually, depending on the association’s rules.

While HOA fees can vary greatly from one association to another, they average about $200 to $300 per month in the United States. Keep in mind, though, that several factors can influence these fees. These include the size of the association, the extent of its common amenities, and the location of the association. More affluent communities with a wider range of amenities can even charge as high as $1,000 per month.

HOA Fees vs HOA Assessments

Many people use the terms “HOA fee” and “HOA assessments” interchangeably. But, there is actually a clear distinction between the two. An HOA fee refers to the regular dues that homeowners pay, whereas an HOA assessment usually refers to a special assessment. A special assessment is something that the association levies in addition to regular dues or fees.

Typically, the need to collect special assessments comes up for one or more of the following reasons:

Failure to come up with an accurate budget
Failure to budget the funds appropriately, resulting in a budget deficit
Insufficient funds in the reserve account
Unanticipated costs such as damages after a natural disaster

What Do HOA Fees Cover?

Throughout the course of its operation, a homeowners association will naturally incur expenses. After all, even with a functioning board, an HOA can’t do most of the work itself. Here are the expenses the HOA fees cover:

Maintenance and Repairs. These can include the cost of goods and materials as well as the cost of professional services such as cleaning, snow removal, plumbing, electrical wiring, pool maintenance, HVAC costs, inspections, pest control, and the like.
Insurance Premiums. Homeowners associations have to maintain a number of insurance policies, including but not limited to a master policy, a D&O policy, crime insurance, and workers’ comp.
Management Fees. An HOA management company can make the board’s job infinitely easier. But, such services come with a price in the form of management fees.
Utilities. Common areas also use essential utilities such as electricity and water. The cost of these utilities is typically shouldered by the homeowners association, which collects the funds from homeowners in the form of HOA fees.
Landscaping Costs. While this generally falls under maintenance costs, landscaping deserves a spot of its own since it is one of the most common expenses an HOA will incur. Curb appeal is a top priority among most associations, the prevalence of landscaping does not come as a surprise.
Reserves. Every homeowners association has to maintain a reserve account which consists of monies set aside for major repairs and replacements in the future. Each homeowner contributes to this reserve fund by way of HOA fees as well.

Who Determines HOA Fees?

The HOA board is responsible for the operations of the association, and this includes setting the HOA fee amount each year. To calculate dues, the board first has to come up with an operating budget. This budget should include all the anticipated costs for the coming year as well as any reserve contributions. It is also a good idea to establish a contingency fund for unexpected costs that crop up throughout the year.

After totaling the anticipated expenses, the board then divides the amount among all the homeowners according to the formula listed in the association’s governing documents. Some communities divide it equally among all homeowners, whereas others divide it based on a percentage share.

The Consequences of Failing to Pay HOA Dues

Paying HOA dues is a financial obligation that every homeowner in the community is expected to fulfill. Naturally, there are penalties for failing to stay up-to-date on your dues. These penalties can range from monetary fines to foreclosures.

1. Late Fees

The first thing most associations do, after sending a notice, is to charge a late fee. This late fee can be a percentage of the amount due or a fixed amount. Late fees can also accumulate interest as time goes by, resulting in a much higher outstanding debt the longer you don’t pay.

2. Suspension of Privileges

Homeowners have access to certain privileges when living in an HOA community. But, when you stop paying your dues, these privileges can be revoked temporarily. You may no longer have access to common amenities such as pools, gyms, and clubhouses. It’s also worth noting that most associations don’t allow you to run for a position on the board if you’re not in good standing.

3. Small Claims Court

Homeowners associations can also take legal action against those who don’t pay their dues. This may end up in small claims court, and the HOA may receive the ability to seek compensation through your paycheck or bank account.

4. Liens

When a homeowner defaults on their fees, an HOA generally has the right to attach a lien to the property. This will make it significantly harder for the homeowner to sell their property, as they will need to settle the lien first. Liens also make it difficult to secure another mortgage.

5. Foreclosure

Homeowners associations are not afraid to foreclose. Once a lien has been placed on the property, HOAs can then initiate foreclosure proceedings. There are two types of foreclosure: judicial foreclosure and non-judicial foreclosure. Judicial foreclosure involves the HOA filing a lawsuit against you and getting permission from a court to sell the home. On the other hand, non-judicial foreclosure only requires the HOA to follow certain statutory steps.

HOA Fees Too High? Limits on HOA Fees

A homeowners association is bound by federal and state laws as well as its governing documents. In some states, an HOA can only increase its fees by a certain amount or percentage each year. For example, in Arizona, HOAs have to seek approval from the membership before charging dues that are 20% higher than the previous fiscal year.

Associations also have to follow the stipulations recorded in their bylaws and CC&Rs. For some associations, though, especially older ones, the provisions on fee limits have become outdated. For instance, if an HOA’s bylaws say it can only charge up to $80 per month, it will be hard for that association to meet its budgetary needs. In such a case, it is necessary to amend the governing documents.

What Is an HOA Fee? Answered!

Paying HOA dues is a normal part of living in a homeowners association. Homeowners have to understand that these fees serve a purpose — they keep the community beautiful and functional, thereby improving the quality of life for all of its residents. But, not everyone wants that kind of financial commitment. As such, before you buy a home in an HOA, consider all of the obligations that come with it.

Managing a homeowners association is often challenging, but HOA software can make it easier. Call Condo Manager today at (800) 626-1267 or contact us online for a free demo.

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5 Easter Community Outreach Ideas

admin on March 31, 2022

Outreach programs are a great way to give back while bringing community members together at the same time. If you need some ideas for your Easter community outreach, you have come to the right place.

Want to Do Some Easter Community Outreach? Here are 5 Ways

This 2022, Easter falls on April 17. The holiday is of particular importance to Christians, as it commemorates the resurrection of Christ. Considering the significance of the day, homeowners associations everywhere should take it as an opportunity to spread love and give back to their community.

Here are the best HOA community Easter outreach programs you can organize.

1. Collect Cash Donations

There are plenty of people and organizations that would benefit from cash donations. Even the smallest amount of money can help feed the homeless or keep a family from losing a loved one. Cash donations are also easier for community members because all they need to do is give money or write a check.

To organize this, make sure to advertise the program. Let everyone know that the association will be collecting cash donations and that everyone is free to donate (or not donate) their money, no matter how much. Residents can either drop donations in a box or someone can go door-to-door to collect them. You can accept hard cash, checks, or have residents do an online transfer to a designated account.

The only caveat to a cash donation drive, though — and it is a pretty big one — is that there is a chance that the money might not go to the intended foundation or charity organization. The person handling the money may be tempted to skim a little off the top for their own benefit. A good way to combat this is to assign more than one person to oversee the funds. Any withdrawals should also be co-signed by two or three people to avoid theft.

2. Plan a Canned Food Drive

While cash donations are certainly helpful, they are a bit impersonal. Plus, there is more room for fund mismanagement and theft when hard cash is involved. If you want to go for a classic Easter community outreach program, a food drive is a good choice.

To do this, make an announcement early on that the association is launching a food drive and that members are free to participate. Set a deadline for collections so that people know how long they have to donate. You should also plan out how you will collect the food — will it be door-to-door or are residents supposed to drop off their donations at a designated place?

When it comes to food drives, it is always best to go with canned food or pantry staples that have a long shelf life. This is to prevent any spoilage along the way.

3. Organize a Clothing Drive

Clothing drives are more popular in wintertime, but they can also make for a great outreach program for Easter. After all, people also need clothes for the spring and summer seasons.

To organize your own clothing drive, partner with a charity or foundation. You can even go to a local children’s hospital or homeless shelter. As with the food drive, make sure to give the announcement well in advance. This way, residents have time to look through their closets and find old clothes they wish to donate. Shoes are welcome, too.

Of course, some residents may use this as an opportunity to dispose of their torn or tattered clothes. As such, as part of the announcement, make it clear that the HOA will only accept clothes in reasonably good condition. To ensure this, assign a few people to do a quality check.

4. Host a Fundraiser

Homeowners associations hold fundraisers all the time, but it is usually for their own gain. This Easter, change things up and host a fundraiser where you donate all the proceeds to a charity or local organization.

Here are some of the most common types of fundraisers:

Bake-sales. Residents can bake their own cookies, cakes, and other pastries to bring to the bake sale. Choose a suitable venue and invite guests to come over, too.
Yard sales. This is an opportunity for residents to get rid of their old or unwanted items for a cause. Like the bake sale, you will need a space big enough to accommodate everyone and everything.
Carwashes. Another fundraiser that requires a large space, a car wash can be a great way to raise money for charity.
Auctions. Ask residents to donate fairly valuable items they no longer want or need. Then, hold an auction where all the proceeds of the bids are donated.

While these fundraisers can work with just your community members participating, you have a higher chance of success if you decide to open the events to the general public as well. Make sure to advertise your fundraiser thoroughly so that you attract a lot of outside attendees and participants.

5. Offer Free Services

Your community can come together and offer free services as a way to give back. You can organize your own temporary food shelter where you can feed the hungry and the homeless. You can even use the car wash idea and offer it free of charge to anyone who wants their car cleaned. The possibilities are endless.

One particularly apt service, though, is organizing an Easter egg hunt for kids outside of the community. These can be local kids, kids with disabilities, or kids from children’s hospitals.

But, planning an Easter egg hunt like this takes time. You need to partner with an organization like Make-A-Wish, Big Brothers Big Sisters, or even just a local charity. You also need to have volunteer community members to help, get an estimated number of attendees, and prepare all the materials in advance. As such, make sure to allow yourself at least 6 months to plan everything.

A Special Day for Everyone

While Easter is a great time to have fun with family and friends, it’s also the perfect time to help those in need. Make the most out of this special day by organizing one or more of these Easter community outreach programs.

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Community Association Management: Frequently Asked Questions

admin on March 17, 2022

Community association management — a lot of people come across this term but don’t quite understand what it means and what it entails. If you want to find out, keep on reading.

What Is Community Association Management?

Community association management is the process of overseeing and governing a community association and its operations. Community associations can come in many forms, including homeowners associations and condo associations. Typically, a set of governing documents dictates how a community must be managed. This includes stipulations on how much to charge in association dues, what obligations homeowners have, and what authorities the community association possesses.

Additionally, many states have enacted their own laws that govern community associations. North Carolina, for instance, has the North Carolina Planned Community Act as well as the North Carolina Condominium Act. California, on the other hand, has the Davis-Stirling Common Interest Development Act.

Aside from community association-specific laws, there are also corporation laws that broadly apply to these organizations. In a lot of states, community associations are formed and recognized as corporations and must, therefore, abide by the corporation acts that govern them. To use the two states above as examples, these include the North Carolina Nonprofit Corporation Act and the California Corporations Code.

Frequently Asked Questions About Community Association Management

What Does Community Association Management Involve?

Managing a community involves performing numerous tasks that facilitate the smooth operations of the association. These tasks include but are not necessarily limited to:

Preparing the annual budget
Calculating and collecting association dues
Maintaining the association’s reserve fund (if applicable)
Preparing and presenting financial reports to the membership
Enforcing the covenants and rules of the association
Reviewing and amending the governing documents
Holding board meetings and annual membership meetings
Signing off on projects and initiatives
Soliciting bids as well as hiring vendors and contractors to complete various jobs
Managing payables
Conduct frequent inspections of the community’s common areas and elements
Maintaining the common areas of the community
Ensuring repairs for any damaged common areas
Communicate with homeowners, including sending out notices and making announcements
Tracking maintenance requests
Purchasing and updating insurance policies for the association
Planning and executing community events
Ensuring the association remains in compliance with changing laws

Tasks generally depend on a few factors, including the type of community association, the extent and nature of its common areas or amenities, and the size of its membership. Smaller communities with only a handful of common spaces to maintain typically don’t require as much work as larger ones with more comprehensive facilities.

Who Is Responsible for Community Association Management?

Community associations are generally managed by a set of board members collectively known as an HOA or condo board. Typically, board members fulfill different roles, such as a president, vice president, secretary, and treasurer. These board members are responsible for maintaining the community, i.e. fulfilling all of the duties listed above. More often than not, board members receive their designation by running for open seats and getting elected into office. Board members are volunteers, which means they are not paid and must still pay association dues like everyone else.

Because there are only a select number of board members and countless responsibilities to juggle, associations also typically set up committees. Committees are formed either perpetually or on an ad hoc basis. Each committee performs a specific function. For example, an Architectural Control Committee reviews requests for architectural changes and enforces the community’s architectural standards. A social committee, on the other hand, is tasked with planning events and functions as well as welcoming new homeowners into the community.

Many community associations also seek professional help in the form of a community association manager or management company. Professional managers essentially assume most of the responsibilities of board members. These include dues collection, homeowner communication, service request tracking, vendor management, and other duties listed above. Managers or management companies can also provide assistance with tax filings and legal matters as well as advise the board on decisions.

Do Community Association Managers Need a License?

It depends on the state you live in. Currently, eight states and the District of Columbia require managers to carry a community association management license. These are Alaska, California, Connecticut, Florida, Georgia, Illinois, Nevada, and Virginia. There are different certifications as well, such as Professional Community Association Manager (PCAM) and Accredited Association Management Company (AAMC).

How Much Do Professional Community Association Management Services Cost?

The cost of hiring a community association management company can vary depending on a few factors. These include the size of the community, the location of the community, the cost of living in the area, and the nature of a community’s amenities. The company you ultimately choose can also have an effect, as companies can charge different rates. On average, though, associations can expect to pay somewhere between $10 to $20 per unit every month.

Are Community Association Managers on the Board of an HOA?

No, community association managers are generally not part of the HOA or condo board. They are a separate entity whose role is to make the job of board members easier by shouldering most of the burden of community management. Managers should not make important decisions for the community. They can merely advise board members, who reserve the ability to make a final decision.

Do All Communities Need a Manager?

Community associations come in different shapes and forms. Whether or not an association needs the help of a professional manager will depend on its unique situation. There are many communities that get by just fine with self-management. But then, there are also many that require expert assistance.

Generally, hiring a manager is the best option if the HOA or condo board is inexperienced. Community management demands a certain level of skill and expertise, particularly when it comes to accounting and financial management. As such, if there is no one on the board who is well-versed in this field, it is a good idea to hire a manager. Many boards also lack sufficient time to manage the community. After all, board members are just volunteers who have their own personal responsibilities to deal with.

Community Association Management Made Easy

As you can see, community association management is not something all boards can accomplish alone. If hiring a professional manager or company is not in the cards, consider investing in management software instead. A community management software can automate many tasks and generally make the job easier. The software also comes with built-in tracking capabilities, allowing for more seamless and accurate reporting.

If you need reliable management software, look to Condo Manager. Call us today at 800-626-1267 or contact us online for a free demo.

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9 Of The Most Interesting St. Patricks Day Facts

admin on March 2, 2022

The Feast of Saint Patrick is a widely celebrated occasion in the United States. But, not everything you know about the celebration may be true. Educate yourself by reading through these St. Patricks Day facts.

Interesting St. Patricks Day Facts Everyone Should Know

While the United States government does not recognize St. Patrick’s Day as a federal holiday, millions of people across the country still take the time to celebrate the grand occasion. With over 31.5 million Americans boasting Irish ancestry, this doesn’t come as much of a surprise. But, there are still some St. Patricks Day facts that may surprise you.

1. The Birthplace of Saint Patrick

Saint Patrick is known as the patron saint of Ireland, but did you know that he wasn’t even born there? Many historians believe that Saint Patrick was born in Britain at the end of the 4th century. When he was 16 years old, Irish raiders kidnapped him. He was subsequently sold to a Celtic priest as a slave in Northern Ireland. He spent 6 years working as a shepherd before making his escape back to Britain.

How did he find his way back to Ireland? Well, eventually, Saint Patrick returned to Ireland as a missionary, introducing many parts of the country to Christianity. Interestingly, Saint Patrick was not even born as Patrick. Instead, he was born Maewyn Succat. Later on, he took the name Patricius during his religious journeys.

2. The Significance of the Shamrock

The shamrock has long been the symbol of St. Patrick’s Day. You will find it everywhere around this time of the year — from shoddy bar merchandise to your local arts and crafts store. It is even a popular party costume.

But, what exactly is the significance behind this three-leaf clover? Well, it is said that Saint Patrick had used the shamrock as a way to preach Christianity, likening its three leaves to the Holy Trinity. The Celts called it seamroy and considered the plant sacred.

3. The Color Blue

Perhaps one of the most fascinating St. Patricks Day facts is that the celebration was initially associated with the color blue — not green. The change is believed to have happened because of the green color in the Irish flag as well as the day’s connection with shamrocks. Additionally, Ireland is known as “The Emerald Isle.” Today, it is nearly impossible to go out on St. Patrick’s Day without seeing the color green.

4. Most Consumed Beverage

If you love celebrating St. Patrick’s Day, then you probably already know the answer to this. Drinking is one of the most popular ways to celebrate the occasion, so it should come as no surprise that beer is one of the most consumed beverages on St. Paddy’s Day.

While many pubs and bars dye their beer green to commemorate the event, one particular brand of beer remains at the top: Guinness. In fact, as part of the St. Patrick’s Day celebration, an estimated 13 million pints of Guinness is consumed worldwide.

5. The First St. Patrick’s Day Celebration in the U.S.

The United States has been celebrating St. Patrick’s Day for a very long time, which makes sense considering there are millions of Americans claiming to be of Irish descent. But, did you know that the first St. Patrick’s Day celebration in the country took place in Boston in 1737?

This is not when the first St. Patrick’s Day parade occurred, though. According to history records, the tradition of holding parades, which originated in America, began in 1601 in what is known today as St. Augustine, Florida. And we have Ricardo Artur, the Irish vicar of the Spanish colony, to thank for it.

6. Chicago’s Unique St. Patrick’s Day Celebration

While cities across the United States celebrate St. Patrick’s Day with parades and pub crawls, Chicago is quite unique. On the morning of their St. Patrick’s Day parade every year, the Windy City dyes the Chicago River green for a few hours. Visitors can view the green river between Columbus Drive and State Street. The dye is environmentally-friendly, though, so it does not do any harm to the river or its inhabitants. The first time the city ever dyed its river green was in 1962.

7. The Shortest St. Patrick’s Day Parade

St. Patrick’s Day parades have become a staple in many cities across the globe, and no two parades are exactly alike. Some go on for a long time, while others only last a little while. But, the shortest St. Patrick’s Day parade takes place every year in Hot Springs, Arkansas. The parade has a route that only measures 98 feet (about 30 meters) long.

Before Hot Springs, though, the record for the shortest St. Patrick’s Day parade was 295 feet (90 meters) long. The parade took place in Dripsey, a village in County Cork, Ireland.

8. Female Leprechauns Don’t Exist

According to Irish folklore, leprechauns were known as “lobaircin,” which translates to “small-bodied fellow.” The origin of leprechauns likely comes from the Celtic belief in fairies.

But, did you know that there are no records of female leprechauns in Celtic folktales? If that is the case, how do leprechauns procreate? Well, some believe that leprechauns are actually the unwanted children of fairies. As such, folktales have always described them as cranky and untrusting creatures in folktales.

9. Four-Leaf Clover Odds

Shamrocks are three-leaf clovers, and it takes a rare genetic mutation for clovers to have four leaves. This is why it is so hard to find a four-leaf clover. It is also why many people associated the four-leaf clover with luck. In addition to luck, according to Irish Celtic beliefs, each leaf on the four-leaf clover represents love, faith, and hope. But, what are even the odds of finding a four-leaf clover? According to calculations, about 1 in 10,000.

The More You Know

St. Patrick’s Day is just around the corner. But, before you go on that pub crawl or watch another parade, it is important to first learn some interesting St. Patricks Day facts. Who knows? These facts may be the answer to questions at your next St. Patrick’s Day trivia night!

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What Is An HOA? FAQs Answered Here

admin on February 17, 2022

Many people have probably heard about homeowners associations. But, what is an HOA anyway? And what does it mean to live in a community managed by one?

What Is an HOA? HOA Meaning Explained

In the process of searching for a new home, you might come across properties listed as belonging to an HOA. But, what does HOA mean?

HOA is short for homeowners association. A homeowners association is an entity tasked with the management and maintenance of a planned community. These associations come in many forms, including single-family homes, townhomes, and condos. When a home is part of an HOA, buying it means automatically becoming a member of that association.

What Is the Purpose of an HOA?

So your home is part of a homeowners association — will anything change? What is the point of an HOA exactly?

The primary function of an HOA is to maintain the community and preserve property values. There are many moving parts when it comes to community management, and there is typically a set of HOA board members calling the shots. These board members, while unpaid volunteers, are elected into position by a vote from the membership.

The HOA board ensures the community remains in good condition by performing several duties, including but not limited to:

Planning the budget to ensure the association has enough money to cover the coming year’s expenses;
Maintaining the association’s reserve fund;
collecting dues and assessments;
Overseeing maintenance and repairs of common areas;
Hiring and coordinating with vendors;
Communicating with homeowners, including sending out notices and meeting agendas;
Enforcing the rules and covenants of the community;
Ensuring compliance with the law and the association’s governing documents; and,
Hiring and coordinating with the HOA management company.

The Pros and Cons of Association Living

What does it mean to live in an HOA? As with a lot of things, living in an HOA community comes with pros and cons. Before you buy a home managed by an HOA, make sure to consider both sides of the coin. This way, you don’t end up stuck in a situation of your disliking.

What Are the Advantages of a Homeowners Association?

First of all, homeowners who live in an HOA community obtain access to its common amenities and facilities. While these amenities can vary from one association to another, usual amenities include swimming pools, clubhouses, and fitness centers. There are also HOAs that have their own parks, tennis courts, and golf courses. Additionally, more often than not, these amenities are only available for member use.

Another benefit of homeowners association living is that homeowners get all sorts of convenient services. This can range from snow removal and trash disposal to landscaping. Homeowners also don’t need to worry about keeping the neighborhood clean and well-maintained, as HOAs are tasked with this very job. As such, most HOA communities boast excellent curb appeal and high property values.

Finally, nothing compares to the sense of community that living in an HOA can offer. Because HOAs typically organize social events, you get a chance to meet your neighbors in a social setting and get to know them. In comparison, when you live outside of an HOA, you probably won’t even know who your neighbors are.

What Are the Disadvantages of an HOA?

Of course, homeowners associations also pose their fair share of disadvantages. One of the main downsides of HOA living is that you don’t get a lot of control when it comes to property use and modification. Many associations limit what you can do with your home, particularly when it comes to external changes such as paint color, building a shed, and how tall your fences should be. There are also several other rules to follow, such as noise rules or quiet hours, parking rules, and pet policies.

It is worth noting, though, that these rules do serve a purpose. They exist to maintain order in the community and preserve its overall appeal. Without these rules, a neighborhood can quickly become chaotic — with untrimmed hedges, cars parked everywhere, and mismatched house colors.

Having to pay HOA dues is another commonly cited disadvantage of homeowners association living. But, as with rules, dues play an important role in the association’s operations.

Can You Refuse to Join a Homeowners Association?

Generally speaking, you can’t refuse to join a homeowners association. For a large majority of HOAs, membership is automatic and mandatory once you buy a home in the community. Membership, though, shouldn’t come as a surprise. Your real estate agent and seller should inform you prior to closing that the home belongs in an HOA. Additionally, they should provide you with a copy of the association’s governing documents and financials. This way, you can gauge whether or not joining that particular HOA is a good decision for you.

What Are HOA Fees?

Living in an HOA community also means having to pay a homeowners association fee. What is an HOA fee? Paid either monthly or annual, these recurring dues go toward the association’s operating fund to pay for the various expenses of the community. After all, maintaining an HOA doesn’t come free. Moreover, a portion of these dues also goes to the HOA’s reserve fund, which is used to pay for major replacements and repairs in the future.

What do HOA fees cover? It depends on the expenses of your community. Common examples of HOA expenses include:

Insurance premiums
HOA management fees
Maintenance and repair costs
Landscaping fees
Common utilities

Everyone in the community, even members of the HOA board, must pay HOA dues.

Raising Fees: Is It Allowed?

Do HOA fees go up? In a word, yes. Homeowners association fees don’t remain the same forever. Dues are calculated based on the budget for the year’s expenses. When expenses go up, so do HOA fees.

There are many factors that can affect an association’s budget and fees. These include the rising cost of goods (i.e. inflation), increased wages, new common areas, and renovations. Additionally, if your HOA is trying to reach its appropriate reserve fund level, it may call for larger reserve contributions.

Bear in mind, though, that there are protections in place to keep HOAs from increasing dues too much. An HOA’s governing documents could impose a limit on increases. Similarly, some states have enacted laws that prevent associations from raising dues to a certain point. Arizona law, for instance, says that HOAs can’t raise dues by more than 20% per year without obtaining majority approval from its members.

What Are the Typical HOA Rules?

As briefly discussed in a previous section, homeowners associations usually have rules in place to maintain order in the community. While these rules can vary from association to association, typical HOA rules include:

Exterior paint rules
Architectural rules
Lawn maintenance rules
Pet restrictions
Parking rules
Vehicle restrictions
Noise rules
Guest rules
Holiday decoration restrictions
Rental restrictions

Can an HOA Evict a Homeowner?

The short answer is yes. When a homeowner defaults on their dues payments, an HOA has several options available. Most start with a stern notice informing the owner of their delinquency. Many associations also impose a fine for the late payment. If an owner still fails to settle their unpaid dues, HOAs will place a lien on the property, at which point they can choose to initiate foreclosure proceedings.

Your Questions Answered

Living in a homeowners association can definitely be confusing. But, what’s even more confusing is when you get behind the wheel. Managing an HOA community is not as easy as it seems, as evidenced by the many duties board members must fulfill.

If your HOA board needs help, perhaps it’s time to automate your processes and invest in an HOA management software. Call Condo Manager today at (800) 626-1267 or contact us online for a free demo.

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9 Valentine’s Day Ideas For Seniors In Your Community

admin on February 8, 2022

A lot of brands and communities focus on the younger crowd when using Valentine’s Day as a tool for engagement. But, senior residents also deserve to receive love from their homeowners association this time of the year. Here are some Valentine’s Day ideas for seniors.

Fun and Suitable Valentine’s Day Ideas for Seniors

While older adults are more likely to live with extended family in other parts of the world, the United States stands out. In fact, in the U.S., 27% of adults aged 60 and older live alone. There are also a number of seniors who live with their partners but not their children. This is common across the country, with many communities specifically housing adults aged 55 and above. For these communities, it can be difficult to think of Valentine’s Day activities and events that fit the resident demographic.

Here are some ideas to get you started.

1. Send a Valentine’s Day Card

One of the simplest and most affordable ways to celebrate Valentine’s Day in a senior community is to send a card. Buy enough Valentine’s Day cards for all the residents, then write a heartfelt message inside each one to show them how much they mean to the community. It does not even need to be long or poetic. Something short yet sincere can work wonders. While you can mail these cards to each resident, delivering them by hand will make the gesture more special.

2. Send Flowers or a Houseplant

Who doesn’t like receiving flowers on Valentine’s Day? The seniors in your community will certainly appreciate a bouquet of roses or tulips — or any other flower, for that matter.

The price of flowers tends to skyrocket during Valentine’s Day, though, so you can send a houseplant instead. Houseplants are great because they add soothing energy to any room. Plus, there are many houseplants that don’t require a lot of care or attention, making them perfect for senior residents.

3. Share Homemade Pastries

Valentine’s Day is all about sweet treats, so why not share them with the elderly residents in your community? You can gather some of the younger residents together to bake pastries for the older adults in the neighborhood. Alternatively, you can just purchase pastries from your local bakery and then hand them out to the senior residents. The best part about this is that there is no shortage of pastries you can give away. Cakes, cookies, or candy hearts — take your pick!

4. Send a Care Package

Many senior residents, especially those living alone, don’t receive gifts on Valentine’s Day anymore. One way the community can make seniors feel appreciated is to put together and send them care packages. You can assemble a standard care package or, if you know residents well enough, tailor each care package according to the personality and needs of every resident.

Here are some ideas of what you can include in your Valentine’s Day senior care package:

Books
Fruits
Cookies
Wine
Snacks
Teas
Cocoa packets
A food service subscription
A small pillow
Socks
A blanket
Slippers

5. Hold a Movie Night

A movie night might be one of the simpler Valentine’s Day ideas for seniors, but it has a couple of benefits. For one thing, the seniors in your community will appreciate watching a movie without having to go all the way to the cinema. It also gives the residents in the HOA a chance to get together and bond with each other.

Of course, given that it is Valentine’s Day, the best movies to watch are romcoms. Some communities are opting for rom-com movie marathons, but older adults might get tired easily and want to go home after only watching one film. As such, you can take your pick from some of the best romcoms and go from there. It can be a single-night event or an event that takes place over multiple nights, with each night showing a different flick.

6. Host a Tea Party

A tea party is a great way to gather senior residents under one roof and have a lighthearted Valentine’s Day celebration together. Brew some tea and put out some biscuits or pastries (or both). Play some soft music in the background for a calm and comfortable atmosphere. You can do this indoors or outdoors, with garden tea parties being a particularly popular choice.

7. Organize a Walk

Another good way to celebrate Valentine’s Day for the elderly is to organize a walk in the community. This is perfect if your neighborhood has greenspaces, a park, or a walking trail. Exercise is good for the health no matter how old you are. As such, getting seniors to walk together not only promotes a healthy lifestyle but also encourages residents to get to know each other.

8. Arrange a Game Day

When you think of Valentine’s Day ideas for seniors, a game day is probably one of the last things that come to mind. But, older adults enjoy playing games just as much as younger ones.

Sure, more active or physical games are probably off the list, but there are other games you can play together. Some examples include bingo, card games, word searches, sudokus, and other puzzles. It gives residents a chance to show their competitive side while still enjoying the company. You can do this at the clubhouse and even allocate a prize for the winner.

9. Give Back to the Community

Many seniors like to knit or sew. You can tap into this hobby and organize a charity drive wherein elderly residents can make hats, gloves, or scarves to donate to a local hospital or shelter. Senior residents will definitely appreciate having a creative outlet while simultaneously being able to share the love with those who need it most.

Spreading Love to Seniors on Valentine’s Day

Senior community residents often feel alone or left out on special days like Valentine’s Day. After all, not a lot of associations create specific events that cater to this demographic. Whether you run a 55-and-older community or an HOA with a sizable elderly population, these Valentine’s Day ideas for seniors are sure to make a huge impact.

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10 Most Common HOA Service Requests And How To Handle Them

admin on January 27, 2022

HOA service requests come in all shapes and sizes. But, more often than not, associations don’t have the tools and resources to handle each one.

What Are the Most Common HOA Service Requests Boards Receive?

Homeowners and condo associations collect regular dues from their members. They use these dues to fund the various expenses in the community, including insurance and management fees. These dues also go into maintenance and repairs of common elements as well as shared facilities.

Every once in a while, though, these elements can break down or become damaged, resulting in a need for repairs. Boards may not always notice these damages, so it is up to the homeowners to report them.

This is where service requests come in. Service requests, also known as work orders, are requests that homeowners or staff members submit to the association. Typically, the HOA manager or HOA board will review these requests and take action if necessary. These service requests come in different forms, though some are more common than others.

1. Broken Windows and Entryways

Whether it is at the clubhouse or shared as a common element in a condo, broken windows and entryways are nothing to brush off. A damaged door, for instance, might not close or lock properly, making it a security issue. A damaged window is the same way, but with the added risk of being dangerous to others.

No matter the damage or condition, it is imperative that boards inspect these service requests right away. In doing so, they can prevent further damage and make needed repairs immediately.

2. Damaged Sidewalk or Road

For non-gated homeowners associations, sidewalks and roads likely fall under the jurisdiction of the local government. In that case, if an HOA receives a service request concerning sidewalks and roads, it is best to forward it to the correct authority.

There are many homeowners associations, though, that are located inside gated subdivisions. For such communities, the responsibility of repairing sidewalks and roads may fall on the HOA. It is not uncommon for streets and sidewalks to become damaged after prolonged use. These surfaces suffer damages due to accidents, too.

When an owner submits a service request for this, boards must spring into action. That way, no further damages and accidents can occur. Moreover, damaged sidewalks and roads contribute to lower curb appeal.

Potential homebuyers will take one look at the state of these surfaces and immediately walk away. Leaving sidewalks and roads in disrepair for a long time can give the impression that the association does not care about the upkeep of the community.

3. Malfunctioning Elevators

Elevators are more common in condo or high-rise communities, though it is not unheard of to find them in the common facilities of single-family communities. Regardless of where they are located, elevators should receive regular maintenance. Boards must hire a professional to inspect all elevators on a routine basis to see if everything is working well.

But, even with regular inspections, elevator breakdowns can still happen. When an owner reports this to the HOA, boards must act quickly. A malfunctioning elevator is not only a nuisance but can also pose certain dangers to the well-being of members. This can result in potential liability for the association.

4. Water Filter Replacement

Some HOA communities use shared water filters. When these water filters become worn or accumulate a lot of sediment, they can affect the quality of water that comes out of the tap. Before long, the board will receive tons of the same service requests from unit owners simultaneously. Since water filters are more of a health issue, it is best to replace them when necessary and when the board gets a lot of complaints.

5. Landscaping

Proper landscaping can breathe new life into any space. The added greens and beautiful layout can significantly boost the curb appeal in a community.

As such, it is important to have a professional company maintain the association’s landscaping.

Sometimes, though, bushes will begin to overgrow and the branches on trees will start to droop over. Grass will grow long and hedges will look unruly. An owner may submit a service request to have common area landscaping redone or retouched. In some communities, the HOA will hire a single landscaping company to take care of the common areas as well as individual owners’ homes (for a fee, of course).

6. Lightbulb Replacement

It may seem trivial to report a single dead lightbulb to the HOA, but it is still within the best interest of the community for the board to take a look at such a request. Replacing a lightbulb does not take a lot of time or effort. But, if the board notices that the same bulb always goes out, then there might be a larger underlying problem.

When replacing lightbulbs, it is a good idea to go with an energy-efficient option. Most local home improvement stores sell LED bulbs at affordable prices. These bulbs also tend to last longer, allowing for fewer service requests concerning lightbulb replacement.

7. Plumbing Requests

Whether it concerns a shared facility or a common element, plumbing requests are some of the most common HOA service requests boards will encounter. Plumbing systems can experience wear and tear, resulting in damage over time. When that happens, boards should expect owners to report the problem.

Boards must swiftly address any plumbing concerns. When left unresolved for even a short period of time, plumbing issues can quickly escalate and turn into water damage.

8. HVAC Maintenance

Heating, ventilation, and air conditioning (HVAC) systems require regular maintenance. This will minimize the risk of a breakdown.

But, sometimes, an HVAC system will still suffer damage even with careful cleaning and maintenance. There are a number of things that can go wrong — from clogged air filters and damaged condensers to malfunctioning ignitions and refrigerant leaks. Whatever it may be, it is best for the board to take immediate action and have a professional deal with the problem.

9. Pool Cleaning

There is just something alluring about living in a community with a swimming pool. But, without proper care and maintenance, pools can quickly turn disgusting.

Homeowners associations can prevent this by actively maintaining a pool cleaning schedule. But, an owner might still lodge a request to clean the pool every now and then.

10. General Cleaning

Shared spaces can quickly become dirty in an HOA community, especially the larger ones. Boards should expect owners to file service requests asking for a common facility or area to be cleaned. This may be due to someone spilling a lot of food somewhere or walking inside with muddy shoes. Whatever the case may be, general cleaning is one of the most common requests associations will receive.

How to Handle HOA Service Requests Using Software

Juggling service requests used to be more difficult in the past. But, in the digital age, homeowners associations no longer need to rely on pen and paper. With HOA software, owners can simply submit service requests online through a member portal. The board or responsible committee will then receive these service requests, sorted in whatever way the board chooses.

It is also possible to combine similar service requests into one. This way, there is no need to respond to each request individually. Once a request has been addressed, the board can simply reply and close the ticket. Then, it is time to move on to the next one.

Another benefit of HOA software is scheduling. Homeowners associations can minimize the number of service requests they receive by following a proper maintenance schedule. A lot of software comes with maintenance scheduling options that boards can tailor to their own specific needs. Once a maintenance task comes up, the software will remind the board and contact the necessary vendor/s.

The Importance of HOA Service Requests

HOA service requests are essential to the smooth functioning of any planned community. These requests notify the board of any problems within the community, allowing the board to inspect the problem for any potential damage. In doing so, the board can address these problems before they worsen.

In need of HOA management software that comes equipped with a service request module? Condo Manager is your best option. Call us today at (800) 626-1267 or contact us online for a free demo.

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How To Read HOA Financial Statements And Understand Them

admin on January 12, 2022

Every member of a managed community should know how to read HOA financial statements. This knowledge will help owners understand how the association is doing financially and be able to determine whether the board is doing its job well.

HOA Finance 101: How to Read HOA Financial Statements

Homeowners associations operate largely like corporations. There is a Board of Directors that calls the shots and ensures that the organization is running smoothly. The HOA board is also responsible for preparing regular financial statements, though this job can also fall on the HOA manager.

Typically, financial statements come at the end of every month and at the end of the fiscal year. In many states, such as California, the law requires homeowners associations to make these statements available for members to review. Homebuyers can also have access to such reports, as assessing the financial health of the association will help them make a decision on whether or not to buy into the community.

What Are the Benefits of Knowing How to Interpret Financial Reports?

It is important for both board members and homeowners to learn how to read HOA financial statements. For one thing, it is part of the board’s job to do so. Knowing how to interpret financial statements will help the board prepare an accurate annual budget. It will also inform the board’s discussions when it comes to the association’s finances, allowing them to make sound financial decisions.

For homeowners, understanding HOA financial statements will let them stay on top of the association’s financial condition. Homeowners benefit from the community’s financial success, as it has a direct impact on property values. As such, it only makes sense to keep track of its finances. Homeowners also have a right to know where their money is going. After all, owners pay regular dues for the purpose of maintaining the community.

Beyond all else, knowing how to read financial statements will help both boards and owners in preventing fraud. If only one person understands these reports, then it would be easy for that person to cook the books and steal money from the HOA. Learning how to read financial statements will allow owners to spot any signs of fraudulent activity.

A Guide on How to Understand HOA Financial Statements

Unfortunately, not everyone in an HOA community knows what the numbers mean in financial reports. But, once one knows about the basics, it is actually relatively easy to learn how to read HOA financial statements.

Balance Sheet

The balance sheet shows a snapshot of the association’s financial condition. It presents the HOA’s assets, liabilities, and equity — all in one neat report. It is called a balance sheet because the association’s total assets should equal its total liabilities and equity.

Through the use of financial strength ratios (such as working capital and debt-to-equity), an owner can determine whether the HOA can meet its obligations. These ratios, along with several others, give owners an idea of the association’s financial stability. While the balance sheet is an integral part of any HOA’s financial package, it usually requires the accompaniment of other reports to fully understand the association’s financial health.

Income Statement

The income statement is a detailed view of the association’s income compared against its expenses. It essentially shows whether or not the HOA was able to meet its financial obligations with the funds it has accumulated over a set period of time. The income statement consists of the HOA’s revenues, expenses, and reserve contributions. Totaling all of these numbers will arrive at a net profit or loss for the association.

Though it is not an HOA’s main goal to earn a profit, a net loss would indicate that the community had more expenses than revenue streams in the past period. This means the board either did not practice smart spending or failed to prepare an accurate projected budget. Sometimes, it could point to an underlying financial issue such as fraud or embezzlement.

Owners should look for overly inflated expenses or redundancies to spot fraudulent activity. For instance, it would not make sense to spend five figures on office supplies. Members should remember that it is okay to question the board’s spending and that such a practice is healthy and helps keep the board in check.

Cash Flow Statement

The cash flow statement consists of three parts: operating activities, investing activities, and financing activities. Analyzing the cash flow statement will allow boards and owners to understand how the association is handling its money.

Under operating activities, owners will find the association’s cash sourced and spent on business-related items. This could mean dues from owners, fines, salaries, and other operating expenses. Under investing activities, owners will find items that are considered investments, such as assets or equipment. Any reserves invested should also be presented here. Finally, under financing activities, owners will find cash sourced from investors such as banks.

Accounts Receivable Report

The accounts receivable report tells boards and owners how much is owed to the association. It is a summary of all the money the association expects to receive. It could include dues from homeowners, rental income from a facility, etc. This could also come in the form of an aging report, which shows how long each account has remained unpaid.

The HOA should maintain a fairly reasonable AR report. It should not have too many receivables, especially overdue receivables, as that would mean the board is not putting a lot of time into collection efforts.

Accounts Payable Report

The accounts payable is similar to the accounts receivable report but in reverse. Instead of showing amounts owed to the HOA, this report shows the amounts the HOA owes. As with the AR report, it may also show how long each account has remained unpaid. Too many payables would indicate that the association is not paying its debts on time or that there is not enough money to settle the balances.

A Form of Protection

Boards and homeowners alike must learn how to read HOA financial statements. In doing so, they can interpret the reports accurately and make smarter financial decisions. It is also a way to protect the association from fraudulent acts. When it comes down to it, understanding financial statements should not be a job left only to one person.

Homeowners associations can significantly make financial statement preparation easier with the help of HOA software. Call Condo Manager today at (800) 626-1267 to learn more or contact us online for a free demo.

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