From The Roundtable

A MESSAGE FROM THE BOARD

By Joseph Price

In this edition of Vision Magazine, the focus is “Financial Trends in HOAs.” The current trend for the economy is moving toward a recession sooner than later. It is vital that we, as the consultants for our board of directors, can guide them through these times.

We all know that managing the HOA finances is critical to ensure the financial health of the communities. As HOA professionals, we must perform several vital financial tasks, including preparing budgets, understanding financial statements, and managing delinquent assessments.

The first essential financial task is preparing budgets. The budget is a detailed financial plan that outlines expected income and expenses for the upcoming year. It allows the board of directors and management to plan for maintenance and improvements and set reasonable fees for our homeowners. The budget should include all expenses, such as landscaping, utilities, and repairs, as well as any anticipated income, such as fees and rentals. We have all seen unexpected increases in expenses, like utilities, insurance, and labor costs, to name just a few. In addition, new legislation has increased costs for many communities. Hence, we need to leverage our experts to aid us in sharing the knowledge for success in future budgeting. We cannot be experts in everything, but we can be experts in consulting experts for budget guidance.

Another crucial financial task for the HOA professional is understanding financial statements. Financial statements provide a comprehensive overview of the HOA’s financial health, including income, expenses, and reserves. By regularly reviewing financial reports with your board of directors, the board and management can identify any issues and make informed decisions about spending and budgeting.

Managing delinquent assessments is also essential for the health of the HOAs. Delinquent assessments are fees that are past due. When homeowners fail to pay their fees, it can create a financial strain on the HOA and impact its ability to maintain the community. To manage delinquent assessments, HOAs should have a clear collection policy for handling late payments, including late fees and other penalties. It’s also imperative to communicate with homeowners about payment expectations and any consequences for non-payment as part of their annual disclosure packet. Recessions in the economy tend to have an impact with an increase in delinquency of assessments– keep an eye on the monthly reports so as not to be caught off guard if the upward “creep” starts to occur.

Our boards of directors, with our leadership, should strive for transparency and communication with homeowners about the financial matters of the association. Doing so can help build trust and ensure everyone is on the same page.

By partnering with the HOA experts that are preparing budgets, understanding financial statements, and managing delinquent assessments, our boards can ensure the community’s financial stability and provide a high quality of life for their residents.

One last thing - share a random act of kindness today!

Joe Price, CAMEx, CCAM

CACM Board Chair

Powerstone Property Management, ACMC