Page 1 - New England Condominium July 2021
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July 2021 
                NEWENGLANDCONDO.COM 
actual? Too much stuff  is on autopilot.”  
He goes on to list other areas that should be scrutinized: “Are we  
looking at real estate taxes and protesting them every year? Energy  
repairs, supply and maintenance, and service contracts should also be  
evaluated every two to three years. Th  e same should be done with pro- 
fessional services like auditors, attorneys, engineers, and architects.   
205 Lexington Avenue, NY, NY 10016 • CHANGE SERVICE REQUESTED 
THE CONDO, HOA & CO-OP RESOURCE 
CONDOMINIUM 
NEW ENGLAND 
How Has COVID  
Aff ected the Multifamily  
Housing Market? 
The Answer: It Depends. 
BY DARCEY GERSTEIN 
Accrual vs. Cash 
Determining the Best  
Accounting Method  
for Your Community 
BY JIM MERSKI & RYAN GALVIN 
Th  e vast majority of co-op and condominium boards are well intentioned and work dili- 
gently with their management and accountants to draft  and monitor their annual budgets— 
and recalibrate them as necessary. Despite their best eff orts to keep costs under control, how- 
ever, many communities fi nd that expenses oft en exceed their projections. Even in the absence  
of an unforeseen crisis or major repair project, it oft en seems like money is just leaking out of  
the system. Th  e question is, where does it go—and how can we plug up the leaks when we fi nd  
them? 
Financial Leakage Defi ned 
Avi Zanjirian is a partner at the accounting fi rm of Czarnowski & Beer and works with cli- 
ents in New Jersey and New York. According to him, fi nancial leakage is more oft en a result of  
inattention than of outright negligence or fraud. To fi nd these blind spots, “We look at it from  
an auditor’s perspective,” he says. “You might be paying electric, water usage, and repairs, and  
all are within budget. But at the same time, you may not be looking at all the line items regularly  
to make sure they’re working effi  ciently.” Zanjirian recommends taking a hard look at every  
line item in your budget on a year-to-year basis, and assessing whether you’re getting the most  
for your money (or even just getting what you’re paying for) from your community’s vendors  
and service providers. “Do you have the best vendors, contract terms, etc.?” Zanjirian says. “As  
contracts expire, you should be checking this.”   
Another factor Zanjirian points out is the popularity of using autopay systems to send out  
payment for recurring bills. While the convenience of a ‘set it and forget it’ payment option is  
undeniable, it can oft en mean that less close attention is paid to cash outfl ow every month. Th  is  
is why it’s important to periodically take a close look at your community’s accounts payable,  
as well as to conduct an end of year review to determine whether costs went up, and if they  
did, why? “It could be because no one negotiated a new contract or a misplaced charge,” says  
Zanjirian.  “In terms of metered services like electric and water, are meter readings estimates or  
One year-plus into the largest public health  
crisis in a century,  
New England Condomini- 
um 
 spoke to real estate professionals across  
the geographic regions we cover to learn the  
eff ects that the COVID-19 pandemic has had  
on their specifi c areas. What we found out is  
that the co-op, condo, and HOA market has  
taken several twists and turns over the past  
year—and a lot of that movement depends  
on where you live. In fact, even within the  
same region, the pandemic has had varying  
impacts in luxury sectors versus middle-mar- 
ket, as well as in urban centers versus more  
outlying areas. A number of tangential factors  
are playing into trends and forecasts as well,  
making for a patchwork of experience across  
the country. 
The Bounces 
Perhaps  unsurprisingly,  the  biggest  dips  
in property value and activity were seen in  
the second and third quarters of 2020, when  
the nation was experiencing its second wave  
of infections and states were in various levels  
of lockdown to contain the outbreaks. Real- 
tors across the country were unable to show  
properties in person for months in many  
cases, and transactions were further ham- 
pered by limits on travel, gatherings, and long  
backlogs in the courts. In many U.S. cities, the  
civil unrest following the murder of George  
Floyd by Minneapolis police offi  cers last year  
also had a compounded impact on real estate  
in those markets—some of which is still felt  
today. Condos and co-ops struggled as dense  
urban living and shared spaces lost some of  
their appeal when less was known about CO- 
VID-19 contagion and vaccines were still a  
pipe dream.   
But all that is changing. In Boston, condo- 
minium sales are not only bouncing back— 
Th  e  successful  fi nancial  management  of  
a condo, co-op, or homeowners association  
relies upon accurate, timely, and consistent  
fi nancial statements. Th  ese statements repre- 
sent the fi nancial position and results of op- 
erations of the association, and understand- 
ing the details of these fi nancials is essential  
to making sound management decisions.  
Also fundamental to this process is choosing  
the appropriate accounting method for your  
association.  
Accrual vs. Cash Basis Accounting 
In selecting an accounting method, trust- 
ees or board members should fully compre- 
hend  the  diff erences  between  accrual  and  
cash basis accounting. Th  e diff erences in the  
methodologies have a material impact on  
how fi nancial information is presented and  
evaluated by users, and therefore infl uence  
how they make far-reaching business deci- 
sions for their associations. 
Th  e fundamental diff erence between the  
two methods is rooted in the timeline in  
which expenses and owner assessments are  
recognized and recorded in fi nancial state- 
ments. While each method has its advantag- 
es, our company primarily uses accrual ac- 
counting to create detailed monthly fi nancial  
packages for our client associations—though  
sometimes a modifi ed cash basis is requested  
and used.  
What Is Cash-Basis Accounting? 
In cash-basis accounting, transactions are  
recognized  in  an  association’s  fi nancial  re- 
cords at the time when cash is received or dis- 
bursed. Put another way: the association only  
records transactions when they are refl ected  
in the association’s bank account—cash in,  
and cash out. Th  erefore, assessment revenues  
are recorded when an owner pays their as- 
sessment and cash is received. Likewise, ex- 
penses are recorded only when a check is cut  
and payment is made to a vendor. Th  is meth- 
od is familiar to anyone running a household  
budget with a checking account, and so is  
oft en requested by smaller associations look- 
ing for a more simplifi ed fi nancial overview.  
Under a cash-basis approach, Accounts Pay- 
continued on page 6  
continued on page 8  
Where Does It Go? 
Th  e Problem of Financial Leakage 
BY A. J. SIDRANSKY 
continued on page 6 
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