MESSAGE ABOUT CORONAVIRUS  More Link

Understanding Your Association's Finances Reading Between the Line Items

 Budgets and financial reports provide a crystal-clear picture of how the  association is doing. From an investment perspective, they show how unit  owners, managers, tenants, building owners, board of trustees, etc., whether  the property is profitable or not. If it is profitable, you can rest assured  that everyone is doing a good job. If the property is in the red, it’s important to determine why that is, and what needs to be done differently to  turn the situation around and restore solvency.  

 It’s important to understand each financial document and its purpose so you can  have a better understanding of exactly what’s going on in your association. So here’s a little Financial Paperwork 101.  

 “My first suggestions lean on the legal side, because all condo associations are  technically trusts, so start by having a trust agreement and a master deed,” says Mark L. Love, CPA, a partner at Love, Jarominski & Raymond, LLP, in Worcester, Massachusetts. “A trust speaks to the point of ‘how many board members should there be,’ ‘what’s a quorum,’ ‘what’s the year end,’ and ‘what are the year-end financial requirements?”  

 A master deed includes all the provisions, rules and regulations that must be  followed by the unit owners.  

 Financial Statements

 Every month, a financial report should be generated to give an idea of where the  association stands. The report compares the actual budget to the projected  budget. In addition, it lists the bills that were paid and the monies that were  collected. In other words, anything financial that happened that month should  be presented in a financial report.  

Read More...

Related Articles

Working With Your Support Professionals

How (and When) Boards Should Speak Up

Q&A: Fishy Financial Operations?

Q&A: Fishy Financial Operations?

Tapping Reserves in a Time of Financial Crisis

An Option to (Carefully!) Consider

Underfunded Reserves

The Dangers of Running Short

Planning for the Future

Keeping It All in Reserve

Financial Record-Keeping

Following the Money

 

Comments

  • Question: condo association six units with laws and bylaws requiring 66% change For an amendment. We have two unit owners who rent their units and live out of the country. we would like to equalize the share responsibilities for self-management come up with a plan that would give everyone a credit who helped out in those who did not would pay a management fee we have been unable to get clarification we were told that if this increase causes a major Financial burden it is not allowed can you at least point me to the MA to law if you cannot clarify thank you Cheryl