Accounting Basics From the Pros

Learn about the basic accounting principles used by Homeowner Associations and non-profit corporations. Cash versus Accrual methods, Reserve funding, etc.
 

• Cash Method of Account -income and expenses are only recorded when cash changes hands. Financial reports only reflect cash transactions. This is a relatively simple system for simple situations. Because all obligations are not recorded until cash changes hands, this method does not provide an accurate portrayal of the financial condition of the association at any given time.
• Accrual Method of Accounting -keeps track of all financial activities, including revenue as it is earned (as opposed to when it is received) and expenses as the obligation is incurred (as opposed to when it is paid). This makes possible a more accurate determination of the financial condition of the association at any point in time. Also, this is a better method for multi-year tracking of capital reserves credits and deficiencies. The primary disadvantage is the greater complexity and technical knowledge that is needed to maintain the records, understand the reports, etc.

Minutes of an HOA Meeting

How should you take minutes for a meeting?  What is required?  Who is responsible?  What are the laws?
 

How can we find a common sense approach to Board Meeting minutes? Here are some helpful facts and information to guide you:

Fact 1 – Minutes are the official record of the actions taken by the Board at the meeting. They are not a transcript of the meeting. They are a reflection of what was done, not what was said. As their name implies, “minute” means “small” and “minutes” should be brief.

Fact 2 – Bad meetings produce bad minutes. The Board of Directors should follow parliamentary procedure or at least have an understanding of the fundamentals of running a meeting. Having an agenda and using it as a guideline to run the meeting will help the Secretary in taking the minutes. A well-run meeting is the first step to good minutes.

Payments and Collection Policy (sample resolution)

Your HOA should establish a payment policy to be fair to all members in when payments are due, what the charges are if you pay late, describe when an attorney will get involved and what happens next.
 

Collection Policy for Delinquent Accounts

WHEREAS the board of directors of the association is charged with the responsibility of collecting assessments for common expenses from homeowners pursuant to Article _______, Section ______of the declaration; and
 

Rental Restrictions (sample resolution)

Read this article to determine if your community should consider imposing restrictions on renting homes in your community. Get a sample Board of Directors Resolution to deal with rental properties.
 

Community Associations help retain and improve the standard of living and property values within a community. While all owners sometimes wish that a particular restriction did not apply to them, most are grateful that the restrictions apply to their neighbors. In some cases their neighbor may not own the home; but have leased the home.
 

Rules – Things to Consider (sample policy statements)

Here are a few suggestions regarding the creation of rules and a fine policy for your homeowners association.
 

The Association reserves the right to make and enforce such other reasonable rules and regulations as in its judgment may be deemed necessary or advisable from time to time to promote the safety, care and cleanliness of the premises and for the preservation of good order therein. It is understood and agreed between the Association and the Owner/Occupant that no assent or consent to changes in, or waiver of any part of this indenture, in spirit or letter, shall be deemed or taken as made, except the same be done in writing and endorsed hereon by the Association. Association reserves the right to alter, amend or modify these rules and regulations and also to promulgate new and additional rules and regulations at any time and in such event such altered, modified, amended or new rules and regulations shall become a part hereof and shall have the same force and effect and be binding upon the Owner/Occupant to the same extend as if incorporated herein at the time of execution of this document.
 

Rules Governing Unit Owner Participation at Association Meetings

Taken from Managing the Florida Condominium, William D. Clark. Publication 80886, Release 13 April 2006. Chapter 8, Section 8.1408
- Approved by the LPCA Board of Directors, September 9, 2006
 

What are your rights as an owner?
Can you speak at or hold your own meeting?

 

I.  BOARD AND COMMITTEE MEETINGS
	A. Board and Committee Meetings
		Meetings of the Board of Directors are hereby defined as a quorum of directors gathered to conduct official association business.  The term “meeting” does not include gatherings of less than a quorum of directors engaged in fact-finding investigations, or legal inquiries, or gatherings of any number of directors to consult with counsel regarding pending or imminent litigation or adversarial administrative proceeding wherein the attorney will express mental impressions, conclusions, litigation strategy, or legal theory.

Successful Leasing in a Community Association

Download This Free Guide Book

Learn how to bridge the tenant and Community Association

Whether you are a homeowner, real estate investor, or community association professional, this guide will help you provide a solid introduction to community association living to your tenants, prevent communication breakdowns that lead to problems and give tenants a stake in the community. Chapters include specific, hands-on steps for the board, the manager and the owner, as well as a section on short-term leasing.
 

Model documents include sample amendments and resolutions, leasing agreements and addenda and a tenant information form.