Tag Archives: Money

Four Ideas for Trimming Your HOA’s Annual Budget


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More and more associations are collecting less and less dues as a result of the housing crisis. Here are four tips for trimming your budget to ensure that your association still provides key services with a smaller pool of funds.

1) Shop around. A good way to shrink your budget is to shop your insurance policies and other ongoing contracts around. If you’ve been with your current insurance carrier for years, it may have been a while since you’ve compared rates. Do it now. While you’re doing that, ask whether increasing your deductibles will net a worthwhile savings. Sometimes the savings are minimal—and probably not worth the added risk. But you’ll only learn that if you ask.

2) Conserve energy. Minor conservation efforts can make a big difference in your budget. If you’ve got timer-controlled sprinklers that run for 30 minutes each morning, cut them back to 25 minutes for a month to see if the plants still get enough water and you save any money on your water bill. Do the same with your hot water heater. Dropping the thermostat a degree or two may make no difference to residents, but it will create savings. Finally, depending on the size of your association, swapping old-fashioned light bulbs out for more efficient compact fluorescent bulbs can save money. Compact fluorescents aren’t inexpensive, so you’ll take an initial budget hit. But you’ll see lower energy costs over time.

3) Do it yourself. If your association is in dire straits, evaluate all your expenses to determine if you can bring any functions in house. If you have a management company, is it possible to eliminate that expense and run the association yourself? (The opposite may also be true. If you’re self-managed, you may save money by having professionals keep an eye on your budget and get you discounts from their trusted vendors.) If you have landscapers, can you cut back on their work and let residents pick up the slack? You could pay for a spring and fall grounds cleanup while bringing grass cutting and flower planting in house. Finally, explain the situation to homeowners and ask owners who are professionals for discounts or freebies. For example, if you have a resident accountant, ask if she’ll prepare the association’s annual tax filing for free or at a discounted rate.

4) Fix it now. Homes are like cars. Routine maintenance helps prevent larger, more expensive problems from creeping up on you. Create a checklist of your major mechanical and building systems. Then ask residents with expertise or outside contractors to check those systems to see if a minor upgrade or repair now will extend the life of the system. For example, if you’ve got a roofer in the house, ask if he’ll volunteer to inspect the roof and do minor patching on areas that may become a problem in the near future.

If your budget is still in the red after all of your trimming efforts, you may have to take more drastic measures—like raising assessments. Before you do, however, consider whether you can generate income. For example, your governing documents may permit you to rent your clubhouse to nonresidents for a fee. Or if your state allows you to earn money on reserves (some don’t), consider putting a lump sum that you don’t expect to use immediately in a safe investment with a higher return than a savings account.

2011 – The Year of the Missing Money


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Published: 02 December 2011 – Written by JWW

If there was a single theme running through news stories and articles about condo and homeowner associations in 2011, it was the shortage of money to carry out their responsibilities.

First, the trend of owners not paying their association assessments due to a weak economy, continued strong, which meant that associations had less money to carry out their required operations.  Then, the foreclosure crisis also continued strong, again leaving associations short, as owners in foreclosure usually stopped paying assessments.  Those associations in states that gave them six month of assessments in a foreclosure process may have been a little better off than those in states without the lien priority, but they still found it was tough to collect.

Then, the mortgage banking industry started piling on, by slowing down foreclosures, so that they would not be responsible for a home’s assessments until the last possible minute.  This dragged out the time frame when associations were receiving no income from a unit, placing a tough burden on the owners who were paying, and on boards to struggle with reduced revenue.  Some states tried to help out associations, and some attorneys got creative in forcing foreclosures, but that was only in a few states.

The following news story leads from 2011 show a growing trend that is entirely preventable, but sadly, is often ignored:

  • FL: President of homeowners association accused of embezzlement
  • OH: Prosecutor’s filing indicates women may plead guilty to stealing $1.6M
  • NC: Parkwood president: Embezzler took at least $150K from HOA
  • WA: Former HOA president is headed to trial
  • IA: Muscatine woman gets probation for theft from homeowners’ association
  • FL: The former manager of a luxury Aventura condo building, accused of embezzling hundreds of thousands of dollars, turned herself in to jail officials.
  • LA: Former president of Montz associations pleads guilty to theft
  • TX: HOA dues disappear in elaborate scam
  • NC: Theft of money from Parkwood involves ‘many thousands of dollars’
  • CO: Embezzler involved with HOA in Aspen called a ‘habitual criminal’ by DA
  • OH: Man pleads guilty to theft possibly totaling $200,000
  • NY: Ex-school board member admits stealing funds
  • CA: Neighborhood-association embezzler is sentenced
  • ME: Convicted condo embezzler arrested
  • CA: Diablo Grande embezzlement is news to sheriff
  • WA: Prosecutors: Issaquah HOA president bilked organization
  • FL: Charge: President bilked own homeowner association
  • MD: Grand Jury Indicts In Theft Scheme Case
  • WI: Franklin police probe suspected condo association fraud
  • WA: Former Olympia-area homeowners association worker guilty of theft
  • NJ: Former property manager in Freehold Twp. accused of embezzling $75K
  • GA: Former HOA treasurer arrested
  • CA: Former Palo Alto neighborhood association admin accused of embezzling $65K
  • GA: Manager gets 3 years probation for fraud
  • NJ: Three charged with thefts from Aberdeen condo association
  • OH: Woman gets prison for bilking condo associations
  • NJ: Mother, daughter charged in scam – Indictment: Condo funds misused
  • Toronto condo owners allege massive fraud
  • NY: Dare’s role in Pastures cost association $100,000
  • VA: Fraud at Koger may tally $2 million
  • WI: Treasurer of Kansasville home owner’s association reportedly forged checks
  • FL: Four charged in multi-million dollar fraud scheme at Hallandale Beach condo
  • NJ: Readington condo official admits stealing $200K
  • PA: $600K Swiped From Montco Condo Association
  • CA: Sheriff’s Deputy Who Took Money From HOA Sentenced
  • FL: Four charged in multi-million dollar fraud scheme at Hallandale Beach condo
  • FL: HOA bookkeeper confesses to embezzling
  • CA: Manager steals $70K from neighborhood group
  • SC: Woman charged with embezzling $14K in HOA funds
  • IN: Mishawaka embezzler to testify against co-defendant
  • IL: Regent Realty owners indicted in fraud
  • NY: Green Mansions Manager Indicted For $162K Theft
  • MA: Yarmouth condo office manager sent to jail
  • WY: Embezzler gets lengthy sentence in Fox Park case

When times are tough, people who need money will justify taking it from others. Every community association related blog and web site wrote articles about how to prevent theft, but, as with anything, there have to be people in place who will actually do the checks to see that everything is as it should be.

The result of all of this, was all too often, delayed or ignored maintenance, assessments increasing to cover revenue shortfalls, a lot of hard feelings and a lot of litigation, all of which will have long-term effects on associations. To be honest, I don’t really see any improvement in the short term, and for the long term, that is going to depend heavily on the economy, and whether or not the housing industry rebounds.

When I used to do seminars for association board members, I would tell them that it wasn’t their job to keep assessments low, but to spend the money wisely. After this year, I think I need to change that to:

It’s your job to collect the money efficiently, watch over it like a guard dog, and then, spend it wisely!

To all of you who donate your time and talents to keep your association going through these tough times:

THANK YOU!

Courtesy of: http://communityassociationsnetwork.com/wordpress/?p=332

With over 40 years of combined industry experience, the Executive Staff of Riverside Property Management  knows that the most successful communities are those where there is a sense of unity and pride among the membership; this unity and pride begins with a firm foundation comprised of:

Well defined policies and objectives
A strategic plan and future vision
A proactive Management team
Mutual team trust and respect
Timely and open communication
Excellent customer service
Industry knowledge
“Out of the Box” Thinking
Services designed to meet your needs

Give us fifteen minutes of your time and we can show you how to put your community on a fast track to success; if you don’t believe us, feel free to call upon any one of our satisfied clients. (678) 866-1436 or info@riversidepropertymgt.com

Protect the HOA Operating and Reserve Accounts


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I know anyone that has any affiliation with an HOA or Homeowners Association has heard of someone stealing or trying to steal money from the Community. The scams are often as simple as writing a check to themselves, either as an administrator, treasurer or president. This is the one constant to which no one paid much attention. Now, with the vast majority of the Associations tax year ending, here’s your chance to make sure that does not, and is not going to happen. Whenever the economy takes a hit, and particulary when it both an extended and bad one, you need to pay special attention to the deep pockets, your association’s bank and reserve accounts.

First – GET AN AUDIT – not an opinion, not a compilation, but a real, honest-to-god audit. Only an audit of the CPA will unearth evidence which, in turn, could be fraud or embezzlement. Yes, an audit is more expensive, but considering the huge increase in financial crimes against associations, this is not the time to spare. Remember, every person trusted the people who were scamming from the Association funds. The fact that the treasurer is a good person, does not mean that they are not having personal financial problems.

Then make sure your insurance covers the Community Association if the money is lost. All too often association’s think that fidelity bonds that the management company has protects them – it doesn’t, it only protects the management company if an employee steals from them.  Whether its a bond or crime insurance, make sure the association is covered for ANY loss, no matter who is  lining their pockets.  This can be done with Directors & Officers Insurance or D & O.

Always make sure the bank or any financial institution that holds your money, sends a second statement, an original for someone other than the person who writes the checks or books. The crooks got away with their scams for long periods of time because they were the only one receiving the bank statement, and then delivering a retouched statement to the Board of Directors. Someone else must have an authentic, original – that can,  in fact be compared to the one presented in the financial report.

Periodically, hold a test of invoices. Ask one of your contractors to review their bills with you. A basic scam is a book of false invoices for work that was never completed, and then write a check for that amount to the scoundrel himself. Unless you’re reviewing canceled checks or verifying proof of the bill, it is quite easy for the thief get away with it. Each time you have a supplier or contractor that is going over budget or contract, this is likely to be the output.

Make sure nobody can get to the reserve accounts easily to withdraw or transfer funds. Talk to any institution that is holding the funds and ask them for the best way to ensure that nobody can reach them without going through a lot of checkpoints.

Basically, you should make sure you have all the necessary protections in place and they are, in fact, actually being followed. There are plenty of articles about how to do this, and that’s a good place to start. But remember, it is the entire process to be followed – not just a part will protect your Property Owners. For example, you can utilize the recommendation to require two signatures on checks, but in reality, banks no longer see or verify the signatures, so that alone will not protect you.

Why go through all this? I’m no lawyer, but if I were a Home Owner and someone was to abscond with a lot of money from my Association, I believe that the board would had failed in its fiduciary responsibilities and should be held accountable for that failure.

Four Ideas for Trimming Your HOA’s Annual Budget


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More and more associations are collecting less and less dues as a result of the housing crisis. Here are four tips for trimming your budget to ensure that your association still provides key services with a smaller pool of funds.

1) Shop around. A good way to shrink your budget is to shop your insurance policies and other ongoing contracts around. If you’ve been with your current insurance carrier for years, it may have been a while since you’ve compared rates. Do it now. While you’re doing that, ask whether increasing your deductibles will net a worthwhile savings. Sometimes the savings are minimal—and probably not worth the added risk. But you’ll only learn that if you ask.

2) Conserve energy. Minor conservation efforts can make a big difference in your budget. If you’ve got timer-controlled sprinklers that run for 30 minutes each morning, cut them back to 25 minutes for a month to see if the plants still get enough water and you save any money on your water bill. Do the same with your hot water heater. Dropping the thermostat a degree or two may make no difference to residents, but it will create savings. Finally, depending on the size of your association, swapping old-fashioned light bulbs out for more efficient compact fluorescent bulbs can save money. Compact fluorescents aren’t inexpensive, so you’ll take an initial budget hit. But you’ll see lower energy costs over time.

3) Do it yourself. If your association is in dire straits, evaluate all your expenses to determine if you can bring any functions in house. If you have a management company, is it possible to eliminate that expense and run the association yourself? (The opposite may also be true. If you’re self-managed, you may save money by having professionals keep an eye on your budget and get you discounts from their trusted vendors.) If you have landscapers, can you cut back on their work and let residents pick up the slack? You could pay for a spring and fall grounds cleanup while bringing grass cutting and flower planting in house. Finally, explain the situation to homeowners and ask owners who are professionals for discounts or freebies. For example, if you have a resident accountant, ask if she’ll prepare the association’s annual tax filing for free or at a discounted rate.

4) Fix it now. Homes are like cars. Routine maintenance helps prevent larger, more expensive problems from creeping up on you. Create a checklist of your major mechanical and building systems. Then ask residents with expertise or outside contractors to check those systems to see if a minor upgrade or repair now will extend the life of the system. For example, if you’ve got a roofer in the house, ask if he’ll volunteer to inspect the roof and do minor patching on areas that may become a problem in the near future.

If your budget is still in the red after all of your trimming efforts, you may have to take more drastic measures—like raising assessments. Before you do, however, consider whether you can generate income. For example, your governing documents may permit you to rent your clubhouse to nonresidents for a fee. Or if your state allows you to earn money on reserves (some don’t), consider putting a lump sum that you don’t expect to use immediately in a safe investment with a higher return than a savings account.