In almost every state, there are specific, detailed laws that govern HOAs, and particularly their financial records. Although the laws and their requirements vary by state, generally HOAs must perform various tasks with respect to their finances, including:
- Create and maintain a fund of fees and assessments collected by the HOA from owners/HOA members
- Make an operating budget, typically for a calendar year, that shows projected income from fees and assessments and itemizes how the HOA plans to use any funds throughout the year, such as paying the costs of landscaping, repairs to common areas, and building maintenance
- Create and maintain monthly and yearly records on how much money the HOA has received, how any funds have been spent, and the current balance of the HOA's fund
- Store all receipts for money spent by HOA from the HOA fund
- Create and maintain a reserve fund from fees and assessments collected by the HOA, which can used only for unexpected emergency repairs, such as sudden damage from bad weather or natural catastrophes, or for the future repair, replacement, or maintenance of the major components of the complex or subdivision, such as building surfaces of the condominium buildings, streets and sewers, and heating and cooling equipment
- Depending on the size of the HOA, it might be required to have a certified public accountant perform a yearly audit
In some states, the HOA must provide these financial documents to the owners/members within a certain period of time and without being asked. Often, they will be posted in a common area, like a recreation room or facility, or it's common for HOAs to have their own Web site where these materials can be posted. In some states, however, the HOA has to provide these financial materials only when an owner makes a written request for them. So, be certain to check the laws in your area if you're trying to obtain financial records from your HOA.