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Related to the condo association property is the duty to adopt condo association budgets and collect HOA special assessments from the association members. In a way, a condo association is merely a conduit for the homeowners to pay for the various expenses of the HOA property. The condo budget process is not one whereby a figure is created that will be the monthly assessment and then the HOA board tries to figure out how to best spend the money. The correct process is a reversal of that.
The condo board must first determine what are the necessary expenses and costs of operation and administration, plus a reasonable condo reserve, and then the monthly assessment is determined by dividing the annual condo association budget among and between the unit owners. The condo budget process therefore must involve a careful review of past budgets and the actual costs plus a careful examination of anticipated costs and expenses, including obtaining bids and quotes for various services.
Of course, in determining the condo budget, it is appropriate and necessary for the condo board to consider the amount of money that can reasonably be collected from the HOA members. The amount of the condo fees must not be so high that it would adversely affect the property values in relation to other condo associations in the area or cause economic hardship to the owners. At the same time, the special HOA assessment must not be so low that the condo association is unable to meet its basic responsibilities for repair and maintenance of the property, to keep the HOA property in good condition, and to have an adequate reserve for emergencies and future repair or replacement.
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Tags: Finance, Assessments, Boards, Budgets
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