Finances

The “Finances” category contains articles of information on topics that are related to a homeowner association’s finances.

“Red Flags” that Signal Potential Reserve Account Problems

/ Finances
"Red Flags" that Signal Potential Reserve Account Problems Homeowners associations must conduct periodic reserve studies in order to have a realistic estimate of the costs of repairing and replacing major common area components such as roofs. Ideally, an association will have funds set aside in a reserve account to cover ...
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14 Warning Signs that Signal Homeowners Association Reserve Problems

/ Finances
14 Warning Signs that Signal Homeowners Association Reserve Problems State laws and/or association governing documents typically mandate that associations prepare a reserve study for funding the future replacement of major components such as roofs, streets, and exterior paint. The reserve study provides a current estimate of the costs of repairing ...
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8 Steps HOA Boards Can Take to Minimize the Risk of Fraud & Embezzlement

/ Board of Directors, Finances
8 Steps HOA Boards Can Take to Minimize the Risk of Fraud & Embezzlement Because they rely heavily on volunteer homeowners with varying background experience and limited time that is devoted to providing services as a director, Homeowners Associations are extremely vulnerable to financial damage as a result of criminal ...
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Accounting Assistant Steals $148,000 from HOA by Setting Up Company with a Similar Name

/ Finances, Managing Agent
Accounting Assistant Steals $148,000 from HOA by Setting Up Company with a Similar Name The Real Deal, a South Florida real estate news provider, has reported that a former accounting assistant in Miami-Dade has been arrested and charged with first-degree grand theft and organized crime to defraud more than $50,00 ...
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Are Your HOA’s Funds Being Properly Handled and Invested?

/ Finances, Managing Agent
Are Your HOA's Funds Being Properly Handled and Invested? The management and operation of a homeowners association (“Association”) results in the Association coming into possession of large sums of funds to cover operating expenses and HOA reserves. Over a period of time, the reserve for HOA funds can grow to ...
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Association Use of IRS Form 1120-H

/ Finances
Association Use of IRS Form 1120-H An IRS Form 1120-H is the tax filing form used by homeowners associations that want to take advantage of certain tax benefits that allow the association to exclude "exempt function income" from the association's gross income. Exempt function income consists of membership dues, fees, ...
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Authorized Signers on HOA Bank Accounts

/ Finances
Authorized Signers on HOA Bank Accounts It is common practice for the board of directors for a homeowners association to designate one or more individuals to be the “authorized” signers on the association’s bank accounts. Some boards adopt resolutions that authorize all of the current board members to sign on ...
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Bank Financing Available for Homeowners Associations

/ Finances
Bank Financing Available for Homeowners Associations Economic conditions over the last several years have left many HOAs short on capital needed for such items as necessary repairs, upgrades and improvements. With proper documentation HOAs can obtain bank financing for these items. Loans to HOAs do not typically necessitate personal guarantees ...
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Ct. Rules HOA Failure to Maintain Does Not Justify Homeowner’s Nonpayment of Dues

Ct. Rules HOA Failure to Maintain Does Not Justify Homeowner’s Nonpayment of Dues This case involved a dispute between a homeowners’ association (“Association”) and husband and wife homeowners (“Homeowners”) over the nonpayment of association dues by Homeowners. The action was precipitated by Homeowners’ failure to pay the dues owed to ...
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Does Your Association Have Adequate Internal Financial Controls?

/ Finances
Does Your Association Have Adequate Internal Financial Controls? By nature, homeowners associations are particularly vulnerable to being financially damaged by errors that are made by the volunteer members and property managers who perform various functions for the association, and by deliberate acts of fraud and embezzlement. To protect against and ...
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Does Your HOA’s Budget Include a Line Item for “Bad Debt?” ….. It Should

/ Finances
Does Your HOA’s  Budget Include a Line Item for “Bad Debt?”  ….. It Should Assessment income is the lifeline for homeowners associations. Without owners paying assessments to the association, the association has insufficient income to pay its expenses. Despite the importance of the association collecting assessments from every owner, in ...
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Don’t Overlook the Need and Importance of HOA Financial Audits, Reviews, or Compilations

/ Finances
Don't Overlook the Need and Importance of HOA Financial Audits, Reviews, or Compilations State laws and/or an association’s governing documents typically contain provisions that require a homeowners association to have periodic financial audits, reviews, or compilations, and association boards and management personnel should be familiar with such provisions to insure ...
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Don’t Allow Your HOA to Ignore Financial Needs and Operate Without Proper Reserves

/ Dues and Assessments, Finances
Don’t Allow Your HOA to Ignore Financial Needs and Operate Without Proper Reserves Studies show that there are a growing number of homeowners associations that ignore reserve funding requirements and as a result, fail to maintain the required level of reserve funds to properly maintain, repair, and replace common areas ...
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