You’ve cleared the hurdle of getting the board to approve the new budget, but where do you go from here? There are so many laws governing HOA’s that it is imperative to follow the appropriate steps, especially when it comes to tracking the funds and ensuring their appropriate allocation. It’s no secret that projects rarely stay on budget, especially if you have any kind of common space developments planned. Here are a few simple steps to keep the condo association budget managed and under control.
Notify the Homeowners
Most HOA and condo association bylaws require that a copy of the approved budget be sent to every homeowner. In addition to the outline of the budget, it is helpful to include an explanation of exactly how the funds will be spent and what homeowners should expect over the course of the year. By informing the community about the upcoming projects, you will avoid angry neighbors later.
As part of the proposed budget, assessment levels were addressed and most likely increased. This is a good time to inform the owners of the assessment changes as it helps to illustrate the benefits they will receive through the increase.
All of the assessments for each property in the community have been completed and the owners notified. Now it is time to begin implementing the changes you worked so hard to get approval on. Depending upon how the homeowner payments are collected, certain updates and changes will need to be made and prepared for. If the owners are issued payment coupon books, new ones will need to be ordered to reflect the change in the assessment amounts. This can take up to a few months to have them commissioned and distributed, so the sooner they are ordered, the sooner they can be sent out to the owners. If monthly invoice statements are sent, the budgeting software will need to be updated and the invoice template changed to reflect the new assessment amounts. You may consider resending assessment increase reminders with a brief overview of the new proposed budget with the first invoice reflecting the new assessment amount.
Update the Budget
Now that you have an approved budget it is important to manage and track it. The budgeting software in place needs to be updated with the new budget information along with the itemized income and expenses. As the expenses are realized, it is important to keep track of the variances. While nothing ever goes exactly as planned it is important for future budgets as well as the management of the current budget to understand how far off track expenses get as the planned projects get underway. Proper management of these variances can allow for budget reallocation as well as provide opportunities to reign projects in before the expenses get too far out of control.
Having an updated and managed budgeting software can also provide a useful platform when unforeseen expenses arise, as they always do. Being able to show the board the actual expenses and the variances between the proposed and actual budgets can help justify the expenses and provide better data when creating future budgets.
Manage Delinquent Collections
No one likes the idea of having to send their neighbors a delinquent notice, so addressing it upfront can help circumvent some of those issues. While bombarding the owners with tons of information can be counterproductive by diluting the overall message, making sure that you include pertinent information can be beneficial in eliminating collection efforts or just simple confusion in the long run. As you are sending notices to the owners regarding the budget and assessment changes, consider sending a reminder regarding the assessment collection process and the policies regarding delinquencies.
Managing the financial needs and expectations of the HOA can seem daunting, especially if you’ve never done it before. With the right planning and management software tools, along with a grasp of the bylaws and expectations, it can be done correctly and without breaking too much of a sweat. By keeping open communication with the owners regarding the budget and assessments, as well as maintaining budget updates along with variance tracking, can pave the way for successful project execution.