When considering how a property owners association is run, we all desire to see where our money is going. As we drive into our communities, we want to witness our assessment dollars in action. Blooming seasonal flowers and a well-maintained landscape are often top of mind, but your assessment funds are also working for you behind the scenes. What is it that many property owners aren’t seeing about their association’s finances?
“With the right service providers, your assessment dollars will work for you to protect your investments in your home and your community.”
Have you ever taken the
time to drive through a community not governed by a property owners
association? How does the overall maintenance of homes compare to your
community? The differences can be striking. Consistent inspections
to enforce your community covenants, conditions and restrictions pay dividends
to keep the appearance of your community at its best. These compliance
inspections, as well as the issuance of enforcement notices, are paid for by
Before you purchased
your home, something appealed to you about the look and feel of the
community. To most homeowners, aesthetics matter. The association’s
architectural guidelines lay the groundwork for the various improvements and
modifications to each residence that come as the community matures. To
maintain the character of your community, volunteers serve on an “architectural
review committee” and follow existing architectural guidelines. The committee must work in harmony with your
management team who processes modification applications from
Just like your home,
your association must be protected from casualty and loss. Depending on your community’s governing
documents your association must maintain several insurance policies with
adequate limits. The volunteers who
serve on the board of directors and various committees are protected (while
operating in their assigned roles) by a directors and officers liability
policy. This policy is above and beyond
a general liability insurance policy which covers the association against
claims for personal injury and other covered losses occurring on association
owned common areas. If your common
facilities or monuments are damaged by a covered weather event or vandalism the
association carries property and casualty coverage to fund repairs up to the
value of your association’s assets.
These are but three examples of insurance coverage your association
likely carries. All are in place to
protect your association from unexpected losses. Associations should engage the services of a
licensed insurance agent to regularly assess their risk and insurance coverage
Often overlooked are
the team of professionals who keep an eye on your finances. Bookkeeping and financial reporting are
essential to help a board of directors run your association like a
business. In addition to monthly
financial reports provided by your management company many associations employ
the services of a CPA to perform a financial audit of the association
financials at the end of a fiscal year.
An audit provides assurances that your association’s finances are
recorded and disbursed using generally accepted accounting principles. Your association was likely organized as a
non-profit corporation upon its inception.
This doesn’t necessarily exempt your association from filing annual federal
and state tax returns. The board of
directors should utilize a professional tax preparer to determine tax
liability, if any.
Are your association’s
written policies recorded and kept up to date with changing law? Is your board holding public meetings and
providing adequate notice to all members?
Do your notices and forms used for voting, violations and assessment
collections contain all required legal language? Communities rely on their professional
management company to raise these issues and direct the board of directors to
consult the association’s legal counsel to ensure proper compliance with all
processes. Your community’s attorney is
a resource for your board to ensure federal and state statutes are followed and
may also help interpret legal documents that govern operations.
Your property owners’ association is led by a dedicated group of volunteers who are elected to serve on your community’s board of directors. However, there is a group of professionals in the background who also work to make your community run smoothly. With the right service providers your assessment dollars will work for you to protect your investment in your home and your community.
AMS®, CMCA® Executive Vice President of Portfolio Operations
37 Years of Community. Well Served. (www.cmamanagement.com)
Headquartered in Plano, Texas, CMA has three regional offices and numerous onsite locations providing contract management services for more than 250 residential and commercial communities, and more than 97,000 individual units.
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