More and more associations are collecting less and less dues as a result of the housing crisis. Here are four tips for trimming your budget to ensure that your association still provides key services with a smaller pool of funds.
1) Shop around. A good way to shrink your budget is to shop your insurance policies and other ongoing contracts around. If you’ve been with your current insurance carrier for years, it may have been a while since you’ve compared rates. Do it now. While you’re doing that, ask whether increasing your deductibles will net a worthwhile savings. Sometimes the savings are minimal—and probably not worth the added risk. But you’ll only learn that if you ask.
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“I have a board member right now who wants to get his board to roll back assessments by 50 percent and not fund reserves,” says David C. Swedelson, principal at Swedelson & Gottlieb, a law firm that represents associations in the Los Angeles area. “He’s in [financial] trouble. So he’s getting a petition of homeowners to compel the board to vote to reduce assessments.”
In this ever-scary economy, Swedelson is surely not the only attorney to field questions from boards about whether they can stop or reduce their funding for reserves as a way to ease the burden on homeowners. Some, but not all states, have laws governing associations’ reserve practices, so investigate your state law before your board takes any action.
Here, attorneys offer a taste of how state laws work from their perspective at each end of the country—California and Florida.
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Budget preparation may be the least favorite time of year for some association board members, especially those who are uncomfortable working with numbers or fear a deluge of homeowner complaints.
But preparing the budget is one of the most important board responsibilities. Yes, it can be hard work, but it’s an essential planning tool for any community. Its effectiveness depends on the preparation and research that board members put into it.
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In today’s economy, many associations are being forced to look for ways to trim costs and increase income.
Here are a few ways to save:
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