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Category Archives: Financial Matters

How to Fund HOA Improvements

What can a board do if its building is faced with extensive capital work while recovering from the real estate slump of the early 1990s? Assessments are unpopular and reserves are low. There’s a desire to have construction operations completed as quickly as possible, but an aversion to parting with too much money at one time. One way to solve this dilemma is to phase in the capital programs over an extended time. Undertaking construction in distinct stages offers many advantages as well as potential pitfalls. Armed with the proper information, however, the board can organize the building’s construction into phases that best suit their purposes.

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4 Ideas for Trimming Your HOA’s Expense Budget

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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HOA Reserve Funds: The Pros and Cons of Underfunding Reserves

“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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* These articles and related content on this website are provided without warranty of any kind and in no way consitute or provide legal advice. You are advised to contact an attorney specializing in Association Management for legal advice related to your specific issue and community. Some articles are provided by thrid parties and online services. Display of these articles does in no way endorse the products or services of Community Association Management by the author(s).