Money, money, money. The world runs on it. And your building’s well-being depends on it.
The issue is not just having funds, but managing them. Handling the purse for an entire building or HOA is a major responsibility, and boards -- even those made up of seasoned members -- need to stay on top of their community’s financial profile. That means checks and balances, oversight, and holding people accountable.
“Board members are charged with a responsibility to make sure the resources and funds are being properly administered,” said Richard Holtzman, president of Prairie Shores Property Management in Chicago.
From reading statements to making sure accountants and managing companies are doing their job, here’s what boards need to know in order to protect the assets of those owners and shareholders that rely on them.
Know Your Expenses – and Your Reserves
The most obvious and crucial thing to understand are your building or association’s basic expenses and reserves. First, there needs to be enough cash inflow to cover those expenses, which include light, heat, power, salaries for employees, real estate taxes, water, sewer, management fees, and (in the case of an association) an underlying mortgage or loan, explains Stuart Halper, an attorney and the president of Stuart Halper & Associates, a management firm in Westchester, New York.