Top 10 Signs Your Community Association is in Financial Trouble

Today, now more than ever, community associations are under financial stresses that do not seem to be getting any better. Some associations have been proactive and some have ignored the reality of their situation. The following are the top 10 signs that your association is in financial trouble and needs to take action immediately to avert disaster.

1. Your association consistently spends more money than it receives in assessments.

2. Your association is not paying taxes or filing necessary reports when they are due.

3. Your association’s accounts payables (the money you owe others) are growing and are going unpaid each month.

4. Your association is now regularly dipping into savings, restricted funds or reserves to pay for ordinary operating expenses or when special projects are to be completed.

5. Your association’s accounts receivable (the money others owe you) are growing and 10% of your owners owe more than 120 days or older.

6. Your association is billing owners in advance and relying on owners who prepay their assessments to pay bills or payroll.

7. Your association has special assessments for operating expenses, not for special projects or capital improvements.

8. Your association has no consistent policy to collect past due assessments or how to prevent this from happening in the future.

9. Your association does not know how much money it owes and does not receive the proper reports to find this out.

10. At your association’s board of directors meetings and annual meetings, lack of money has become the focus and dominant point of conversation.

If this sounds like your community association, it may be time for you to get on the board of directors, join a committee or just get involved. Besides your association’s location, the price of the units, your association’s finances will have a major impact on the value of the unit.

Tagged as: Community Association, Finance, Management Company