Self-managed homeowners and condominium associations are run by volunteers, and most of those volunteers do not have a background in finance. Yet the association's books must be kept accurately, budgets must be adopted on time, assessments must be collected, and financial reports must be delivered to owners as Florida law requires. Many boards find that the financial side of self-management is the hardest part.
This article is general information and is not legal or accounting advice. The association's attorney and accountant should be consulted.
Record Keeping
Accurate, consistent records are the foundation of everything else.
- Operating and reserve funds should be kept in separate accounts.
- Every deposit and payment should be recorded and supported by an invoice, receipt, or board approval.
- Bank accounts should be reconciled every month.
- Each owner's ledger should show every assessment, payment, and charge.
- Financial records are official records of the association and must be kept as required by sections 720.303 and 718.111. Owners may inspect them, and requests must be answered within 10 working days in a homeowners association or 10 business days in a condominium.
Budgeting
An annual budget is required for every association. In a homeowners association, section 720.303(6) requires the budget to show estimated revenues and expenses and the estimated surplus or deficit for the current year. In a condominium, section 718.112(2)(e) requires a copy of the proposed budget to be delivered to each owner at least 14 days before the meeting at which it will be considered, and reserve rules are found in section 718.112(2)(f) and (g).
A sound budget is built from current vendor bids, actual spending in prior years, and a reserve study rather than from guesses. Spending should then be compared with the budget every month so problems are caught early.
Collections
Collecting assessments from neighbors is one of the least comfortable tasks a volunteer board faces. Online payment options and automatic reminders make on-time payment easier for owners. When an account falls behind, a written collection policy, applied the same way to every owner, keeps the process fair.
Florida law sets specific notice steps that must be followed before liens and foreclosure can be pursued. Those rules are found in section 720.3085 for homeowners associations and section 718.116 for condominiums, and the association's attorney should be involved before a lien is recorded.
Annual Financial Reports
Under section 720.303(7), a homeowners association must prepare a financial report within 90 days after the end of its fiscal year, or on the date in the bylaws. The level of report depends on total annual revenues:
- Less than $150,000: a report of cash receipts and expenditures
- $150,000 to less than $300,000: compiled financial statements
- $300,000 to less than $500,000: reviewed financial statements
- $500,000 or more: audited financial statements
- 1,000 parcels or more: audited financial statements regardless of revenue
A copy of the report, or a notice that it is available at no charge, must be provided to each member within 21 days after it is completed, and no later than 120 days after the fiscal year ends. Similar revenue tiers apply to condominiums under section 718.111(13), with delivery required no later than 180 days after the fiscal year ends.
Safeguarding Association Money
Under sections 720.3033(5) and 718.111(11)(h), an association must maintain insurance or a fidelity bond covering everyone who controls or disburses association funds, in an amount that covers the maximum funds in the association's custody at any one time. Two signatures or two approvals for larger payments, and a monthly review of bank statements by a director who does not sign checks, add useful protection. The warning signs of misuse are covered in
HOA fraud: know the signs.
Transparency With Owners
Clear monthly or quarterly reports help owners understand where their money goes and reduce misunderstandings. A simple summary of income, expenses, and reserve balances, shared at board meetings, builds trust. More on reserves can be found in
understanding the importance of reserves for your condo or HOA.
Accounting Help for Self-Managed Associations
Self-managed associations can keep control of their community while handing off the bookkeeping. Accounting services from Condominium Associates, including record keeping, budgets, collections, and financial reports, are available to self-managed associations across Tampa Bay, Sarasota, and Pasco. To learn more,
contact us or
request a proposal.
