HOA Accounting Advice for Self Managed Communities

Our HOA Accounting Advice for Self-Managed Communities

“There’s no business like show business, but there are several businesses like accounting.”

That’s talk show host pioneer David Letterman, who recently left his post at “Late Night,” joking about the oft-maligned work of accounting. And though he’s not the only comedian to make wisecracks about it, the truth is that accounting is a vitally important to any business, including HOA management. If your community has decided to self-manage, it’s even more important that there’s no “funny business” when it comes to your books and accounts.

We’ve culled several pieces of advice for those homeowners associations that have decided to go their own way in the area of accounting:

Practice Transparency

Perhaps the most important thing for an HOA board to remember is the importance of metaphorically (and literally) open books: for legal and ethical reasons – as well as a spirit of cooperation and teamwork – accounting matters should be fully transparent before fellow board members and homeowners.

Lock Down Expenses

It’s smart to streamline expenses and arrange for them to be as predictable as they can be. Of course that’s not always possible, but one way to work toward that is to sign contracts with vendors whenever you can. It helps your accountant to better predict regular expenses and avoid, say, an astronomical, unexpected bill from the landscaper.

Consider Daily and Long-term Issues (Reserve Studies)

Understand that there are different types of accounting that you’ll need to manage, from daily and monthly to longer-term issues. Accounting responsibilities that pop up regularly include homeowner inquiries, assessment payments, bank statements, vendor payments, and escrow requests. Longer-term issues like year-end financials and reserve studies may not happen every day, but they are incredibly important for the long-term health of your HOA’s finances.

Arrange for Professional Review (CPA Audit)

Even for self-managed communities, it’s wise to get professionals involved from time to time – especially when finances are involved. Consider hiring a CPA to perform an annual review of your HOA’s books.

Ensure that Your Board Members Stay Informed

Encourage – or require! – HOA board members to attend classes. At PDS (Peoria, Arizona) we offer courses on Arizona HOA accounting basics like “Budget Planning” and “Reserve Studies.” You may also check out Community Associations Institute for a list of their online classes.

5 Ways To Ruin HOA Collections

5 Ways to Ruin Your HOA Collections Process

Managing the collections process of your homeowners association can be a dicey undertaking when unpaid dues increase in frequency (or length of delinquency). However, if you self-manage your HOA collections, it’s especially important that the process is done, and done well.

If there’s one thing that will make your homeowners angry, it’s the delinquent dues of a few creating problems for the majority through assessments, increased HOA fees, or a host of other negative consequences.

Here are five things that can ruin your HOA collections process, and get homeowners up in arms.

  1. Wait too long to act on delinquent dues.

The longer that a delinquency continues, the more difficult it will be for the HOA to recoup those funds in a timely manner and avoid unpleasant legal action. Make sure that the board takes action as soon as it spots a potential situation.

  1. Leave the process vague and open-ended.

One quick way to be misunderstood – or ignored – is to leave the HOA collections vague and open-ended. Communicate with the delinquent homeowners in a clear and thorough manner. Let them know exactly what is expected of them, when it’s expected, and precisely what the consequences will be.

  1. Don’t give manageable alternate options.

It is essential that the HOA be firm and consistent when dealing with collections. But firm and consistent can also be fair and reasonable. If a delinquent homeowner is facing serious consequences like foreclosure, consider offering them a repayment plan that is more workable for their budget and gives the HOA a better chance of ever seeing the funds.

  1. Only involve the homeowners.

In the case of homeowners who rent their homes out, it makes sense to involve their renters. Communicate with renters about the consequences of overdue funds, and consider having all incoming renters know that they will be responsible for HOA dues if a landlord falls behind.

  1. Ignore the legal process for collecting funds.

Part of managing the collections process well is making sure that the HOA is fair, firm, and legal. Make sure that your HOA board stays on board legally, and follows the appropriate process for filing liens, composing letters, and preparing collection files for attorneys.

Need more help with your hoa collections? View our HOA Collections page or visit our Meet Our Team page to contact one of our HOA accounting and collections specialists directly. We are here to help!

Does Your HOA have Pool Rules?

Of Course My HOA Has Pool Rules…..Or Do They?

As temperatures rise, kids say goodbye to school for a few months and you can be sure that your community’s pool will soon become a hoppin’ destination during the dog days of summer. With the increase in swimming visits around the corner, and National Drowning Prevention Month coming up in May, there has never been a better – or more important – time to sit down with the HOA board and ensure that pool safety is a priority for the entire community.

  1. Set and enforce enforces rules designed to maximize fun and safety for everyone.

The community should have guidelines – covering everything from hours of operation to supervision of minors to food and drink (especially where alcohol and glass bottles are concerned). Consider sending out a reminder to homeowners in advance of the summer months, including water safety information like how to spot a swimmer in danger.  The rules should be posted clearly around the pool area, as well.

  1. Make sure your pool has the tools needed in case of an emergency.

An AED (automated external defibrillator) and first aid kit should always be easily accessible. Having an available phone for emergency phone calls – or, preferably – a qualified/certified lifeguard* on duty during open hours, is also important.  

  1. Manage and maintain the pool correctly.   

Pools need to be cleaned, maintained, repaired, and kept in accordance with state laws. With so much on the line, it might make sense for the board to hire a contracted company to maintain the pool. Pool safety is no place to cut corners. If the HOA board makes a priority of maintenance and safety, it can be a sun-soaked, cannonball-filled summer for the entire community!

HOA Noise Disturbance Guide

Got Noise? The HOA Noise Disturbance Blog You’ve Been Waiting For

 Got Noise? A Guide to Handling Noise Disturbances in the HOA

The 2 a.m. blast of music coming from an adjacent home, the constant yapping coming from a neighbor’s adorable but excitable dog, the loud peacock (yes, we’ve had complaints of this before!), the click-clack of high heels on marble that comes from the upstairs condominium – whatever the noise disturbance, if you’ve shared adjoining walls or lawns with someone, you’ve probably experienced some form of it.

And you can be sure that, as a member of your HOA’s board, members will come knocking on the board’s door when they’re on the receiving end of obnoxious noise disturbances.

The trouble is, a perfectly reasonable sound to one resident may be nails-on-a-chalkboard annoying to another. How do you navigate those tricky waters? Here, some essentials to consider:

 

1) Review City’s Noise Ordinances

 

First things first. Every city has its own codes regarding noise disturbances, so checking your city’s ordinances is an important beginning step. Consider the city of Mesa, which has outlined its codes to include standard prohibited noises (after 10 p.m. and before 6 a.m.) and others more specific (using an automobile to “create loud and unnecessary grating”). Find out first what your city and its police department regulate.

 

2) Consult HOA CC&Rs

 

Your HOA’s Covenants, Conditions, and Restrictions (CC&Rs) should provide some guidance as to what kinds of – and how much – noise is acceptable. (If it doesn’t, your board will need to address these guidelines and establish them for the future.) You’ll also need to review what course of action you’re required to take, if that’s been outlined.

 

3) Act Quickly

 

If you find out that a resident has installed new wood or tile floors – or other remodeling projects that affect sound – without approval from the HOA, and you ignore or put off their neighbor’s noise complaint, you could leave the board open to a lawsuit. Do your research, but don’t delay too long in taking the appropriate action.

 

4) Take an Attitude of Mediation

 

It’s important to adopt an attitude of mediation and resolution regarding noise disturbances. You don’t want what could be minor conflicts to escalate. Encourage residents to talk to each other first, perhaps mediated by some members of the board, if necessary. If a solution can’t be worked out, offer to bring in a third party – perhaps sound or other engineers who can test walls, floors, etc. – to see if what is being perceived by one party as an over-the-top sound is actually normal. The outside opinion could help to de-escalate the situation.

Smart Water for HOA Community

Why “Smart Water” Devices Are Best for Your HOA

 

Today, more than ever, smart irrigation controllers – or “smart water devices” – are in high demand to maintain HOA landscapes as water conservation and saving money are the top concerns of homeowners and their associations.

What do smart water devices do?

They maintain watering schedules automatically to meet specific landscape needs. Simply stated, they take the guess work out of watering your landscape. Nearly two-thirds of residential water use occurs outdoors, yet much of that water is wasted due to over-watering. Many homeowners do not know how to adjust irrigation schedules to match water needs based on the season, nor have the time to deal with it.

What is the difference between a traditional system and smart irrigation controllers?

No matter how efficient a current irrigation system may seem, it doesn’t take into affect weather conditions that change sporadically. Specifically, we are talking about evaportranspiration (ET) and rainfall. ET is the amount of water the soil loses through evaporation in conjunction with the plant’s water loss, both of which are affected by changing weather conditions. Most traditional systems turn water and and off based on a time schedule that does not change with the weather and soil conditions, therefore plants are over-watered too much, for too long, which wastes water, money, and damages the plant.

How do smart water devices work?

Smart controllers use weather information and site and soil conditions to determine how much water to apply, and when to irrigate. Some controllers utilize historical weather data to compliment on-site weather conditions. Other controllers actually download ET values daily. Soil moisture sensor smart controllers also measure the amount of moisture already in the soil to determine irrigation schedules.
Once these systems are programmed, they usually require no additional monitoring and will water the landscape at peak effeciency times. The Irrigation Association has proved that smart irrigation controllers save up to 30% more water than traditional irrigation controllers. The Environmental Protection Agency now has selected these devices to be one of the first technologies endorsed by the EPA’s WaterSense program.

We encourage you to visit Water Use It Wisely, for important day-to-day water conservation tips and tricks for home and office!

Nuts and Bolts of HOA Reserve Studies

Why Complete a Reserve Study for the HOA?

Why should my HOA complete a Reserve Study?

A reserve study is a budget planning tool. It reviews the major capital systems in the homeowners association.
The study evaluates how much life is left and how much items are likely to cost when they wear out. It calculates how much money the HOA needs to set aside each year to have enough to replace common area items.

Why should I complete a reserve study if Arizona HOA Law doesn’t require us to?

Easy – it protects board members from liability. Somewhere down the line, board members do not want to be subject to potential liability. Especially for non-profits boards, standards are set fairly low. They MUST act in good faith. But it’s not too far of a cry to argue that a board is failing even that standard, if it isn’t making effort to make sure adequate reserves are maintained. Reserve studies would certainly go a long way toward providing the board some protection if they’re competence was ever challenged.

How do you do the calculation?

Take the estimated replacement cost an any item, then divide by number of years it is estimated to last (useful life). That number is the amount that needs to be reserved each year for the HOA.

I am not sure I can adequately complete a study. Are there experts to complete a reserve study for my Arizona HOA Board?

Yes! It can be costly ($500 to $10,000 depending on complexity of the HOA).  Studies get complex, for example when dealing with condos where associations may own only some of the walls.  Determining which walls are homeowner responsibility and which are the responsibility of the association can be tricky.   Gated associations that have their own roads or golf courses, will pay more for a reserve study expert, as large estimates may be required. But, hiring an expert is imperative. They have the knowledge and software to make sure every single component is included, therefore producing the best results.

Reserve studies aren’t perfect either….

For example, if you ask ‘how many years does my roof have left,’ or ‘how many years until we have to replace the swimming pool and what does that cost?’ remember that the answers are only estimates.
Unless your HOA board is expert at building components, they aren’t qualified to evaluate the useful life. The board needs to understand that the reserve study may be an important aspect to their responsibilities, and not doing one may cost some major $$$ down the road!
For more information about how the HOA Reserve Study impacts your HOA Budget, please visit “An Insiders Guide to HOA Budgets” and “Best Practices for Passing an HOA Budget.
When Should an HOA Use a Consent Agenda

When Should My HOA use a Consent Agenda?

When (and why) does an HOA use a consent agenda?

First, let’s define consent agenda: A consent agenda enables HOA members to vote on a block of items that are noncontroversial without a lot of discussion. They are useful to free up valuable time during your board meeting.

What belongs on a consent agenda?

Typical consent agenda items are routine and/or procedural decisions. Examples include:
  • Approval of minutes
  • Final approval of proposals that the board has already been dealing with for a substantial amount of time (all members must be familiar with the implications in this case).
  • Routine matters such as appointments to committees
  • Correspondence requiring no action
  • Reports provided for information only

Sounds good, how does my HOA Board get started?

To start utilizing consent agendas, the board should adopt a rule of order allowing for the consent agenda process. Here’s a sample:

A consent agenda may be presented by the president at the beginning of a meeting. Items may be removed from the consent agenda on the request of any one member. Items not removed may be adopted by the consent without debate. Removed items may be taken up either immediately after the consent agenda or placed later on the agenda at the discretion of the assembly.

Remember that consent agendas only work if the reports, or other matters for the agenda, are known in advance. 
We would love to know, do consent agendas help or hinder your HOA Board meetings?
Olive Trees in HOA

3 Things To Know About Spraying Olive Trees

Ah, the olive tree.

The summer-blooming Mediterranean natives are true beauties, growing up to 30 feet tall and spreading out nearly as far. It’s no wonder that these evergreens have become Arizona mainstays, soaking up the plentiful sunshine that allows them to thrive.

And while few people complain about the olives in a delicious tapenade or a beautiful Niçoise salad, unless you have a sprawling property or plan on committing lots of time to jarring homemade olive oil – they can be a major headache.

In fact, there are a few reasons why you should consider having olive trees sprayed before they start flowering:

 

Fruit Can be Bad News for Walkers – and Indoor Flooring

It’s frequently said that moderation is key, but olive trees didn’t get that memo, often producing an abundance of fruit that’s challenging to keep up with.When the olives ripen and fall from the tree, they can quickly cover the ground and sidewalks, posing a major, oily threat to those walking over them. Not only does the fruit create an increased potential for falls, but their color and oil can quickly be transferred from the soles of shoes to light-colored living room carpet.

Blooms Are a Major Irritant for Allergy Sufferers

Many people suffer from an allergic reaction to olive tree pollen, and their symptoms can be anywhere from mildly irritating to severe. When the pollen is released – typically in May and June – those with allergies can experience respiratory symptoms like runny, itchy, and watery eyes and noses, as well as sneezing, coughing, wheezing, and all sorts of olive tree-induced discomforts. Those with asthma must exercise extra caution even in the general vicinity of blooming olive trees. 

Timing is Everything

In order for spraying olive trees to be effective, the timing has to be right: annually, in the first quarter of the year, and well before the flowers begin blooming in late spring and early summer. It’s sometimes necessary for trees to be sprayed more than once, so it’s advisable to book your tree care experts in January.

The HOA Rookie's Beginner Guide

The Complete Beginners Guide for the Rookie HOA Board Member

Starting anything for the first time can be a challenge: tackling a new career, buying a new house, training in a new sport, maybe even bringing home a new baby. But when you find yourself a first-time elected HOA board member, things can be especially tricky: you’ve got a property (and its value) to protect, and fellow homeowners to represent. You’ve got obligations and responsibilities to fulfill, but you need to be – well, likable – as you’re doing it. This new position can be intimidating, but it doesn’t have to be. There are a couple of key concepts you can begin to think through that might make your early days less stressful.

HOA Board Leadership

 

It’s important to understand that your new role – to which you were elected by your peers – is one of service, not power. You’ll lead and serve on behalf of the homeowners, for whom you’ll be a representative voice, and on behalf of the property interests as a whole.

  • Glean wisdom from former and current board members you respect, whether from your HOA or another. Ask plenty of questions, and listen to their advice.
  • Talk to other homeowners – find out what their core concerns are, what’s important to them and their families.
  • Read up on books covering issues like communication, leadership, teamwork, and conflict management outside the realm of HOAs. There are also lots of great resources on these topics within the field, such as the Community Association Institute.

HOA Board Logistics

 

Any new job or volunteer position will require you to learn the ropes at some point, and an HOA board position is no different. There may be a learning curve, but do your best to educate yourself in the logistics of your new role as quickly and thoroughly as possible.

  • Study the homeowner’s association documents, and understand what your roles, responsibilities, and limits are.
  • Before you begin in your new role, pay attention to the details of how meetings run, how communication is managed, and how your current board operates.
  • Consider taking certification classes through homeowners groups like the Community Association Managers International Certification Board.

Remembering to serve with integrity and transparency will go a long way, too – and put you on the path to a rookie term that’s productive and fulfilling.

HOA Management App, the HOA Link

PDS Launches Mobile App: The HOA Link

We have launched the first app of its kind in the HOA industry!

 

After months of development, we are so excited to announce our new mobile application – “HOA Link”
We now offer an on-the-go option for our homeowners to have direct communication with PDS! The “HOA Link” is the first of its kind in the HOA management industry!
The easy to use application allows users to look up PDS community websites, make payments within seconds, and learn about upcoming community events all while on the go.
HOA members can quickly submit pictures to PDS and access all necessary forms such as architectural requests and violation reports using the HOA Link. Additional special features include a tip calculator, QR scanner, and a car finder.
PDS is structured to ensure accurate communication between board members, homeowners, and their PDS team of community managers. The development of the HOA Link application is a natural progression of our mission to communicate with homeowners and boards promptly and efficiently. The HOA Link is now available for download on iTunes! Android users can download it here.

Will you download the HOA LINK? Tell us what you think about the app!