What Elements Should Be Included In The Property Owners Association Budget?

A property owners association board is tasked with overseeing the development and maintenance of a community which requires a budget for the association to map its future. Whether the budget is tens of thousands, hundreds of thousands, or more, every homeowners association needs one to create a secure and enjoyable space for residents to live.  If your POA website has posted the association’s new budget, take the time to review it and ensure it contains all the necessary elements.

 

Every property owners association incurs expenses regularly from the services it offers homeowners on a weekly, monthly, or seasonal basis.  Each year, the new POA budget must identify all the services an association will provide to homeowners and the contractors who deliver them before determining and highlighting the cost.  These are categorized as operating expenses.

 

The POA board is expected to not only plan for future maintenance, replacement, and repairs but to also create a reserve fund that holds the money used to finance those projects. Reserve funds are important as they enable the property owners association to avoid lawsuits by making sure the community assets remain in the best possible condition. A POA budget requires a reserve fund that was prepared after a specialist carried out a reserve study.  In that, projects should be identified that must be executed in the next few years and decades, as well as their associated costs.

 

Aside from dealing with the operating expenses and reserve fund, the association will usually list the sources on the POA website that they use to generate the money needed to complete the work.  Most POA boards rely on the fees collected from homeowners to finance their budgets; though, many communities aren’t opposed to the organization having fundraising events to bolster the property owners association's revenue.

POA boards are encouraged to consult with experts such as attorneys and property managers to ensure their budget expectations are realistic. These are just a few elements that the POA board should include when creating a budget.