Managing the Community’s Benjamins (Money)

Published November 2016

Editor’s Note: This feature focuses on tips provided from some of FLCAJ’s advertising partners on how to save money, how to make money, and how to responsibly manage money.

Encouraging Community Members to Pay

By Mitch Drimmer

What should a community do to encourage members to pay their maintenance fees? Charging late fees and interest per your governing documents provides the first incentive to get people to pay and pay on time. You really should never get into the habit of waiving late fees because then you may be accused of unequal enforcement of the rules. Also, many associations have the ability to suspend privileges to any member who is delinquent after a certain amount of time (usually 90 days) and to deny them the right to vote in your elections.

The Condominium Act was amended, effective July 1, 2010, to allow associations to suspend use rights in the event an owner is more than 90 days delinquent. Section 718.303, Florida Statutes, says in part: “If a unit owner is delinquent for more than 90 days in paying a monetary obligation due to the association, the association may suspend the right of a unit owner or a unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the monetary obligation is paid.” 

The same goes for the statutes that govern homeowners associations operations. Section 720.305, Florida Statutes, states that if a member is delinquent for more than 90 days in paying a monetary obligation due the association, an association may suspend, until such monetary obligation is paid, the rights of a member or a member’s tenants, guests, or invitees, or both, to use common areas and facilities and may levy reasonable fines of up to $100 per violation against any member or any tenant, guest, or invitee. 

Mitch Drimmer is Vice President for SNAP Collections by Association Financial Services. For more information on SNAP Collections, call (866) 736-3069 or visit www.SNAPcollections.com. 

Important Steps for Sound Money Management

By Janet Romano            

Community association managers wear many hats and manage all aspects of the community’s operations, but by far, the highest-ranked responsibility by board members and owners is good financial/money management. Below is a list of some important banking procedures.

• Review and reconcile monthly bank statements as soon as received. Look at checks paid to be sure there are no fraudulent presentments, no checks have been altered (washed), and payees and amounts match check ledger.

• Keep separate accounts for operating and reserve funds.

• Keep bank signature cards current. Be sure to update signature cards when there is a change on the board.

• Require two signatures on all checks. Although your bank may not inspect and monitor the two signature requirement, this is a good internal control.

• Be mindful of the $250,000 FDIC insurance limit and make sure that your association does not exceed that limit in any financial institution.

  Janet Romano is Sr. Vice President—Association Services for Stonegate Bank. For more information on Stonegate Bank, call (866) 227-0441 or visit www.stonegatebank.com.

Save Money, Save Time!

By David Farrar

You have association dues, and they need to be deposited so you can pay bills. A bank is part of it and can save you money and time. Yes, that is the reverse of the old saying: “Save time, save money.” An association bank can save you money, if you watch the fees. Look for a flat fee, and be sure the only remaining fees are for things like non-sufficient funds (NSF) or stop payment (items that will be billed to a unit owner). A bank should be able to give a flat annual fee that would include coupon books and all forms of payment processing (lockbox, ACH, and credit cards).

After you confirm that the bank will save you money, now make sure it will save you time as well. It should be as simple as a daily file to download into your accounting software. You should be able to avoid trips to the post office and bank. So if you feel time is money and you want to save money as well, check with a couple of association banks to find a good fit. This is an important relationship.

David Farrar is Vice President, Association Banking Manager for Centennial Bank. For more information, contact him at dfarrar@my100bank.com or call (844) 898-1994. For account information and set-up questions, contact Patty Sadiku, Association Specialist at psadiku@my100bank.com or call (813) 755-0488. www.my100bank.com/associations.

Stop and Ask:  Two Common Oversights to Plug the Leaks in Your Cash Flow

By Melissa L. Nash

Are you treating collection fees as common expenses?  Let’s hope not!  There are occasions where we have seen associations take fees relating to collections, including legal, and rather than making them a “homeowner” expense, they are expensing them from the common budget as legal fees.  The cost of collection of a file is the responsibility of a homeowner.  Is it possible that even foreclosure defense could be a homeowner expense rather than a common expense?  It’s a good answer to know.  I would seek confirmation from your attorney.

Your accountant can work with you on the proper way to handle the “advancement” of costs if the funds are coming from the association. The best way to make sure you’re being repaid the full amount owed is tracking everything on one ledger.  In our office, we will make sure we collect and reimburse for the advancement of fees.

Are you just writing off discharged bankruptcy balances?  If a borrower is forgiven from debt, are you maintaining the lien against the property and collecting at transfer?  It was recently upheld that while a homeowner may be forgiven from debt, the property is not relieved of the debt.  While foreclosure and other actions might be barred against the homeowner, patience and collecting at title transfer is not.  Check with your attorney and accountant about the best practices to recover these assessments later.  You might just find some bad debt cash when you are ready for a special project.

Melissa Nash is President of ARI (Account Receivables Inc.) For more information on ARI, call (561) 697-4911 or visit www.4aronline.com.