Budget Preparation Service
Homeowner associations are required by law to prepare and distribute a budget to all members of the HOA each year 60 to 90 days prior to the beginning of its fiscal year. That is January 1 for more than 90% of associations.
There are several reasons to prepare and distribute a budget on time including but not limited to the following:
- California law requires it to be done;
- Failure to comply suspends the board's right, without a formal vote of the membership, to increase assessments up to 20% per year; and
- When an HOA budget is inadequate, it almost always results in reserve contributions being reduced. This can result in special assessments. It can also affect the ability of homeowners within an association and new buyers to obtain mortgage financing at the most favorable interest rates.
Given that nearly all real estate lenders sell their loans into the secondary mortgage market, most lenders find it necessary to comply with the requirements of the Federal Housing Administration (FHA), the Veterans Administration (VA), the Federal Home Loan Mortgage Corporation (FHLMC), and the Federal National Mortgage Association (FNMA).
Unless a current reserve study justifies a lower amount, the mortgage industry requires that 10% or more of an association's assessments be set aside as reserves in a separate account.
Given that the cost of having a professional budget prepared runs between $250 and $400 per year, it makes sense to have one completed. When a 25 unit condominium association pays $250 for a budget, it costs each unit owner $10 per year or $.83 per month.
Schedule of Fees for Budgets
- 4 units to 25 units $250
- 26 units to 50 units $300
- 57 units to 75 units $350
- 76 units or more $400
Nationwide Accounting Services