For many community associations and non-profit organizations, the start of fall means it is time to budget for the next fiscal year. The importance of careful and comprehensive budgeting cannot be overstated. Creating a budget is about far more than simply projecting revenues and expenses — it also includes measuring financial health, planning for security and stability and ensuring full compliance with all relevant community association laws in Illinois.
Four Budgeting Tips for Condominium and Community Associations
Effective budgeting requires an in-depth assessment and review of all relevant financial issues. If you oversee budgeting for your condominium association or HOA, it is imperative you do it in the right way. Here are four of our top budgeting tips that community associations in Illinois can use:
- Start with Property Maintenance Issues: One of the core functions of a condominium association/HOA is maintenance of the common areas. While many maintenance-related expenses are consistent from year to year, there are also plenty of exceptions. Be sure you review all property maintenance projects that may be necessary. You do not want a large, unplanned maintenance problem to exceed your condominium association’s budget.
- Analyze Vendor Contracts: It is a best practice to review all vendor contracts on a regular basis. Be certain the contracts the association has in place are still fair and effective. In some cases, it may be advisable to seek new vendors or to renegotiate service agreements.
- Assess Financial Reserves: All community associations should keep excess funds aside to cover significant emergency expenses. Failing to properly fund reserve accounts with sufficient capital is one of the most common ways community associations run into problems.
- Do Not Forget About Insurance: Finally, it is crucial condominium boards and HOA boards put the proper insurance policies in place. Ensuring the community association has adequate insurance coverage is one of the most important duties of a board member.
The Importance of Proper Budgeting — Avoid Special Assessments
There are few things more frustrating than getting an unanticipated bill — and a special assessment is no exception. As explained by Realtor.com, a special assessment is a fee levied to cover unexpected expenses. It is probably no surprise that condominium and HOAs members want to avoid getting hit with special assessments whenever possible. With proper budgeting practices at the beginning of the fiscal year, boards of directors can dramatically reduce the risk that they will need to levy a special assessment on individual members.
Get Help from Our Illinois Condominium Law Attorneys Today
At Keough & Moody, P.C., we provide comprehensive legal services to condominium associations and homeowners’ associations (HOAs). If you have questions about budgeting or any related financial issue, our legal team is here to help. To set up a strictly confidential initial consultation, please contact us right away. With law offices in Naperville and Chicago, we represent clients throughout Northern Illinois, including in Cook, DuPage, Will, Kane, Kendall, Lake, McHenry and Grundy Counties.