Tips for Sticking to Your HOA Budget When the Unexpected Happens

Most of the time, sticking to an HOA budget isn’t difficult. After all, most associations face generally the same expenses every year and they have ample notice when prices are rising or something else is going to change with how they spend their money.

Sometimes, though, emergencies come up. If this is happening to you and it’s not something covered by insurance, there are a few things you can do to cover the difference.

Use Your Reserve Fund

Most of the time, the funds you keep in reserve are earmarked for something. They may be for putting a new roof on the condos or replacing an old swimming pool. However, a portion of these funds should be available for emergency use, too. If you are facing an expense that isn’t covered by insurance, this may be the best place to start. See if you have funds in reserve that will cover the expense, then make a plan to replace them as soon as possible

Cut Back or Eliminate Something Else

If your association is planning to do something big this year, it might be time to reconsider. Instead, spend that money to cover your emergency expenses and put off your other big investments until later. This is especially true if your big investment is something that is not necessary, like a large fireworks show or a holiday celebration. You might be sad to cancel something so fun, but it may be better than any other alternative.

Consider Raising Assessments

If you need to cover an expense and it looks like this will become a regular expense, or if you need to slowly reimburse your reserve fund, you may need to raise assessments for everyone in your association. Many HOA boards are loath to do this because of how much pushback they might face, but the truth is that sometimes it’s unavoidable. If you do decide to raise assessments, make sure you explain to everyone why you’re doing it. Take time to answer homeowner questions so they can understand why this is the best (or only!) option.

Propose a Special Assessment

If the expense is a one-time thing, you may need to use a special assessment to pay for it. Once again, the board will likely face pushback from homeowners because no one likes to face surprise expenses. Make sure that the special assessment is the best way to solve your problem, then present the financial need to your community. Homeowners may not like the assessment, but they should be able to understand the association’s need for more money.

Hire an HOA Management Team

If you need help sticking to your HOA budget when something unexpected occurs, contact us for HOA financial management in Siesta Key at AMI. We can help you come up with a plan not only for the circumstances you’re facing but also for the future. Our community management professionals will help you make sure you have plenty of reserves, prepare financial statements to show your association members, and more. No matter what, we’ll help you out.