Living in a community comes with its own set of challenges, responsibilities, and benefits. Managing a homeowners' association (HOA) is one such responsibility that involves a lot of documentation, communication, and payments. One of the critical documents that every member of the association should be aware of is the HOA statement. The statement contains crucial information that relates to the community's financial health, including budget plans, expenditures, and collections. A deep understanding of the statement's elements can help every member contribute towards the community's overall well-being, and this blog post aims to do just that.
An HOA statement is a document that reflects the association's financial health and crucial metrics every member should be aware of. The statement usually includes the association's income and expenses in a particular period, account balances, information about the reserve fund, and outstanding balances that members of the community owe the association. The statement also shows the amount of money the community collects through special assessments, late fees, and interest/penalties.
An HOA statement helps members get a comprehensive picture of the community's financial stability and make informed decisions, including budget planning, expenditure prioritization, and setting community goals. The statement is also a critical communication tool that helps the board share crucial updates with the members and maintain transparency.
The HOA statement comprises several components that include the income statement, balance sheet, and cash flow statement. The income statement shows the community's revenue, expenses, and net income/loss. The balance sheet shows the community's assets, liabilities, and equity. The cash flow statement reflects the inflows and outflows of cash in the community. Each of these components helps members understand the community's financial standing from different perspectives.
Reading an HOA statement can seem overwhelming, especially if you have little or no accounting background. However, familiarizing yourself with the various components of the statement can make it less daunting. As a member, focus on the income statement to understand the community's revenue sources and expenses, and check the reserve fund balance to ensure the community has adequate funds to handle emergencies.
Ignoring HOA statements can lead to severe consequences, including late payment fees, interest, and penalties, and could ultimately lead to the association taking legal action. It may also lead to overspending and a dip in community financial health, which could potentially reduce the community's value and the homeowners' investments.
Overall, HOA statements are critical documents that every community member needs to understand to contribute towards the community's financial well-being. Remember to read the statement every month to stay updated with your community's finances, and if you have any questions or concerns, don't hesitate to contact your HOA board. Additionally, if you're looking to enhance your community's communication and make HOA statement management easier, consider using Community Connect Systems, a reliable community communication app. Contact us today for more information.