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REH Condo Accounting

Accounting Services for Condominium Properties

REH Condo Blog

22.02.2016

One of the most important steps a self-managed condominium corporation can take to control and moderate condo fees is to create an operating plan or budget. This step enables the board to monitor actual operating expenses against a budget.

Ongoing property maintenance and repairs are important because they will increase property values and your condo’s equity. An Operating Budget and a multi year Reserve Plan/Budget will provide a financial guideline for such maintenance.

A couple of months prior to your fiscal year end is a good time to give thought to beginning the budget process. A review of the year’s income and expenses to-date, with a projection of next year’s expenses, will permit you to formulate a budget plan for the upcoming year. In addition, a longer term review of the adequacy of your Reserve Fund balance should also be a part of the process.

It is important to note that budgeting is the best way to ensure that future monthly contributions are both reasonable and adequate ….no owner likes unhappy surprises that involve large condo fee increases, or a special assessment.

Ronald Hampton

February 22, 2016

Condominium Self Management

Are you discouraged with high management fees? Are you frustrated that major issues remain unresolved for long periods of time? Are unit owners unhappy with the lack of communication and response from your property manager?

Perhaps it's time to consider an alternative to professional property management for your condo complex. More and more condominiums are realizing the benefits of being self-managed. Self-management is ideally suited to smaller condo communities where residents show a pride of ownership and enjoy a close community environment.

Professional property management firms have high overhead costs. And also suffer from the constant difficulty of finding, hiring, and retaining qualified property managers who are increasingly in short supply. Their management fees reflect their high cost structure. In turn this necessitates a large portfolio of properties that must be handled by each property manager in order to earn enough revenue to offset these costs. Of course this means the property manager must divide his or her time between numerous clients, and therefore can not devote full attention to your condominium.

Large condominium corporations of 100 units or more, who have complex maintenance, repair, or legal issues, are better able to absorb the professional property management fees among their greater number of units. It only makes economic sense that the property management firm will devote the majority of their time and resources to their larger revenue clients.

By eliminating outside property management, a self-managed community can reduce condo fees. Or it may then be possible to increase contributions to their Capital Replacement Reserve Fund. With self-management a board of directors can gain direct control and supervision over regular maintenance and other operating costs. Self-management will increase the board’s flexibility and ability to directly respond to owner’s concerns.

In today’s age of information an active and informed board of directors can have access to all the resources and support necessary to successfully manage their condominium community. The Alberta Condominium Act and Regulations, which govern condominium corporations is available online and through the Queen’s Printer. Advice on condominium management such as how to conduct board meetings, policy formation, or how to find landscape contractors is readily available on the internet. Access to professional expertise is also readily available – legal, insurance, accountants, bookkeepers, building engineers.

The actual degree of hands on involvement by the board in managing a condominium can vary depending on the wishes or desired time commitment of the board. Many boards wish to formulate policy, regulations, manage and supervise the day-to-day maintenance trades, while contracting out the accounting function. The need for any legal or professional engineering services can be obtained on an as needed basis.

There can be any number of varying degrees of self-management. However, the worst scenario for condo owners would be to completely ignore the management of your complex and allow deterioration of the property and a corresponding decrease in property values. In reality each owner bears the responsibility to care for their property through their board of directors.

Whether management of the condo complex is accomplished through a professional property management firm, or by a form of self-management, the board of directors is still ultimately responsible under the Alberta Condominium Property Act to act in good faith, and in the best interests of all owners. Neglecting issues, ignoring problems, or refusal to act is really not an option for the board of directors.

Ronald Hampton - February 10, 2010

REH Condo Accounting