CAI-NJ Aug. 2020(w)

DEALING WITH THE MANY FACETS OF

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By Carly Brancato, CPA and Michael Mezzo, CPA, WilkinGuttenplan

W hether it be within our local municipalities, social groups, or even within our own com- munities, it seems that we are surrounded by a world of rules and regulations. For a condominium or homeowners association, remaining in compliance with the countless rules and regulations impacting your site can be a difficult course to charter. This month’s issue has discussed many of the different issues of compliance that condomini- ums and homeowners associations must consider. Within this article, we will discuss some additional regulations which boards should be aware of, as well as their financial impact. One of the first places boards can look for regulations is within their own internal set of bylaws as these are con- sidered the foundation for the way in which an association operates. Often, an association’s governing documents set forth certain rules to which the board has a fiduciary respon- sibility to adhere to. Does the association need to have an audit done? How often is the board required to meet? How often should open meetings for homeowners be held? Is a capital contribution collected at the time of each closing? Are late charges or penalties applied to maintenance fees submitted after the due date? If so, what are these charges? All this information and more can be found in the governing

documents of every association. Most bylaws require that on an annual basis, the board conduct a financial audit (to be completed by an indepen- dent auditor) of the books and records of the association. Furthermore, the bylaws may require a timeline for said audit. For example, some bylaws require that the audit be completed no later than 90 days from the association’s year end. It is important for boards to be aware of such financial regulations in order to ensure that they remain in compliance with their governing documents. Other regulations included within an association’s gov- erning documents can include restrictions on voting rights, use of common amenities and general operation of the site. Although, over time the board members and management can and likely will change, the governing documents pro- vide consistency for the association’s operations and act as a guide for the current board. It is vital that all board members familiarize themselves with the regulations includ- ed within the bylaws to ensure that they are acting in good faith and complying with the rules set forth in their internal governing documents. The board must also ensure that they are enforcing the rules and regulations outlined in these governing documents in a consistent and uniform way. In addition, it is not uncommon for a set of governing CONT I NU E S ON PAGE 14

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