CAI-NJ Aug. 2020(w)

“...there can be an overwhelming number of rules and regulations the board needs to adhere to...”

association is not compliant with any terms contained in the loan agreement, the association may be considered in default or incur a penalty. Another important aspect that boards should remain aware of is the financial impact that all of these different reg- ulations may carry. For example, as discussed above, most associations are required to conduct a financial audit of their records on an annual basis. This audit is typically performed by an inde- pendent accountant and consists of an annual fee for the service. Other systems of the site, such as the fire suppression system, may require frequent mainte- nance or inspections in order to remain in compliance with the regulations of the municipality. As with the annual audit, these inspections come at a cost. Housing inspections by the Department

of Consumer Affairs is another category of regulations to which the board must comply. All of these external regulations have one thing in common, they will result in an expense to the association. These items can often be difficult to budget for as they do not all occur on an annual basis. As such, it is import- ant for boards to track these required inspections and ensure that sufficient funds are being put away annually. For example, if a $3,000 inspection of the fire suppression system is required every three years, the board could spread out the cost of the project by budget- ing $1,000 per year. This will help to ensure that the association has sufficient funds available to remain in compliance with the regulations. As you can see, there can be an overwhelming number of rules and

regulations the board needs to adhere to whether these come from the internal governing documents of the association, or an external regulatory authority. In this article we have touched on the primary areas of operating an association that require compliance, but each and every association has its own unique set of circumstances that demand the board’s attention. Fortunately for boards, there are countless resources and profession- als available to help them navigate these rules and regulations and ensure they remain compliant in all areas. n

CIVIL & STRUCTURAL ENGINEERING ARCHITECTURE & DESIGN SERVICES MEP & ENERGY CONSULTING DRONES / AERIAL IMAGING FACADE & BUILDING ENVELOPE EXPERTS

EXPERT WITNESS SERVICES CAPITAL RESERVE STUDIES TRANSITION REPORTS STORM DAMAGE ASSESSMENT FORENSIC ENGINEERING www.falconengineering.com info@falconengineering.com (800) 839.7740

682 Highway 202/206 Bridgewater, NJ 08807

17

A U G U S T , 2 0 2 0