CAI-NJ February 2021

Keeping Your Association on the Right Financial Track

By Michael Mezzo, CPA and Joseph Chorba, CPA, CFE, WilkinGuttenplan

W hether it be as simple as balancing a checkbook or as sophisticated as running a business, most of us can agree that dealing with finances is not always fun. It requires a watchful eye to constantly monitor financial activity, as well as a strong discipline to keep your finances on the right track. This is often easier said than done. Without the right knowledge and preparation, your financial train can easily become derailed. Within this article, we will help to identify some of the most common pitfalls boards fall into with respect to financial matters and will provide guidance to help prevent your finances from running off course. Although it may seem obvious, the maintenance fee is one of the most common sources of financial pitfalls. Far too often, we find that the decision process for determining the annual maintenance fee becomes clouded with irrelevant factors. For example, the news of a main- tenance fee increase, or even worse, a special assessment, is something that is often met with opposition from the owners. This can make these usually elected to relatively short terms, typically ranging from two to three years. These short terms make the decisions to increase maintenance fees or pass a special assessment even more difficult for fear of being the “bad guy” during their term as a board member. Factors such as this should never impact the decision to increase (or maintain) the current maintenance fee. There will always be a personal aspect to these financial deci- sions. An increase will not only impact your own wallet, but also the wallets of your neighbors and friends within the community. Although it may seem like you are “doing the right thing,” allowing these factors to sway your opinion will only put your association at a disadvantage. It is important to remember that as a board member, you have a fiduciary responsibility to the unit owners to make decisions that are in the best interest of the entire CONT I NU E S ON PAGE 42 “...the maintenance fee is one of the most common sources of financial pitfalls.” decisions particularly uncomfortable for some board members. In addition, members of the board are

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