Important Questions Homeowners Should Ask at Annual Meeting

The financial statements usually given at the annual meeting consist of the Balance Sheet and Budget Comparison.  They are intended to give the reader a picture of the financial health of the community.  The problem is that they fail to give a complete picture.



The budget comparison shows the reader the amount that was expected to be spent and what was actually spent is important.  But, one very important aspect of the financial health is not shown.  The amount owed to the HOA.  The income on the budget comparison is not as clear cut as the expenses.  We have to be concerned with income just as much as we are with our spending.

The amount owed to the HOA commonly referred to as the accounts receivable balance or past due balance.  The budget only includes the amount of money that will be billed in that year.  If the dues are $100.00 per month and there are 200 owners the amount billed annually will be  $240,000.00.  The total amount received for dues only was $220,000.00.  The budget comparison will show that a variance of ($20,000.00) is owed.   Some people may look at this and say that the past due balance is $20,000.00.  Which is wrong. 

At the end of 2011, not all the money owed the association was paid.  If we say that the total amount owed to the HOA at the end of 2011, was $25,000.00.  This would include dues, late fees, violations, legal fees, etc.  Of the $25,000.00 we'll say $10,000.00 of it is dues and $15,000.00 is other.  In 2012, $8,000.00 in dues from 2011, was paid.  This means of the $220,000.00 received for dues, only $212,000.00 of it was paying dues billed in  2012.  This means the 2012, past due dues totals $28,000.00.  Plus, the remaining $2,000.00 from 2011, dues makes $30,000.00 and the remaining $15,000.00 for late fees, legal, etc. from 2011, gives us the total amount of the past due accounts receivable balance of $45,000.00.  This large of a balance is alarming and should be questioned.  It is something that you cannot see on the financial statements and boards may not tell you.

Owners can ask general questions regarding the past due amount.  Such as total, how many months is it taking to collect from one account on average; is the manager staying on top of collections, etc.  You just cannot ask which owners are past due or why they are past due.  Just because it is an executive session topic does not mean general questions are not allowed to be discussed.

Remember this is a meeting of the members for the members to conduct business.  It is not a meeting of the board for the board to conduct business.  Members can make motions to force the board do take a specific action, limit their actions, restrict their ability to spend money, if the owners want the board to do something or stop doing something, want the board to write an amend to the rules or governing documents it just takes making a motion and for it to pass by a 51% vote of those at the meeting.  This is the time for the members to speak up and act on issues that they are unhappy about.  Sure ask questions then use the information given to decide if the owners need to take action.  If so, make the motion.  Don't wait to discuss it with other owners.   Don't be embarrassed if it doesn't pass.  Your taking an active role in your community by using your voice to make the motion.  You'll be surprised to find more owners will agree with you than you think.  If you want later pool hours; make the motion.  If you want a new landscape company; make the motion. 

Don't be afraid to ask the tough questions and use your voice to spark change.   Don't assume that the board will tell you what you really need to know.