COA billing question

Jeff, at a minimum, each charge should carry its own item/identification number in the accounting system to facilitate accounting, report generation, and budgeting.

We maintain two or three types of accounts for almost all our clients: operational checking, reserve, and sometimes an operational reserve which is used by some clients to hold operational funds for large non-reserve items, such as annual insurance premiums which are accrued during the course of the year. Some clients with large reserves will "ladder" their funds into different savings type accounts to gain advantageous interest rates.

I recommend you and your board discuss why it may be useful to segregate the funds, and also discuss it with your accountant. As long as your accounting system can provide reports which segregate the items you mentioned I see no need to maintain separate accounts other than as I described above. An exception might be if you have non-assessment taxable revenues, such as from pool and common facility rentals, etc. Your accountant should provide guidance in such situations.

In a chart of accounts, different general ledger codes are set up as well as different posting codes.

For instance, one can bill on the same invoice, the regular assessment, a special assessment, maybe a parking space charge, a late fee and an interest charge for past due account.

Followup:

If you send an invoice with Monthly dues, parking, violation late fees, etc. and the owner sends a partial payment that would be enough to cover the monthly dues and not the rest, where does this payment get applied.

IE: the owner disputes some charges and refuses to pay but will pay the monthly dues. How would you know to apply this to the dues or which charge to apply to.

I would think that this would come into play because not paying certain things would have different repercussions than others would. If you take the partial payment and apply it to parking and fines, then the owner would be delinquent on dues for which they may possibly be foreclosed upon but will still have a parking space, where as if you apply it to the monthly dues and not parking you just lose the parking spot

In my community we wouldn't send a single invoice that mixes the monthly assessments and fines. Homeowners receive a coupon book each year to use with their assessments, and fines appear on separate notices. Legally assessments are different from fines. The association can foreclose for non-payment of assessments, but not so for fines for violations. In addition, homeowners may dispute fines and the association may forgive some or all of the fines it imposes; however, there is no negotiating on the amount of assessments.

You should have a delinquency policy and schedule of fines that spell out when items are considered late, penalties for late payment and the order in which payments are applied when multiple things are outstanding. If you don't have these items in place, it would probably be better to direct partial payments toward the assessments. This could end up in court eventually, and courts often frown on association actions that they think are "abusive" - by directing partial payments towards fees first it may appear that the association is trying to force a foreclosure.

I stand corrected: Ohio condominium law also refers to fines as "enforcement assessments", which puts them in a different category than usage fees and the like. The law also specifies that, unless the declaration states otherwise, payments are applied to interest, administrative late fees and legal collection costs AHEAD OF principal payments.

As with so many other questions, the answers are in the declaration and in state laws...

Royal

Do you know of any association in SC that tried to foreclose based on unpaid fines?

When we asked our attorney (one of the largest HOA Law Firms in SC) about this, he said he was pretty sure no court in SC would allow foreclosure based on unpaid fines. He said his firm would never represent an HOA in such an action.

ps.



sounds just like the bums we just fired - the SC Bar even voided their fee

PERFECT

ERGO: