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A knowledgeable communication association manager will most often be the first resource a board turns to when preparing a budget. In fact, it may be the only other resource a board consults outside of the board members themselves. Remember, not only do the numbers need to add up, but the budget must also be properly adopted. A deficiency in the numbers may lead to a deficit. A deficiency in the adoption procedure may lead to problems in collecting unpaid assessments from delinquent members. Accordingly, it behooves a board to thoroughly vet any manager it wants to engage to ensure that the manager is knowledgeable and fits the needs of the association.


Another key component or team member, depending on your choice of analogies, is a knowledgeable certified public accountant (“CPA”). When I say knowledgeable, I do not refer only to general accounting and tax matters, but also to association issues. There is a certain uniqueness to community associations, compared to typical corporations or governmental entities, as there is a bit of both infused in the administration and operation of an association. Of course, a community association also brings in an element of “community” (hence the name “community association”), which is absent from a corporation or government. Thus, a CPA familiar with typical association issues will know what to do with an association’s TIN, and more importantly, will likely mean more tailored accounting and tax advice, which will assist in better financial management of the association.


A banker will also know what to do with the association’s TIN with respect to opening and maintaining bank accounts, as well as financing issues. There are banks familiar with community associations and their need for operating and reserve accounts. A banker from such type of bank may help a board determine what type of account will best suit the association’s needs. For example, perhaps the association does not expect the need to access a portion of its reserves for a given amount of time. The bank may offer an attractive certificate of deposit in which that money can be deposited.


Also, if ever an association needs to obtain financing for a capital project, a banker familiar with community associations will be able to provide that financing. Since reserves are rarely, if ever, fully funded, it is not uncommon that an association needs to adopt a special assessment to fund a portion of a capital project. Financing may provide a means for the association to have the funds available to pay for work while permitting owners to pay in installments over time, instead of one lump sum. That can ease financial burdens on individual owners and reduce the likelihood of the association having to deal with collecting unpaid assessments.


In addition to the manager, CPA, and banker, an attorney can provide valuable assistance with respect to the financial management of an association. For example, an attorney can file appropriate documents to reduce the assessed value of any association owned property used for common purposes to a nominal level, resulting in no taxes having to be paid on that property. Also, an attorney can advise the board on proper procedure for adopting budgets and special assessments to ensure the enforceability of assessments.


So, what’s in a TIN? Literally, just a bunch of numbers. However,                           


In parting, I would like to share a tin fact that I find interesting. Although I have never personally heard it, I have read that when one bends a bar of tin it makes a screaming sound called a “tin cry”. That sound results from the crystal structure of the atoms breaking. With that, I hope that all boards take advantage of available assistance when managing the finances of their associations so that the association never utters a tin cry.


42 | COMMON INTEREST®


A Publication of CAI-Illinois Chapter


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