Are you a board member, homeowner, or resident of a managed association? Are you struggling to understand what your assessment dollars are used for and how they benefit you and your community? Living in a managed community comes with many benefits, including common areas or utilities, which are managed and maintained by the association’s budget. The budget is funded by collecting fees from owners, known as assessments, which are essential for maintaining these common areas and other features, as well as the quality of life within your association.

For Homeowners:

Simply put, an assessment is a set fee per home or unit determined by and paid to the association by the owner on a monthly, quarterly, semi-annual, or annual basis. This assessment covers the basic costs of necessary services and maintenance, which may include landscaping or pool vendors, security, upkeep of utilities and common areas, insurance, and even lawyers. Unlike special assessments, which are collected due to an unplanned or large-scale project, a portion of the recurring regular assessment can also be allocated to fund planned, larger-scale repairs or capital construction projects within communal property. These funds ensure your community remains safe, clean, and up to standard. Associations do not function for profit but rather to maintain and govern. It’s important to note that every dollar is accounted for within the budget and allocated to essential services that benefit all community residents.

The exact amount of the regular assessments will depend on the types of amenities included in each community, which impacts insurance premiums, utilities, and maintenance costs. A community also needs day-to-day management and accounting. The cost of management services depends on the community’s location, community size, needs, and the full extent of management services required. The cost will also depend on whether the community decides to hire a community management company or directly hire staff or personnel for the community. Hiring a community management company with a dedicated part-time manager and support staff to assist with things like financial reporting can be one of the most cost-effective ways to manage a community. These costs typically only make up a small portion of the recurring assessments – on average, owners pay less than $15 per month in management fees when utilizing a community management company.

Residents should refer to their community’s governing documents, often found on their online portal, or contact their association’s board of directors to discuss any questions or concerns regarding their assessments and how the funds are being utilized. Attending board meetings that are open to residents is also a great way to gain an understanding of how funds are budgeted.

For Board Members:

As the board determines the budget and assessment fee, the board must ensure the budget covers all necessary expenses without overestimating the assessment fee for homeowners. To do this effectively, the board regularly reviews the community’s financial health and expenses. This helps identify areas where costs can be reduced without compromising on quality or planning to increase fees to meet increasing expenses. In addition, the board also needs to allocate a portion of the assessments to a reserve fund, a financial safety net for unexpected expenses, or large projects that will be needed in the future. By setting aside a portion of the assessments each month, the community can minimize or avoid special assessments or sharp increases in recurring assessment fees.

The community manager could and should assist the board with planning and budgeting each year. For boards that work with Sentry Management, Sentry can also advise on loan options available to supplement association needs.

Need More Assistance?

Your assessments are crucial to keeping the community running smoothly, maintaining its appeal, funding necessary services, and helping manage the shared spaces all residents can enjoy. For more assistance and information on your community’s assessments, fees, and governing documents, log on to CommunityPro® to view more.

Sentry Management is a full-service community management company. Sentry’s business is the day-to-day operation of communities, homeowner associations, and condominiums. Sentry is accredited as an AMO® (Accredited Management Organization) by the Institute of Real Estate Management, providing the independent evaluation that Sentry has one of the highest operating and financial standards in the industry. Sentry operates in dozens of localities in Florida, Alabama, Arizona, Colorado, Georgia, Idaho, Iowa, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, New Mexico, New York, North Carolina, Ohio, South Carolina, Tennessee, Virginia, Washington, and Wisconsin.