Budget Frequently Asked Questions
What is an Association Budget?
Association Budgets determine the suggested cost each homeowner or occupant will pay to share in the upkeep and general expenses of common areas. The budget will address all common areas, break down the normal operating expenses and calculate the various components of maintenance of the long term function of the project.
What projects require an Association Budget?
All Common Interest Subdivisions which include Planned Developments, Condominiums, Mixed Use Project and even Vacant Lot Offerings are required to prepare an Association Budget.
How are monthly assessments calculated that each owner has pay?
The budget preparer will work closely with the developer, engineer, attorney and the Department of Real Estate to breakdown the cost of each component that has to be maintained in the common area of a project. There is a cost assessed to each item such as landscaping, electricity, painting, insurance etc…A monthly amount is determined and then divided by the number of lots or units in the project. Some projects have different amounts assessed to each unit based on the size of the unit. This is known as a “Variable Assessment”.
Who reviews the Association Budget?
If your development is a Common Interest Development that consists for five (5) or more units, you are required to submit the proposed budget to the Department of Real Estate as part of your filing package to obtain a Final Public Report. The Department of Real Estate reviews each line item on the budget and matches it against the plans, Governing Documents and Guidelines, to determine if the monthly amount is sufficient to cover all of the monthly operating expenses and long term reserves.
What is the purpose of the Association Budget?
To make sure there are adequate funds to properly maintain the project and enhance the value of the community.
Can the Budget be changed?
Once the Department of Real Estate reviews and approves the proposed budget for the Association, the Developer can increase the monthly budget up to 20% or reduce it by 10% without having to resubmit the Budget to the Department of Real Estate for another approval. After the project is sold out, the Association Board can adjust the budget on an annual bases within the guidelines and restrictions of the Governing Documents.