How do you read your association's annual budget?

What comes with the budget?

In California, the budget usually arrives as part of a larger annual budget report. Beside the operating budget — the year's expected income and costs — the report summarizes the association's reserves and the board's plan for funding them, says whether a special assessment is expected, sets out any loans the association has, and summarizes its insurance: the insurer, the type of cover, the limits and the deductibles.

Read the whole report, not only the page with the new monthly amount. If your fees changed, look for the reasons there before you ask.

Which lines should you read first?

Start with the lines that can change most at renewal, or that say least about what they pay for: insurance, the reserve contribution, utilities and service contracts, the management company's fee, anything called miscellaneous or other, and any line that appears for the first time. Why did your HOA fees go up? sets out what to ask about each.

Check the categories first. A line split in two, two lines merged, or a cost moved from one section to another can make a line look bigger or smaller than it is.

What does the reserve section tell you?

Two figures matter most: how much the association holds in its reserves, and how much the reserve study says it should hold by now. The report may express the difference as a percentage — how far the reserves are funded.

A low figure is not a verdict on the board. It tells you that the contribution may need to rise, or that a special assessment may come, and both are worth asking about before they happen. Look, too, for whether the board has put off any major repair or replacement, and why.

How does the budget become your monthly fee?

The budget sets what the association needs from its owners for the year. The association's governing documents say how that total is shared among the homes — equally, or by a measure such as size — and your yearly share is then billed in installments, such as monthly or quarterly.

So if the total rose and the way it is shared did not change, your fee rose in the same proportion. If your fee rose by more than the total, ask why.

What should you ask the board?

• why each line that moved changed;
• the full reserve funding plan, if the summary leaves questions;
• whether any repair or replacement has been put off, and why;
• the terms of any loan the report lists;
• what was actually spent last year, line by line — the year-end financial statement shows it.

Put your questions in writing, and keep a copy.

What does Synclair do?

Synclair sets out your association's annual budget and year-end financial statement line by line, and shows what the figures say. Each budget line sits beside last year's figure where the budget prints one, and a year-end financial statement for the same fiscal year can be set beside the budget. These are the association's own figures, not amounts worked out for your home. If you're paying for a service you aren't receiving, you can record it, and it stays on record with a date. If something needs raising, Synclair can draft a letter for you to check and send in your own name, and once it's sent you can record the reply and the outcome.

Only owners pay for Synclair: never managers, insurers or suppliers.

One document is enough to start. It is free for three months, for one property, and the three months begin when your first analysis is ready — not when you sign up. There is one free period for each email address.

Documents for a property in California or New York State are uploaded from an account: sign up, then upload the annual budget or the year-end financial statement.

See a worked example→