You’ve just been elected to your HOA board in Charlotte or one of the surrounding communities. If you’re feeling overwhelmed by the financial responsibilities, you’re not alone. Financial management is your most critical duty as a board member, and it can feel intimidating without a background in accounting or finance.
Here’s the good news: you don’t need an MBA to get this right. You need a solid understanding of the fundamentals, a commitment to transparency, and the willingness to make decisions that benefit your community long-term. Whether your community is in Weddington, Fort Mill, Huntersville, or anywhere else in the Charlotte metro area, the financial principles remain consistent.
When you accepted that board position, you took on a fiduciary duty – a legal obligation to act in the best interests of the association and its members.
This duty includes three key components. Your duty of care requires informed decisions. You can’t vote on budgets you haven’t reviewed or approve contracts without doing your homework. Your duty of loyalty means the association’s interests come before your personal interests. Your duty of obedience to governing documents means your community’s covenants, bylaws, and state laws aren’t optional.
Board members in communities around Matthews and Indian Trail have faced legal trouble for ignoring these duties. One treasurer approved contracts with his brother-in-law’s company without competitive bids, costing the association thousands in a legal settlement.
Your financial decisions must be made carefully, documented thoroughly, and always with the community’s best interests at heart.
HOA financial management isn’t just one thing – it’s a system of interconnected responsibilities that work together to keep your association financially healthy.
Your association’s primary income source is member assessments – monthly or quarterly dues homeowners pay. You need systems for collecting assessments, tracking payments, and handling delinquencies consistently. When you let one homeowner slide on late payments while pursuing another, you’re violating your governing documents and creating liability.
Many Lake Norman area communities use automated payment systems that improve collection rates and reduce the time your volunteer board spends chasing payments.
You’re responsible for everything from lawn care to insurance premiums. Think about vendor relationships as partnerships. The landscaping company maintaining your Rock Hill common areas or the pool service in Waxhaw – these relationships matter. But you still negotiate fair contracts, get multiple bids for significant work, and hold vendors accountable.
Creating an approved vendor list works well for larger Charlotte communities. You’ve already vetted these companies, so when something breaks, you’re not scrambling to find someone reputable.
Your homeowners have a right to know how their money is spent, and you need clear financial reports to make informed decisions.
Review these reports monthly: balance sheet (assets and liabilities), income statement (actual vs. budget), accounts receivable aging report (who owes money), and cash flow statement (money in and out).
If these terms sound foreign, learn what they mean or work with a management company or accountant who can explain them plainly. Board members in Mecklenburg and Union counties get in trouble when they sign off on reports they don’t understand.
Maintain at least two account types: operating accounts for day-to-day expenses and reserve accounts for long-term capital needs.
Your operating account should hold enough to cover three to six months of expenses. This protects you from cash flow issues when collection is slow or unexpected expenses arise.
Reserve accounts hold money specifically for major repairs and replacements – roofs, parking lots, amenities. North Carolina doesn’t legally require reserves, but proper funding is non-negotiable for responsible management.
Choose banks offering FDIC insurance, online access, and HOA experience. Several Charlotte banks specialize in association accounts.
Require dual signatures on checks above $1,000 (or higher for larger communities). This prevents fraud and ensures oversight of significant expenses.
Your annual budget guides all financial decisions for the year. Start the process three to four months before your fiscal year begins – September for most calendar-year Charlotte-area HOAs.
Review current expenses, identify variances, and adjust for the coming year. Don’t just add 5% to last year’s numbers. Look at each line item critically. Get updated vendor quotes. Consider upcoming projects. Factor in inflation.
Include these categories: administrative expenses (management, accounting, legal, insurance), operating expenses (utilities, landscaping, maintenance), reserve contributions, and a 5-10% contingency fund.
Gastonia and Huntersville communities create problems when they underestimate expenses to avoid raising assessments, then face mid-year special assessments. That destroys homeowner trust.
Your association owns assets worth hundreds of thousands or millions of dollars. Roofs, roads, pools, clubhouses – all have limited lifespans. When they fail, replacement costs are substantial.
Reserve funds are your savings account for inevitable replacements. Proper funding means having money set aside rather than hitting homeowners with $5,000 special assessments.
Well-managed associations maintain reserves at 70%+ of full funding. Get a professional reserve study evaluating your components, estimating useful life, and calculating annual contribution needs. Update studies every 3-5 years.
Treat reserve contributions as non-negotiable budget expenses, like insurance. Communities treating reserves as optional inevitably face crises.
Fraud happens more often than you’d think. Effective controls protect everyone.
Implement these basics: dual signatures on large checks, regular bank reconciliation, separated duties (one person shouldn’t control everything), annual audits or CPA reviews, and limited debit card access.
Review monthly bank reconciliations – don’t just file them away. Ask questions if something seems off.
Weddington and Marvin communities often require annual CPA reviews or audits. Reviews are less expensive than audits but still provide independent verification.
Should you hire professional management or self-manage? It depends on community size, complexity, and your board’s capacity.
Self-management works for very small communities (under 50 units) with capable, available board members. Most Charlotte-area communities benefit from professional help – full-service or specific services like financial management.
Good management companies bring expertise you probably lack: knowledge of state laws, vendor relationships that save money, continuity during board turnover, and daily operations handling.
Evaluate beyond monthly fees. Ask about financial reporting, emergency handling, staff qualifications, and technology. Get references from similar communities.
You retain ultimate responsibility even with professional management. They handle implementation; you make the big decisions.
North Carolina’s Planned Community Act (Chapter 47F) and South Carolina’s Title 27, Chapter 31 govern HOA finances. These address assessment collection, late fees, liens, annual reporting, and document retention.
Your governing documents – declaration, bylaws, articles – create additional community-specific requirements. Read these documents. If unclear, consult an HOA attorney. The consultation costs far less than a lawsuit from homeowners claiming you violated your own rules.
Most HOAs must file Form 1120 or 1120-H with the IRS annually. Failing to file results in penalties. Hire a professional specializing in HOA tax returns unless you have a qualified CPA on your board.
Underfunding reserves: You skimp on contributions to avoid raising assessments. This works until major repairs are needed, then you hit homeowners with preventable special assessments.
Inconsistent assessment collection: You let one neighbor skip payments, others want the same treatment, and cash flow becomes a mess. Enforce collection policies consistently.
Poor documentation: You approve contracts in hallway conversations without formal records. When disputes arise, there’s no documentation of what was decided or why. Make all financial decisions in properly noticed board meetings with recorded votes.
No competitive bids: You renew vendors without checking market rates and overpay by 30% or more. Get at least three quotes for expenses over $5,000.
Commingling funds: Mixing operating and reserve accounts makes proper tracking impossible. Keep accounts separate and transfer money only with board approval.
Your homeowners deserve transparency about how their money is managed. Regular communication builds trust and reduces conflicts.
Provide at least quarterly financial updates including summary statements, major project updates, and budget variance explanations. Some communities post monthly reports online or hold annual budget meetings.
When raising assessments or implementing special assessments, communicate why before bills arrive. Explain what’s driving the increase, show cost control efforts, and be transparent about what the money funds. Homeowners accept increases they understand.
Be honest about financial challenges. If you’re struggling with delinquencies or facing major unexpected expenses, don’t hide it. Present problems with your plan to address them. Most homeowners are understanding and supportive of transparent boards.
You have significant authority over day-to-day financial decisions as outlined in your governing documents. However, major decisions like special assessments over certain amounts or amendments to the budget typically require homeowner approval. Your specific authority is defined in your community’s bylaws and declaration of covenants. In North Carolina, boards generally have broad discretion to manage the association’s affairs, but you must act within the scope of your governing documents and state law.
Your operating budget covers day-to-day expenses that keep your community running – landscaping, utilities, insurance, management fees, and routine maintenance. This money cycles through quickly. Your reserve budget is a long-term savings plan for major repairs and replacements like roofs, roads, and amenity renovations. Think of operating funds as your checking account and reserves as your savings account. Both are essential, and you should never raid reserves to cover operating shortfalls except in genuine emergencies.
Most experts recommend updating your reserve study every three to five years. However, if your community has undergone significant changes – added amenities, completed major projects, or experienced unexpected component failures – you might need an update sooner. An annual review of your existing study is good practice to adjust for inflation and any changes in component condition. Charlotte-area communities face specific climate factors like humidity and seasonal temperature swings that can affect component lifespans, making regular updates especially important.
Consistency is key. Your governing documents and North Carolina law outline the process for handling delinquencies. Typically, this includes late fees after a grace period, formal notice requirements, and eventually placing a lien on the property if the debt remains unpaid. Work with your management company or attorney to ensure you’re following proper procedures. The most important thing is treating all homeowners equally – you can’t enforce rules selectively. Many Charlotte-area boards find that offering online payment options and payment plans reduces chronic delinquencies.
This depends on your community’s size, complexity, and your board’s capacity. Self-management can work for very small associations (under 50 units) where board members have the time and skills needed. However, most communities benefit from at least some professional help, even if it’s just financial management or consulting services rather than full-service management. Consider the time commitment required, the expertise needed for your specific challenges, and whether your board can provide continuity when members turn over.
First, verify the expense is truly necessary and get multiple quotes if time allows. Check your contingency fund – well-run associations budget 5-10% for unexpected costs. If the expense exceeds contingency funds, you have several options: delay the expense if it’s not urgent and work it into next year’s budget, use reserve funds if the expense qualifies as a capital item (though this should be a last resort), or implement a special assessment following the procedures in your governing documents. Document the decision thoroughly and communicate clearly with homeowners about why the expense was necessary.
At minimum, you should review a balance sheet showing all assets and liabilities, an income and expense statement comparing actual results to budget, an accounts receivable aging report showing outstanding assessments, a general ledger detailing all financial transactions, and bank reconciliations confirming that your records match actual bank balances. These reports should be distributed several days before meetings so everyone has time to review them. If you don’t understand something in these reports, ask for clarification – that’s fulfilling your duty, not showing ignorance.
North Carolina doesn’t require HOAs to maintain reserve funds, though it’s still best practice. The state’s Planned Community Act (Chapter 47F) governs most HOA operations, including financial matters. North Carolina allows HOAs to place liens and potentially foreclose on properties for unpaid assessments, but the process has specific requirements. The law also requires HOAs to provide financial statements to homeowners upon request. Compared to states like Florida or California, North Carolina has relatively less regulation, giving you more flexibility but also more responsibility to self-regulate.
*Cusick Company has been providing professional HOA management services to communities throughout Charlotte, NC, and the surrounding areas for over 25 years. Our financial management expertise helps boards fulfill their fiduciary duties while protecting property values and building stronger communities. Contact us at (704) 544-7779 to learn how we can support your association’s financial success.*
