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HOA Fee Settlement – the Annual Accounts for Condo Owners

The HOA fee settlement, also called annual maintenance assessment, is compiled by the manager once a year, and must be approved by the home owner association (HOA) at the meeting of owners. The HOA fee settlement lists and reconciles all revenues and expenditures of the previous financial year. As a rule, the financial year will coincide with the calendar year, and possible exceptions tend to be governed by the condominium declaration.

A HOA fee settlement must be complete, clearly structured, and intelligible even for non-experts. It should itemize reserves, liabilities, and revenues of the home owner association. Revenues include, for one thing, the HOA fee (also called condominium fee or maintenance assessment) paid in by the owners. On the other hand, they may include rental income from let common ownership areas as well as interest income. Another item to be listed includes expenses that accrued in the course of the financial year: on the one hand the total costs of the home owner association, and, on the other hand, the pro rata expenses for each owner. Also, the manager should identify the allocation key that is used to assess the pro-rata costs – including the method by which the allocation key was derived. Aside from the settlement for the home owner association as a whole, the manager compiles separate settlements for each owner. These include possible additional payments or credit, as the case may be. Obviously, each owner should carefully review their settlement statements.

The costs of a given owner break down into recoverable and non-recoverable items. Private investors need to bear in mind: As the name suggests, only recoverable costs may be allocated to the tenant. Exactly which costs qualify and which do not is governed by the German Operating Costs Ordinance. They include utility costs for water, heating, and waste disposal, among other things. Maintenance, cost of capital, and administrative overhead, by contrast, cannot be allocated to the tenant.

Whether Prior to an Acquisition...

Even ahead of an acquisition, the Accentro Real Estate Encyclopaedia offers interesting facts and decision guidance: We will coach you through the first steps on your path to homeownership. For instance, it provides information on the process flow of a condominium purchase. It will also tell you what sort of documents you need in order to buy property, and where to obtain them.

... or after – Our Real Estate Encyclopaedia Provides the Answers You Need

Once you have bought a property, you may wonder who is going to manage your condo and how. After all, caretaking your property is one of your main obligations as a condominium owner. In addition to numerous tips and suggestions, you will find answers here to many questions involving the property management subject, such as: What does “individual freehold ownership” mean? What exactly do “condominium regulations” govern? And what does the term “condominium fee” imply? In addition, we elaborate subtle differences between terms such as “real estate management” and “corporate real estate management.”

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