Good advice for the association's finances

On this page, we have gathered everything that your board should know about the finances in your homeowners' association. It concerns your budget and annual financial statements, operations and maintenance, as well as costly construction projects.

In this section, you will find information about the budget and annual financial statements that set the financial framework for your homeowners' association.

Budget

Every year, in connection with the annual financial statements, your administrator prepares a proposal for the association's budget for the following accounting year. The board recommends the budget for approval at the general meeting. At the same time as the budget approval, the general meeting decides on the common expenses for the coming year. In connection with the approval of the financial statements, the limits for expenses that the board can incur during the financial year without needing continuous approval from the general meeting are also determined.

Annual Financial Statements

The annual financial statements consist of two main elements: the income statement and the balance sheet.

The income statement shows how the past year has performed with a detailed breakdown of the revenues and expenses the association has incurred. The income statement also shows how much the association has repaid on its mortgage.

The balance sheet presents a status of the association's assets at the end of the financial year. The balance sheet is divided into assets, showing the values the association owns, and liabilities, showing the debts and equity in the association's finances.

The property is the homeowners' association's most significant asset. The long-term value of the property depends on how the association manages and maintains it. In a typical board, members may not necessarily have the knowledge, experience, or expertise to handle the planning and decisions necessary to keep the buildings well-maintained. Our recommendation for homeowners' associations is to create a maintenance plan and appoint a dedicated operations and construction advisor to assist with its implementation.

Get an overview of maintenance

There are four fundamental elements crucial for sustainable and effective property maintenance:

1. A maintenance plan that provides an overview of the property's condition and a plan for its maintenance over a 5- or 10-year period.

2. An annual operating budget that includes specific maintenance tasks from the maintenance plan, broken down into detailed and targeted activities with a detailed budget.

3. Renovation projects (construction cases) that timely ensure the replacement of worn building components.

4. Targeted financial management that ensures the association can finance both maintenance and renovations without unexpected and unnecessary increases in homeowners' expenses.

Maintenance plan and operating budget go hand in hand

The maintenance plan and operating budget are updated annually and then approved by the general assembly. Before formulating the operating budget, we recommend that you, along with the caretaker and/or operations advisor, assess the property's condition. Based on this assessment, the next year's operations can be organized accordingly. Adjustments to the maintenance plan may be necessary during the year. To ensure timely decisions regarding these adjustments, maintaining a continuous dialogue with the caretaker and/or operations advisor is essential. This way, you can keep track of the maintenance's execution as planned and account for unforeseen changes.

Get the help that makes sense for you

As a board, you are responsible for maintaining the property in the homeowners' association, and we recommend seeking the help that makes sense for you. For example, collaborating with an operations advisor can assist in planning and managing ongoing operations. Daily operations and maintenance can be performed by a caretaker or property service company based on an agreement. The caretaker or company will work under the board's or operations advisor's guidance, following the homeowners' association's maintenance plan and budget. At DEAS, we can assist you in managing the maintenance of your homeowners' association's buildings, both for daily tasks and long-term planning.

Building projects can be broadly divided into two main groups:

1. Renovation projects, where worn building components are maintained and replaced if needed.

2. Improvements, where something new is added to the property (e.g., balconies, elevators, etc.).

Here is the typical process for building projects

1. Idea and preliminary planning: Formulating the initial project and preliminary budget.

2. Initial decision at the general meeting: Authorization for the board to incur expenses for planning, obtaining quotes, and public approvals.

3. Planning and obtaining quotes: Preparing a proposal for the general meeting regarding the project's implementation, including an assessment of the financial implications (cost and financing).

4. Execution of the building project: Construction credit, construction insurance, supervision, notifying tenants, and financial follow-up.

5. Handling the unexpected: Dealing with any damages that occur during the process. This may involve insurance claims, changes in requirements or needs, or modified recommendations as more information becomes available.

6. Completion: Construction account, final financing, final calculation of contributions or shares of communal loans, quality assurance.

There are many things to keep track of when an association is carrying out a building project. We're here to help you through the entire process and make it as seamless as possible.

Building project management

We know that a building project can be a daunting task. We have many years of experience in construction management and can help you with all aspects of the process and ensure the successful realisation of your construction project.

You can leave the building administration to us, so that you can focus on your association and the important work.

Examples of tasks we solve:

• Impact calculations for the association's finances.

• Information about financing options.

• Preparation of final building accounting.

• Organising construction insurance.

• Payment of invoices.

• Securing financing.

• Handling payments from the association's members.

An in-depth planning with us ensures that your organisation is better prepared in the event of unforeseen financial surprises.

DEAS also offers building technical consulting services to associations. We have a large team of building technical experts ready to advise you on all aspects of your construction project. 

Whether you are planning a major renovation, replacing installations, or ensuring that your buildings meet the latest standards, we have the necessary expertise. Our building technical consulting includes assessing building conditions, inspections, identifying potential issues, and developing action plans.

Our goal is to ensure that your properties are safe, durable, and meet the highest quality standards.