3 Ways to Bulletproof Your Association During a Recession

When the 2008 mortgage crisis hit, homeowners associations experienced difficulties due to the financial stress imposed on homeowners. Members found themselves in a position where they had to choose between paying their bills or their assessments, which posed a major challenge for associations. Many found themselves underprepared, unable to keep up with unanticipated costs, and with insufficient funds in their reserve accounts.

Since the pandemic struck in 2020, news outlets have been predicting a recession. Most experts expect this recession to last for more than four years, starting in 2023.

It’s time to consider what measures can be taken to ensure stability during these uncertain times. First and foremost, community associations must keep a well-funded reserve account. Are you doing these three things to protect your reserve fund?

• Do you conduct reserve studies every 3-5 years? All too often, community associations find themselves caught off guard by unexpected repairs and unable to front the bill. To avoid such surprises, conduct regular reserve audits. Such studies typically detail how long it will be before you need to repair or replace the association’s facilities and the cost of such repairs.

• Do you have multiple layers of security? Once sufficient reserve funds are in place, it is critical that those funds be kept safe. Best practice is to require a minimum of two members to sign off on checks and expenditures and a third member to review ledgers. Additionally, ensure your board members are getting to know the bank staff personally, as this can allow the bank to serve as another layer of protection. Last but not least, ensure your funds are insured by the Federal Deposit Insurance Corp.

• Are you getting the best rate? At Modern Bank, we offer one of the most competitive interest rates available. By keeping money in a Modern Bank account, community associations can earn 15 to 20 times the national average amount of interest while keeping money liquid and easily accessible. The key to being prepared is to be mindful of where you are storing your reserve money. The right bank will help you keep your funds accessible, protected, and recession-proof.

Interested in banking solutions for your homeowners association? Contact us at  deposits@modernbank.com | 212-323-1181