Calculating & Collecting Owners’ Payments


Term Interest Rate


Property Unit 1 2 3 4 1 2 3 4 1 2


Lot # 101 102 103 104 201 202 203 204 301 302


5.00% Annual


15


Owner Ratio 1.23% 1.13% 1.22% 1.22% 1.23% 1.22% 1.13% 1.22% 1.22% 1.13%


collected and being applied to the loan which will cause lost interest.


The lag time between prepayments being collected and their application to the loan causes lost interest.


Create a separate “fund” in your software.


` This ensures that funds are not comingled. ` This makes it easier for the manager, accountant, CPA, and bank to track the money coming in for the special assessments vs. regular assessments.


Create amortization schedules for each owner.


` This is especially helpful when owners are assessed based on a percentage of ownership and when payoffs are requested.


` This allows the manager and the board to track the status of each owner.


` If the association and management company allow full or partial payoffs, this assures accurate tracking.


Have a predetermined procedure that includes communication between the board and the management company as to when and how prepayments are applied to the loan.


0.42% Monthly


180 Loan Amount


Total Assessment $12,300 $11,300 $12,200 $12,200 $12,300 $12,200 $11,300 $12,200 $12,200 $11,300


MonthlyPmt w/o Interest $68.33 $62.78 $67.78 $67.78 $68.33 $67.78 $62.78 $67.78 $67.78 $62.78


$1,000,000


MonthlyPmt/Interest $97.27 $89.36 $96.48 $96.48 $97.27 $96.48 $89.36 $96.48 $96.48 $89.36


` This creates a checks and balances system. ` Be sure the board understands when re-amortizations can and should take place. This is determined in your loan documents.


Be sure that the board understands when re-amortizations can and should take place.


Develop a Quick Reference Guide that includes important dates.


` Origination date ` Maturity date (be sure you know if the loan is fully amortized or if there is a balloon payment)


` Date of rate adjustment (if applicable) ` Current balance/current payment (can be updated when this is being reviewed monthly or annually)


` Reamortizations cost and frequency ` Loan covenants/reporting requirements(Debt service, reserve requirement, delinquency percentage, etc)


Carefully structuring and executing a special assessment is important before, during, and after the loan closing. Following these best practices and having an experienced manager, attorney, banker, and CPA supporting your association will ensure your community is in good hands.


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