Cost Share Arrangements An Accounting


Perspective...  A


greements to share costs are not new. Whether one association pays for certain expenses that are enjoyed by a sub


association or an adjacent association, reserve funding for major repairs and replacements set aside in a master, or shared access or use of common areas, it is important to have a clear understanding of your association’s legal responsibilities, together with accurate and timely accounting and reporting.


Shared cost or funding arrangements may be articulated in the respective associations’ governing documents or supplemented via a formal legal shared cost or shared maintenance agreement. Such agreements would be agreed to by the respective parties. Sometimes, shared costs are termed assessments. Whatever the label, it is important to understand what costs are allocated and how they are allocated to each party.


Costs can be allocated based upon the nature of an expense and its measurement characteristics. Some condominium buildings are set up with a condominium


14 Community Associations Journal | November-December 2023


master association, a condominium commercial association and a condominium residential association. The condominium master association pays vendors for common area services, and other costs such as utilities and insurance. Both the residential and commercial associations are required under the association’s Declaration of Covenants, Conditions and Restrictions to pay the master association for a share of expenses incurred by the master association. The Declaration will present the expense categories to be allocated, together with the allocation method, which commonly includes either an allocation based on square footage and/or 


The master association pays vendors for common area services, and other costs such as utilities and insurance.


Putting On the Ritz m


housed Some high-rise residential condominiums are


hd in bu dbiilldings that include a hotel. Depending upon the physical structure and relationship between residential


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