units and the hotel, there are frequent allocations of physical access and/or provision of services between the association and the hotel. Details of the access, accommodations, and services provided should be documented in a legally binding shared cost/shared access agreement.
a leg .
Some high-rise residential condominiums are hous
other party for under or over payments when compared to is to maintain accurate accounting, keeping copies of all documentation including vendor contracts and invoices, cleared checks paid to vendors, accounting ledgers and correspondence between the parties.
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buildings that include a hotel Access or Easement Rights
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There are associations that provide access or easement rights to other associations or entities which require the is provided in exchange for a fee that is not a cost share. costs to be allocated and charged by the paying party the use of a road, or the use of an access or entry area into an association that also provides access for the other association or entity. Depending on the complexity of the access, one scenario could be the association pays for security or gate attendants, utilities, landscaping, and other costs to maintain the shared area.
The may pay for security or gate attendants, utilities, landscaping, and other costs to maintain the shared area.
Shared costs can be charged periodically based on actual expenses incurred. Alternatively, and more commonly, cost allocation to the other association monthly. Each year, the parties to shared cost arrangements should review budgeted cost projections for the next year and determine the effect of any changes to allocated costs and thus on owner assessments.
Mechanism for Reconciliation
Often, shared cost agreements provide for an annual reconciliation mechanism. Upon mutual acceptance of a reconciliation, one party might pay or refund the
Often, shared cost agreements provide for an annual reconciliation mechanism whereupon one party might pay or refund the other party.
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Accounting by the payor of costs and recipient of reimbursements typically presents a revenue line item referred to as shared cost income or reimbursements. Assessment income (from the sharing party) is another possibility. The paying association usually records a shared costs expense or perhaps a master assessments expense. In cases where cost sharing is in dispute, and one party has stopped making payments, we recommend that the non-paying party continues to record an expense together with a liability for the amount presented in the cost share agreement.
The receiving party should record a receivable from the other association for the disputed amount.
The receiving party should record a receivable from the other association for the disputed amount. There are times during disputes that the paying association does not record its liability to the other association. This can cause the association to under record expenses and liabilities, potentially leading to budgeting and cash challenges.
Concluding Recommendations
In conclusion, to share costs successfully between multiple entities, all parties involved should abided abide by the recommended best practices: Read and understand the cost share agreement.
he following owing
Budget appropriately. Prepare and maintain accurate and timely accounting records.
Maintain all supporting documentation including vendor contracts and invoices.
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