The importance of accurate record keeping by the management committee in your Apartment Building / Resort

Episode 4 of our Communal Property Essentials Series.

In this fourth episode of our communal property essentials series I will discuss what type of records you should be keeping, why they are so important, what should be available for inspection by owners & how to easily distribute them.


Video Transcript

In this fourth episode of our communal property essentials series I will discuss what type of records you should be keeping, why they are so important, what should be available for inspection by owners & how to easily distribute them.

Importance of accurate record keeping.

You will have heard me say it many times before, but I will say it again, your management committee is responsible for what is most likely millions of euros of people’s property investments. 

So, it should go without saying that your duties should not be performed ad-hoc, you should have structure in the administration tasks of your committee and one of the foundations of this structure is keeping good records.

While pretty much everyone knows they should be keeping some form of records, it may surprise you that when my communal management company takes on a new contract, our biggest challenge usually isn’t arranging staff or organising the maintenance, its decoding years of muddled records. 

This is one of the unavoidable problems with the volunteer-based committee structure.  Your members may change over time, different people each have different levels of administration and bookkeeping skills and different ways they keep their records.

This results not in a lack of information, but way too much conflicting information, with no clear way to identify which is the most up to date. 

Fortunately over the years my communal administration team have got very good at finding order in the chaos but this is a skill they have needed to build over time and is easily preventable. 

As a committee should not only make sure that you keep accurate and detailed records, but that they are kept in a consistent way that someone else can easily and clearly understand them. 

Why is this important? Well if you take a debtor to court and they question the amount they are being asked to pay you will need to present a copy of these records.

If you have an incident at your pool, you may be requested for the records of the pool maintenance, chemical levels and so on.

If you don’t have these records, they are inaccurate, or they are not very clear then this could put you at risk of losing your legal battle and potentially open you up to liability. 

You can also use your records to help identify potential problems and increase efficiency.

So, if you have records of how much water you use in August for the last 3 years and suddenly the usage jumps up this can identify a pool leak. 

Also, as I covered in the previous episode, if you have accurate historic records of expenses you are more likely to calculate your budget more accurately.

The Different types of records your management committee should keep, and why they are so important

There are many different types of records you should be keeping but these fall into two general categories. Financial Records, and General Administrative Records.

Financial records will include Itemised monthly Income & Expense reports, financial summaries, copies of the bank account statements, original invoices, receipts and so on.

General Records would be the unit owner database, records of contacts with owners, records of maintenance, swimming pool test logs, equipment service records, contractors and staff contracts and so on.

The minutes for the Annual General Meeting are also part of your General Records, and the AGM is a subject I will be covering in more detail in the next episode of this communal property essentials video series.

Create a Record of how you keep the records

One of the easiest ways to prevent problems when committee members change, is to put together a committee manual for each position.  This manual details step by step the roles and duties of that committee member.  How things are calculated, how they should be recorded, where particular records are kept and so on.

To create this manual, next time you perform a task simply note each step as you take it and then write this up.  Think how much easier your first few days of being on the committee would have been if you had been handed small ring binder with all this information clearly laid out.

Of course, as you improve on the systems and processes you can update this manual and over time this will improve the efficiency of the management committee and reduce the stress and hassle of its members.

Problems with lack of transparency

While embezzlement from the communal fund is rare, suspicions and accusations are very common.  Almost every committee will have had some form of accusation at some point.  These are usually made by a debtor but any accusation or concern raised can quickly spread and cause damage to the reputation of the committee severely effecting your ability to operate and collect communal funds. 

If you keep accurate and comprehensive accounts you can help prevent these accusations being made, and allow you to easily respond with fact if they are.  If when a comment or accusation is made you don’t have the records to support you, even though you have done nothing wrong the suspicion will remain.

Should everything be available to all unit owners

Many of the records of the committee will contain personal data and/or confidential information.  So the committee will need to follow the rules of the GDPR along with the confidentiality terms of any service agreements they enter into.  If you have not heard of GDPR, effectively this is the new law which has strict requirements and heavy penalties for misuse of personal data.

Due to this there are some records that cannot be distributed to unit owners, such as a list including names of other unit owners, unit owner contact information and so on.

I will be publishing an entire article dedicated to the GDPR regulations and how this effects the committee on my website next month.

I also suggest that the committee draft a non-disclosure and confidentiality agreement which should be signed by any new member of the committee so that it is clear what can and cannot be sent out.

How to distribute reports

The most common way to send out financial summary reports to owners is by email. 

However, email delivery is sometimes hit and miss, and not everyone reads the emails they get. 

Instead I suggest setting up a online cloud storage like dropbox, google drive, onedrive etc. 

Most of these online storage services have some form of free plan and allow you to provide a passworded read-only link to a folder where all the owner reports will be deposited.  This link can be included on all payment notices/receipts and the AGM notice and minutes so unit owners can access this folder whenever they need it  

Remember only documents should be placed in this shared folder that do not contain any personal data or confidential information.

Annual Reports

At your Annual General Meeting of owners your records will be essential as you will need to present an annual summary of finances.  And will also be useful if you present other information such as maintenance updates, pool updates and so on.

If you want to know more about the Annual General Meeting, including how to organise one, make sure its legal and what needs to be included, this will be the subject of the next episode of the Communal Property Essentials Series.


USEFUL LINKS

Ultimate Committee Handbook

Get your copy of the Ultimate Committee Handbook, the #1 Resource for Apartment Building and Resort Management Committees In Cyprus written by the Award Winning Communal Property Expert – Russell Flick.  www.UltimateCommitteeHandbook.com

More Articles & Videos on Communal Property Ownership, Administration & Management

Visit https://www.cypruscommunalguide.com/ for more articles, videos and advice on all aspects of Apartment and Communal property ownership from setting up a committee, getting communal payments in, organising the AGM or simply administrating and maintaining your building. Russell Flick Founder of the Cyprus Communal Guide. "Helping you unlock your buildings True Potential" www.RussellFlick.com

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www.Hub.CyprusCommunalGuide.com

Have any Questions on this topic or have a suggestion for a future topic.

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Russell Flick

International Property Professional, Public Speaker & Author of 'The Ultimate Committee Handbook'. In addition to his published books, Russell is a public speaker, columnist and founder of www.CyprusCommunalGuide.com, the online information portal for property owners to get support and advice on all aspects of communal property ownership and management. Russell is currently in the process of publishing his second book (expected to be released in 2018) the 'Step-by-Step Guide to Owning Investment Property'. While the first book is aimed as a support resource for committees, giving step by step instructions on the management and administration of their buildings. This second book is is a practical guide to assist property owners and investors with information and procedures in acquiring, maintaining and maximizing their property investments.