A separate bank account: why the board should insist on it

It is the simplest safeguard a building has: your money, in an account in your name, that you can look at.

A building’s money should never sit mixed with another’s. That is the point of a separate account: opened in the association’s name, holding only its funds — charge calls, works fund, insurance settlements.

The principle looks obvious. It was not always: for a long time many managers used a pooled account across several buildings, with internal sub-accounts. That practice has been tightly framed, and the separate account is now the rule.

What it changes in practice

• The building’s funds are not mixed with another’s, nor with the manager’s.
• If the manager fails, the sums remain identified as the association’s.
• Movements are verifiable line by line, without accounting reconstruction.
• Any interest earned goes to the association, not the manager.
• The banking relationship survives a change of manager.

That last point is decisive during a transition: see changing your property manager. A handover goes far better when funds already sit in an identified account.

The board and account access

Opening the account requires specific documents, and the bank generally asks who on the board will hold viewing access. That access is one of the most effective oversight tools the board has.

It is not about managing in the manager’s place: viewing grants no payment power. It simply shows, in real time, what comes in and goes out — what the annual review only shows a year later. See checking the accounts.

Five annual checks

• Is the account really in the association’s name, not the manager’s?
• Does the bank balance match the accounting balance presented to the meeting?
• Do charge calls land in this account, and how quickly?
• Is the works fund held distinctly, as it must be?
• What bank fees are borne, and by whom?

The second is the most revealing: an unexplained gap between bank and books deserves a written question to the manager. It is one of the checks in the pre-meeting checklist.

What the account reveals about the building’s health

Statements tell a story the annual accounts smooth over: contractors paid systematically late, cash brushing zero every quarter, charge calls arriving two months behind.

These are exactly the signals described in a building in difficulty: they surface on statements long before they surface in the accounts.

The works fund

Sums paid into the works fund are not ordinary provisions: they are meant to finance future works and must stay identifiable. The board should check they are not, in practice, covering day-to-day cash.

This is developed in the condo works fund, and becomes critical as soon as a major project is being prepared — see funding major works.

A bank statement read every quarter says more about a building’s health than annual accounts presented once a year.

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