Condominium & Townhouse HOA Boards

Minneapolis condominium votes to ban smoking

2008-02-14T18:29:00.000-07:00

If you're not a smoker, smoke stinks and is offensive.

This apparently why 77% of members of a Minneapolis high-rise condominium voted to ban smoking by new owners. Current owners who smoke won't be affected by the ban, which is getting national attention.

Home sellers see prices 20% below their purchase prices

2008-02-13T22:40:00.002-07:00

Bloomberg reports on potential home buyers who are finding that their homes are worth as much as 20% less than they paid for them three years ago.

The boards of condominium and townhouse home owners associations undoubtedly will have foreclosures in their communities. This will drive down values of homes in those HOAs until those homes are sold.

Meanwhile, the HOAs will need to make sure that the banks that foreclose on homes keep them up and maintained.

Consult your attorneys now.

Housing and recessions

2008-02-13T21:55:00.000-07:00

The housing industry's depression may play a role in creating a national or even world wide recession, and this might be a good time to review the history of housing depressions and general recessions. John H. Makin's essay is an interesting read.

Economists debate 'housing bubble'

2008-02-13T21:02:00.000-07:00

The housing market clearly is correcting the housing bubble of the last 10 years, but over at Marginal Revolution, economists are debating whether there was a bubble.

Many economists are looking for housing prices to drop another 15% to 20% and probably more for condominiums and townhouses.

Condominium markets collapse in major cities

2007-01-16T09:24:00.000-07:00

The NY Times reports that demand for condos has collapsed under soaring inventories in Boston, Las Vegas and Washington, DC, but remains firm in New York City, but even there, prices are down 5%.

This is a natural reaction to years of soaring prices, and it was to be expected regardless of interest rates or the strength of the economy or stock market. A correction was inevitable, and the actions of home builders suggest that it's far from over.

Hands on condo and townhouse HOA boards save money

2006-11-28T16:25:00.000-07:00

When members of condo and townhouse home owners associations take charge of hiring and managing contractors, they spend their own money, and they get more for their money than boards that let management companies spend their money for them.

Long ago, the late, great economist, Milton Friedman, noted that when politiciians or anyone else spends your money for you, you will get less than desired results. "That's government."

How to choose a bank for condo and townhouse HOAs

2006-10-30T21:29:00.000-07:00

Most condo and townhouse home owners associations use banks recommended by their management companies, but a fair share no doubt search the market for banks that will give them the best returns on their reserves and good deals on loans.

An HOA's banking needs are relatively simple.

You need a checking account that allows online banking, produces useful monthlly statements and provides access to the certificate of deposit and Treasury bill markets.

HOAs don't speculate in the stock or bond markets with their reserves or other excess cash.

The jobs of HOA directors is to preserve assets, not to grow them.

Thus, it makes pretty much sense to use the bank that an HOA's management company knows and uses so long as there are no conflicts of interest between the bank and the management company or members of the board of directors and basic banking needs are met.

Many HOAs, however, need loans to finance major maintenance and repair projects when their reserves are too low. Some banks specialize in lending to HOAs, and they should be considered by HOA boards.

Why do you need a bank that specializes in lending to HOAs?

The simple answer is that HOAs are run by volunteer boards who need special services and attention when it comes to lending to them. And the assets that HOAs put up as collateral are different than the assets and cash flow statements offered by other borrowers.

Some banks make it a point of being comfortable with lending to condo and townhouse HOAs, and some don't.

Snows challenge condo and townhouse HOA boards

2006-10-26T14:20:00.000-06:00

Snow removal policies are always a challenge for condo and townhouse (patio home) HOA boards.

At what point do the sidewalks and driveways get shoveled and plowed. Some common issues include:

1. Does the HOA clear driveways as well as sidewalks?
2. Clear snow before it stops falling, regardless of depth?
3. Clear snown at 1", 2" or 3"?
4. Who calls for snow removal, or does the contractor come when he thinks it's appropriate?
5. Who decides that snow is heavy enough to bring in additional, expensive workers and equipment?

Condos hardest hit in weakest housing markets

2006-10-18T11:28:00.000-06:00

Three real estate economists say condo prices are falling the most quickly, and by "condos," they probably also mean townhouses, if not patio homes.

Anyone trying to track the housing market will be interested in the wsj.com's Econoblog round table discussion.

Retirees looking for friendly condo communities, neigborhoods

2006-10-02T11:17:00.000-06:00

The Wall Street Journal reports today that retirees are looking beyond Florida, Arizona and the mountains for communities that are friendly and comfortable.

Pickup today's paper if you don't have a paid subscription to wsj.com. The impact graphs for members of the boards of directors of condominium and townhouse HOAs:

But today, while weather and leisure remain important, retirees are telling builders, developers and researchers that they are looking primarily for what Mr. Lydens has found in Mount Airy: a community where they can make friends and connections quickly, whether it's a small town or a walkable neighborhood in a big city. A close second and third on the priority lists: a home that's near grandchildren, and a setting where one can indulge a post-work passion, such as a second career, a newly adopted sport or even, for a growing number of people, farming.

"Moving to a mixed-use development, a small town, or seeking an urban experience are all elements of the same thing: It's a community where you get to know each other," says John McIlwain, 62 years old, a senior resident fellow for the Urban Land Institute, a research group in Washington. He traded a Maryland suburb for a 1,000-square-foot loft downtown after his children left home. "You're walking around, and you get to know your neighbors, you get to know the shopkeepers, because you meet them on the street."

Condo and townhouse boards must enforce bylaws and rules or change them

2006-09-28T22:47:00.000-06:00

One of the hardest things boards of directors of home owners associations have to do is enforce their condo and townhouse home owners associations' bylaws and rules.

It is just uncomfortable to enforce some rules. Others are pretty easy to enforce.

This brings up the question, what does a board do about rules that its members don't feel like enforcing?

Bite the bullet and enforce the rules, sue people and make people mad, regardless.

Or change the rules?

Why change the rules? If a board member feels a rule is unenforceable or shouldn't be enforced, the board should consider eliminating the rule.

Why not change a rule? Two reasons come to mind.

You enforce a rule because the rule involves safety and you enforce the rule that is essential to maintaining the appearance and the value of the community.

Condo and real estate appraisers under fire in Colorado

2006-09-27T10:35:00.000-06:00

Condo and townhouse HOA board members will be interested in the controversy involving alleged inflationary appraisals that are putting over appraised homes at even more risk if home prices begin to decline.

The Rocky Mountain News' John Reebock reports on the plans of Erin Toll, director of the Division of Real Estate for Colorado, to go after appraisers who inflate homes. His key graphs:

"The best way to stop mortgage fraud and our abysmal foreclosure rate is to crack down on appraisers who inflate property values," Toll said this week.

"And lenders, who trust the appraisals, are often victims, too," Toll said. "They may not know there is a scam going on."

Others, however, say that lenders often pressure appraisers to artificially inflate properties so they can justify making loans and collecting fees.

National studies indicate that predatory lending practices, which frequently involve appraisal fraud, are especially prevalent in poor minority neighborhoods.

Toll said she can yank the license of an appraiser who is found to be inflating values. There are about 5,500 licensed appraisers in Colorado.

In her first case, Toll said she knows the appraiser has inflated more than a dozen appraisals, but she's trying to figure out why.

"I don't think he is doing it for the $350 appraisal fee," Toll said.

Asked if she thought some appraisers were taking kickbacks, Toll said: "I would not be surprised. Why else would they do this?"

Condo prices down, single families up

2006-09-26T12:36:00.000-06:00

Economists and Realtors™ offer their spins on the latest housing sales figures, which show some price declines for condominiums and townhouses. (click head for free wsj.com roundup of economists's reactions.)

In Denver, Realtors™ are seeing very weak demand for condos and townhouses.

Huge Florida condominium HOA airs new web site

2006-09-25T12:49:00.000-06:00

In an effort to improve communications with its some 9,000 residents, a Floridal condominim and townhouse HOA board has introduced a sophisticated web site.

Lede graphs from a story in The Observer News:

Kings Point Community Communications Go Global
By Melody Jameson mitch@observernews.net
Sep 21, 2006, 16:13

Email this article
Printer friendly page
KINGS POINT – The long-standing grapevine here has been updated.

With launch of its own colorful, comprehensive and highly navigable website last week, KP’s 9,000 or so retirees have joined the global village - and enhanced their community communications with interactive 21st century electronics.

They now have access to a trio of communications tools unprecedented in their 35-year history. The website joins a new internal television channel – 95 - and a recently-initiated computer e-mail network dubbed KP Info, to create free-flowing, two-way means of staying in touch.

KPSCC.COM is the latest in a series of innovations undertaken by the KP Federation’s board of directors in the last half year aimed at assuring transparency in governance and clear communications across the community. Meeting the objective fulfills a pledge made when a coalition of five reform candidates for board seats campaigned successfully early in 2006.

The new communications system still includes Channel 20, another televised internal information vehicle providing a schedule of activities slated within the community in a scrolling power point format, according to Ruth Flinn, vice chairman of the federation’s communications committee. There are no plans to alter Channel 20 which is maintained by clubhouse personnel and transmitted to residents via cable, Flinn indicated.

The multi-paged website, in development for several months, is the result of concerted efforts by both volunteers and a commercial firm, Flinn said. It was designed by E Solutions Corporation, a company specializing in such creations, and will be hosted by the company, meaning KP information is stored in E Solutions computers, she added. But funds to get it up and running, for example, were contributed by the KP Condominium Owners Association (COA). And a team of volunteers are to be trained to keep the website current, Flinn said.

Shortage of condo and townhouse HOA managers feared

2006-09-24T16:43:00.000-06:00

There may not be enough professional property managers available to managed the home owners associations for residents in condominium and townhouse associations and coops.

That, at least is the warning publishe in the Toronto Star:

Impact graphs:

Millions of dollars are at stake: Asset values in a single condo corporation can easily reach between $50 million and $70 million, yet boards are under pressure from owners not to raise fees. Boards often see only the bottom line, awarding contracts to the lowest bidder.
"Management, at the moment, is in deep trouble," says Andy Wallace, a veteran of almost 40 years in the industry which he has helped shape since its infancy.
"Anyone can hang out a shingle," says Wallace, 77, who began his property management career in 1979. The vice-president of General Property Management stayed about six years before opening Wallace McBain and Associates and has spent his career focused on the issue of good governance. He now runs his own consulting firm and teaches a course in condominium law at Humber College.
Wallace knows of crackerjack managers, too, but insists, "There's a dire shortage of good ones."
He tells of one property manager fired for taking a $1,000 payoff from a cleaning company. The property manager got a job with another company two days later.
Another quite capable manager was caught stealing and was fired, Wallace said. When another employer asked Wallace about a reference for her, Wallace said he couldn't give one. The employer hired her anyway.

You can look at this story several ways.

1. There is a shortage of trained managers.
2. There is a shortage of honest managers.
3. There is a shortage of managers over 70 years old.
4. The people quoted in the story got some good publicity.
5. Watch your check book. And that's not easy for a board to do. Need to write about theft and audits.

Condo HOA boards and directors can find lots of blogs on alternative & renewable energy

2006-09-22T10:56:00.000-06:00

Use the search bar in this blog to search blogs that are covering renewable energy. Click the head on this post to link to one of the more active ones.

This site on alternative energy looks pretty good. Click here. It offers a bunch of links to similar sites.

Condo & townhouse home owners association hot topics

2006-09-21T08:52:00.000-06:00

Condominium prices, townhouse prices, home owners insurance premiums, insurance premiums for home owners associations, energy costs, renewable energy, the impact of interest rates and inflation on HOA reserves and finding good HOA management firms are the hot topics that we'll be covering here.

The housing market is growing slowly compared to recent years and is quite weak in many markets.

Interest rates are encouragingly flat to falling, which may help home sales. At the same time, however, the interest HOAs will earn on certificates of deposit and money market accounts will decline, or at best, hold steady.

Natural gas prices are tanking, and petroleum prices are correcting, but renewable energy will continue to be worth considering by HOA boards that are running large buildings.

Inflation seemed to be threatening earlier this year but seems to be less of a threat today.

In many states, the government's increasing policing of illegal immigration will put HOAs and their contractors at risk. They must be sure that their vendors are employing people who are in the country legally.

This could drive up the cost of maintaining condominium and townhouse communities. If fewer illegals are available to grounds maintenance and painting contractors, they'll have to pay more to get workers. And they will pass those costs on to home owners.

Budget for it.

Condo board purchases renewable energy credits

2006-09-20T20:00:00.000-06:00

A Chicago condo is purchasing renewable energy credits from an Iowa wind farm. (Click head.)

Following in the footsteps of major corporations such as Whole Foods and Johnson & Johnson, the building's association has approved a contract to purchase renewable energy credits from an Iowa wind farm. The clean renewable energy will go into the electric grid to alleviate some of the system's demand for coal, gas and nuclear power-producing facilities.

Felix Friedman, the association's president, proposed the idea of creating a "green" building. The condo association brokered a deal to purchase "green credits" from Midwest Renewable Energy Credits in the amount that offsets the total quantity of electricity used by the building. Friedman said the decision was made to help the environment, and to attract environmentally-conscious real estate owners.

Condo and townhouse HOAs boards must help market their communities

2006-09-20T19:23:00.000-06:00

Condominiums and townhouses are the first to feel a break in housing prices in times like these for whatever reasons.

HOA boards can use their membership meetings, newsletters and community marketing and public relations talents to let the world know why people should want to live in the community.

It's not as obvious as you might thing. Many bright new developments are offering great price discounts to potential buyers these days.

How do you do this?

1. Publish and maintain a strong web site that keeps members and their friends up on the community's news and people. An HOA blog would make sense, but who will write it? A retired PR, marketing or news person, perhaps?
2. Make the periodic newsletter mailed to members a vehicle for promoting the community and reminding home owners to visit the web site and tell their friends how much they love living here.
3. Encourage a resident Realtor™ to mail promotions for homes on the market to a wide audience.
4. Get home owners to sit down for home design and garden design interviews with the local paper.
5. Oranize annual house tours that allow neighbors to visit and bring their friends to see the great places that they might buy some day.
6. Make sure that your community is well maintained, provides outstanding customer service to residents and has a strong balance sheet with competitive maintenance fees, and promote those benefits on your web site/blog and in your newsletter.
7. Have your HOA president serve on regional HOA boards and spread the word about your great community.

These are just some quick ideas. More will come in due time.

Townhouse and condomium home owners associations may use this referral service

2006-09-20T19:08:00.000-06:00

Here's an 11-year-old referral service with 425,000 paid members. Click on headline.

Condo and townhouse HOAs might use vendor referal services

2006-09-20T18:59:00.000-06:00

A new service, getvendors.com, is creating online communities where handy men, plumbers and other services can advertise their services and members can discuss vendors and review them.

Services like this have been available in health care for years, recommending dentists, physicians, nursing homes and home health care services.

The problem with them is that all the recommended services are paid advertisers, not independently reviewed and checked out.

This particular service claims that two of the five services it will recommend to members will come up as unpaid, organic searches, and the other three will be paid sponsors. Whether the paid sponsors will be clearly identified as such remains to be seen.

Another question for the sponsors is whether home owners will turn to their site instead of or in addition to friends and neighbors? How will getvendors.com generate traffic for the advertisers?

Advertisers will pay something like 99 cents per lead, which getverndors.com says will be screened for false leads. And advertisers can buy banners on the sites to generate traffic.

Here is the news release e-mailed by getvendors.com:

Click here.

Hewlett-Packard's board secrecy a lesson for all condo HOA boards

2006-09-20T14:20:00.000-06:00

I've blogged on the board secrecy and corporate spying issue over at The Business Word.

If you think you have to hire a private investigator to learn about another board member or home owner, you've got a problem and should consult your lawyer and your HOA's lawyers. Hopefully, they'll keep you and your board out of trouble.

HOA reserves important to condo, townhouse values

2006-09-19T15:04:00.000-06:00

Homes 101 (click on head) offers a basic article on evaluating and maintaining home owners association reserves. Consultants make nice livings doing reserve studies for HOA boards.

Trust, integrity and fairness key to condo, townhouse HOA boardmanship

2006-09-19T14:46:00.000-06:00

The Hewlett-Packard board used pretexting to spy on a board member who was leaking information to the business press, and as the Washington Post reports (click headline), a law firm used a consulting firm to illegally obtain a partner's phone records using pretexting. Pretexting is misrepresenting a phone company's customer to get to that person's phone records.

Home owners association boards often are scenes of acrimony and distrust, and I wouldn't be surprised if a few of them have hired "consultants" to spy on fellow board members for one reason or another.

This is unethical, no matter the reason.

An HOA board member is an elected member of a board and has the right to say anything he or she wants to, subject to being sued by the board or other offended parties after committing the misdead. And that's one point. If a person on the board is misbehaving, the board should remove that person by vote or a recall election or call in the attorneys. No one should use illegal or unethical tactics to get back at someone they disagree with.

In the HP case, a board member acted unethically in leaking confidential information from the press. That board member has resigned and probably will never be asked to serve on another board.

When you join a board, you make a commitment to work for the better interest of the organization and to work through channels. You commit to keeping information confidential that the board deems confidential unless you see wrong doing. If you see wrong doing, you call the organization's attorneys and go to your constituency during the next election.

For HOA boards, not much should be kept confidential from members. If you have direct employees, you make personnel decisions in executive sessions. But you ultimately should make all contracts and salaries public so that all home owners can inspect them, if they wish. If an employee or vendor objects, they can leave. Secrecy has no place in local government, and HOAs are the ultimate in local government.

Luxury condos open in NYC's China Town

2006-09-19T13:27:00.000-06:00

Serving on the board of a gentrified inner city Condo apartment building would be interesting.

Everyone on the board will be affluent, most will work in the city and may will be frequent travelers.

It's a good read.

Interest rates drop, housing market depressed

2006-09-19T12:16:00.000-06:00

Housing construction was down 6% in August. Inventories of unsold homes are at record highs in many markets.

Both buyers and sellers are on strike.

At some point both will break. Buyers won't be able to resist bargains, and sellers will get tired of just sitting there. They'll take what they can get.

Our strategy when we sold our townhouse last spring was to price high when we listed. We started at $359k. After a few weeks we went to $345k. Then we dropped to $335. I was just getting ready to drop the price to $320k when we were offered $310k, up from the $297k we paid 30 months earlier. We took the offer, because in this market, if you don't close the deal, the buyer may find something better and walk. I wanted out of the deal, and I was sure the market was quickly weakening. That was in May. The market's softened considerably since them, and I'm happy to have done as well as we did.

Sellers who hold out for "their price" in this market may find themselves selling for a lot less in a few months.

Buyers with the discipline to wait for sellers to give up will find some wonderful bargains over the next 12 to 18 months, I'm thinking.

Today, the AP reported: "WASHINGTON - Housing construction plunged in August, falling to the lowest level in more than three years as the once-booming industry showed further signs of a dramatic slowdown.

The Commerce Department reported Tuesday that construction of new homes and apartments fell by 6 percent, the third consecutive decline and a much bigger setback than analysts had been forecasting."

Time to say I'll serve on another HOA board

2006-09-18T21:13:00.000-06:00

The year has been a busy one, and it looks like I may have another busy one if I get elected to the board of our new HOA.

I'm thinking that I can make my contribution to the community while I'm still relatively young. And we like to get to know the neighbors. Serving on an HOA board introduces you to a lot of people real quick.

Home Rental blog

2006-08-26T22:21:00.000-06:00

Dave Drugal writes about renting homes at his Home Rental Blog.

This should interest anyone on the board of a townhouse, condominium or other home owners association as well as members of those associations who rent their condos, etc. Click the headline on this blog or the link in the right column to see Dave's blog. Click the banner on his blog to see his home page and the rest of his content.

Learned a lot on HOA board

2006-08-20T19:54:00.000-06:00

Since my last post, we've sold our townhouse and moved into a bigger patio home community.

My term as HOA president ended just before we closed on the new home, and the new board took over with no problems.

Transitions can be easy or hard. This one apparently was easy, because I received no phone calls. Two of us left the three-person board and were replaced by people who've lived in the community a few years. I was elected to the board and president of the board a couple of months after we moved in.

Important lessons learned about being on the board of a small HOA (47 homes).

It's great to have fellow board members who really care and are home most of the time. They did the nitty gritty and helped make good decisions. And they had the historical knowledge I lacked.

Even better, they respected me for my business and communications experience. So I dealt with the lawyers, negotiated a major painting job contract and worked with the mangement company.

We were a great team.

It is important to have a responsive management company. The community we moved to already has changed management companies due to its non-responsiveness to owners. You've got to wonder how someone can run a business and not take care of the people who can get them fired?

Other lessons learned. Being on an HOA board is a little like being on hospital boards. The biggest difference is that you're dealling with relatively small dollars in an HOA compared with a hospital, and a hospital's board is usually seven to 20+ members versus three to five for an HOA. Regardless of the size of the board and the business, serving on a board, especially as president, takes time. You've got to be available for afternoon and evening meetings and regular monthly meetings.

And serving on an HOA board is like being the elected official of a small municipality. The budgets and problems are smaller, but the pressures are quite similar. That is, you don't want to raise monthly maintenance fees (taxes), you want to build a reasonable reserve and you want to give your members every opportunity to attend meetings and make their wishes known.

While some HOA boards historically have been secretive, ours was open. But while we had pretty good attendance at annual meetings, nobody but the board members and management firm's rep showed up for monthly board meetings, which was ok.

Still, board meetings take two three hours. It just take time to get everything discussed and decided.

Now I've been asked to run for a place on the five-person board of our new HOA. More about that later. I'm going to blog about the HOA management business at www.businessword.com.

Colorado: Governor may veto bill giving owners more rights

2005-05-07T04:55:00.000-06:00

Amazingly, some HOAs don't allow owners to speak at meetings or to see financial reports. Senate Bill 100 in Colorado's General Assembly, which would correct that problem and has passed the House, may soon hit Governor Owens' desk. He almost never expresses an opinion about a bill like this until he signs or vetoes it. Lobbyists for HOAs oppose the bill, but I wouldn't, because our HOA is open and fair with our owners. The Rocky Mountain News reports:

Carroll's bill started small after constituents complained to her they couldn't post political signs, xeriscape their lawns or even fly the American flag in their yards because of HOA rules.

But it grew to include due-process rights and the rights to see financial reports.

Opponents argued the bill interferes with private contracts between an association and an individual. A late blitz by HOA lobbyists attempted to exempt resort properties such as Vail from the expansion of homeowner rights.

"It was an 11th-hour gigantic lobby feeding frenzy and it might work," Carroll said at midday Friday.

But a legislative committee rejected attempts to weaken the bill, and the House voted 37 to 27 later Friday to approve the stronger version.

Update: The governor may veto vetoe the bill.

Create private neighborhoods from public ones

2005-05-06T22:36:00.000-06:00

Robert H. Nelso of the University of Maryland School of Public Affair writes in Regulation Magazine:

In 2004, more than 17 percent of all Americans belonged to a homeowners or condominium association, or were part of a cooperative. This privatizing of the American neighborhood represents a fundamental development in the history both of local government and of property rights in the United States. The rise of private neighborhoods, as Steven Spiegel wrote in a 1998 law journal article, is achieving "a large-scale, but piecemeal and incremental, privatization of local government." I propose to expand this privatization by establishing a legal mechanism by which an existing neighborhood could create a private neighborhood association. It would be similar to the incorporation of a new municipality, but it would result in the creation of a private neighborhood based on a private property relationship among the property owners of the neighborhood.

Click on the head to access the full article.

National standards for HOA and condominium reserves; Colorado doesn't require studies

2005-05-06T15:35:00.000-06:00

If you're looking for an outline for a reserve study, this probably is a good start. Click on the headline to find and download the pdf file of the 17-page document. What it is is an application for certification as a reserve specialist who prepares studies for HOA clients. Along with the application forms you'll find the basic outline of a study. I don't think you have to be a construction engineer to do this study. What you do is obtain estimates on doing certain high-cost capital projects such as painting, replacing roofs, concrete work, street repairs, pool repairs, major replantings, etc. In obtaining those estimates, the HOA board or management company can get estimates of the expected lives of various components and work them into their reserve studies.

The question is whether a small HOA has to go through all of these hoops.

HIring an outside firm protects the board in terms of proving that it lived up to its fiduciary responsibility. But this can also be proved by doing your homework and keeping your working papers and spread sheets for review.

Colorado doesn't require reserve studies. At the Association Reserves, Inc. site, click on the State Legislation button and select your state to see what it requires. The Reserves Study Legislation button is here.

Some Q&A about Condo reserves are are offered here.

Things to consider in reserve studies

2005-05-06T15:33:00.000-06:00

Association Reserves Inc. outlines its recommendations for HOAs in Florida, and they are worth considering in other states as well.

Community Associations Network offers blogs on HOAs and these resources for those interested in reserves studies.

Ohio bill says condominiums must reserve at least 10% of budget annually

2005-05-06T15:23:00.000-06:00

The firm Kaman & Cusimano tells clients that the most significant provisions of Ohio's new condo legislation:

"specifies that “unless otherwise provided in the declaration or bylaws,” the board must adopt and amend budgets for revenues, expenditures, and reserves in an amount adequate to repair and replace major capital items in the normal course of operations, without the necessity of special assessments, provided that the amount set aside annually shall not be less than ten percent (10%) of the budget for that year unless the reserve requirement is waived annually by the unit owners exercising not less than a majority of the voting power of the unit owners’ association."

It notes that many HOAs don't have the reserves they need and they will have to increase home owners' fees:

"For many associations, fully funded reserves in accordance with a reserve study are going to cause a drastic, but necessary, increase in fees. If a board believes that fully funding the reserves will cause too drastic of an increase, it must send a letter and a ballot to each owner. The letter must disclose the amount necessary for fully funded reserves. This disclosure should mitigate any claims against the board by a future purchaser who gets hit with a large special assessment. In addition to disclosing the amount necessary to fully fund reserves, the board should indicate the lower amount the board proposes be put into reserves, and request ownership approval of the alternative, lower amount. A ballot should be included for the owner to sign and return. In the event the board fails to obtain majority approval for the lower reserve amount, the fully funded reserve must be implemented. Current bylaws dictate the date by which the board must have an approved budget for the following year. All balloting must be completed in time for the board to meet the required budget approval date."

Why HOA boards need to build reserves

2005-05-06T15:19:00.000-06:00

This is a rather terse explanation.

Track the real estate market at Yahoo!

2005-05-06T15:11:00.000-06:00

This is a good resource.

Boards need to know what condo and townhouse buyers are looking for

2005-05-06T15:08:00.000-06:00

ehow.com offers this simple outline of what to look for in buying a condo or townhouse.

Legal books worth a look

2004-09-19T17:04:00.000-06:00

Condominium and Homeowner Association Practice: Community Association Law, by Wayne S. Hyatt. ali-aba.org. The book is out of print.

Privatopia, Homeowner Associations and the Rise of Residential Private Government, by Evan McKenzie, 1994, Yale University Press.

Duties and responsibilities of HOA board members

2004-07-12T19:29:00.000-06:00

This article is worth a read.

Reserves of $3,000-$6,000 per unit recommended

2004-07-12T18:20:00.000-06:00

HOA Boards should accumulate reserves of about $3,000-$6,000 per unit, according to this article. I take these recommendations as being a bit extravagant, driven, perhaps by the wishes of the banking industry, which salivates at the thought of receiving such huge sums of money. Richard Thompson writes,

"As a rule of thumb, the average garden variety condominium should have around $3000-$6000 per unit in reserves, depending on amenities. There are many HOAs that should have much more than that because of deferred maintenance or extensive common elements. Even the most modest properties should have tens of thousands of dollars socked away in reserves. Larger, more complex properties should accumulate reserves in the millions. To truly know what level of reserves applies, a reserve study must be performed by an experienced and qualified reserve analyst. (See www.apra-usa.com for a list.)"

Resources for HOA boards

2004-07-09T17:40:00.000-06:00

This Old House offers a wealth of information about home and building maintenance and repairs.

Regenesis publishes a newsletter and offers paid subscribers access to what appears to be a lot of info. I haven't subscribed yet.

What should go in an HOA owners' handbook?

2004-07-09T15:36:00.000-06:00

Creating an HOA owners' handbook can be as simple or complicated as you want to make it. The mission of a handbook is to make it easy for owners and residents to follow the HOA's rules and to get things done. The trick is to keep a handbook small and readable so that people will use it.

One way to start is to simply rewrite the HOA's bylaws or covenants into understandable language. This can be done by making a list of topics and writing simple explanations. Another is to write a list of Frequently Asked Questions and answering them.

After the HOA's basic rules have been covered, you can expand your book to summarize rules that have been created and updated by the board of directors since the HOA was formed. The easiest way to do this is to make a list of topics and then research board minutes to find the answers to the questions created by the topics, say pets or parking.

What are the most common topics? Here's a list, which will be edited over time:

1. What can I do to my home without getting permission from the HOA board or a delgated authority?
2. When to I need to get permission before I do something to my home?
3. How do I apply for permission?
4. How long does it take to get permission?
5. Why do I have to get permission?
6. What happens if I do something without getting permission? Are there penalties?
7. How do I get help from the HOA or the management company?
8. Who do I call?

9. Is there a web site?
10. I want to get cable TV. How do I do this and do I need permission?
11. I want to get satellite TV. Where do I put the dish, and how do I get permission?
12. I want to put in some plants. What is the process for getting permission?
13. Are there rules regarding planting flowers, bushes and trees?
14. Do I own any of the land outside my unit, or is it owned by the HOA?
15. What does the HOA do for me when it comes to maintaining my unit?
16. What maintenance responsibilities are mine?
17. Can the HOA require me to spend money to maintain my unit?
18. Snow. When is snow plowed and under what conditions?
19. Trash. How and when is trash picked up?
20. Are there limits to what trash will be picked up by our service and HOA?
21. Pets. What are the rules?
22. Parking. What are the rules?
23. Painting. Can I paint the interior of my unit without permission?
24. Painting. Are there any rules about painting my interior?
25. Painting. Can I paint the exterior of my unit?
26. Remodeling. Do I have to get permission to remodel my kitchen, bath, basement or whatever?
27. Garage doors. Do I have to keep my garage door closed?
28. Holiday decorations. Any restrictions regarding lights and other holiday decorations?
29. Peddlers and solicitors? What are the rules?
30. Parties. What do I do about parking when I have a party?

What house paint to use for townhomes?

2004-07-09T14:36:00.000-06:00

Sorting through the exterior paint options for an HOA townhome complex is time consuming, but once I've done my research, we'll have a useful report for all to use.

This Old House explains how to select a paint.

This Old House explains how to select a contractor.

Our management firm doesn't have much painting and paint contracting experience. As a result, I'm talking to paint suppliers and contractors, using my reporting and research skills to figure out how the painting industry works in the Denver area.

Here is what I think happens:

Paint manufacturers all produce pretty much the same product with similar warranties, application processes and life expectancies.

Paint manufacturers market through painting contractors and stores. To attract contractors who will help sell their paint and then apply it appropriately to minimize warranty claims, paint manufacturers try to make using their products as profitable as possible for painting contractors. They do this by giving price discounts that vary depending on the volume of business they do with each contractor. The contractor keeps the discount and marks up the paint. Manufacturers produce paints that require five applications—power wash, primer, coat one, rollback, coat two—plus caulking and other repair work. This creates work and billable time.

In addition, manufacturers work with HOAs and other commercial prospects in developing job specifications, and they share the names of their favorite contractors with prospects. This creates a bond and co-dependence between manufacturers and contractors. It also can be helpful to consumers who know the paints they want to buy and are looking for dependable contractors and vise versa.

We've started by creating specifications for bidding painting contractors. Our process began when I e-mailed specs to our HOA management firm. Our manager then combined my specs with her ideas, and we reviewed them at our board meeting. I'll publish them later.

Now I'm shopping for paint. It is important to talk to and meet with each painting company's representative for your area. Each company offers various degrees of consulting to HOAs, and they all have similar but different requirements about how you have to use their products to qualify for their warranties.

Consumer Reports gives Glidden paints, which are distributed through Home Depot, their highest ratings. HD says it sells its Glidden paints to consumers and contractors at the same price, regardless of quantity. I have contacted the Glidden representative for this area's HD stores. He is visiting our property and will send paint recommendations and a description of Glidden's warranty qualification process.

Lowe's sells a house brand made by www.Valspar.com. Valspar's a publicly-owned company and says it's the sixth largest paint maker in the world. In Denver, Lowe's doesn't have any regular contacts with painting contractors who paint exteriors. This suggests that the contractors are getting better deals elsewhere. The Warranty deal at Lowe's looks pretty simple. Your contractor pressure washes the building and lets it dry 72 hours. Then a Lowe's primer is applied followed by a Lowe's paint. Lowe's offers its top paint, American Prospect, which has a "lifetime warranty" and can be expected to last 12 to 13 years here in Colorado.

Kwal is a paint company based in Texas that serves the Rocky Mountain states. It's claim to fame is that it has established relationships with contractors who follow the processes that it specifies for a job to qualify for its 5 year warranty. It's warranty document is quite detailed, and it requires that a Kwal represenatative sign off on each stage of the job. Its local rep asked to meet with me and faxed me a lot of information about her products and warranty process.