June 18, 2008
10 Laws of Community Associations
Like science, community associations also have certain immutable "natural" laws that exist outside of state or federal legislation. You are welcome to your opinion on any of them
1. Community associations are going to continue to be the major component of new development
Unless the American populace makes a complete 180 on taxes, developments that allow local governments to collect full taxes and not pay out for full services will be the norm rather than the exception. By requiring associations be formed, in return for greater density (profits), local governments can use the excess income to offset rising costs, so they won't have to lay off friends and family. Until the majority of us come around to the thinking that increasing local taxes is a good thing, you can expect mostly HOA's and condo's.
2. State legislatures don't have a clue as to how to do anything with HOA's and condo's
They will therefore continue to "tweak" laws, in response to interest groups; resulting in more confusion for association boards and owners, as well as greater costs and liability.
3. State legislatures will not seriously offend the major interest groups - home builders, real estate agents, mortgage bankers, or developer attorneys.
The best way to help ensure the possible success of an association is to make sure its developed and built well, that full disclosure takes place, and that the developer is held to a high standard as the first board of directors of the association - all of which the largest and most powerful interest groups have no real desire to see.
4. In every association there is a hero and an a**hole
You may not know who the hero is yet, but just about everyone knows the other. The key to a successful association is to find the hero(es)and defuse the jerks
5. Given the choice, the majority of owners would rather not fund reserves
In Florida, they don't buy green bananas and the state legislature gave condo's the ability to "opt out" of fully funding reserves, which is why you're seeing so many in such dire financial straits today. Let's face it, the majority of owners don't think they'll still be living in the same home 10 years from now, so see no reason to fund reserves.
6. Documents are not carved in stone for eternity.
Documents are originally written by an attorney working for the developer and designed to assist the developer. See number 3. Change them to fit the owners and the times when you can
7. It's not the association's fault
The association is a legal entity and has no inherent personality - the people who live in it and the people they elect to run it make it great, or make it miserable, or somewhere in between
8. It's the pole, stupid!!
Community associations do not remove your constitutional rights. First, the constitution doesn't grant unrestricted rights, no matter how they are worded. You still can't yell "Fire" in a crowded theater; libel and defamation can make freedom of speech costly; and you can't plant a flag pole in property either that you don't own or that you've agreed to the controls the CCR's place on them. You still can put your flags and signs inside your home and be just as patriotic or political as the next guy.
9. Given the choice, the average association board will ask legal questions of its manager, neighbors, an internet forum, relatives, people driving by or a ouija board, before paying the attorney to give them the correct answer. Once they have the latter, 50% will ignore it.
Human nature in groups
10. As long as people are electing people to govern people - there are going to be arguments, letters, fines, court cases, arbitration, mediation, hard feelings, politics, favoritism, screwups, etc.
Democracy is messy - it goes with the territory. Nobody likes to be told what to do, or disagreed with. The difference between your association and the local, state and federal governments telling you what to do - is that you agreed to let the association do it (and don't blame the association if you didn't read or get the documents)- the other governments were already here when you got here.
Posted by joewest at 10:50 AM | TrackBack (0)
May 29, 2008
How Do You Defend Associations
People often ask me why the CAN news feeds are so full of bad news about associations. The answer's quite simple - we get our news from other news feeds and by definition, "news" is something out of the ordinary - so, in reality, bad news about associations is something "out of the ordinary". People who work with or follow associations know that most of them plug along, day in - day out, without doing anything "newsworthy". However, you know as well as I do, that what's in the news can shape opinion of those who really don't know much about a subject. We also know that the news media, has come to consider associations as the "big, bad, bully" and the homeowner arguing with it, the "poor, downtrodden, underdog". Not accurate, but also not likely to change soon.
Again, if you follow news stories about associations, you will see that on the internet, there is often room for comments after the article. There's a whole group of people out there, led by some of the nastiest "advocates" that immediately jump on the article and damn all associations, and the people who serve on their boards, and their managers and their attorneys, as something evil to be avoided at all costs. I've often considered responding to these people, but then I remember that they're involved in a jihad, and rational thought just gets in the way. I also ran across a web site that helped me understand them a little more, and reminded me why it's probably a waste of time engaging them . The site is HOA True Believers and can be found at: http://www.hoatruebeliever.com
If you watch today's politicians running for office, the mantra is "Stay on message!" No matter what the question, make sure you get your message across. So when asked by someone about associations (whether they're in the media or just thinking about moving in, try these:
"People choose to move into associations"
"Yes, most new homes are in associations, but that's a decision made by the local government to generate additional tax revenues without increasing their costs or raising everyone's taxes"
"These are rules everyone who moved in agreed to abide by, and the owners can change them by a democratic vote"
"The association is run by residents elected by their neighbors"
"In any demcratically elected group, there are going to be people who agree with the leaders elected and people who disagree"
"It's about the pole, not the flag, the POLE!" (Often followed by: "Who are you - Fox News?")
"You know, some people like having rules - they like knowing that their neighbor is not going to turn their home into a truck repair shop - wo why shouldn't they have the right to expect that others who chose to live their have the same expectations - the rules were there when they moved in"
"What would you call a person who agreed to follow the rules when they moved in, then changed their mind when it didn't suit them - a liar"
Associations ARE a housing choice - don't be put on the defensive just because you chose to live in one.
Did you notice that "No comment" is not one of the choices.
Posted by joewest at 7:43 PM | TrackBack (0)
May 19, 2008
Time to Fire Up the Committees and Get People Involved
Two issues are showing up in the news - the first being the foreclosure crisis and its impact on association finances; and the second is the continuing intervention of state legislatures with respect to energy conservation issues. I believe that both issues will touch just about every association in the country before too long - so this is a reminder that is usually better to be proactive, and put together well-formed plans, rather than be reactive and try to put something together on the fly.
These issues are also in the news enough that residents are already aware of them, but they may not be aware of how they are going to impact them through the association. If they are paying their assessments, they may assume everyone else is and you really don't want to spring a surprise on them with a large increase in the regular assessment, or with a special assessment, to make up for others not paying.
So, why not try and form two committees (if you don't already have them). One to deal with the revenue issues and one the energy issues.
The committee looking at assessments and potential financial problems could review the current collection policy to make sure that it is up-to-date and being implemented effectively. If you've got collection issues, they can review possible solutions, including using a third-party collection firm, an attorney or even doing it themselves, but only after checking the documents and state and federal laws. The committee could work with the board to help identify potential cost-saving areas in the budget, that may not have been looked at real closely before. A few extra eyes and hands can really help with this. The side benefit of using a committee to help with this is it increases the number of owners who have a good awareness of the issues and the efforts to deal with them.
A number of states have already passed laws (and more are proposing) prohibiting associations from banning clothes lines or solar panels. Other forms of energy conservation will not be far behind. Forming an energy conservation committee can help you identify areas where the assocaition can conserve energy (and water) as well as investigate ways that individual owners can also conserve energy. In addition to clothes lines and solar panels, they can look at both common area and owner xeriscaping (natural environment), changing lights to flourescent or other energy-saving type, changing out sprinkling systems to automated, more efficient ones, recycling water, etc.
These are two areas where the board cold use some help, that owners need to know what's going on; and people need to communicate - and that's what committee's are for. Start now, because waiting to see what happens almost never works or helps.
Posted by joewest at 6:47 PM | TrackBack (0)
May 7, 2008
Back Again
I took a couple of weeks off from writing to take care of a few other things, but I couldn't stay away forever - there's always some luncacy that has to be written about. The latest comes from one of my favorites - the American Homeowner's Resource Center (AHRC). This is the largest of the "rant" sites (a "rant" site is one that gives people with problems a place to vent, then pours gas on the fire rather than trying to solve the problem).
It seems that the owners of the site lost a court battle and the domain for AHRC was awarded to the winning party. However, you'll never find that little bit of truth anywhere on their site. Instead, they've got their stable of writers all worked up that its a conspiracy to deny themm their First Amendment rights. There is no mention that the owners of AHRC so abused the court system that they are barred from filing any suits, motions or just about anything else without first receiving the approval of the presiding judge of the court. It was their actions in the courts that caused the costs to skyrocket, and when they lost, they lost most of their assets, including the domain.
Shutting down the site won't stop the ranters. They've already begun copying their diatribes to other sites. Shutting down AHRC won't stop the die-hards that rearely listen to anytning other than their own voices (or the little voices in their heads), but it may be a positive factor for those owners who are simply trying to find help with their issues. They may find other places that might actually help.
o those AHRC supporters - its not a conspiracy, its not about the First Amendment - its about using words as weapons, and claims you can't support - and its about blaming your own stupidity on everyone but yourself.
Posted by joewest at 10:28 AM | TrackBack (0)
March 31, 2008
Legislative Idiocy - Continued
Julio Robaino, legislator and main advocate for changing Florida's community association laws, proposed some major legislation, that, if enacted, will probably make being a board member for a Florida condo, co-op or HOA, not worth the effort or risk. Let's take a look at what he's proposed:
- Creates civil and criminal sanctions against any officer, director or association manager that knowingly or intentionally defaces, destroys or fails to create or maintain accounting records
- Prohibits staggered terms for board members (lets not have any experience or historical memory, let's just start over every year.)
- Requires condos to allow storm shutters to be left up year round ( who cares what that they make the building look horrible, we don't want to incovenience those snowbirds who are paying all the property taxes)
- allows the Florida Condo Division to remove board members from office and prohibit some owners from even running for the board (can we get this so that they can remove other elected officials, say legislators)
- Requires the free expression of religion on the condominium premises (without defining what that is - so we can have that goat sacrifice out by the pool - this should lead to some great arguments)
And thats just the start - the language will change from day-to-day. And the advocates who say they're just trying to get some rights for owners, and not to destroy associations, continue on their destructive path.
Colorado and Connecticut are working to allow clotheslines without regard to where they're hung or what they look like - something sure to help with re-sale values in this wonderful market.
I'm sure there will be more.
Posted by joewest at 9:35 AM | TrackBack (0)
March 20, 2008
Legislatures like to impose responsibility while ducking same
Florida, Arizona and Connecticut are all looking at some form of oversight of community associations involving state appointed commissions or something. In Florida, Rep. Julio Robaina, R- Miami, worked hard holding hearings all over the state to make sure everyone who ever got a violation letter or was behind in their assessments got to blast their boards.
As has been the case, they made sure that little mention was made of the fact that the people with issues represented less than a miniscule percentage of of owners, or that problems like embezzlement of association funds, while dastardly, happened in a dozen associations nationally, out of 270,000, or that many of the people testifying before them created their own problem by ignoring the rules that they had agreed to in the first place.
There's an easy way to solve this - first pay the board members $50,000-100,000 for their part-time efforts; then let's give each board member a staff of 4 or 5 people (paid for by the owners) to help them out and ignore it if a few of them happen to be realtives; exempt them from accepting bribes from vendors who get contracts from the association (call it "campaign contributions"); and while you're at it, exempt them from any potential liability that might result from their action or inaction. I mean, if its good enough for the people elected to state legislatures, it ought to be good enough for the people on community association boards, since both are freely elected.
In Arizona, a columnist for the East Valley Tribune has been on a jihad against associations for the past few weeks, looking up everyone claiming that "property rights" or "constitutional rights" are being violated by HOA's. Someone must have told this writer that he couldn't paint his house purple or sent him a violation notice for some weeds. With him, its all too obviously personal, so the subscribers of this paper can expect to read nothing positive about HOA's for the coming future. This is pretty typical in AZ. Make sure everything being built is part of an HOA, then ignore the way the developers build it, then when the owners move in, change all the laws.
It's crazy season, with legislators looking to make their marks before the November elections, so we can expect more of the same. In the end, it will cost all of the owners in community associations a little more to live there; there will be fewer people who want to serve on the board and deal with more bureaucracy, and the professionals, the managers and attorneys whom the ranters love to hate, will be a little bit richer helping deal with the new restrictions, laws and legislators.
Posted by joewest at 10:56 AM | TrackBack (0)
March 5, 2008
Departments of Housing and Urban Development and Justice Release New Guidance on 'Reasonable Modifications' Under the Fair Housing Act
WASHINGTON, March 5 /PRNewswire-USNewswire/ -- New guidance released this week by the Departments of Housing and Urban Development (HUD) and Justice (DOJ) reinforced the right of persons with disabilities to make "reasonable modifications" to their dwellings if a structural change to their dwelling or to a common area of the building or complex in which they live is needed so that they can fully enjoy the premises.
The guidance is designed to help housing providers and homeowners' associations better understand their obligations and help persons with disabilities better understand their rights regarding the "reasonable modifications" provision of the federal Fair Housing Act (FHA).
"The right to reasonable modifications is essential to ensuring that persons with disabilities can fully enjoy the homes in which they live," said Grace Chung Becker, Acting Assistant Attorney General for the Justice Department's Civil Rights Division. "This guidance will help housing providers understand their obligations under this important component of the Fair Housing Act."
"Persons with disabilities have a right to have the place they call home altered in a way that will enable them to fully enjoy it," said Kim Kendrick, HUD's Assistant Secretary for Fair Housing and Equal Opportunity. "This guidance is a major step toward enforcing that right today, and for generations to come."
The FHA prohibits discrimination in housing based on disability, race, color, religion, national origin, sex and familial status. HUD and DOJ share responsibility for enforcing the FHA. HUD is the agency with the primary responsibility to investigate individual complaints of discrimination. The Secretary of HUD, on his own initiative, may file complaints alleging discrimination. In addition, the Attorney General may commence a civil action in federal court when he has reasonable cause to believe that person(s) are engaged in a pattern or practice of discrimination or that a group of persons has been denied rights protected by the FHA.
One type of discrimination prohibited by the FHA is the refusal by housing providers or homeowner associations to permit a reasonable modification - i.e., a structural alteration - of existing premises, occupied or to be occupied by a person with a disability, when the modification may be necessary to afford the person full enjoyment of the premises. Although the housing provider or homeowner association must permit the modification, the tenant (or prospective tenant) is responsible for paying the cost of the modification. Examples of reasonable modifications include widening doorways to make rooms more accessible to persons who use wheelchairs or installing a ramp to provide access to a public or common use area, such as a clubhouse.
The new guidelines, issued in the form of questions and answers, cover such topics as:
-- What is a reasonable modification?
-- Who must comply with the reasonable modification requirement?
-- Who is responsible for expenses associated with the upkeep or maintenance of a reasonable modification?
-- When and how should an individual request permission to make a modification?
-- What types of documents and assurances may a housing provider require regarding the modification before granting the modification?
-- What procedures are available to a person wishing to challenge a denial of a requested modification?
The guidelines are available online at both http://www.usdoj.gov/fairhousing and http://www.hud.gov/offices/fheo/disabilities.
Since January 2001, HUD and its Fair Housing Assistance Program partners have investigated and either conciliated or charged nearly 10,000 cases that alleged discrimination based on disability. Since Jan.1, 2001, the Justice Department's Civil Rights Division has filed 244 cases to enforce the Fair Housing Act, 115 of which have alleged discrimination based on disability. More information about HUD and the civil rights laws it enforces is available at http://www.hud.gov/offices/fheo/aboutfheo/aboutfheo.cfm. More information about the DOJ Civil Rights Division and the laws it enforces is available at http://www.usdoj.gov/crt.
Individuals who believe that they may have been victims of housing discrimination should contact HUD at 1-800-669-9777. In addition, individuals may contact DOJ at 1-800-896-7743, or they may email DOJ at fairhousing@usdoj.gov.
Posted by joewest at 2:58 PM | TrackBack (0)
February 23, 2008
The Very Rock-bottom Basics of Community Associations
I get a lot of questions from people who find my web site, and I spend some time on HOATalk - a discussion board geared to board members. I am constantly amazed at some of the questions, given the fact that most of the writers have had numerous boards before they were elected, and why the question couldn't answered, or was answered wrongly, is sometimes leaves me staring at the screen, wondering what I've been working so hard at for the past 33 years. So let me outline some basics about community associations. These will apply to most, so assume they apply to yours until you can definitely determine otherwise:
You are a corporation - subject to your state's corporate laws. This is where you get your board structure.
You are not tax-exempt - you are probably "not-for-profit", but you're not a charity. You may fit into a couple of different tax categories - which one you should be in is up to you and a qualified CPA.
You have to file a tax return every year - that doesn't mean you will owe taxes, but you have to file. Yes - state too.
You have to renew your corporate status every year - if you missed a year, you may have lost the protection of corporate law.
It doesn't matter who does your books, someone else should be checking them and the bank accounts.
It doesn't matter how large you are or how small you are - if there are common areas involved in your association - you need to have reserves.
You are not required to have professional management, legal counsel or a CPA - but you'll be an idiot if you don't periodically call on them for help when you run into a problem. The good ones have "been there and done that", and won't waste your money.
You need to have insurance, and more importantly, you need someone on your side (not necessarily the agent you are working with) to tell what's really insured and what's not. Insurance surprises over the past few years have been very expensive for associations.
If you can't read your documents from front to back without falling asleep, or if you have to continually go back to try and figure out what they're saying - you're long past time having legal counsel come in and help you clean them up. Bad documents never make for good associations.
It's not your job to keep the assessments low - it's your job to spend the money wisely.
Most of the problems that end up in court between an owner and the board boil down to stubborness on both parties part. Don't let it get to that and you'll save everyone a lot of money and aggravation.
[Special note to association's in drought areas - if you're on water rationing, don't send owners violation notices for not having a green lawn - I don't care what your documents say - you look like idiots.]
More later-----
Posted by joewest at 8:16 PM | TrackBack (0)
February 15, 2008
"You're Banned"
Note to criminals: Check your mail, it may keep you out of jail. To curtail nuisance crimes, residents of a Crofton (MD) neighborhood are sending letters to people they deem unsavory, telling them if they return to private property owned by the neighborhood they will be arrested for trespassing, a crime that could result to a $500 fine or 90 days in jail. Full article
When I saw this news article, for some reason my mind shifted to the religious groups that "shun" outsiders or people who have mis-behaved in their group. Since I hadn't seen this in a while, it had that "old-time" feel to it.
In this day and age of frustration with authorities who don't seem to be able to deal with minor issues any more, this might just strike some as something to try.
Posted by joewest at 5:12 PM | TrackBack (0)
February 4, 2008
Watching Your Money (Again)
Last weekend, there were three more reported embezzlements from associations. So the usual questions were asked by people as to how they could better protect their money. I said that there were a number of policies and procedures they could and should take, but I wanted to highlight two:
FIRST - make sure that a copy of the bank statement goes directly from the bank to someone other than the person who keeps the books. ts really hard to steal your money if the crook can't doctor the statements to show that the money is "there". Better yet, through electronic banking, allow multiple people access for reviewing the bank statements, deposits and payments. But, at a minimum, if a manager or management company is writing the checks and handling the banking, then the Treasurer should receive a statement directly from the bank. If the Treasurer is writing the checks, then someone else should be getting the other statement. Don't just rely on the "two signatures" as most banks don't even look at the signatures anymore as they run the checks through scanners.
SECOND - You need either a Fidelity bond or Crime Insurance policy that covers the association for any theft of its money. AND - you need to know what the exclusions are for which they won't pay, or any policies or procedures that you need to institute in order to keep them from denying a claim. Your agent needs to explain this in detail and you need to make sure that any of the possible scenarios, in which money could be diverted or disappear, is covered.
You can find articles on our site covering more items, but I really wanted to stress these two as something that shouldand could be done immediately!!! DO IT!
Posted by joewest at 10:05 PM | TrackBack (0)
