Should Condo Associations Be More Proactive in Fire Prevention?

In going back over the news stories for January, I was surprised to find that there were more condominium fires in those 31 days, than  in any previous month during the 10 years I’ve been tracking those stories.  I was surprised because I would have thought that with the mild weather, the usual causes of winter fires would have declined, fireplaces, space heaters etc.  But, after thinking about it for awhile, I decided that we were probably lucky with the warmer weather.  There would probably have been even more fires if the weather had been colder.  Why?  Just like associations around the country, condo owners are stretching out their maintenance expenses, and I’m sure that in a lot of units furnace and fireplace cleanings and inspections, smoke detector battery replacement and testing, stove burner cleaning and replacement, etc. may have been postponed until “the money was better”.  The problem with this it that while these items are often the responsibility of the owner, not the association, failure to maintain them can put other people at risk.

Every association should have a fire prevention policy.  What items should be considered in a “proactive” fire prevention policy:

1. Require that furnaces and fireplaces be cleaned and inspected annually
2. Require that a certified, multi-purpose fire extinguisher be within close proximity to items that cause fires – stoves, furnaces, grills
3. Require functioning smoke detectors on every level of the unit and that batteries should be changed at least twice a year (unless they have the 10-year, long-life battery or if the detector is hard-wired)
4. Require that units which have smokers residing in them use only sand or water-filled ashtrays.  Units with smokers should also be prohibited from having mulch in potted plants on decks or mulch or other flammable materials in patios (you’d be surprised by the number of fires started by people putting their cigarettes out  - or not out -in mulch-filled planters, or just tossing them into their back yard)
5. Require that grills be kept at least 10 feet away from the unit.  Grills on small decks should be electric, not gas or charcoal.
6. Require that units not store highly flammable items, such as paint, gas, etc.  (you might expand this to large amounts of paper to give yourself some leverage in hoarding issues)

Now the question is, how does a board make sure that the fire prevention rules are being followed?

If the association has a direct responsibility for some of the items, such as the furnace or fireplace, then establishing a maintenance and cleaning schedule would be relatively easy to enforce.  However, if the owner has the responsibility for the items listed above, checking on them could be viewed as an intrusion.  Check your documents with your attorney to see what’s possible and then check with the owners to see what’s going to be acceptable.

You may want to consider sending out a notice every year asking the each owner to check the above list of items and respond that all items are in compliance with the rules.  At the very least, it would serve to remind them.

You should consider asking for volunteers to help seniors deal with some of the issues, like changing smoke alarm batteries.  Recently, an elderly woman died in a condo fire that started in her unit.  The smoke alarm didn’t work because of a dead battery. She wasn’t able to get on the ladder/stepstool to change it.  Helping out now and then is a good thing and should be a regular part of your community.

Reminding people about things they feel they already know sounds like nagging, but it only takes one small ember, and a lot of owners could find themselves without places to live or a lot worse.  Fire prevention is a continuous effort at reminding people to use caution and common sense.  Don’t put it aside because it’s boring.

2012 – What should you plan for?

If you read my last post, you understand that that money, more specifically the lack of it, was the main problem faced by most associations in 2011.  The likelihood of a major turnaround in that area during 2012 is not promising, and as a result, most associations are again going to face tough decision on how to spend what they can raise. A survey recently published by the Community Associations Institute shows how associations have been dealing with the revenue issue.

The survey showed that associations are taking a variety of steps to address budgetary shortfalls:

• 50 percent have increased homeowner assessments
• 40 percent have reduced contributions to reserve accounts that are set aside for major maintenance and repairs
• 39 percent have reduced landscaping services
• 38 percent have deferred maintenance of common elements
• 38 percent have postponed planned capital improvement projects
• 28 percent have reduced professional costs or management fees
• 22 percent have borrowed from their reserve accounts
• 20 percent have levied special assessments

[CAI Survey: HOA's Still Reeling from Economic Slump 12/8/2011]

The impact will be felt in many areas, but here are a few that should on your planning calendar for 2012:

A full audit of the books

2011 saw a huge increase in embezzling from associations.  It is all too easy to forge invoices, checks, bank statements and other financial records these days.  A financial review or compilation just doesn’t dig deep enough to find anything but the most obvious problems.  Yes, a full audit is more expensive than a cursory scan, but if you haven’t had one in a year or two, or transitioned from a developer, or changed management companies or managers, it’s time.

Reserves

Making reduced reserve contributions or borrowing from the reserve fund is a very touchy situation.  First you have to make sure its not against the law as a number of state acts require that funds set aside for reserves be used for the purposes intended, and some states have minimum requirements for amounts to be placed into the reserves.  So before you start fooling around with the reserve account, make sure you can, and if you need to take any specific actions to make sure what you are planning on doing is legal.

More to the point, if you did borrow from or reduce the payment to, the reserve fund, what are your plans for making it whole. Just “kicking the can down the road” hoping that the next board will deal with the problem is both irresponsible and a little bit cowardly.  If the problems occur on your watch, then at least put a plan together to fix it.  How are you going to repay those funds for the reserve account?

Deferred Maintenance

Like reserves, it not a good idea, nor is it fair to future owners and board members, to defer maintenance without a plan to deal with both probable and possible results of your decision.  ”Probable” may mean that if you defer painting another year, that more chips may appear resulting in more rotting and more expensive repairs down the road.  ”Possible” may mean that by not sealing the cracks in the road, severe potholes could occur resulting in damage to owner and visitor vehicles, with the attendant claims.  For everything you defer, plot the the “probable” and the “possible” to see if you want to take those risks.  And then make sure you include a plan on how you intend on catching up, or how you plan to deal with the risks.

Collections

I can’t tell you how often I’ve read of associations asking how to collect assessments that are 1, 2, even 3 years behind.  The smaller the amount, the easier it should be to collect.  If it isn’t then the owner is in serious financial trouble and the sooner the association acts the lower the amount they may ultimately lose should be.  Every association should have a collections policy that is automatic, with checks in place to allow board members to confirm that the funds are  indeed, in arrears, and that the owner has some opportunity to work with the association if they wish to try and put together a reasonable payment program.  Every owner should be made aware that the payment of the assessment is just as important as the mortgage and tax payment for their home.  Don’t let the debt continue to accumulate.

Revenue

This is the time to seriously consider new revenue sources.  Although there are tax consequences to outside earnings, you first would have to actually make some money, and if you’re having assessment collection problems, then looking into other revenue streams would probably be a good idea.  Take a tip from management companies – management fees have basically remained the same for the past 30 years (adjusted for inflation – sometimes) and they have created ancillary services and charges to bring in the additional revenue they need to survive.

It could something as simple as adding Google or local ads to your web site.  It’s easy to set up and easy to maintain.  Google ads won’t generate a lot of money, unless your web site gets a lot of visitors, but even pennies matter today.

If you publish a community newsletter, then finding local advertisers to not only offset the cost, but possibly make some money, should be considered.

These won’t be popular but do generate revenue: leasing space for a cell phone tower, or allowing advertising or signs, or adding vending machines.  But if your association is in dire financial straits, then you might want to add it to a list for discussion.  However, never enter into any serious discussions until you’ve talked to your attorney, insurance agent and the owners.

–

2012 may or may not be a better economic year for the country as a whole and whatever the economy does, it’s likely to be another tough year for associations, given the size of the hole they find themselves  in.  Don’t let tough decisions or needed planning slide to the “next” board. If you do, then you are just another part of the problem, and everyone’s seen enough of that.

2011 – The Year of the Missing $$$$$$$$

If there was a single theme running through news stories and articles about condo and homeowner associations in 2011, it was the shortage of money to carry out their responsibilities.

First, the trend of owners not paying their association assessments due to a weak economy, continued strong, which meant that associations had less money to carry out their required operations.  Then, the foreclosure crisis also continued strong, again leaving associations short, as owners in foreclosure usually stopped paying assessments.  Those associations in states that gave them six month of assessments in a foreclosure process may have been a little better off than those in states without the lien priority, but they still found it was tough to collect.

Then, the mortgage banking industry started piling on, by slowing down foreclosures, so that they would not be responsible for a home’s assessments until the last possible minute.  This dragged out the time frame when associations were receiving no income from a unit, placing a tough burden on the owners who were paying, and on boards to struggle with reduced revenue.  Some states tried to help out associations, and some attorneys got creative in forcing foreclosures, but that was only in a few states.

The following news story leads from 2011 show a growing trend that is entirely preventable, but sadly, is often ignored:

• FL: President of homeowners association accused of embezzlement
• OH: Prosecutor’s filing indicates women may plead guilty to stealing $1.6M
• NC: Parkwood president: Embezzler took at least $150K from HOA
• WA: Former HOA president is headed to trial
• IA: Muscatine woman gets probation for theft from homeowners’ association
• FL: The former manager of a luxury Aventura condo building, accused of embezzling hundreds of thousands of dollars, turned herself in to jail officials.
• LA: Former president of Montz associations pleads guilty to theft
• TX: HOA dues disappear in elaborate scam
• NC: Theft of money from Parkwood involves ‘many thousands of dollars’
• CO: Embezzler involved with HOA in Aspen called a ‘habitual criminal’ by DA
• OH: Man pleads guilty to theft possibly totaling $200,000
• NY: Ex-school board member admits stealing funds
• CA: Neighborhood-association embezzler is sentenced
• ME: Convicted condo embezzler arrested
• CA: Diablo Grande embezzlement is news to sheriff
• WA: Prosecutors: Issaquah HOA president bilked organization
• FL: Charge: President bilked own homeowner association
• MD: Grand Jury Indicts In Theft Scheme Case
• WI: Franklin police probe suspected condo association fraud
• WA: Former Olympia-area homeowners association worker guilty of theft
• NJ: Former property manager in Freehold Twp. accused of embezzling $75K
• GA: Former HOA treasurer arrested
• CA: Former Palo Alto neighborhood association admin accused of embezzling $65K
• GA: Manager gets 3 years probation for fraud
• NJ: Three charged with thefts from Aberdeen condo association
• OH: Woman gets prison for bilking condo associations
• NJ: Mother, daughter charged in scam – Indictment: Condo funds misused
• Toronto condo owners allege massive fraud
• NY: Dare’s role in Pastures cost association $100,000
• VA: Fraud at Koger may tally $2 million
• WI: Treasurer of Kansasville home owner’s association reportedly forged checks
• FL: Four charged in multi-million dollar fraud scheme at Hallandale Beach condo
• NJ: Readington condo official admits stealing $200K
• PA: $600K Swiped From Montco Condo Association
• CA: Sheriff’s Deputy Who Took Money From HOA Sentenced
• FL: Four charged in multi-million dollar fraud scheme at Hallandale Beach condo
• FL: HOA bookkeeper confesses to embezzling
• CA: Manager steals $70K from neighborhood group
• SC: Woman charged with embezzling $14K in HOA funds
• IN: Mishawaka embezzler to testify against co-defendant
• IL: Regent Realty owners indicted in fraud
• NY: Green Mansions Manager Indicted For $162K Theft
• MA: Yarmouth condo office manager sent to jail
• WY: Embezzler gets lengthy sentence in Fox Park case

When times are tough, people who need money will justify taking it from others. Every community association related blog and web site wrote articles about how to prevent theft, but, as with anything, there have to be people in place who will actually do the checks to see that everything is as it should be.

The result of all of this, was all too often, delayed or ignored maintenance, assessments increasing to cover revenue shortfalls, a lot of hard feelings and a lot of litigation, all of which will have long-term effects on associations. To be honest, I don’t really see any improvement in the short term, and for the long term, that is going to depend heavily on the economy, and whether or not the housing industry rebounds.

When I used to do seminars for association board members, I would tell them that it wasn’t their job to keep assessments low, but to spend the money wisely. After this year, I think I need to change that to:

It’s your job to collect the money efficiently, watch over it like a guard dog, and then, spend it wisely!

To all of you who donate your time and talents to keep your association going through these tough times:

THANK YOU!

Out of Sight – Out of Mind

I’ve spent the past two days without electricity, heat, cell phone or internet.  A cold front, pushing wind gusts of up to 50 mph blew through and damaged some power lines.  This is the third time this year, and about the 60th time since I’ve lived here, that I’ve gone more than a day without power.  It’s easy to figure out why this is happening.  Just looking outside I can see the utility poles, leaning in all directions, overloaded with lines of all kinds.  They’re original poles, 60+ years, and many of the lines are no longer in use, but were simply left when new lines were run.  Someone driving by, sneezing out their car window, could take out one of the lines or poles.  This is basic, necessary infrastructure, and like too many things these days, has been ignored by everyone for years.  Given the growing economic need for electricity and communications, one would think more attention would be paid to this issue, but since that would cost money, utility companies have long figured out that its easier to put up with the aggravation of people who have lost power, than to correct the problem. As long as they are not held liable for the damages, they have no incentive to move the lines underground, where weather and other dangers can’t easily reach them.

Unfortunately, condo and homeowner associations don’t have that luxury.  The association is usually responsible for the utility infrastructure once it enters association controlled property.  Maybe not all of it, but certainly some of it.  What is even a greater problem, is that most associations have no idea of just what that entails.  What do I mean?  Let me ask a few questions:

• Do you have accurate site plans detailing the actual placement of:

1. Electrical lines
2. Sewage lines
3. Storm water lines
4. Gas Lines
5. Water lines
6. Communication (phone/cable) lines

• How do you know the site plans are accurate?
• Do you know where the utility/municipal/association/owner responsibility points are?
• Do you know what materials those lines are made of?
• Do you know their life expectancy?
• Do you know their current condition?
• Are any of these items included in your reserve plan?

I’d be surprised if you could answer any of these questions, and yet, the association will bear some, if not all, of the responsibility for their maintenance and eventual replacement.  Reserve plans often don’t include those items that can’t be seen, such as underground systems.

Take a moment and think about what it would cost and what would be involved, to replace any of the above items.  The actual location would have to be found, common areas would be dug up, new lines run, connections made and grounds restored, not to mention the problems of owners without power/cable/heat/water, etc.

These items need to be a part of your reserve plan, and if they aren’t, then talk to the company that did your reserve study to see how it might be done.  Set up an infrastructure committee to find the original site plans, and then run some tests to see how accurate they might be.  In the process, work out the answers to those questions above, and then incorporate them into your reserve plan.  Don’t wait for a catastrophic failure to find out you really should have set some money aside for something you should have know was coming.

Owners and Association Can Work Together

Even though you might not believe from reading the various “horror” stories the media love to relate about HOA’s, more often than not, people figure out a way to get along.  Here’s a good example from the “The Reporter” inVacaville, CA:

 ‘Regular guy’ from Vacaville honored for small solar installation

He knew the letter, an e-mail, was coming, but, still, to open it and read the letterhead, “The White House, Washington,” startled him.

“When you open it, it’s surrealistic — you want to share it with your friends,” said Bruce Rasmussen of Vacaville, a third-grade teacher at Laurel Creek Elementary School in Fairfield. “They look at you and look at you and say, ‘I didn’t know you did anything like that.’ ”

What he did was replace an aging, propane-fired water pump with a solar-powered one that provides water to his mountain home and 19 others near Yosemite National Park.

For his efforts to upgrade and modernize the pumping system, Rasmussen was nominated — by whom, he doesn’t know — for an award through the White House’s Champion of Change program. He will be recognized for his work on Thursday at the White House Conference Center.

“Your remarkable and innovative achievements have not gone unnoticed,” Kyle Lierman, of the White House’s Office of Public Engagement, began the award notification letter.

“I think it’s a pretty big honor, I’m blown away by the whole thing,” said Rasmussen, 59, his school’s teacher of the year in 2010 and its technology learning coordinator.

He made the conversion two years ago “because there was a need,” he explained. “I didn’t do it to receive an award. I’m just a small guy, a regular person who lives in the United States. It’s kind of like a shock. It’s almost overwhelming. I’m flabbergasted.”

He said the White House program leaders “were looking for small things that make our country a better place to live.”

In a matter-of-fact way, Rasmussen, for 12 years president of the Peach Growers Tract Improvement Association, his homeowners association, recounted what led to the solar-power conversion.

In the Stanislaus National Forest, about five miles from the national park entrance, his and other summer homes have no electricity. The original water system was built in the 1920s for a lumber mill. In 1978, association members replaced it by drilling a well and lowered a pump into it. Initially, the water pump was fired by gasoline, then diesel and, for the last 20 years, propane.

Rasmussen approached the homeowners association members with the idea of using a solar-powered pump as a replacement and they gave him the green light. As water operator for the association, he planned the conversion, raised the money for the association and installed it alongside the propane-powered pump, which is still used in emergencies, he noted. The new water pump is powered by four solar panels. Stored in a 100,000-gallon holding tank, the water is used for drinking, household uses and fire suppression by U.S. Forest Service, the National Park Service and Cal Fire.

Modest and not one to describe himself as highly skilled in the building and mechanical trades, Rasmussen, by all accounts, clearly is. The pump conversion does not surprise those who know him. In 1994, he tore down and rebuilt his home, formerly a summer cabin owned by the Peach and Fig Growers Association of Modesto.

“I guess I’m kind of handy at times,” he admitted.

Again saying he was surprised by the honor, Rasmussen, who has taught for 31 years in the Fairfield-Suisun Unified School District, figures the Obama administration “is looking for less dependency on fossil fuels” to power our homes, workplaces and cities in the future.

“They’re looking at large projects and small projects,” he said, adding that California is at the center of solar technology not only because of its abundant, mostly year-round sunshine but also its many Bay Area-based technology firms.

While at the White House Conference Center, Rasmussen also will participate in the Make it in America White House Roundtable, with guest speakers Secretary of Transportation Ray LaHood and House Democratic Whip Steny Hoyer, D-Md. Its purpose is “to share best practices and connect Champions of Change with more of the federal resources they need to succeed,” Lierman wrote in the notification letter.

While U.S. governments may change, political leaders of all stripes are “looking for ways to continue to promote” alternative energy, to become less oil dependent, said Rasmussen, who also will tour the White House.

“Instead of buying a gas heater or dryer, if you have solar panels, you could run them on solar power instead of electricity,” he said. “I really wanted to push our association toward solar.”

His road to the White House began about two months ago, when a homeowners association member received a telephone call about his nomination.

“It’s kind of interesting,” said Rasmussen. “I’m just a common person. This is all about regular people making a difference.”

Annual Reminder – October is National Fire Prevention Month

Every day, I sort through about 30 news feeds for stories about condominium and homeowner associations. Way back when I started this, I also started noticing and tracking stories about fires in condo associations.  I was interested because a local association had just had a major fire which started with a loose gas line connection in a grill parked next to a unit.  The fired totally destroyed 4 units.  This was the kicker, fires in homes in HOA’s are usually contained to a single home, but condo fires almost always take out multiple units, displacing numerous families and costing much more to repair.

This past year showed about the same number of condo fires as the previous years, but some of the causes were of sufficient numbers to take notice.  One of the most frequent causes was cigarettes being put out in planters or outdoor walkways.  Mulch actually burns very easily and many potted plants and gardens are loaded with it.  Many people have stopped smoking inside of buildings and so this is an area that will be of concern in the near future.  Associations that have decks and patios should remind the owners of this potential danger and ask that they use sand or water filled ashtrays in these areas instead.

Another area that showed an increase in fires was in garages and carports because of overheating cars.  The heatwave this summer meant that car engines didn’t cool as fast they used to and fires resulted (I’m not sure this was always the reason, the articles rarely gave explanations other than the fire started with the car, or something near the engine).  If we have another summer like this last one, associations may want to give garage owners a break on leaving the garage doors open for a little while.

The economy probably was the cause of a large number of fires as vacant units and unfinished developments were targets of vandals and people who had an interest in seeing them burn.  If you have a number of vacant units, you might want to consider requiring the owners to use cell-phone equipped smoke alarms that can call when smoke or fire is detected.

Fires most often start because of negligence and it is here that associations can use National Fire Prevention Month to remind themselves and their residents of some of the things that should be checked regularly to prevent them:

• Clean lint build-up from clothes dryer exhausts
• Change the batteries in smoke alarms if they are battery-operated.  Test the hard-wired smoke alarms.
• Have fireplaces cleaned and/or inspected.
• Have furnaces inspected and cleaned.
• Are all BBQ grills at least 10 feet from the building
• Are your buildings properly grounded?  There were a number of fires started by lightning this year.
• Remind owners to check the charge on their fire extinguishers and replace them if needed.
•  If you have mulch everywhere, you might to consider creating “No-Smoking” zones, and put a couple of signs up reminding people that even the “ground” can be combustible
• Every high-rise should have a fire sprinkler system. If you’re in one of the  older buildings, and have no internal fire suppression system, it really should be part of your future plans.  I know it costs a lot, but so will replacing your buildings and possessions.

There are plenty of other tips and suggestions that can be found on the National Fire Prevention Association’s information pages

It would be great to go a week without reporting on fires that burn multiple units or buildings, fires that injure or kill people and pets or fires that injure firefighters trying to save someone’s home.  Everyone thinks that fire prevention is “common sense”, but if you stop and think about, “common sense” has been in short supply lately.  So why not make a point of really pushing fire safety and prevention in your association this month.  Who knows what, or who, you might save.

P.S. October 9-15 is National Fire Prevention Week (Oct. 9 is the anniversary of the Great Chicago Fire)

It’s Budget Time Again – Let’s See If We Can Get the Owners to Read It

[This is a re-print of a blog I did last year, from a longer article I wrote a number of years ago.  The point is still valid, even more so in these tough economic times]

One of the most common complaints about associations is that the owners don’t know how the money is being spent.   Boards typically send a spreadsheet format budget and a year-end or audited financial report, but both come with very little in the way of explanation.

The standard budget package consists of a cover letter that basically says “We did our best to keep the assessments from going up too much….please don’t hurt us, we have to pay them too”.  Attached to the cover letter is a spreadsheet that has only one number that everyone looks at and that’s the total.  Most owners can’t divide that by the number of units, months and then apply their unit’s percentage value, so their first reaction is to feel like they have to pay the lion’s share of that outrageous number.  Stop doing this.

Your budget should tell a story.  A story about why the owner made a great decision in choosing to live in your community.  And it was a great decision.

Tell them about the volume savings on items like lawn, snow, roofs, roads, etc.  Show them how cheap it is to have the grass cut by telling them what it costs them each week, don’t just tell them the total contract cost.  Tell them how wonderful it is that someone else takes care of checking things out, then finding contractors, then watching them, then checking their work…..all things they would have to do themselves if they lived in a single family home.  But they didn’t want to do those things anymore so you’ve arranged to take care of them.  What a bunch of great people you are (and the manager too, of course).

Put the numbers in the middle of paragraphs that explain them and explain in a way that means something to them.  Don’t say you’re going to spend $200,000 on roofs, tell them you’re putting a new roof on their home, without them having to do anything, for about $2,000, a fantastic savings over the normal roofing price.

You have a problem in your budget this year that caused a major increase?  Go after it right up front.  Tell them the problem, what you’re going to do to resolve it and why it’s a good thing.

Use photographs to make your points  A picture is worth a thousand words so use that digital camera that you’ve been trying to figure out.

The budget is probably the single most important letter you will send to them during the year, so spend a little time and do it right.  By the time they finish reading your budget package,, you want the owners to be saying:  “Wow, that wasn’t all that bad”.  At least they will have a much better idea of where their money is going.

To see a sample budget (PDF format)  click here

Welcoming New Owners and Renters

A number of years ago I went to work for a subsidiary of a local management company. The owner of the company had surveyed new owners six months after they moved in asking them about their understanding of the association they lived in, based on the communications they had received to date. He found that slightly less than 50% of the owners had read all of the materials they had been sent and, had retained less than 20% of what they had read.

We tried to overcome this problem with a videotape, figuring that new owners would be willing to spend 15-20 minutes learning about the community association lifestyle. The problem with video is that because of the cost, it has to be generic in content and therefore was only a marginal improvement over the unread written welcome packages. Too often associations and management companies used it as a substitute for, rather than a part of, a well thought out program for new owners.

The point I wish to make is not the success or failure of the video, but that overcoming the tendencies of new residents to ignore or forget what you show, tell or send them is the key point of any successful welcome program.

What is it that you want to accomplish when communicating with new residents?

How about:

• The smooth assimilation of the new resident(s) into the community
• The reinforcement of the new resident(s) decision to move into the particular community as a good decision
• Providing information that results in the new resident believing that professional management of their community is a positive benefit for them and that the fact that your company is handling that management is a great benefit.
• Encourages them to become knowledgeable about their association and to consider participating in its activities.

To accomplish this you will need to:

• Provide them with the necessary information needed to function as a member of a community association
• Provide them with multiple reference sources to find answers to questions at the time the need arises
• Communicate with them often enough and at the right time to get the message across without being a pain.

The information needed by a new resident is often too broad and yet often presented in too detailed a form to be absorbed in a single reading, or scanning. It needs to be designed in such a way as to attract and hold their attention, when they have the time and interest to look at it.

[All of the items are samples. They should be reprinted professionally and co-branded with the association]

Did you notice the picture as soon as the page scrolled down? It is the blend of visual and written that will make a good communication piece. If you simply have paragraphs of detail, the reader will tend to scan the documents, possibly focusing on certain words that are of interest to them, but they may miss many important points. By adding a visual reference, you will focus their attention to the items that they might be concerned about or that you want them to concentrate on. If you want them to notice the rules about pets, use the picture above to draw their attention.

Timing

Timing is always a touchy point. Send something too soon and it may be ignored among the mass of closing papers and the hurly-burly of moving in. Send it too late and the damage may already be done. For each component there will be a suggested time frame for using it. This isn’t tested or carved in stone, adjust it to your needs and experience.

Components of the New Resident Welcome Program

• Alert and request for move-in date
• Note/card
• Letter
• Handbook
• Forms/Documents
• Internet
• Visit

Alert

Closing will probably be your first real opportunity to communicate with a new owner and it’s probably the worst time. No matter what you do its going to get buried in the rush to get everything signed and settled. I would suggest that you include a document with the Status Letter (or whatever you officially provide to let the new owner know the account is up to date). This should be printed on brightly colored paper to call attention to it. It should include a simple form and an envelope addressed to the management company and stamped.

Basically the Alert should remind the owner that they are purchasing or renting a home in a community association, that they should have received certain documents (list), what to do if they didn’t, and a request for basic information (names, address of property if you can’t match it, and an approximate move-in date. Sample

Note/card

The Note can be a postcard or other format (a customized Greeting Card would be best) and should be mailed around the move-in date. It should be simply a “Welcome” to their new home and community, letting them know you’re there to help if they have any questions, and alerting them to the fact that you will shortly be sending them a larger, more informative package of information. It should also direct them to the “New Resident” section of your internet site.  You should come up with a basic format then have each association professionally print up a quantity at their cost. Have the President and the manager sign enough for 6 months or so at a time.

Letter

The Letter is the official welcome package.

One to two weeks after move-in. They’re unpacked and somewhat settled, and may now have the time to read something.  Sample

Handbook

I’m a believer in the following:

• Information must be given in an easy, friendly format
• It must be retrievable. In other words, the Handbook should cover all of the important points
• It should be printed in a size that will allow it to fit in the same drawer as the resident’s address book. (The sample is done in 8.5×11 for convenience in editing)
• It should not read as if it was written by a lawyer
• It shouldn’t be filled with just the things a resident can’t do

Send with letter

Forms/Documents

Any forms or documents should either be included in the Handbook, or as part of that mailing.

Internet

I would suggest the internet be used as a visual medium to welcome new residents. Here I would do the following:

1. create a special section designed for new residents that either provides or links them to all of the information they will need; and,
2. create an interactive, or flash-type welcome that walks them through community association living.
3. create a video welcoming them to the association and highlighting areas of importance

[Feel free to link to our welcome videos.  Although generic, they do provide basic information]

Everything they need to fill out, or sign up for, should be here. Information at their convenience.

Visit

If the association is large enough, or active enough, it would be nice to have a “Welcome Committee” stop by and visit the new residents (owners or renters), drop off a basket of local products, coupons for local services and the Handbook. If not, any personal contact early on would probably be helpful in giving a good first impression of the association.

Budgets and the “Tea Party”

So, I’m in northern Michigan, taking care of an ailing parent – a place where the discussions usually revolve around health and the weather – never about my business. I decided to drop in on the local AmVets post, to “ease some stress”, and give them an medical update, when one of the patrons looks at me and says, “Aren’t you that guy who knows something about condo’s?”  Not being sure if he’s looking for a fight or just being inquisitive, I quietly replied, “Yeah, a little.”   And the following conversation ensued:

Him: “I just got back from my association’s board meeting, and they said it looked like they were going to have to raise the assessments for next year!”

Me:  “Uh-huh…”

Him:  “How can they do that?  Don’t they know how horrible the economy is?”

Me: “Well, since they’re living in it, I would guess that they have some idea of what’s going on.”

Him:  “Don’t they know that my condo is only worth half of what is what worth three years ago?”

Me:  “I’m pretty sure there’s is too.  Besides, assessments aren’t like taxes, they aren’t tied to the value of the unit.”

Him:  “Well, they oughta be.

Me:  “Well, if that was the case, your assessments would have gone up a lot back when the value of your unit was increasing.  Did they go up a lot back then?”

Him:  “Well, no, but don’t they know that it’s really getting hard to make ends meet?  After all, most of us are retired and on a fixed income, and watching our nest egg disappear.”

Me:  “Look, did any of your personal costs go down over the past few years?  Are you paying any less for gas, groceries, electricity, insurance, etc.?”

Him:  “No”

Me:  “Well, costs haven’t gone down for your condo either.  All of the people who provide services to the association have had to deal with the same rising costs and to the extent they can, pass them along to their customers.”

Him:  “Well, then we need to cut back on our costs!”

Me:  “Where do you think the board should cut?  Should they pay the snow removal guy less? He probably wouldn’t get to your condo as fast or as often as he has.”

Him: “He was already too slow last year!”

Me:  “That’s probably because the board already asked him to take a cut last year and now you want him to take another one?  How many can he handle before he goes out of business?

Him:  “That’s not my problem!”

Me: “If he’s forced out of business and you have fewer snow plowers around, how is that going to reduce your costs?”

Him: “I don’t know, but it should”

Me: “Do you have any owners who are behind on their assessments or in foreclosure?”

Him: “One – he got laid off and he’s really in a bind”

Me:  “What did he do?”

Him:  “Had a landscaping/snowplowing company.”

Me: (ignoring the irony): “Well, the association was counting on him contributing to the assessments when they developed the budget.   Now it’s going to be short, so, they have to spread the shortfall around until they can find a way to fix it.”

Him: “That’s not fair!”

Me:  “No, it isn’t.  but unfortunately, that’s the way things are.  The board has to make do with what they have.”

Him:  “I still think we need to cut the budget.”

Me:  “Well, talk to the board, and your neighbors.  See what services they would be willing to give up and tell the board what you, personally would be willing to give up.  Just remember, everyone will have their own idea of what is, or isn’t, important, so you may not get your way.  The board has take everyone’s interests into account, as well as what they are legally required to do, like fund the reserves.”

Him:  “Just so long as the assessments don’t go up!  If they do, they’ll have a real problem with me.”

Me:  “Welcome to democracy in a bad economy.”

The Huffington Post’s New Devil – Home Owner Associations

TopRetirements.com recently replied to an article that had made it’s way around the internet and specifically, was re-printed in the Huffington Post.  John Brady asked if I would comment on the article for his post.  Below is the reply to the article:

July 19, 2011 — The Huffington Post is the world’s master of controversial publishing. Recently they really stirred things up in their “expose´” of Home Owners Associations (HOAs), “Home Owners Associations Cause Trouble in Retirement Communities“. Their one-sided broadside apparently hit a nerve too, generating 634, mostly angry, comments at last count.

The thrust of their mostly one-sided article was this: bad guy HOAs unreasonably foreclose on innocent homeowners, causing catastrophic damage. In particular, the authors cite the Inlet House Condo complex in Fort Pierce, Florida. The community has fallen on hard times, with units that sold a few years ago for $76,000 now going for as little as $3,000. Rats had infested vacant units and sewage was seeping into lower level units. Huff Post took issue with the HOA’s assessments and subsequent foreclosure of condo owners who failed to pay those assessments or other fees. Hundreds of angry people apparently agree, as they vented with Comments laden with examples of diabolical HOAs, vowing never to conform to these power grabbing boards

We respectfully disagree with both the major thrust of the Huffington Post piece and their angry commentators. Make no mistake, Home Owner Associations (often called Community Associations) are not always angels. There are plenty of examples of power-crazed, short-sighted condo boards. Many boards are guilty of poorly thought out rules, selective enforcement, and fiscal irresponsibility. Fortunately, many states and organizations recognize that these boards serve an important function, and are working to improve them. Florida now mandates training for board members as a way to improve management.

But on the other hand…

People who live in condos, co-ops, and planned developments share ownership of facilities and infrastructure. They also typically live close together and usually move into the community because it represents a certain look and lifestyle. Someone has to manage all that, or if not, the situation would become like the town in an old western where there is no sheriff, and the mob takes over. Serving on a condo or HOA board is not that dissimilar from jury duty, or offering to help in a volunteer organization. Everyone enjoys complaining, but only the brave (or foolish?) step up to help out. If you belong to an association and won’t volunteer or come to meetings, don’t complain.

The housing and financial meltdowns have been very, very difficult for condos and community associations. In Florida in particular there are many associations where a significant percentage of the units are in arrears for dues or assessments. Up until recently, most associations were fairly powerless against homeowners who either chose to or were forced to default on their obligations. When even more than a small percentage stop paying on time, the results are catastrophic for the other residents. Cash runs out, bills don’t get paid, and employees and services have to be cut. The owners who pay their bills suffer unfairly. As the Post article eventually pointed out, quoting Association manager and Inlet House resident Janice Stinnett: “It’s unfair that everyone is paying extra to cover these deadbeats”. The problem eventually becomes a vicious cycle. Prospective buyers see that the community is in trouble. Property values fall, and more and more owners either walk away or stop paying dues and assessments. Although it hasn’t happened yet in big numbers, eventually some of these communities will totally fail, and all of the owners will lose equity.

We were appalled at the sensational nature of the Huffington Post article, so we asked Joe West, President of the Community Association Network if he would comment about it. His response is below:

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Joe: The article conveniently overlooks the millions of Americans who decided they wanted to live in an environment with a set of rules on how certain aspects of that environment would be operated. Instead it focuses on those who, having moved into this environment, decided they didn’t like some part of it. And when they didn’t get their way, or if they got reprimanded or fined, they ran to the press crying that HOA’s are evil. The people who wrote this article obviously didn’t do much research, or have any basic understanding of the subject matter, and there is a complete absence of any data supporting any of the claims. They didn’t challenge or ask the person making the statement to provide any sort of facts regarding any of these descriptions.

The news media treats condo’s and HOA’s as if these associations were some monolithic entities crushing the hopes and dreams of individuals. That might get the authors better placement in the news but it is neither truthful nor accurate. The association is a group of people who made a choice to live in a community that had certain restrictions and rules, and elected people from among themselves to govern the association. What is interesting is that somehow the media looks at associations as if they were supposed to be perfect and that human foibles somehow show a failure in the “system”, rather than a microcosm of society in the U.S. today and representative of how electoral government works. Individual homeowners have the same method of resolving disputes with their association as they have with their government, they can take them to court. However they somehow think that there should be some form of “cheaper” solution.

So maybe the authors, or the people they interviewed, might be willing to answer these questions:

– When someone stops paying the assessments they agreed to pay, how long do you allow it to continue before you take any action?

-How much hardship do you want to put on their neighbors to cover their share of the bills? None of the people complaining were serving on a board, faced with the decisions of how to pay the association’s bills, with a declining revenue base. They could complain, but they didn’t have any constructive suggestions, just bile.

Step into the shoes of those unpaid volunteers who have to make the decisions they are required to make. It’s easy to complain – it’s not so easy to make the decisions that have a real impact on your neighbors.

Homeowner and condominium associations are simple:

First, you don’t have to live in one. So for all of the commenters who hate the thought of living somewhere where someone else has some degree of control over your residence and actions – good news, you don’t have to. Of course local governments are beginning to enforce local ordinances a little more so you’re never really going to be “living free”.

Most recent state legislation mandates greatly increased administrative actions on behalf of the association, at increased cost to all owners. These are often enacted as a result of media stories or “anecdotal evidence” presented by upset homeowners, many of whom broke their agreement to abide by the covenants, conditions and restrictions when they moved in. Even the veteran putting up the flag pole – yes the problem was the pole, not the American flag – agreed to abide by the rules when he moved in, so does his breaking his word make him a “dishonorable” veteran? The gentleman in the article who stopped paying his assessments in protest is part of the problem, not part of the solution, and unfortunately, will find out that that he’s going to be on the losing end of this disagreement.

After 35 years of working with associations, I’ve found that you get the association you deserve: “you get who you elect – good boards make good associations – bad boards cause problems”. Almost all of the board members I have met (which number in the thousands) try to do right by their neighbors. Most are not power-hungry dictators. But you would never know that by reading anything in the media today.

Homeowner and condominium associations are not going away. They represent a win-win to local government and developers by increasing property density and the tax base while reducing municipal costs. Without them, your local taxes would be much higher. They will never be perfect and there will always be people who move in and then decide that the rules don’t apply to them, or they will elect some idiot to the board who has his or her own agenda that an owner disagrees with – and trouble will ensue . But you get that with every organization in the world – when people and their personalities are involved – conflict eventually happens.

Condo’s and HOA’s have become a popular “punching bag” with the media. They can present it as a “human interest” story and rarely get countered by spokespersons for the association, as it would normally require the board to meet, and that never fits in with the news timeline. The media, in fact, has become the “bully” that homeowners have accused the association of being. I track news stories about condos and HOA’s and if you took every negative story about associations that has been reported about during the past year, (even the stories that only reported the owner’s side), you still wouldn’t have 1/10 of 1% of the associations out there. Not exactly a major trend. But people don’t sell books or get their names in the news when it comes to boring facts.

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Thanks Joe, we appreciate your insight into this situation.