Thursday,
March 3, 2011
A
'MARCH MADNESS' of a Different Kind
Ok,
so I'm not talking about the upcoming basketball tournament, but rather,
a "madness" (tongue-firmly-in-cheek) of a different sort
-- that time honored tradition of volunteering for your homeowners
association. Why do I mention this now? Well, since many Associations
will be holding their annual meetings in the coming months, we need
to be reminded why people volunteer in the first place, and to use
those motivations to the Community's advantage so that participation
levels in much-needed neighborhood projects maintain sustainable levels.
Spend a few moments at your Association's meeting to remind the membership
why their efforts are vital to the success of the organization as
a whole.
The following are just some of the reasons that people volunteer:
(1) Discontent. People tend to get upset when they encounter something
that jostles their status quo. Or from a perceived injustice or malady
that can be corrected by participation on the Board or in other committee
work.
(2) Self-Interest. Volunteering is mostly altruistic, but not an altogether
selfless act. Everyone has intrinsic motivations that power their
resolve. These motivations can be a desire to protect property values
(their own) or maintain a quality of life within the community.
(3) Social Benefits. As crazy as it sounds, some people actually enjoy
interacting with others. Volunteering is a great way to meet neighbors,
make friends, and exchange ideas. Besides, isolation and loneliness
are highly overrated.
(4) Idealism. Or "Ye Ol' Social Conscience." Yes, it still
exists because these folks are committed to social improvement and
community duty. What better way to satisfy the need to contribute
than by volunteering for the benefit of your fellow residents?
(5) Pay It Forward. One good turn deserves another and all of us have
benefited from the kind acts of others at some point in our lives.
Some people volunteer to "repay" that debt to society.
(6) Education, Personal Expression, Recognition. Some people might
volunteer because they want to learn how an activity is performed,
or to fulfill a desire for creative expression through community beautification,
or just to receive plain-old validation and an "attaboy"
for a job well done.
While the aforementioned motivators represent the more common reasons
that people might seek volunteer opportunities, this list is by no
means exclusive. Communicate with your fellow homeowners (at the next
annual meeting or event, as soon as possible really) and seek to discover
the hidden motivations of your homeowners and reap the rewards of
their volunteering efforts.
*thanks to the Community Associations Institute, Editor Debra Lewin,
"Volunteers: How Community Associations Thrive" for excerpts
used in the body of this article
Tuesday, February 15, 2011
Painting the Town (Community Common Areas) Red
Here
are four simple tips to heed when it comes time to paint the common
areas in your Community:
(1) Don't let the contractor supply the paint. The Association is
much better off supplying the paint for a variety of reasons -- (i)
no delays while waiting for paint to arrive on the jobsite; (ii) better
control over where and how the paint is applied (and whether all the
paint earmarked for your community gets USED in your community - not
always a given); (iii) ensure paint quality.
(2) Don't agree to a "time and materials" approach to bidding
the paint project. With a "time and materials" approach,
costs can go spiraling out of control, leaving the Association with
a bloated paint bill and a hole in its pocketbook. The bill will always
be higher if you allow the contractor to charge for all hours spent
on the job as well as every item procured. This method also fails
to account for hidden costs and other potentially costly variables
such as weather conditions or pre-paint preparation. Try securing
a contractor via a fixed-price bid instead and avoid the money pit.
A fixed-price bid also eliminates the need for heavy-handed monitoring
of the contractor to ensure that the job is finished in a timely manner.
With a fixed-price bid, the contractor is incentivized to finish in
the shortest amount of time to maximize profit.
(3) Don't bite off more than you can chew (don't paint too much at
one time.) If the Association plans on painting several buildings
in the Community, try limiting active painting to three buildings
or less at any one time. Expanding the scope of the job may cause
lapses between the time a building is cleaned/prepped for painting
and the actual paint job (this could lead to a less effective paint
job if the buildings get dirty again.) Also, limiting the scope of
the project minimizes resident inconvenience and reduces the incidence
of complaints from members.
(4) Don't forget about waste disposal. Make sure that the Association
and contractor agree upon who will be responsible for the cleanup
and removal of waste generated throughout the painting project. Make
sure that the contractor is well versed in the location of the Community's
dumpsters and/or local laws regarding disposal that could get the
Association in legal hot water if compliance is not observed.
*thanks to the Insider's Guide to Managing Community Associations
for excerpts used in the compilation of this article
Wednesday,
February 2, 2011
Is Your Association Wilting from High Utility Bills? Then
AUDIT them!
It's mid-February in Houston and the thermometers here are already
climbing towards their peaks of August. But enough waxing poetic about
our weather woes here in the Bayou City, what I wanted to shed some
light on during these overheated times is this: a Community Association
needs to be wary of overcharging on their utility bills especially
during times of high usage (like the summer months).
Utility
companies routinely overcharge their clients, whether by accident,
oversight, or policy. Utility bills and ratings can be complex. These
bills are composed of meter readings, rate charges, usage adjustments,
and other variable and hidden factors unknown to the client. Errors
can be hard to detect on a utility bill, and thus, the opportunity
for a Community Association (or any client) to recoup any of these
charges diminishes over time. Sometimes there may not be anything
wrong with the charges per se, but you're just paying a higher rate
(even if you're qualified to pay at a lower one!)
So how can a Community Association locate and eliminate these utility
billing errors? Hire a Utility Auditor ("Auditor") (or see
if your Property Management Firm can perform audits as well.) Auditors
can dissect your utility bills down to their base elements and review
each item for correctness. Then the Auditor can "reconstruct"
the bill and determine if the client is paying too much based on component-level
billing, versus the all-in-one pricing that most of us see on the
"amount owed" line each month.
But
is there a downside to using an Auditor? Yes and No. You will have
to PAY for this service in most cases. The standard fee for a utility
auditor can approach or exceed 50% of prior overcharges collected
on behalf of the client. Seems kind of steep right? Not really. Any
monies recovered on the strength of that utility audit are a bonus
of sorts for the client since the client didn't know that it was overpaying
in the first place. Plus, the audit bestows future benefit upon the
client because now all subsequent bills will issue at the correct
rate, thus resulting in continued savings for the Community Association.
*thanks
to Insider's Guide to Managing Community Associations for excerpts
relating to this article
Thursday,
January 20, 2011
Keep Good Meeting Minutes and Keep Your Board Out of Trouble
Incorrectly-kept minutes from your Community Association board meetings
could have serious legal ramifications. They can lead to legal action
for defamation, or even nullify actions taken by the Board during
that meeting. So what should or shouldn't be included in your Board's
meeting minutes? Keep the following tips in mind when asking yourself
this question and prior to the next board meeting.
(1) Record all ACTIONS taken at a meeting. Remember, the purpose of
meeting minutes is to preserve an accurate and objective record of
business that was conducted. Be sure to include business motions proposed
as well as those that passed.
(2) Record what was DONE at the meeting, and NOT what was SAID. Minutes
should be as concise as possible. Include dialogue that is necessary
to understand the action taken, but it is not necessary to include
entire debates on a topic. Keep in mind that discussions memorialized
by the minutes can become a tool against the Association in litigation.
Keep it short and simple.
(3) Don't include privileged conversations. This one is a no-brainer.
If the Association is sued, the meeting minutes can be used as an
evidentiary record by the opposing counsel. If privileged information
is included in that record, this effectively destroys the Association's
confidentiality rights regarding that privileged information. Typically,
this scenario might occur with talks to the Association's attorney,
or in executive sessions held by the Board. Reporting these conversations
compromises the very premise for having private proceedings, which
is to freely discuss topics of a sensitive nature without fear of
public scrutiny or reprisal.
(4) Leave Opinions out. Unless a particular board member is an expert
regarding the topic about which she speaks, it is inappropriate to
include opinions in the meeting minutes and opens up the possibility
for liability against the Association.
(5) Don't exclude details about actions taken. (See #1 and #2 above).
Remember to include pertinent details about actions taken by the board
so that the record is an accurate reflection of the "why, what,
when, where, and how" of that particular action.
(6) Include necessary details about the meeting. These might include:
type of meeting, time and place of meeting, people in attendance,
no. of voting members present, nature of reports given, motions proposed,
record of the voting, motions passed, and postponed actions.
(7) Have your Association's Attorney review the minutes before finalizing
them. An attorney can spot troubling references and can warn the Board
to edit out certain entries that could pose difficulties later. Although
it may cost a little bit in the short-term, the long-term benefit
realized by the Association will more than justify the expenditure
if the Association is ever subject to litigation.
*special thanks to Vendome Group, LLC for excerpts used in the above
article
Tuesday,
January 4, 2011
Another New Year, Another Assessment
As the New Year tolls and the memories of the holiday season slowly
fade into our collective rearview mirrors, Community Associations
must focus on assessment collections -- the lifeblood of subdivisions
-- that substance which allows the Association to maintain operations
for the remainder of the year.
Since the new year typically marks the due date for most communities'
assessment fees, I thought it pertinent to recount some problems inherent
in assessment collections and the steps that an Association can take
to mitigate these problems.
Action is the key. When an assessment remains unpaid, it's important
that the Association take decisive measures to collect the fee. To
avoid needless delays in the collections process, make sure that the
Association has an effective procedure for gathering these delinquent
assessments. An effective collections procedure will: include a written
policy, address accounting error(s) if applicable, ensure that homeowner
contact info is updated on a regular basis, and utilize a feedback
system to determine why homeowners aren't paying.
Perhaps the most critical element of an Association's collection procedure
is its timeline. Make sure that homeowners understand what they are
expected to do and WHEN -- include due dates for payments, lateness
penalties, or other additional fees and/or drafts that may become
due as a consequence of non-payment. Be sure to spell out what legal
actions will be taken at specific points in the collections process.
Remember, more information is better. Keep the homeowner informed
of these critical milestones so that they are incentivized to pay
the assessments on time each year.
Finally, the Board must make sure that the collections process is
applied consistently to all delinquent homeowners regardless of the
situation. Homeowners will understand the severity of assessment delinquency
only through the consistent enforcement of collection policies against
all offending community members. It doesn't take long for an Association
to garner the reputation for persistent or inconsistent collection
efforts; the latter of which can actually lead to INCREASED late assessment
payments by those homeowners who sense lax collection efforts on behalf
of the Association. Consistent application of the collections policy
will ensure that favoritism or bias is avoided, while allowing the
Association to enjoy timely receipt of those funds which are absolutely
necessary for its survival.
Thursday,
December 16, 2010
Don't Be A Nuisance!
It's midnight and the rhythmic sound of drums and a screeching guitar
blare out from some youngster's speakers parked outside your home.
That's the third time this week. You bury your head in the pillow
and hope that the noise will cease, but you are granted no relief.
So you drag your weary bones out of bed and go outside to confront
the little noisemaker. But to your surprise, the source of your sleeplessness
has finished his serenade and has left the premises. What's a frustrated,
tired resident to do? Well, the Association's restrictive covenants
provide some measure of relief while state law does the rest.
Loud noises, foul odors and intrusive activities, among other unpleasantries,
all fall under the category of nuisance. In the legal context, nuisance
is some thing or some activity that substantially interferes with
an individual's use and enjoyment of her land(s).
The Association's restrictive covenants provide the basis for most
neighborly nuisance disputes. A typical nuisance provision will read
like this: "no noxious or offensive activity of any sort shall
be permitted nor shall anything be done on any Lot which may be, or
may become, an annoyance or nuisance to the neighborhood." The
provision is sufficiently broad to encompass all manner of possible
activities that could be considered nuisances to the homeowners. Once
the nuisance provision is in place, the Association must have a uniform
method for enforcing such. This typically includes notice of violations,
an administrative hearing, and an appeals process with an opportunity
to remedy the conduct by the offensive party or parties.
Sometimes, the Association's nuisance provision won't be the panacea
needed to cure the offensive behavior. Luckily, state law provides
for criminal and civil penalties and causes of action to arrest this
unwanted activity. Criminal nuisance laws only take effect, usually,
once the offensive activity has risen to a level of "public nuisance,"
meaning that the conduct is offensive to such a degree as to warrant
the intervention by municipal, county or state authorities. Local
government officials are generally empowered to handle these types
of violations, issue sanctions and enforce the criminal code for that
municipality. City ordinances or county statutes provide explicit
direction on the method of enforcement, procedures for notice and
hearings, and ultimately, what remedies are available in the form
of penalties, sanctions, and/or fines for the offending party or parties.
Civil litigation is typically the last resort when combating nuisances
in the subdivision or from nearby properties. If the nuisance is between
neighbors, the enforcement through civil remedies is difficult because
the process inherently smacks of a "neighborly dispute"
which the courts are loathe to address or get involved with. This
does not mean that civil suit is a lost cause, but because of the
temporary nature of most nuisance complaints (ie. loud music played
at night), evidence is hard to gather, unless the offender repeats
his conduct on a regular basis and video tapes can capture the activity
for use in court proceedings. Otherwise, it becomes a "he said
she said" argument in open court without concrete evidence of
the violative conduct.
Now, if the nuisance activity originates from nearby properties or
outside of the subdivision, then filing a civil suit may be the best,
or only, alternative. Since the violation occurs outside the authority
of the Association, restrictive covenants cannot protect the embattled
homeowner. By filing suit, the homeowner and/or Association can seek
civil and criminal sanctions and damages recovery in a court of law
using the same statutory rights as prescribed above.
Remember that the nuisance legal standard is one of reasonableness:
would a reasonable person find the conduct or activity so annoying
such that the use or enjoyment of land(s) is substantially affected?
What this means is that ultimately, it will be up to the judge or
jury to decide whether the conduct met this standard, which determines
whether or not the homeowner or Association is successful in its nuisance
claim.
*special thanks to David J. Marmins, Melanie D. Becknell, "How
Annoying?", Common Grounds, vol. XXXIII, no. 2, March/April 2007
from which this article was based upon.
Friday,
December 3, 2010
Put Executive Sessions in their (Proper) Place
Executive Sessions can be effective management tools when used judiciously
by the Board of Directors; on the other hand, when misused or even
abused, executive sessions can lead to trouble for the Board.
Executive Sessions can be used to foster conversation amongst the
community association leadership without fear of any reprisal by the
non-directors in attendance at a meeting. This confidential aspect
to the executive session allows for directors to discuss more sensitive
issues before presenting a unified stance to the membership and without
infringing on any one individual's privacy rights or giving the appearance
that the Board is not acting in unison with its directives.
Executive Sessions can also be improperly deployed, often resulting
in the perception that the Board has no accountability to the membership,
thereby fueling distrust, dissension, or other anti-Board sentiments
by the membership or other non-director association personnel.
So how does the Board avoid these negative distinctions by using the
executive session as a positive tool for community governance? Follow
these simple guidelines and your Board should reap the benefits of
executive sessions while avoiding the pitfalls that improperly-managed
executive sessions can engender.
1. Don't overuse the executive session and be judicious. The executive
session should be purpose-driven. Focus on the objective or agenda
item to be dealt with and do not use this session to isolate or intimidate
factional leadership and/or manipulate the results of a vote that
the membership should be privy to.
2. Create an environment for sharing ideas. The Executive Session
should be used to foster the free exchange of ideas and discussion
on sometimes difficult topics. Don't hinder this process with heavy-handed
tactics; instead, encourage board members to offer opinions, ideas,
experiences and solutions to the issues being dealt with at the executive
session.
3. Communicate to the membership. Don't mask the executive session
in a shroud of secrecy. Instead, let members know why, when and for
what purpose they are being excused from the executive portion of
the meeting.
4. Don't hide the vote - take action in meetings, not executive session.
Because the Board's actions are memorialized in the meeting's minutes,
make sure that formal votes occur in the regular meeting, and not
in the executive session.
*thanks to BoardSource, and its white paper, Executive Sessions:
How to Use Them Regularly and Wisely, http://www.boardsource.org/Spotlight.asp?ID=14.337,
copyright 2006 BoardSource.
Thursday,
November 18, 2010
Can a Fence Be held in Contempt?
No, but the homeowner who built it can. Homeowners can be held in
contempt of court for acting in bad faith and/or for failing to comply
with a Court's order to remedy a deed restriction violation. Even
if the violation is as ordinary as an improperly-erected fence.
Contempt is a sometimes misunderstood judicial remedy. There are two
types of contempt, criminal and civil. Criminal contempt is assessed
as a "punishment" for offending conduct. Criminal contempt
penalties typically include some monetary fine in addition to, or
in lieu of, incarceration for the offending party's misconduct. The
length of time spent in confinement is fixed by the judge's determination.
Civil contempt, however, is a different animal altogether. Sure, the
judge can assess a fine and/or incarceration against the offending
party, but this remedy is not a "punishment" per se; rather,
the contempt order serves as a motivator to get the offending party
to ACT (or to stop acting, as the case demands). The length of time
spent in confinement for civil contempt is entirely in the hands of
the offending party; that is, the offending party is said to "have
the keys to his jailor." End the misconduct, end the incarceration.
The choice is up to the offending party.
In the case of the "contemptuous" fence, the community association
obtained a permanent injunction against a homeowner because the homeowner
had constructed a fence in violation in of the community's deed restrictions.
The trial court ordered the homeowner to comply with the deed restrictions
and rebuild/repair/remove the offending structure. In a subsequent
hearing held almost three years later, the trial court found the homeowner
in contempt of the court's order because the homeowner had failed
to comply with the deed restrictions, the fence was still non-compliant,
the homeowner had the means and ability to comply, and the homeowner
had deliberately and willfully refused to comply. The trial court
ordered the homeowner incarcerated until he was "purged of his
contempt" by complying with the permanent injunction. The homeowner
appealed, citing that contempt could not be ordered on a simple money
judgment. The appeal ultimately failed, because the trial court has
wide discretion when enforcing its own orders, a key distinction to
note in this matter. The contempt order is not issued as a "moral
commentary" against the offending party, but rather, is a mechanical
penalty applied to parties who ignore court orders, regardless of
the underlying conduct that initiated the contempt proceeding. Absent
a court's gross abuse of discretion, if there is any evidence to support
that trial court's determination that a party willfully disobeyed
the court's order, then the order will be affirmed on appeal.
Tuesday,
November 2, 2010
Three Steps to Minimizing Insurance Premium Hikes
(1) Consider taking a higher deductible. One way to manage fluctuations
in premium is to request a higher deductible from your insurance carrier.
Generally, there is an inverse relationship between the premium paid
versus the deductible paid on any given policy (since the association
is basically taking on more liability via the deductible for any claim
made against it under the policy). One caution though: before you
start raising the deductible on your polic(ies), make sure to review
any claims made against them in the past few years (a 5-year period
should be sufficient) and compare the savings resulting from the lower
premium versus the chance that if a new claim is made, the association
will have more exposure based on the higher deductible. More often
than not, the association will save money by raising the deductible
if the association’s incident rate for claims can justify the
move.
(2) Review your coverage limits. Many associations are “overinsured.”
From a practical perspective, the more coverage the association has,
the bigger the target for a plaintiff to attack. While it is equally
undesirable to “underinsure” an association, review your
association’s coverage(s) and make sure they are commensurate
with replacement cost for all insurable property held by the association.
(3) Don’t be afraid to shop around. Loyalty to one company or
agent is fine provided that the association is getting a good value
for the money spent. But don’t be afraid to shop around and
rate-check from time to time, especially if you haven’t had
any claims against the policy lately – you just might find that
the competition for your business from reputable agencies will lower
the total cost of owning that insurance by just placing a few phone
calls. Above all though, make sure that whatever carrier you choose
to do business with possesses a high rating or grade, which indicates,
among other things, the financial health or stability of any given
insurance company.
*Thanks to Community Association Management Insider,
June 2002 edition, from which excerpts of this article originated.
NORTH|Law