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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,, 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.

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