High Performing Board Practices

The public debate on boards often focuses on catastrophic failure. In many cases, the boards actually meet the standards and follow the right policies, but were not committed enough and left to ask the right questions.

Exceptional boards center around four key concepts or practices:

Strategy
This includes being mission-driven, using strategic thinking, and maintaining of sustainable resources.

Responsibility
This includes having  compliance with integrity, being results-oriented, and promoting a spirit of transparency.

Building relationships
This includes developing a constructive partnership between the home owners and the board, ensuring revitalization, and implementing intentional board practices such as thinking about the board’s size, structure, and meetings.
Dynamic
This includes fostering a culture of openness to ensure that all voices are heard, respective practice when making decisions, and demonstrating continuous learning through guidance, education beyond the boardroom and self-evaluation of the board as a whole and the members of the Board.

The true essence of an exceptional board is in the way members of the board and homeowners are interrelated to create something much richer and more powerful than anyone can create one.

When thinking about each other’s participation differently in the meeting, you want to make sure you understand why. It is not just because of better conversations; it is because they have better information and ask better questions which lead to more robust discussions, more authentic debates, and better decision making.

By strengthening our Boards, we will have stronger organizations, and in time much stronger communities. HOA Board leadership is critical to serving the public good and the impact of our State and Country.

2011 – The Year of the Missing Money

Published: 02 December 2011 – Written by JWW

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!

Courtesy of: http://communityassociationsnetwork.com/wordpress/?p=332

With over 40 years of combined industry experience, the Executive Staff of Riverside Property Management  knows that the most successful communities are those where there is a sense of unity and pride among the membership; this unity and pride begins with a firm foundation comprised of:

Well defined policies and objectives
A strategic plan and future vision
A proactive Management team
Mutual team trust and respect
Timely and open communication
Excellent customer service
Industry knowledge
“Out of the Box” Thinking
Services designed to meet your needs

Give us fifteen minutes of your time and we can show you how to put your community on a fast track to success; if you don’t believe us, feel free to call upon any one of our satisfied clients. (678) 866-1436 or info@riversidepropertymgt.com

Four Ideas for Trimming Your HOA’s Annual Budget

More and more associations are collecting less and less dues as a result of the housing crisis. Here are four tips for trimming your budget to ensure that your association still provides key services with a smaller pool of funds.

1) Shop around. A good way to shrink your budget is to shop your insurance policies and other ongoing contracts around. If you’ve been with your current insurance carrier for years, it may have been a while since you’ve compared rates. Do it now. While you’re doing that, ask whether increasing your deductibles will net a worthwhile savings. Sometimes the savings are minimal—and probably not worth the added risk. But you’ll only learn that if you ask.

2) Conserve energy. Minor conservation efforts can make a big difference in your budget. If you’ve got timer-controlled sprinklers that run for 30 minutes each morning, cut them back to 25 minutes for a month to see if the plants still get enough water and you save any money on your water bill. Do the same with your hot water heater. Dropping the thermostat a degree or two may make no difference to residents, but it will create savings. Finally, depending on the size of your association, swapping old-fashioned light bulbs out for more efficient compact fluorescent bulbs can save money. Compact fluorescents aren’t inexpensive, so you’ll take an initial budget hit. But you’ll see lower energy costs over time.

3) Do it yourself. If your association is in dire straits, evaluate all your expenses to determine if you can bring any functions in house. If you have a management company, is it possible to eliminate that expense and run the association yourself? (The opposite may also be true. If you’re self-managed, you may save money by having professionals keep an eye on your budget and get you discounts from their trusted vendors.) If you have landscapers, can you cut back on their work and let residents pick up the slack? You could pay for a spring and fall grounds cleanup while bringing grass cutting and flower planting in house. Finally, explain the situation to homeowners and ask owners who are professionals for discounts or freebies. For example, if you have a resident accountant, ask if she’ll prepare the association’s annual tax filing for free or at a discounted rate.

4) Fix it now. Homes are like cars. Routine maintenance helps prevent larger, more expensive problems from creeping up on you. Create a checklist of your major mechanical and building systems. Then ask residents with expertise or outside contractors to check those systems to see if a minor upgrade or repair now will extend the life of the system. For example, if you’ve got a roofer in the house, ask if he’ll volunteer to inspect the roof and do minor patching on areas that may become a problem in the near future.

If your budget is still in the red after all of your trimming efforts, you may have to take more drastic measures—like raising assessments. Before you do, however, consider whether you can generate income. For example, your governing documents may permit you to rent your clubhouse to nonresidents for a fee. Or if your state allows you to earn money on reserves (some don’t), consider putting a lump sum that you don’t expect to use immediately in a safe investment with a higher return than a savings account.

The Top 10 Questions to Ask Your Prospective Community Association Management Company

1. How many households (or units) are each community manager responsible for in your company?

Throughout the industry, Homeowners Association Management Company overload their community managers, giving them too many homeowners associations operate. The industry average is about 1,800 houses by the  community manager, which is about 500 too many homes. If the portfolio manager of a community is very large, some of the clients in the  HOA can be neglected.

2. How many people support the administrator of the community in their efforts?

A management company HOA should not only assign an administrator to a community homeowners association, but a team of people to operate smoothly for the association. A well organized team should include a community manager, accounting manager, a compliance inspector, a customer service representative, and a director of community management .

3. Is the community regularly inspected? How often? Who answers the phone when the community manager is absent or inspecting the property?

The homeowners association must be inspected for violations at least once a month. The compliance inspector should take a picture of the violation, which is sent with the letters of violation.

4. How long does your team take to respond to calls and emails?

The management company must respond to homeowners and the homeowners association board members correspondence as soon as possible, usually within 24 hours. However, Board members must also have the number of community manager’s cell phone for emergencies.

5. Does the community manager have a college degree and / or industry certifications?

Directors of the community must be college educated. They must have training and industry designation as well. Community managers must also attend seminars and industry events to stay current on changes in legislation.

6. Does the management company aggressively pursue homeowners who do not make payments on time for collection?

It is the responsibility of an owner to pay HOA dues in accordance with the rules of the homeowners association. However, when an owner fails to pay their dues, it is the responsibility of the management company to collect the funds. The board of the directors should work with the management company to delineate an HOA collection policy, including the final letters, notices of demand and eventual liening of the home.

7. Is a community web site included in our monthly management fee?

A website for your community association is a great way to help build a sense of community throughout your neighborhood. Other features should include access to forms, governing documents, closing forms, payment online access and emergency contact.  There should also be an option for accounting integration.

8. What hours can the property manager be reached?

A community manager should be available 24 hours a day. During the day which should be available through the office phone, email and cell phone and in the evenings and weekends, the management company HOA must provide an emergency service response, if a situation becomes an emergency.

9. Does the management closing account information before being transferred (sold) from one owner to another?

When a request is escrow by a title company, this information should be shared with the title company and documented in the system of the management company.

10. It is the management company Owners Association a professional team of experts?

The management company should be a team of experts with experience in professionalism and a commitment to quality service in order to properly service its customers the homeowners association.

With over 40 years of combined industry experience, the Executive Staff of Riverside Property Management  knows that the most successful communities are those where there is a sense of unity and pride among the membership; this unity and pride begins with a firm foundation comprised of:

Well defined policies and objectives
A strategic plan and future vision
A proactive Management team
Mutual team trust and respect
Timely and open communication
Excellent customer service
Industry knowledge
“Out of the Box” Thinking
Services designed to meet your needs

Give us fifteen minutes of your time and we can show you how to put your community on a fast track to success; if you don’t believe us, feel free to call upon any one of our satisfied clients.

HOA Website Information

A Home Owners Association that has accurate and reliable information is extremely important for your community. Prospective buyers, realtors and title companies need to know who to contact to provide closing documents. Members of the HOA need to know who to contact for general information, the application of architectural standards and money matters.

Providing online information provides for 24 / 7 self-help and reduces the time requirements for both the board and management. Providing contact information conveys the openness and responsiveness of the association Board. Try these steps to ensure that your contact information is useful to your community:

1. Provide board member contact information, as long as the person approves the release of this information. If you do not have a phone number with voice mail and HOA email address create an email such as info@myhoa.com  for your Owners Association.

2. If you have committees, describe the duties of each committee and the names of those who serve.

3. Post a calendar that includes due dates, annual meetings and the committee meetings, as well as social events and pending repairs (painting, roofing, etc.).

4. Add photos of members of the board.

5. Provide the greatest amount of self-help and information possible, such as newsletters, governing documents, the approved budget, the reserve study and rules/regulations.

6. Update contact information when a change occurs. While the organization and updating of this information takes some time, in the long run, it will save you time and time is money.

With over 40 years of combined industry experience, the Executive Staff of Riverside Property Management  knows that the most successful communities are those where there is a sense of unity and pride among the membership; this unity and pride begins with a firm foundation comprised of:

Well defined policies and objectives
A strategic plan and future vision
A proactive Management team
Mutual team trust and respect
Timely and open communication
Excellent customer service
Industry knowledge
“Out of the Box” Thinking
Services designed to meet your needs

Give us fifteen minutes of your time and we can show you how to put your community on a fast track to success; if you don’t believe us, feel free to call upon any one of our satisfied clients.

HOA Cash Management Programs

Cash management programs for Community Associations

Council members have a fiduciary responsibility not only to track revenue and expenses of the association, but also to use procedures that provide security for the assessments collected from homeowners and cost control. If your community association or management company has not recently revised its payment processing and cash management systems, you may not be aware of the innovations that can make your Board more efficient, save money and help increase your investment earnings.

Lockbox services designed for Community Partnerships
Does your staff still handles accounting manual assessment payments? If your association or management company is the opening of envelopes, posting payment information, preparing deposit slips and bring them to the bank, these activities consume a significant amount of management time and also increase the risk of theft and error . There is a solution: an automated treatment.
Automated processing services include a lockbox. A “lockbox” is a cash management tool that is a cost effective way to outsource most of the obligations associated with payment processing, saving time and money partnership.
Lockboxes have been available since the 1930s. They were designed to expedite the processing of payments by mail. Payments were sent to a PO box, closed and a delivery service could collect payments and transport it to their customers. The delivery of the contents of the box directly to the association eliminated the time lost by the post office to sort and deliver the payments. Computer imaging technology improved the process dramatically in the 1990s, making possible the creation of electronic payment files.
Today, the assessment payments are mailed directly to the lockbox, not the office of the association or management company. The controls are read by electronic scanners that reduces read errors, and payments are processed faster than it would be manually. Payments are credited to the account faster for the homeowner as well. The department of the association or management company accounting can upload files directly on your payment of accounts receivable system, eliminating manual entry of payments. The payment information is available to you online immediately.
Using a lockbox, associations often find they are able to reduce the time spent in processing payments and may be able to use staff to work on other tasks necessary to meet the daily needs of the association . How to find a lockbox service that meets the needs of your association?

1. Get recommendations from other professional associations or management companies what works for them and why.

2. Ask detailed questions about the technology used by the lockbox. The answer “using the latest technology” is not enough. Your questions should focus on specific services offered by the lockbox:
• Do you see a diagram and picture coupon?
• Are your electronic files compatible with your accounting system?
• Is the lockbox in use of their own software or licensed by third party? The costs are usually higher if the lockbox does not use its own software, because they must pay licensing and maintenance fees.
• What is the cost, if any? Most banks do not charge for the service in exchange for maintaining certain balances in checking and / or savings accounts.

3. Ask specific questions about what is working with the vendor to ensure that lockbox services fits your needs. Lockbox is held within the company or outsourced? How to handle errors? What kind of reports do you offer? How do you handle payments with on-line services to pay bills?

Cash Management Services Associations
It is important for all associations to ensure that financial institutions use to understand their needs. If they do, you may not be receiving advice and guidance you need to maximize the profitability of the funds of the association. In reviewing the cash management process, which should ask the following questions:

Are my reserve accounts performing as well as they could be?
I’m making the maximum rate of return on my money market accounts?
Do I have FDIC coverage on my CDs?
Do I have an investment manager we can trust to recommend investments that meet the regulations of my association and the investment policy?
Are all financial institutions that hold money for my association ensuring the highest level of protection of the funds?

If you are unsure, look for a financial services company specializing in industry owners’ association and work closely with them to implement an effective program management for an effective and efficient partnership.

License to Manage

Governance – Property and Community Management Manager Licensing The rapid growth in community associations in the last decade has  equally shown dramatic increases in the number of people entering the field of management. Some are of greater qualification than others. … Continue reading →

What You Should Know About Homeowners Associations

Questions to ask the HOA before buying.

Buying a condo or townhome is more than four walls and interior air space, it also means buying the homeowner association. Smart shoppers examine all the homeowner association documents, including its latest financial statements to determine whether one is buying a money pit or a gold mine. Here are the most important questions a buyer should ask:

How financially sound is the HOA?

To determine this, ask for and read (yes, they are long, at least 50 pages or more) copies of the following documents:

Covenants, Conditions and Restrictions (CC & Rs)
Statutes and Regulations
Minutes of the meetings for the last year
Homeowners Association Financial Statements

These documents will tell you:

If special contributions are expected to address deferred maintenance
Planned capital improvements
Amount of cash reserves
If the association is or has been sued
The history and the likelihood of increased fees

What services are covered by your monthly payments? Does it include the payment of:

Water
Cable television
Ground maintenance / gardeners
Garbage Collection
Sewage
Insurance
Management fees
Pool, spa or fitness centers
Streets and sidewalks
Assigned parking / metro (and if so, how many spaces?)
Gateway

How do you compare the rates of assessments from other condominiums in the area? I sold an apartment in an older complex, where the monthly fees are $120. Renovated apartments around the corner had a maintenance fee of $ 190. The main difference between the two complexes had been remodeled units, stainless steel appliances and granite counter-tops in the kitchen. That’s why buyers ask, “Is it worth $ 70 a month to own stainless steel appliances?” For some buyers, the answer is “yes.”

Who manages the complex?

Larger complexes require professional management. That could cost more than hiring a professional company, but in the long run tend to save money. Exercise bargaining power in negotiating professional management services such as offers for gardeners or general maintenance, as they represent a greater number of complexes.

How many units are rented?

Nobody likes tenants. Not that renters are bad people, but there is some truth that the tenants do not take care of the goods in the same way that an owner occupier would take care of it. In addition, some lenders will not lend money to a buyer if more than 25% of the units in the complex are rented. Some homeowner associations refuse to let the owners rent their unit for more than 30 to 60 days, if at all.

How quiet are the units?

Ask neighbors to give potential buyers an idea of ​​the noise factor. But driving in the area late on Saturday night will also let you know. It is best to purchase a unit in the corner because there is less common (side) walls means less noise. However, the soundproofing does not help much if your next door neighbor enjoys blasting Pink Floyd, every Sunday at 2 PM.

A customer who bought a condo on the ground floor near the stairs leading to the second floor was worried about the sound of footsteps on the stairs, so I suggested he talk to the occupant above. It turns out that the resident was the president of the Homeowners Association and a stickler for keeping things quiet.

What are the recreational areas, parking and Pet Restrictions?

Find out the hours of use for pools, spas and recreation areas such as tennis or  game room and check that the working time schedule.
How do you manage parking for guests, and the number of parking spaces are deeded to each unit? Is it possible to rent an additional parking space if needed?
How much will be charged to replace a lost key to the security gate or club?
How many pets can I have? Are there size restrictions? Are you allowed to bring pets through the lobby on a leash?

Finally, talk to the people who live there. Drive through the parking lot or garage in the evening when the owners are coming home from work. If they hate the homeowners association, they will undoubtedly tell you what is wrong with it.  Discover the reasons behind it before before you buy. HOAs have the power to regulate and sanction violations that affect owners financially as never before, so make sure you fully understand what you are getting into before signing on the bottom line.

How to remove a member of the HOA Board

Every homeowners association is to maintain the welfare of their community by maintaining an acceptable  standard protocol in all relevant areas of importance to the community itself. This means putting the needs of the community as the first priority in the objectives of each and every member of the  Home Owners Board of Directors. However, in some cases, individual board members can not or will not properly handle the responsibility given to them. When this happens, the council as a whole should consider removing the board member in particular.

But before getting into the best ways to remove a board member, consult first with the statutes of the association. These vary from association to association, and state laws relating to association management should also be checked as there are limitations – for example – Florida laws do not apply in Georgia.

If one or more members of the board shows an irresponsible behavior,   legitimate removal is necessary for the good of the community. However, before starting a potentially very complicated and long process, the board as a whole must put everything in perspective.  Make sure that the removal is based solely on the basis of verified facts and documentation. If a resident plans to file a complaint, he or she – and the HOA went to officials to solve the problem – there is a need to investigate whether the board member is really the culprit.

If it is determined that the board member in effect, be removed, there is a specific process to be followed. Once all the evidence gathered, a formal request to resign must be made to a member of the Board. If the request to opt-out does not work, a more formal meeting between members of the Board is held to discuss the situation. If after this conversation has determined to be in the best interest of the community that this board member is removed, the board has to consult the manual for the board to plan the next steps.

The first step usually involves giving proper notice, either on a scheduled annual meeting – or if more urgent, in a special meeting. A special meeting may be called if the necessary signatures are obtained from members of the community. This ranges from 5 to 50 percent of the members of the community, according to the Covenants and Bylaws of the community themselves. Once enough signatures are acquired for the Board to approve the meeting, a quorum must be established (a minimum number of voters). All homeowners in the community and investors are invited to attend.

At the same meeting, the member of the Board subject to removal must be given an opportunity to defend themselves. Supporters, opponents and Board members should be given enough time to make their case. After the debate is over, the President should appoint independent inspectors to count the votes present. If the board member is removed, the next step is to hold another election to fill the position now vacant.

A board member may be unfair and should be eliminated for the good of the community. However, prevention is always the best tactic. At day’s end, HOA board members should be chosen based on the positive attitude and the good sense to avoid such situations arising in the first place.

Negotiation not Litigation for Your Homeowners

Without a board, a community association would cease to function. Many organizations are challenged to find enough volunteers to serve on the board, as some owners are afraid of being sued or becoming involved in a dispute with a contractor or, more worryingly, a neighbor. Some councils believe they must sue in the beginning instead of trying to solve a problem amicably. I believe that negotiation is the first action that all cards must be considered for resolving disputes association.

Ask any board member, community manager, insurance agent or a lawyer what the number one recommendation is legal and financial. Certainly, all will tell you to avoid litigation. Litigation is costly and slow. More often, neither party ends up being what you want. Certainly there are times when litigation is the only resource, but I am convinced that most problems can be resolved through negotiation. After many years of experience in managing community associations, I can personally say that negotiation is resolved most issues at a lower cost and less distress to the association and the owners.

Collecting delinquent assessments is a major problem in most associations in the community during these tough economic times. Quick reference instead of an attorney delinquent owners of the collection, first try to negotiate with the owner. Association of Community Boards have the authority to consider and offer payment plans to homeowners who have clearly shown a financial burden and they will to carry your checking account if you can extend your payments. The Council must ensure that a lien is presented for registration and the payment agreement made in writing by both parties. If all goes as planned, the account is updated, the board held to its fiduciary duty to the association and the owner defaulted greatly appreciates the fact that the board was understanding and compassionate. And the association does not spend time and money in litigation!

The declaration of an association, the governing documents, become protagonist is another example of first negotiation to try before resorting to litigation. The successful partnerships in the community have clearly written policy resolutions establishing procedures for implementing the rules, including holding hearings and appeals process. Many rules violations can be resolved through negotiation. Most homeowners appreciate a manager and / or  board that takes the time to explain a violation of the rules and why they issued a citation. Quiet, intelligent conversation, not confrontation really works. To be fair, reasonable and consistent, and approval of changes in your case, results in a respectful and rewarding in a community, residents and volunteer leaders to become star.

These are just some examples of why it is better to negotiate and litigate only as a last result. Come on, become the protagonists.  Focus on resolutions and save your association some big money!