Monthly Archives: January 2012

Protect the HOA Operating and Reserve Accounts

I know anyone that has any affiliation with an HOA or Homeowners Association has heard of someone stealing or trying to steal money from the Community. The scams are often as simple as writing a check to themselves, either as an administrator, treasurer or president. This is the one constant to which no one paid much attention. Now, with the vast majority of the Associations tax year ending, here’s your chance to make sure that does not, and is not going to happen. Whenever the economy takes a hit, and particulary when it both an extended and bad one, you need to pay special attention to the deep pockets, your association’s bank and reserve accounts.

First – GET AN AUDIT – not an opinion, not a compilation, but a real, honest-to-god audit. Only an audit of the CPA will unearth evidence which, in turn, could be fraud or embezzlement. Yes, an audit is more expensive, but considering the huge increase in financial crimes against associations, this is not the time to spare. Remember, every person trusted the people who were scamming from the Association funds. The fact that the treasurer is a good person, does not mean that they are not having personal financial problems.

Then make sure your insurance covers the Community Association if the money is lost. All too often association’s think that fidelity bonds that the management company has protects them – it doesn’t, it only protects the management company if an employee steals from them.  Whether its a bond or crime insurance, make sure the association is covered for ANY loss, no matter who is  lining their pockets.  This can be done with Directors & Officers Insurance or D & O.

Always make sure the bank or any financial institution that holds your money, sends a second statement, an original for someone other than the person who writes the checks or books. The crooks got away with their scams for long periods of time because they were the only one receiving the bank statement, and then delivering a retouched statement to the Board of Directors. Someone else must have an authentic, original – that can,  in fact be compared to the one presented in the financial report.

Periodically, hold a test of invoices. Ask one of your contractors to review their bills with you. A basic scam is a book of false invoices for work that was never completed, and then write a check for that amount to the scoundrel himself. Unless you’re reviewing canceled checks or verifying proof of the bill, it is quite easy for the thief get away with it. Each time you have a supplier or contractor that is going over budget or contract, this is likely to be the output.

Make sure nobody can get to the reserve accounts easily to withdraw or transfer funds. Talk to any institution that is holding the funds and ask them for the best way to ensure that nobody can reach them without going through a lot of checkpoints.

Basically, you should make sure you have all the necessary protections in place and they are, in fact, actually being followed. There are plenty of articles about how to do this, and that’s a good place to start. But remember, it is the entire process to be followed – not just a part will protect your Property Owners. For example, you can utilize the recommendation to require two signatures on checks, but in reality, banks no longer see or verify the signatures, so that alone will not protect you.

Why go through all this? I’m no lawyer, but if I were a Home Owner and someone was to abscond with a lot of money from my Association, I believe that the board would had failed in its fiduciary responsibilities and should be held accountable for that failure.

Originally from October. Great reading for Homeowners Association Board Members in Georgia.

Riverside Community & Property Management

The purpose of a maintenance plan is to train a board of the homeowners association and the property manager in the ways to properly maintain the common element components. Following a well prepared maintenance plan will help extend the life of the amenities and reduce costs to its members.

An effective preventive maintenance plan must meet the following five key objectives:

To preserve the investment of the owners. Preventive maintenance can extend the useful life of building components, in turn, maintaining and enhancing the value of the property.

Buildings operating at peak efficiency. Because preventive maintenance ensures that items are still operating as they were designed, therefore, reduce inefficiencies in operations and energy use.

Prevent failures of building systems. Buildings that work seamlessly allow occupants to enjoy the property as planned. Preventive maintenance includes periodic inspections and replacement of equipment crucial to construction operations.

Maintain a safe and healthy environment

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Should Your Atlanta HOA Adopt The Georgia Property Owners Act?

Why Your Atlanta HOA May Want to Adopt the POA…

In 1994, the Georgia Legislature adopted the Property Owners Association Act. The POA provides significant advantages to homeowners associations. Here are some of the most important advantages of the POA:

1. Automatic Statutory Liens

After submitting to the POA, an association no longer needs to file liens at the county courthouse for unpaid assessments or other charges. Instead, the POA creates an automatic statutory lien against a delinquent owners lot for any sums owed to the association. The POA provides that the declaration of covenants itself serves as notice that there is a lien on every lot in the community for any unpaid assessment or other charges. As a result, closing attorneys, title examiners, purchasers or owners must contact the association for a statement of any amounts owed to the association prior to concluding a sale or refinance of the lot, or risk the existence of a lien. If the association is not paid out of the proceeds of the sale or refinance, the lien continues against the lot and will generally have priority over subsequent liens and mortgages.

Another benefit of the POAs automatic lien is that it protects the association even if the associations records have incorrect or misspelled owner names. Recorded liens are only effective if filed under the correct owner names. If the associations records have an owners name misspelled the recorded lien may be ineffective. The POA makes the lien effective, even if you have incorrect or no information about an owner.

2. Buyers and Sellers are Jointly and Severally Liable to Pay Assessments
The POA includes another provision that helps strengthen an associations assessment collection powers. The POA makes buyers and sellers jointly and severally liable for all unpaid assessments. This means that, if the automatic statutory lien is not paid at the closing, the association can proceed against the new owner, who will be personally liable for all amounts owed prior to the closing.
3. Tenants are Obligated to Comply With Association Regulations
The POA also requires that both owners and tenants must comply with all the provisions of the declaration of Covenants and the associations rules and regulations.
4. Fines and Suspension of Privileges
The POA gives homeowners associations a statutory power to assess fines against violators and to suspend the common area use rights of violators, if allowed in the Covenants. Fines constitute a lien against the violators lot, and the ability to fine significantly strengthens the associations powers to enforce the Covenants and the rules and regulations.
5. Late Fees and Interest
Submission to the POA allows homeowners associations to charge a late fee equal to the greater of $10.00 or ten percent (10%) of the amount due, and interest at a rate of ten percent (10%) per annum on unpaid assessments and charges, if allowed by the Covenants.
6. Recovery of Attorneys Fees from Owners
The POA authorizes the recovery of the associations costs of collection of the delinquent assessments, including reasonable attorneys fees actually incurred. This provision is extremely helpful with judges who otherwise are reluctant to grant the association its attorneys fees, when it sues delinquent or violating owners.
7. Perpetual Duration
Prior to 1993, Georgia law at Code Section 44-5-60(d)(1) generally provided that Covenants expire after twenty years. That statute was amended in 1993 to permit Covenants to automatically renew, but the Georgia courts have held that Covenants in communities that were recorded prior to 1994 do not receive the benefit of the new 1994 law. One of the most important benefits of the POA is that it has a provision that states Georgia Code Section 44-5-60(d)(1) shall not apply to any Covenants contained in any instrument submitted to the POA. That means that if a communitys Covenants were recorded prior to 1994, submission to the POA now will eliminate the possibility that the Covenants will expire after twenty years.

8. Ease of Adoption
In most communities, Board members can quickly and easily adopt the POA by obtaining the consent of the association members by mail or by going door to door, depending upon the specific amendment provisions within a communitys governing documents.

Once in place, the POA provides clear advantages to homeowners associations seeking to maximize their collections.
Riverside Property Management is a Homeowners association management company management company proudly serving Roswell, Alpharetta, Buckhead, Marietta and all of North Georgia. Riverside is also an expert Georgia condo association management company and high rise Atlanta association management company. To find out more about Riverside Property Management and why it is one of Georgia’s fastest growing property management companies, go to You’ll be glad you did.


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.

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:

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

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.
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.

Riverside 2011 in review

The stats helper monkeys prepared a 2011 annual report for this blog.

Here’s an excerpt:

The concert hall at the Sydney Opera House holds 2,700 people. This blog was viewed about 12,000 times in 2011. If it were a concert at Sydney Opera House, it would take about 4 sold-out performances for that many people to see it.

Click here to see the complete report.

The Rise of the Homeowner Association

Posted on Nov 6, 2011 in Blog by hoa-admin…

With 62 million Americans governed by HOA’s and $35 billion dollars in operating revenues and growing, thought is was time to bring clarity to the homeowner association with a one-of-a-kind infographic: The Rise of the Homeowner Association.