We are pleased to announce the hiring of Jennifer Wilson as an Assistant Property Manager. Jennifer has been in the property management industry for over 4 years, serving both condominium and homeowners associations throughout the Baltimore/Metro area. She holds a Bachelor’s degree in Social Science with a minor in History, and a Master’s degree in Women’s and Gender Studies. She is also a member of the Phi Alpha Theta History Honor’s Society. In addition to her role as Assistant Property Manager, Jennifer is also an adjunct professor at Towson University. Please join us in welcoming Jennifer to the Pelican team.
Towson, MD, January 28, 2019
Pelican Property Management’s Matthew Hancock, CMCA, AMS, was recently interviewed about the property management industry by Jesse Cunningham of Mountain View Insurance Services. Matt discussed the many roles of a property manager and the services that Pelican offers. With over 15 years of property management experience, Matt is a valued team member and an industry expert in HOA/Condo association management.
Check out Matt’s interview here.
When people are elected to positions of power, there is always the possibility that a conflict of interest will develop. It is almost impossible to avoid them but how they are handled is critical. For example, when it comes time for painting your homeowner association and there isn’t enough money to do the whole job at once, which units get done first?
Rather than be exposed to well earned criticism, why not ask a third party consultant to make the call? This technique can be used in many situations where limited resources cause some owners to benefit over others. Avoid the perception of self dealing…get someone else to make the call.
Another technique for avoiding conflict of interest is for a director to abstain from voting when the outcome is self-benefitting. Make sure the secretary records in the meeting minutes that (fill in the blank) abstained due to a conflict of interest” so that the written record will show no intent to sway the vote.
Disclosure is another way of avoiding conflict of interest. The idea behind disclosure is that possible conflicts are brought to the board’s attention. But beware. Technically, if you advise the Board that your brother in law, the HOA’s landscape contractor, is giving you kick backs to influence the contract, you’ve provided disclosure. No foul, right? Hardly. Disclosure can smooth over minor conflicts of interest but if there are significant implications, the disclosure should be made to all members. And this may raise more questions than answers.
One of the best ways for the board to avoid self dealing is to deal openly. With a few exceptions, board meetings should be open to all owners and minutes should be complete and easily available. Frequent newsletters should advise of upcoming meetings well in advance. If the Board knows someone is looking over its shoulders, it’s less likely to engage in self serving activity.
Some HOA developers spur sales by setting the HOA fees artificially low. This strategy starves the HOA of funds it desperately needs to properly take care of the assets.
Savvy developers seek outside counsel to help shape the homeowner association framework. Attorneys specializing in HOA law write usable governing documents while consultants can assist with proper budgeting and maintenance scheduling. This makes the whole process “arm’s length” and more credible to owners. In a word, the developer should offer every possible resource to help ensure board success.
We’re all capable of feathering our own nest even when we don’t think we’re doing it. The best policy is to avoid any perception of wrong doing. Step “outside the box” and ask yourself if what you’re doing could be miscontrued by outsiders. Trust is a fragile thing. Take precautions to avoid conflicting interests that can conflict your community. -Richard Thompson
One of the more common mental biases that affects people is known as “recency”. Recency is the tendency to consider the most recent information as more important when making a decision instead of weighing all information equally. This kind of thinking can be pervasive in the homeowner association environment. In the heat of discussion, the most recent hot topic can loom large and perspective lost. Recency causes skewed decision making driven by passion. How does this phenomena manifest itself?
Consider the enactment of a rule designed to control the scofflaws. An example is the guy that has five vehicles and only one parking place. After repeated notices to thin out his car collection, the board decides to take radical action, enact a no-nonsense tow on sight rule and smite the offender. This approach, however, also applies all including the occasional offenders and guests. The towing policy is not necessarily a bad one but needs to be approached with reason.
When it comes to rule making, rules need to be widely applicable. They should never be enacted to control the few. The few, frankly, could care less. When a narrow rule is enacted, the many that generally live in harmony with their neighbors are netted with the few that don’t. This is a bad mix and bound to create ill will or inconsistent enforcement of the rule.
Consider collections when they involve a habitual trouble maker. The board may react with “last straw” will and enact an iron clad collection policy punctuated by a foreclosure option. The manifestation of “recency” thinking again affects all members, including those that have a legitimate excuse for their delinquency (job loss, disability, etc.). Bottom line: The board needs to be careful in its “one size fits all” rules and policies.
Consider reacting to a member’s bullying at a board meeting. One of the great advantages of a meeting agenda composed in advance is that the board is given the opportunity to reflect on upcoming discussions, even if they’re controversial. If member concerns are required to be on the agenda to get board action, impromptu tirades can be deflected to a future board meeting. In truth, tirade passion usually dwindles over time and the board rarely needs to deal with these issues at all. Use the meeting agenda to avoid shoot-from-the-lip decisions.
When recent events stir the body politic, it’s usually time to put the matter on the slow track. Time heals all wounds and moderates hysteria of the moment. If the discussion takes on a personal aspect (like, “You worthless SOB!!!”), it’s time to adjourn to another time and place so that reason, and not recency, prevails. There are few issues in an HOA that require immediate board action. When the effects of recency begin to taint board thinking, shake them off and slooooow dooooown.
By Richard Thompson
Does opening the homeowner association’s pool mean stagnant water spilling from the cover into the pool, and do layers of leaves and insects mask the water surface? Well, it doesn’t have to. Just follow these basic steps:
1. Fill the pool to the middle of the skimmer opening to make cover removal easier.
2. Brush debris off the pool cover and rinse it well with a hose. When you remove the cover, try to keep rainwater that has collected on the cover from spilling into the pool. Apply a good cover treatment product to the cover in order to keep it in good condition while in storage.
3.. Remove all plugs from filling and return lines. Reinstall pumps, motors, drain plugs, filters and any equipment dismantled for the winter. Turn on the pump.
4. Check ground wires for proper connection. After you have started the pump, turn on the heater and reset the thermostat.
5. Clean your filter with a good filter cleaner/degreaser. This is very important to ensure peak pool operation. The filter should be cleaned now, as you’re opening the pool, during six week intervals during the season, and when you close the pool for winter.
6. Circulate the water and vacuum the pool.
7. If the water is clear, circulate it for 24 hours. If your water is cloudy or green, add shock and run the filter 24 to 48 hours.
8. Test your water to ensure it is properly balanced. Before doing so, replace your test kit reagents or test strips. Or, bring a quart sample of water to our store for a free computerized water analysis.
Written by:Richard Thompson
Question: I am a senior citizen and live in a condominium. The Board of Directors recommended that the balconies be repaired and then passed a special assessment. As I read the Bylaws, there should have been a special meeting called, so that the owners could discuss the need for repairing balconies, and then vote. Our Bylaws require that three-quarters of the unit owners vote in favor of any such special assessment. The manager and Board of Directors sent threatening letters to all owners who did not pay their special assessment, and now are threatening to take us to court. What can we do?
Answer: It is amazing to me that people who live in condominium associations do not take time to read the Bylaws of their own organization, and that includes many board members also.
There is in condominium law a priority which we call the “power source.” In order of priority, the state condominium statute controls. To the extent that state law is silent on a particular subject, the next level of priority is the Declaration. This is the basic document creating (declaring) that a condominium is established.
The third level of priority are the Bylaws. Where the Declaration is silent, the Bylaws will control. The Bylaws are perhaps the most important part of any condominium association documents. They are, in effect, the association’s bible. These Bylaws should spell out, among many other items, what authority the Board has, what responsibilities unit owners have, and whether there are any limitations on spending power by the Board of Directors.
The final level of priority are the rules and regulations of the association. Where the rule conflicts with the Bylaw (or any higher power source) that higher power source takes precedence. The courts have made it clear throughout this country that where the Bylaws are clear and specific, the Board does not have to be “reasonable” in its enforcement and implementation of those documents. Every unit owner who buys into a condominium is presumed to know that this is a condominium, and the unit owner is duty bound to comply with those documents — as they exist today and as they may be properly and legally amended from time to time.
On the other hand, if the Bylaws are silent, the rules and regulations adopted by a condominium association must be “reasonable.” This is a wonderful concept taught to lawyers in law school, but the bottom line from this author’s point of view is that “reasonableness” should be equated with “common sense.”
You must review your Bylaws carefully. Many documents distinguish between “additions, alterations and improvements,” on the one hand, and “maintenance and repair” on the other. For the former, many condominium Bylaws put dollar limitations on the amount of money that a Board can spend without receiving approval from a majority of the unit owners. If indeed your Bylaws require 75% majority, I believe this is highly unusual — and indeed perhaps restrictive.
From a practical point of view, even if the Board of Directors has the legal authority to spend money for repairs, in my opinion if this amount is going to be substantial, the Board should involve all of the membership in the decision making process. Clearly, the Board must have authority to spend money to keep the building in good shape. On the other hand, if the Board members want to stay in office and want to do “the right thing,” I have always recommended that Boards of Directors keep the membership fully advised as to the scope of their plans. Transparency should be the motto of every association.
You raised an interesting question as to how the Board can raise the monies necessary to do the balcony work. Oversimplified, there are three options:
- take money from reserves;
- pass a special assessment; or
- borrow money from a bank
Many condominium associations have long been reluctant to borrow money from banks. Historically, this is probably because banks until recently were reluctant to loan money to condominium associations. However, in recent years, more and more banks have opened up their doors, and are more than anxious to work with community associations on their financial needs.
There is no easy answer to this question. Each association has different needs and concerns. However, at the very least a Board of Directors and its management company should be able to give a complete explanation to the membership outlining the pros and cons of all of the above financing options.
Finally, you have indicated that the Board intends to file suit against the unit owners who have not paid the special assessment. Either the Board has the authority or it does not. Your Bylaws should provide the answers to your questions. The courts will read your Bylaws.
Question: At our annual meeting, the board advised that the monthly condo fee was increasing by $30. Some argued that some services could be discontinued and that they would rather pay a special assessment to do a renovation project next year. What’s the answer?
Answer: The board is required to establish a budget adequate enough to pay the bills, current and future. The governing documents also stipulate that expenses be divided according to a prescribed formula. Special assessments almost always reallocate expenses to future owners that don’t owe them because they weren’t in ownership when the expenses were incurred. Changing the allocation of expenses takes a 100% approval vote of all members. That will never happen because who is willing to pay more than they already do? In addition, some of those called on to pay a special assessment (future owners) won’t have been given the chance to vote at all.
If a member vote is required to increase the annual budget (usually not the case) and the owners vote to put off paying some expenses to the future, the matter is out of the board’s hands. But the consequences will come back to haunt the entire HOA if some future owners refuse to pay the special assessment. The debt is simply not theirs to pay.
Put another way, special assessments are the consequence of not reserving adequately in the past. The roof wears out over years as does the paint and other long life components the HOA maintains. If all owners over those years aren’t paying their fair share, special assessments result. Special assessments are an illegal reallocation of expenses. A fully funded reserve plan divides up those long range expenses fairly and eliminates the need for special assessments. For more on Reserve Planning, see Regenesis.net.
Question: My neighbor has a willow tree that makes a big mess in my yard. Does the board have that right to require removal?
Answer: As a general rule, the HOA and board have the authority to control landscape issues that impact neighbors. The problem with willow trees is that pruning will not address the problem you describe, only total removal will.
The bigger question is: Are you advocating removal of all trees? Trees do what trees do and wind does what wind does. All neighbors experience some degree of inconvenience because of tree debris. While it is reasonable to require owners to keep trees trimmed, removal is unreasonable unless there is a life/property damage threat or if the tree in question has clearly overgrown the location.
Question: Our HOA is considering renovating our landscaping after 18 years. We have a number of trees that have overgrown, impede views and are too close to the buildings. How do we figure the percentage of increased unit resale value that would come with new and improved landscaping? We need to resolve this prior to investing thousands of dollars.
Answer: Developing such a percentage is impossible. That said, keeping the landscaping looking good will help maximize property values since curb appeal has much to do with value and landscaping has much to do with curb appeal.
You should invest in a professional landscape designer who can develop a comprehensive plan that will consider bush, plant and tree removals and additions. Modern designs combine larger planting beds, less grass and more hardscape (like boulders, water features) so maintenance and water costs can be reduced. The art of xeriscaping selects low water need plants to reduce the need of irrigation. Hiring an arborist to do corrective pruning and selected removal of trees may satisfy the view needs.
Question: Meeting minutes are supposed to be approved at the following meeting (board or annual as applicable) But in either case, a lot to time can pass and who can remember the details? Should the minutes be sent out shortly after the meeting in “raw” form?
Answer: Meeting minutes can, and should, be distributed in “draft” form within a week of the meeting so that all are informed what happened. The actual approval of those minutes doesn’t happen until the following meeting. They should be previewed by the board for typos or discrepancies before distribution.
Written By: Richard Thompson
Question: Do you have any advice on dealing with hostile neighbors? There is a couple in our HOA that make the rest of us miserable with their constant complaining and badgering the board about rule violations.
Answer: Difficult people rarely change their ways. But if there is someone in your group that has the ability to communicate to them what you have just described, it might make a difference. Maybe they don’t realize how abusive they are. Also, the board is not required to respond to every opinion and complaint. If it’s pointed out to these folks that their demands are likely to fall on deaf ears if they are aren’t more restrained, that too may help them change. But if they refuse to mend their evil ways, simply refusing to respond to them may be the best alternative.
There is an excellent article in the www.Regenesis.net Article Archive titled “Dealing with Difficult People” that will be helpful in understanding personality types and how to cope successfully with them.
Question: Our board is considering a surcharge to owners that rent out their units. Any problem with this?
Answer: This kind of surcharge is illegal since it changes the homeowner fee allocation. Changing that allocation takes a 100% approval vote of the membership and, possibly, their mortgagees. However, if any resident causes extraordinary costs to the HOA like damage to common elements, those costs can be passed on for reimbursement. It is fairly common to charge Move In/Move Out fees when there is documentable costs incurred by the HOA but those fees should apply to all residents, not just renters.
Question: Our HOA has provisions in the governing documents requiring board approval for certain additions like awnings. The board recently received several requests for awnings and the board has decided not to allow awnings of any kind. Is this a correct interpretation of the board authority?
Answer: It’s reasonable for members to assume that since the awning option is mentioned in the governing documents, the intention was to allow them. The board cannot enact a policy that contradicts the governing documents. If the board feels that awnings aren’t desirable in any form, the governing documents should be amended by an appropriate vote of the membership. Otherwise, the board should honor the provision as it is written, arrive at a awning standard and approve requests under those conditions. Adopting a standard is important because of consistency, quality and curb appeal considerations. It also saves both board and petitioner a lot of time and guesswork.
Question: Our regularly scheduled board meeting fell on a holiday. At the last minute, our management company informed us that they could not make the meeting and failed to provide reports or materials for us to review. I cancelled the meeting and reschedule it for another date. Some directors disagreed with my decision stating I was letting the management company run the HOA instead of the board. Was I wrong?
Answer: A board meeting scheduled on a holiday is never a good idea and the management company should have advised you well in advance about not being available to attend. Presumably, there was just a miscommunication. But you made the right decision to reschedule.
One of the most important benefits of professional management is the counsel the manager provides. Having the manager attend board meetings is critical to get objective feedback and adequate information for the board to make informed decisions.
It sounds like some directors are maneuvering to self manage. In most cases, this is a very bad decision. There is a lot more to it than they imagine, not the least of which is having to collect money and enforce rules on neighbors. It rarely works and all members suffer the consequences. The management company is hired to manage and distance the directors from these sources of conflict. Written by: Richard Thompson
“Quarrel” has been defined as “the minimum number of people required to hold an argument”. One of the many challenges facing homeowner associations is resolving disputes between neighbors. Noise, parking, garbage, pets, trees, fences and other territorial based conflicts can erupt any time. Most conflicts result from false assumptions and, according to the prison warden in the movie “Cool Hand Luke”, a failure to communicate. Neighbors, wanting to avoid confrontation, stew over issues until their emotional pot boils over, usually scalding innocent bystanders. What now?
Conflict is a natural part of human relationships. Self interest is a top priority while others interests are usually somewhere down the list (WAY down). People become embroiled because interests or values are challenged. Here are a few suggestions for quelling the quarrel:
Know What’s What: The board wasn’t elected to babysit or police neighbor squabbles. Some issues are association, some are not. Don’t take on personality conflict issues. People that can’t get along often look for others (you) to blame. Don’t get involved unless it affects the harmony of the community.
Let Them Deal With It: If the issue is a personality conflict, suggest they discuss and resolve it like adults. If they won’t, let it go. Don’t encourage immature behavior.
Clarify the Issue: If the issue impacts the whole community, clarify it. What seems to be isn’t always what is. Ask each party what they think “it” is.
Facilitating Discussion: If the association’s interests are involved, here are several tips for facilitating the discussion:
Schedule a convenient time to talk
Agree on a neutral place for the meeting.
Stick the facts. Steer clear of “He said, she said”.
Avoid blaming, insults and exaggerations which make it difficult to consider other viewpoints.
Listen, even if you disagree, to better focus on the issues.
Defuse hostility. Let them know you understand they are angry or upset. Explore what’s behind the emotion.
Direct the conversation toward solutions.
Question their assertions:
Too many/much/little/few. Compared to what?
You never… What would happen if we did?
We’ve tried that already… What was the outcome?
The only way is… Yes, that’s one option. Any others?
It will never work… What would work?
Good conflict resolution focuses on needs, not positions. It is indeed possible to quell the quarrel. Harmonizing your HOA should be a top priority.
A Reserve Study is an essential part of running a homeowner association. It provides the board with a systematic way to schedule the repair and replacement of common elements and a fair way to distribute the costs of those events to all the members who benefit from them over the thirty year time line. A properly funded Reserve Plan eliminates the need of special assessments which are unfair to those that have to pay them. And with adequate funding, maintenance gets done when it needs to be done instead of piecemeal or deferred.
There are just too many advantages to reserve planning to ignore. The board that follows a reserve plan is succeeding in a fundamental charge: to protect and maintain the HOA’s assets which have a direct correlation to the members’ home/unit values. Conversely, the board that does not have or follow such a plan is guilty of negligence and failing in its fiduciary duty. The implications are clear and significant and the wise board chooses the high road.
Thirty years is a long time and things can happen that are impossible to predict. Inflation moves up and down as does return on invested reserves. Construction costs can be higher or lower based on competition, the state of the real estate market and the price of oil in the Mid East (talk about unpredictable!).
One of the biggest wild cards in this thirty year projection is how well preventive maintenance is done. Preventive maintenance are those little things that, if left undone, have huge impact on a component’s useful life. For example, if a roof is not kept clean of moss, or small seam separations repaired, the normal useful life could easily be cut in half. Siding that is not inspected, repaired and caulked on a regular basis can fail years sooner than it should. Failure to perform regular and adequate preventive maintenance can undermine the financial prognostications.
How well the board invests reserve funds also have enormous impact on the funding model. Improving the rate of return an average of only 1 to 2 % over the thirty year period can reduce owner contributions by thousands of dollars (sometimes tens or hundreds of thousands of dollars).
The message is clear: A Reserve Plan is an essential planning tool for all HOAs but to be truly useful, must be tweaked and refined over time. It’s like tending a vineyard. Left untended, the fruit (value) will gradually disappear.
The annual budget review is the logical time to assess the condition of the Reserve Plan. A judgment should be made on the life and cost assumptions of each component included in the Plan. Do they still hold true or is there need for some revision? These judgments should be made by an objective and knowledgeable source like a Professional Reserve Analyst (PRA) member of the Association of Professional Reserve Analysts. See www.apra-usa.com.
If the reserve fund Percent Funded is below the ideal of 100%, implement a funding strategy to increase that level to the 100% goal over a period of years.
As the saying goes, “Change is inevitable except from vending machines” and this is particularly true about a Reserve Study. If your HOA has no Reserve Study, arrange to have one performed as soon as possible. If you have one, hurray! Now, get out your clippers and start pruning to produce great fruit.