September 2011

We attend a lot of homeowners association board meetings.  Sometimes, it’s to discuss things like collections, meeting procedures, policy adoption, and other similar, mundane matters.  All too often, however, we attend board meetings for one simple reason: to make people play nice.

We understand that association governance is an intensely personal activity.  While the politicians in Congress are fairly removed from the actual effects of the decisions they make, association board members have to see their neighbors, who may be impacted by association decisions, every day.  Even a board member may disagree with a board decision that impacts that member’s home ownership.  As such, it is very common for emotions and personalities to cloud what are fundamentally business decisions.

There is one simple way to help remove many of the personality conflicts that arise with association governance:Continue Reading A Rant on Civility

According to Community Associations Institute ("CAI"), the Federal Housing Administration is evidently backing off a new requirement that management companies carry a fidelity bond on any condominium association they manage that would cover an amount equal to the association’s budget and reserves.  Here is what CAI is reporting: 

"Thanks to pressure from CAI members across the country, the Federal Housing Administration (FHA) indicated that it will revise a controversial regulatory mandate that would require management companies to carry a fidelity bond if they managed a condominium association. In June, FHA released new guidelines for its condominium mortgage insurance program. The guidelines set standards that condominium associations must meet in order for any potential buyer to qualify for a FHA-backed mortgage. As FHA accounts for nearly one in three condominium mortgages, the guidelines have a significant impact on the marketability of condominiums.

 Continue Reading CAI Reports FHA Backing Away From Management Company Insurance Mandate

As you have probably figured out by now, I follow HOA headlines from across the country. Yesterday, a story reported by WFAA.com really caught my eye and not because there is a dispute in a Dallas area HOA about how funds are being expended by the association. Unfortunately, disputes of this ilk aren’t all that uncommon. What caught my eye is the level to which the anger has escalated. Residents have allegely been receiving threatening letters, have been physically threatened in the community and one resident evidently got so out of control that he was tased by local law enforcement. 

Based upon what I can piece together from the story, there are some real questions about how funds are being expended and accounted for by the association. There are also allegations of impropriety by directors. I have no idea whether there is any truth to these allegations. However, at least in Colorado, there are constructive ways to deal with this scenario. Continue Reading Dial It Back Before You Get Tased!

For those of you who love to bake, you know that carefully following a recipe to bake the perfect loaf of bread is a must. While I’m not a plumber, I suspect these fearless folks don’t leave home without their trusty plungers!  For those of you who serve on the board of directors of your homeowners’ association (“HOA”), you know that your tools of the trade are the governing documents of your association. Right?!

As a director for your HOA, you have the fiduciary duty to comply with and enforce the governing documents of your association. How can you fulfill this duty if you aren’t familiar with or don’t have your association’s governing documents available at board meetings? The short answer is – you can’t. However, it’s never too late to get prepared to govern! Here are the documents for your HOA you should locate, review, put in a binder and take to meetings:Continue Reading Are you a plumber without a plunger?

September is National Preparedness Month. For the past few years, we have  devoted a September post to reminders of preventative steps that can help keep your community safe and prepared for emergencies. By implementing preventative measures now, your association may reduce injury and liability later. The following focus areas may assist your association in identifying how prepared it is for the next emergency:

Review governing documents and insurance policies. Ensure that insurance coverage and reserve funds meet the association’s needs as well as the requirements set forth in the declaration and state statutes. An insurance and maintenance chart and insurance guidelines prepared by the association’s attorney, in consultation with the insurance agent, can serve as one way of notifying owners of their responsibilities. We also recommend that associations check their fidelity coverage and purchase crime coverage to protect against fraud and embezzlement.Continue Reading Prevention and Preparedness: How does your community deal with emergencies?

I just returned from an excellent training provided by the U.S. Department of Housing and Urban Development (“HUD”) on the new and revised requirements for FHA condominium project approval found in the Condominium Project Approval and Processing Guide.

The 800 pound guerilla in the room was the new Project Certification requirement. Beginning on August 31, 2011, any application for a new certification or recertification submitted to HUD for FHA approval requires the condominium association, or an agent of the association, to sign the Project Certification which says the following:Continue Reading HUD Commits to Revisit Provisions of the FHA Project Certification

 Here’s an update from CAI National on CAI’s lobbying efforts relating to FHA’s role in establishing criteria for condominium associations to become approved for FHA-backed loans: 

"The House Financial Services Committee’s Subcommittee on Insurance, Housing and Community Opportunity hosted a hearing on September 8, examining the role of FHA in the mortgage markets. Acting FHA …

In March, Molly Foley-Healy blogged on the Nevada crime ring that conspired to steer homeowners associations to certain law firms and contractors in exchange for kickbacks.  On Tuesday, one of the "hired" Board members pled guilty to one count of conspiracy to commit mail and wire fraud.

Darryl Scott Nichols used funds from other conspirators to become a strawman purchaser, and eventually was elected to the Boards of Directors of two different condominium associations.  As a Director, Nichols used his influence to send association business and money to other parties.  These parties compensated Nichols for his assistance, a fatal conflict of interest.Continue Reading Nevada HOA Fraud – Could it Have Been Avoided?

Summer is officially behind us which means HOA budget season is in full swing. Given the tough economic times, some HOA boards have understandably been reluctant to increase assessments over the past few years. Others have relied upon unrealistic budget projections to rationalize keeping assessment levels steady or even decreasing them. Some associations have deferred critical maintenance or relied upon “borrowing” from reserves to cover normal operating expenses.Continue Reading Tough Budgeting Decisions: Are You Ready to Make Them or Hear Them?