Tuesday, October 4, 2016

New in the HUD

As is typical during the end of presidential administrations, a lot of new regulations are implemented, and this year is no different.  Beginning October 14, 2016, HUD Fair Housing regulation 2015-0095-0001 goes into effect, incorporating the results of court cases which in some instances involved homeowner associations. 

While HUD says this regulation does not place any new duties on HOAs, it squarely places these items “on the radar” of some who may see it as an opportunity to litigate.  Because of this, it is crucial that Boards of Directors consult with their insurance agents to confirm that appropriate Directors & Officers insurance is firmly in place. 

 This regulation clarifies some instances where a community’s Board of Directors must address harassment between neighbors:  Boards must carry a heightened sense of awareness and act in certain situations that in the past they may have chosen to ignore.  Additionally, they can be held liable for the actions of agents or employees.

In the commentary HUD included in releasing the new regulation are the following tidbits:
  • You can be held liable for failing to take prompt action to correct and end a discriminatory situation where the Board knew or should have known of the conduct and had the power to correct it.  Such knowledge can come from, for example, the harassed resident, another resident, or a friend of the harassed resident.  Neither psychological nor physical harm must be demonstrated to prove that a hostile environment exists.
  • The power to take prompt action depends upon the extent of control or any other legal responsibility the Board may have with respect to the conduct (as indicated in bylaws or other rules of a homeowner’s association or condominium, or by federal, state or local law).
  • Community associations regularly require residents to comply with CC&Rs and community rules through such mechanisms as notices of violations, threats of fines, and fines.  HUD understands that community associations may not always have the ability to deny a unit owner access to his or her dwelling; the rule merely requires the community association to take whatever actions it legally can take to end the harassing conduct.
  • Creating and posting policy statements against harassment and establishing complaint procedures, offering fair housing training to residents and mediating disputes before they escalate, issuing verbal  and written warnings and notices of rule violations, enforcing bylaws prohibiting illegal or disruptive conduct, issuing and enforcing notices to quit, issuing threats of eviction and, if necessary, enforcing evictions and involving the police are powerful tools to control or remedy a tenant’s illegal conduct.
  • A principal (such as the Board) is vicariously liable for the actions of his or her agents taken within the scope of their relationship or employment, or for actions taken outside the scope of their relationship or employment when the agent is aided in the commission of such acts by the existence of the agency relationship.
The response from some Boards has been denial, believing this regulation only applies to apartment complexes and the like.  HUD has stated otherwise, and this should be seen as an addition to existing Fair Housing considerations Boards must take in areas such as pet regulations and architectural review approvals.  It is crucial that you consult with the Association’s legal counsel on this timely topic.

Tuesday, May 31, 2016

Insurance Notice Deadline

Lawsuits are almost always unwelcome surprises.  Combined with the regular daily stresses Board members face for their communities, it's a relief knowing you have proper insurance in place, right?  So, when the insurance company denies the claim saying you didn't report it quickly enough, you reach for the heartburn medicine. 

Unlike in Georgia, many other regions of the country are lenient when it comes to missing reporting deadlines.  In these States, the thinking is that only material breaches relieve obligations under a contract.  Insurers should not benefit if they haven't suffered an actual disadvantage due to late notice.  And as one court said, "It would also disserve the public interest, for insurance is an instrument of a social policy that the victims of negligence be compensated."

A century ago, insurance policies were truly private contracts and judges avoided altering them.  Many courts now recognize that insurance policies are no longer fully negotiated agreements.  Instead, these are based on standardized forms with conditions dictated by the insurance company.  Since these forms are now used industry wide, there really aren't alternatives for the consumer to tap into.  But we live in a pro-insurer state, so let's dig a little into this whole "notice" thing.

Your insurance covers a time period defined as either "occurrence" (for damages that happen during the term of the policy, such as a windstorm) or "claims made" (for when you are served a lawsuit, not necessarily when an incident occurred).  "Claims made" policies have become more popular for insurance companies.  It helps them avoid losses from asbestos, environmental, and other claims having roots in actions occurring decades ago.   Among other reasons, the insurer isn't having to defend a previous customer from thirty years back, and can tack on stipulations to the claims-made policy to limit covering similar events for new clients involved in such items. 

The claims-made version can be either "general claims made" (discovery policies) or "claims made and reported policies" (reporting policies).   A general-claims-made policy may say something like,  "The Insurer shall pay on behalf of the Insured on account of any claims first made during the Policy Period."  A claims-made-and-reported policy may be something like, "The Insurer shall pay on behalf of the Insured all sums which the insured shall become legally obligated to pay because of any claim or claims first made and reported to the Insurer during the policy period." 

See the difference?  General-claims-made versions often give you a longer window to place a claim.  While Georgia courts usually side with the insurer when it comes to determining the notification period, on occasion something known as the "prejudice" rule comes into play.  In this arena, prejudice means that delaying notification to your insurance carrier placed it at a disadvantage.  It needs time to investigate, set aside reserves, and control or participate in negotiations if it hopes to have the best outcome possible.

If the insurance company can show prejudice, it avoids covering the situation even if there is a question about the late notification.

The take-away is this:  As soon as you suspect a claim, notify your insurer.  If your claim is denied, consult with your Association's legal counsel.  And most importantly, be sure to only use insurance brokers who regularly operate in the homeowner association industry.  You can locate them at the Georgia CAI (Community Associations Institute) website.  The first mistake many Boards make is cutting corners on costs by using an insurance broker who is not familiar with all the intricate pitfalls faced by HOAs.  An inexpensive policy fails you when you need it the most.  Don't scrimp in this area.   

Tuesday, May 17, 2016

Like A Good Neighbor...

Like a good neighbor...dah, dah, is there! Many of us recognize this popular slogan. So what defines a "good" neighbor exactly? They are many ways that owners choose to manage their relationships with neighboring units. Let's take a moment to look at the more successful ways these relationships have been managed.

New ownership is the best time for  owners to make a good first impression. Some immediately introduce themselves to neighboring homeowners by visiting their homes. While others, choose to write little courtesy notes with notifications about pending work that will likely prove messy and disruptive to nearby units or homes. These small acts of kindness go a long way with building a good rapport with new neighbors. There's a high probability in attached multi-family structures that  an owner may have to one day confront an owner about a leak, noise, smoke intrusion, or any of the other items that may come up. An initial good rapport will make these confrontations more pleasant and better managed if the neighbors are already starting from a position of mutual respect.

Owners who have passed the new neighbor period can still strive for good rapport with their neighbors. For example, if an owner is being disturbed by a neighboring unit’s noise, then they have a couple of choices. Most owners either contact management or they confront the noisy neighbor directly. We've seen more success with owners who choose to politely address their noisy neighbor versus asking management to step in and address/handle. People are often a bit offended when management is contacting them with a report from an incident that took place a couple days prior and they are even more frustrated that management is not permitted to disclose who the reporting party is. However, when an owner chooses to confront a neighbor with an issue, it's often best if they introduce themselves and begin by saying "you may not be aware of this but...." or “probably don’t know or realize it but….” The noisy neighbor will sometimes offer their cell phone so the impacted neighbor can call or text if they hear future disturbances. Again, small acts of kindness go a long way.

The age old adage do unto others as you would have them do unto you is very true. In communities, a strong rapport amongst the neighbors is very important. Management often has to coach people through this process. People have diverse backgrounds with varied upbringing. So banging on the ceiling to make a neighbor be quiet is totally fine to some, or smoking in the bathroom where smoke goes into a shared vent is no big deal, or allowing contractors to leave messy trails of construction dust in the hallway is ok because they think the janitorial team will clean it. The Governing Documents, the Rules and Regulations, and community newsletters are designed to establish these standards for everyone. So on-going education about these standards is crucial to having a successful, vibrant community!

Tuesday, April 26, 2016

Spirit Stick Beat Down

How does a stick become a carrot motivator?  When it’s a Spirit Stick.  This symbol evokes memories of high school pep rallies and Friday night football.  The stick tradition began in the late 1940’s at a national cheerleading camp.  One squad was not particularly good at performing the moves, but always arrived early and stayed late, all day long actively encouraging the other teams.  Their enthusiastic attitude had a dramatic impact on the spirit of the camp.  For this, the camp coordinator created an impromptu award, a decorated tree branch, to recognize that squad’s positive impact.

We all hunger to see such enthusiasm in our organizations.  But some groups have strange ideas of how to instill ‘spirit’.  An obvious example is some religious or social gathering that gets mired in group-think.  This mindset isolates and strangles the ability to positively influence newcomers. 

Introducing a newbie into your homeowners association, business, or a Georgia CAI committee is a matter of first impressions.  Does your welcoming act include a thick list of rules?  Greetings of “Thou Shalt Not” drown out any thought of benefits and rewards.  Words are like rain:  Hard ones don’t soak in.

The ways conflicts are handled cement your group’s reputation as a bridge builder or burner.  When a homeowner sends a ten-point list of accusations, the natural reflex is a point-by-point response.  That list of complaints serves to pull your emotional chain.  Ignore the distraction.  Instead keep your responses short, focusing on big picture items.  Sometimes silence is the best answer.

Conspiracies are an opportunity to quench the fires of volunteerism.   Gossiping about past conflicts with other individuals is unprofessional and leaves the hearer wondering what is being said about him or her.  If everyone is out to get you, there’s probably a good reason for it.  Take a look in the mirror.

Self-absorbed personalities in an organization are also a turnoff.   At best, they are daunting, or worse, obnoxious.  Either result dampens spirits.  Instead you should tout group accomplishments not yours.  Self-important people are only important to themselves.
Tooting your horn about the organization is expected.  More often, let your actions do the talking.  Keep your focus on encouraging the others to do their best, even those who might be competitors.  Raising the standard of excellence for ALL creates opportunities for you and your team.  So walk softly and carry a big spirit stick.

Tuesday, April 5, 2016

What Does the Architectural Committee Really Do?

Are you getting ready to make an addition to your house or build a new shed or fence in your back yard? Before you break out the miter saw, make sure to get your plans approved by your association’s architectural committee.

While it may seem arbitrary from an individual homeowner’s standpoint, the architectural committee looks out for the entire community. Aside from stopping residents from painting pink polka dots on their houses, the committee’s job is to make sure that the size and style of the project, the type of building materials being used and the overall look of the new structure adhere to the association’s design requirements. Not only does this keep the community looking cohesive, it also helps to keep property values up by preventing individual structures from standing out. Of course, it’s also important to note that unapproved structures might legally have to be removed at the owner’s expense, so save yourself money and headaches by getting approval before building.

So when you’re ready to start your new project, or if the design of your project changes midway through building it, send your plans to the architectural committee first so that the committee can make sure they’re in compliance with the association’s design standards. If the committee does find any issues, they will let you know what they are and try to help you come up with other options. The Association does appreciate all the hard work residents do (and have done) to make their homes and their community beautiful—so help the Association keep your community looking great by keeping them in the loop on all of your building projects.

Tuesday, March 22, 2016

Secrets, Secrets Are No Fun

Association members are welcome to read official association documents. There’s nothing secret about the business of the association. In fact, you should already have copies of key documents like the bylaws or rules. Other common documents that are open for members to review include:
  • Board meeting minutes
  • Insurance policies
  • Financial statements and annual audits
  • Declaration and bylaws
  • Rules and regulations
  • Current contracts
  • Leases and agreements
  • Ballots and proxies

Here is typically how homeowners are able gain access to these documents (procedures may vary depending on your exact community):
  • Send the board a request in writing specifying exactly what records you wish to review, the date of those records and the purpose of your request.

  • The board will respond to your request within 30 days. During that time the board or manager will locate the correct documents and get them ready for you.

  • The records you requested will be available for your review during regular business hours at the manager’s office for 30 days after your request is processed.

  • The association will make copies of records for a reasonable fee.

Please do not request documents that infringe on the privacy of an individual like medical or personnel records. These are not public records, and the association will not make them available. Salary information is available in the aggregate, but not for individuals. Some requests might also be denied if they involve ongoing legal or contractual obligations that might expose the association board or manager to liability.

Tuesday, March 15, 2016

Homeowner Rights & Responsibilities

As a homeowner in our association, you have certain rights—and certain responsibilities. And its just as important to know both!

You have the right to . . .

  • A responsive and competent community association
  • Honest, fair, and respectful treatment by community leaders and managers.
  • Attend meetings, serve on committees, and run for election.
  • Access appropriate association records.
  • Prudent financial management of fees and other assessments.
  • Live in a community where the property is maintained according to established standards.
  • Fair treatment regarding financial and other association obligations, including the opportunity to discuss payment plans and options before the association takes any legal action, and the right to appeal decisions
  • Receive all rules and regulations governing the community association—if not prior to purchase and settlement, then upon joining the community.
You also have the responsibility to . . .
  • Maintain your property according to established standards.
  • Treat association leaders with honesty and respect.
  • Read and comply with rules and regulations of the community and ensure that your tenants and guest do too.
  • Vote in community elections and on other issues.
  • Pay association assessments and charges on time.
  • Contact association leaders or managers, if necessary, to discuss financial obligations and alternative payment arrangements.
  • Request reconsideration of material decisions that personally affect you.
  • Provide your current contact information to the association so you receive all information from the community.