Tuesday, July 31, 2012

Continuity, Comfort and Reliability

HOA and COA boards are constantly faced with the issue of volunteer turnover. Serving on a board can seem like a thankless job and burn out can occur quickly. Many homeowners do not understand the commitment and the time it can take to have a successful community.
The addition of a trusted community association manager (CAM) can bring invaluable continuity to your property. Having the consistency of a committed Board makes the process smoother, but having the same CAM from year-to-year offers stability.

Every community and every Board has a personality and goals - some short term and some long term. Short term goals are typically easy to handle, but the goals that take years to complete require someone to be diligent in follow up and control. If a new group of Board members come on every year, it takes many sessions just to bring everyone up to speed. As a result, you lose valuable time recreating the process. Having Board members that make a long term commitment and a CAM that has been involved throughout the process makes this more productive and utilizes the small amount of time a volunteer has to its fullest potential.
The average industry turnover for a CAM is 2 to 3 years.  At Access Management Group, we are proud of our average turnover, which is significantly higher at 7 to 8 years. This ensures your community will not lose the knowledge and your Board will be able to be as efficient and productive as possible.
At Access Management, we believe in promoting from within. This provides your community with additional stability because you not only have a tried-and-true employee, but one who understands our systems and processes as well as our commitment to quality. When a community management company begins serving a new property, they spend countless hours becoming familiar with the property and typically will not have a full functioning expertise for many months. Our durability is reflected in the long-term relationships we maintain with our clients – evidenced by several communities which have been with us for over 20 years.
We go the extra mile in offering training to our personnel to allow them to further their industry knowledge and broaden their base of expertise. This allows a Board to have a vast amount of knowledge at their finger tips and a CAM that is prepared to handle a variety of situations.
We believe in personal service at every level. Our support staff understands the concept of working with homeowners to answer questions, resolve conflicts and create goodwill within the community. It is our desire to make every community we represent better and more vibrant. Not only does this make the process smoother, it also increases property values.

Last but not least, we believe in training our Boards so they understand the roles each party plays in the management of their property. We go in-depth about Board responsibilities and the pitfalls to be avoided. We detail the decisions a Board can make, including important information to ensure compliance with Georgia law. We also discuss how the Board can further protect itself, should it make a decision that results in a lawsuit. In this training, we outline important topics such as insurance issues, ADA issues, compliance issues, debt collection and special assessments. We believe an educated Board will not only operate more effectively and efficiently, but that it will gain the respect of its community though a stronger approach to professionalism.
As a volunteer, we understand that your time is valuable. The more time invested on wasted efforts not only slows the process down but it also impacts you as a Board member. No one wants to be at odds with a neighbor and we firmly believe that proper education, attitude and continuity in a Board of Directors - along with properly trained management personnel - is the recipe for success.
So the questions become “Do you wish to be as productive as possible? Do you wish to be as knowledgeable as possible? Do you wish to reflect a professional approach and resolve conflict as quickly as possible?”  If so, work with a management company that is known for all the above and has done it longer than any other company in the metro Atlanta area:  Access Management Group!

Tuesday, July 24, 2012

Clear as Mud

One of the greatest struggles in Board stewardship is homeowner interaction. The majority of homeowners don’t understand what their Board actually does and more than likely only “participate” in community affairs when they personally have an issue. Rather than simply waiting and reactively responding to conflict, many Boards have made the decision to follow the mantra of transparency.  By publishing more information (financial statements, maintenance decisions, etc.), Boards may feel that false allegations will be less likely to take root.

However, this type of transparency is not always enough. A board also needs to consider its obligation to maintain governance continuity - years of experience and knowledge are at stake. Board members need to ensure that they are acting in a way that will set a standard for future board behavior. When a homeowner has an issue or concern within their community, you often hear comments like “I could do a better job than the current board is doing” and other similar statements. In actuality, it’s not that simple. Taking steps to mitigate homeowner revolts and wholesale board turnover is a must!

Homeowner hurt and confusion can stem from the following rules regulating Association living:               
·         Governing documents are written in legalese, and certain phrases have special meanings
·         Overlaps and exclusions in insurance coverage may leave homeowners underinsured
·         Delays in enforcing violations (i.e. noise, smoking, pets) are due to a series of required disclosures and time periods that vary by situation and government law
·         Collections can be arduous, with their own special set of regulations and court procedures
·         Ownership, maintenance responsibilities, and insurance obligations may diverge
·         Leasing restrictions and regulations
·         Technical aspects and government regulations of various vendor professions
·         Differing contractual terms and obligations
·         Fair Housing and Americans with Disabilities considerations
·         Budgeting and capital reserve obligations
·         Parliamentary procedures
Boards often have only a passing understanding of these various frameworks, and the average homeowner may not know these even exist - much less understand how they work separately or together!
Boards must take an active role educating the membership about the dynamics in these different arenas.  An effective option is to mail or email on a monthly or quarterly basis, providing simple overviews on each of these areas.  Not only does this proactively prevent conflict and anger, but it prepares the next generation of Board members to responsibly represent the community once your time of service concludes. 

Set the example and tone of future Boards by taking time to educate today! 

Tuesday, July 17, 2012

Condo Insurance - Are you Covered?

Most people don’t necessarily understand how their insurance policy works…but then throw a condo in the mix, and worry about common and personal property issues! What a headache! Here is a little info about condominium insurance and an example of a recent condo insurance claim.

Although an association's master policy may cover the exterior and the rebuilding cost of the barebones interior of your home, there is much more to protect. A HO-6 policy is a regular homeowner’s policy, tailored specifically for the special needs of condominium homes. These policies cover the interior structure of the unit and personal property inside. In most cases, the community’s master policy only covers areas such as the common walkways, roof, basement, elevator, and boiler, for both liability and physical damage–but nothing inside your home except in special circumstances.

Your HO-6 policy provides coverage for damage to furniture, computer equipment and clothing. It may also provide personal liability coverage, medical coverage for guests injured in your home, and coverages for improvements or upgrades, such as flooring or granite countertops. 

Under new FNMA (Fannie Mae) and FHA requirements, HO-6 policies are now required for all new loans. Sounds like common sense - but before the housing market changed, lenders didn’t necessarily require HO-6 policies, and many condominium unit owners were (and still are) under the mistaken impression that the master condominium insurance policy covers all damage to the interior of his/her unit as well as damage to furniture, appliances, etc. In the event of disasters such fire, the rebuilding that occurs from the master association policy may possibly leave you with a shell of a home!

Another benefit of an HO-6 policy is that in certain situations, it will provide gap coverage caused by the often-high deductibles on a master insurance policy. Typically, condominium documents stipulate that the unit owner is responsible for losses falling below the deductible. A well-tailored HO-6 policy protects you in this situation.
HO-6 policies can also provide coverage for assessments applied against an individual unit due to a direct loss to the condominium. This type of coverage is called “Loss Assessment” and protects against an assessment from the Association for an uninsured loss, an underinsured loss, or as a result of the deductible for a given loss. The loss must be a “peril” covered under the unit owner’s individual policy. A standard condo policy typically provides only $1,000 in loss assessment coverage – absolutely increase this coverage to at least $5,000!
A real life example
The homeowner on the bottom unit of a two-story building called the management company to report that water was leaking through his ceiling from the unit above. The source was the air conditioning condensation line in the condo above him. This had possibly been leaking for several months, since the upstairs homeowner had not lived in the unit for some time. This homeowner did not have insurance, and the Association’s deductible for this type of claim was $7,500. The deductible had to be paid by the homeowner suffering the damage. Unless negligence can be proven (which is very difficult to do), each homeowner is responsible for repairing his own interior damages, regardless of the source of the damage. The impacted owner discovered that it was more cost effective to just pay for the repairs out-of-pocket, rather than file a claim on the Association’s master policy. If HO-6 insurance had been in place, he would have only had to pay a $250 or $500 deductible, with the HO-6 policy covering the rest of the $7,500 deductible.

In the above example, be aware that there may be different deductibles for the Association’s master policy, depending on the cause of the damage. It is not unusual to have a $5,000 deductible for all except water damage, and a water damage deductible of $25,000. Make sure your HO-6 covers these variations!

If you have not already done so, get with your insurance agent today and confirm you have appropriate coverage!

Tuesday, July 10, 2012

Dirty Water

If you are currently a member of your community's board of directors, or even considering serving on a board, here is some important information to consider:

Last October, federal regulations were enacted that consider both Board members and Community Association Managers to be “co-permittees” along with maintenance companies/vendors using any type of biological or chemical applications that might run in to nearby waterways (ponds, lakes, streams). All must comply with the National Pollutant Discharge Elimination System permit for items such as the treatment of mosquitoes, algae, weeds, tree pests, etc. 
Even if the Board or Community Association Manager selects a vendor whose contract stipulates that the vendor is responsible for obtaining a permit and complying with regulations, Board members are also on the hook if the vendor fails to comply.

Along with proof of insurance, make sure your landscapers and pest control people are providing the Association with copies of this NPDES permit!

More information about this topic is available at the following links:

Contact your Community Association Manager if you have any more questions!

Tuesday, July 3, 2012

Proactive or Reactive? Where Do You Stand?

Many people find taking a proactive stance to be very difficult - you are essentially making repairs to something that is not yet broken.  The opposite, being reactive, is responding to a circumstance requiring immediate attention. Research shows that the majority of people naturally fall into this latter category. The basic belief about the proactive approach is that you are spending monies that are not (yet) needed.

A better understanding of a proactive view leads to a better appreciation about what is being done and probably more importantly – why it is being done!
A car analogy:  You are planning a long trip. You realize your tires are becoming worn and are approaching the end of their useful life. Your two options are: 1. Being reactive – waiting until the tire blows out and then replacing it or; 2. Being proactive - replacing the tires before they blow out.
A reactive perspective:
You leave and a hundred miles into your trip, you find yourself with a blown out front tire. You are now on the side of the road with no way to replace it, except by using your spare.  You change the tire, knowing that the spare will only get you so far (at a minimal speed) and continue on your way. You go another hundred miles and you lose a back tire…what are the odds, right? Now you are in a pickle! You are stuck on a highway, far from home, where you know no one to call and fix the tire. Your smart phone locates a local tire company, but after calling them, you discover they do not tow cars. They refer you to a local tow company who comes to you within the hour and transports you to the local tire shop. You meet with the tire shop representative only to discover that your size tire is not in stock and will not be available until noon the next day. You order the tire and then get a taxi to a local hotel for the night. The next day you return by taxi to the tire shop, the tire is mounted in 45 minutes and you are finally back on your way.
Now let’s recap the total costs of this reactive venture.
Tow bill to the local shop                                             $85.00
Ordering a single special tire incl shipping costs        $185.00
Cab rides to and from hotel                                         $36.00
Hotel for the night                                                        $129.00

Total                                                                            $435.00 (plus a day lost from your trip).
And let’s not forget that lost $155 deposit on the hotel room at your destination
Grand Total                                                                 $590.00 reactive cost per tire
Now from a proactive perspective:
Since you are aware that your tires are worn, a few days prior to your trip, you call up the local tire shop with which you have done business for years.
The owner pulls your records.  He sees that he has ordered your tires in the past and that the installed cost for the set of four tires is $540.00. It will require a three day order time, which comes in the shop’s regular shipment and requires no additional cost. Since you planned ahead, this doesn’t inhibit your trip, since you are not scheduled to leave until next week. You place the order, the tires come in, you drop off your car at the shop and because you are a regular customer, they drop you off and pick you up from work. Absolutely no additional hassle or time on your behalf. So, that $540 divided by 4. Your proactive cost per tire $135.00. (In terms of actual dollars spent - by being proactive, you actually spent $50 less and got 3 additional tires!)

In terms of just replacing the one tire, being reactive cost you an additional $455.00 plus a lost day of your trip. This does not include the mental anguish you suffered – being stranded in an unfamiliar area, spending monies not planned or budgeted, missing out on certain activities planned, etc. All of these things may have removed a lot of enjoyment that you were anticipating on your trip.

Now consider your building, house, clubhouse, etc. A professional can review certain items that need to be addressed before they become costly. For example, a typical paint job on the exterior of a building has a useful life of 4 to 8 years. Again, this estimation is based upon several items and can be easily identified.  The loss of paint coverage can result in water entry and wood rot. These items can become very costly to repair but can be avoided if you repaint before the failure of the original base coat of paint. This means preplanning and prebudgeting your expenses.  Another negative of allowing paint to fail (and subsequent wood rot) is the potential for mold growth within the walls of your building. This mold growth could lead to thousands of dollars in expenses to remove the mold - not to mention the potential impact to your life and safety due to mold spore inhalation.

This same process applies to your roof, sewer systems, lighting, gates, roadways, gutters and drainage systems, just to mention a few.

One way to be proactive is to have a Reserve Study completed by a reputable engineering firm. This process will show you the anticipated life each item, the future replacement or repair costs (based upon normal inflation) and help you allocate the appropriate funds to make the repairs required when needed.  This may mean you actually have $150,000 allocated and in the bank for that new roof before it actually begins to leak.
So now ask yourself:  Are you as a Board of Directors going to be proactive and preplan to maintain your community’s property or are you going to be reactive and pay a premium for work when the work HAS to be done and you are in a bind?
We, at Access Management Group, promote being proactive. Not only does it save you money in the long run, it shows your community that their money is being spent wisely. We can assist you in every aspect of the process and will refer you to tried and true contractors that are fully insured and capable.  Let us help you help yourself.