Tuesday, August 28, 2012

Troubled Water

Water heaters normally last 8 to 10 years. If you try to keep your heater any longer than this, you face an increasing risk of tank failure and leaking. If your home is connected with other homes (such as in a condominium or townhome setting), this risk extends to your neighbors. In multi-level dwellings, depending on which floor the water heater is located on, the average cost in damages (ex: water removal service, replacing wood floors and sheetrock, etc.) may run anywhere from $10,000 to $22,000! In these situations, the Association’s insurance only kicks above a certain level – this typically occurs only after the policy’s deductible has been fufilled. In some cases, this can be thousands of dollars later! Since Associations in Georgia are not required to carry water coverage, it is not unusual to see these deductibles set at $10,000 or even $25,000 - which means that homeowners need to make sure their HO6 policies cover this event.

While some water heaters will “warn” you by rusting out at the bottom, others experience internal failures and end up leaving a big wet surprise. If the break is big enough, the catch-basin pan that (hopefully) you have underneath the water heater will not be able to contain the flow. Of course, it’s far cheaper to go ahead and replace the water heater before it bursts.
What about tankless water heaters? They can remove the risk of a massive water event, but are not an option for everyone. If you do not have natural gas lines, it is important to find out if the wiring in your home can handle the load required by a tankless system. Many older homes were not constructed to handle the levels of electrical use that now considered standard. Depending on the age of the home, it may cost thousands of dollars to bring power levels up to a point to handle a tankless system that can provide sufficient water for all of your fixtures.

At the same time you are having your tank replaced, please please please have the hoses for your dishwasher, clothes washer, and commodes checked – as these are also prone to failure and have the potential for the same level of damage as a water heater. The best solution is to have these replaced with stainless steel braided hoses.
Only you can prevent flooding by being proactive with your appliances and hoses.

Tuesday, August 21, 2012

Lines of Authority

What is the legal relationship between homeowners, Board members, and community association managers?  Not knowing responsibilities between these parties can lead to confusion and costly mistakes. Consider the below expectations, followed by true/false explanations.  

  • A homeowner calls up the manager with a demand and states, “I am your boss (and/or) I pay your salary.” 
False. The manager is an agent of the Association as a corporation, and answers solely to the designated officers of the Board of Directors. While a level of customer service is expected when interacting with homeowners, the manager cannot bend or break directives from the corporation.

  • A homeowner requests a meeting with the manager to view and agree to replace dead landscaping.
Usually False. Unless the Board has extended authority to the manager on a particular item, any such request would need to be channeled to the Board for consideration.

  • The Board expects the manager to carry an Errors & Omissions policy.
Partially True. While the Georgia Real Estate Commission does not require E&O coverage for this profession, some community association management firms, such as Access Management Group, do choose to carry E&O. However, the only assurance that a manager is covered at all times is to specifically include him/her in the Association’s Directors & Officers (D&O) policy. Management contracts typically stipulate this as a requirement for engaging their services. Boards may not realize that their actions might place a management firm at risk and vice versa. Including mutual indemnification and hold harmless contract clauses between the management company and the homeowner association benefits both parties, removing a barrier to productive partnership, and relying on an insurance carrier to mediate disputes. 

  • The homeowner expects the manager to issue a violation notice against his neighbor for loud noises.
Normally True. The trigger for when the Association (and the manager) become involved is typically established by the governing documents, or by Board resolution. In the instance of a noise complaint, the Board may have established a requirement that multiple neighbors complain prior to intervention.

  • A delinquent homeowner demands that the property manager provide clarification of the account charges.
May be True or False. Prior to be turned over to collections, the manager would be the person to go to for such account information. Once the situation is in the hands of a collections attorney, neither the manager nor Board is able to provide account balance information. At this point, the attorney is the party to contact, and will have the most current and accurate account balance.

  • The homeowner demands a Board member’s telephone number.
Usually False. Board members expect a level of privacy, with communications channeled through the manager. While mailing addresses may be required, the forum for homeowners to speak directly with Board members is at a community meeting.

  • The Board expects the manager to put together the budget.
Normally True. Although this is the Treasurer’s duty, often the Bylaws authorize this function to be delegated to the manager. However, the Board is ultimately responsible for the final approved version.

  • The Board expects the manager to take record meeting Minutes.
Normally False. Besides introducing a bias, the governing documents do not normally authorize this delegation. Instead, the manager is usually tasked with facilitating the meeting in general and assisting the Board president directly with various issues raised in the meeting.

  • The manager expects the Board to have reviewed all paperwork prior to Board meetings.
True. A Director is negligent in his duties if he has not prepared to carefully weigh and consider items brought before the Board.

The above issues generate the most common confusion, but always feel free to consult with your community association manager to address any particular situation. They are there to help!

Tuesday, August 14, 2012

Have a Degree in HOA Service?

Even several years of service on a community’s Board does not adequately prepare one in all aspects of homeowner associations.  Directors, facing financial pressures,  can cut corners rather than seeking expert advice. This usually ends up being more expensive for the community  than if they had hired a consultant (attorney, CPA, engineer, community association manager, landscape designer, insurance broker, etc.) to weigh in on the decision.
Few Associations require their Directors to take continuing education courses.  These courses do not create experts, but do build up awareness of “red flag” situations, so that costly mistakes can be avoided.  Community members benefit when Boards self-educate, as less time and effort are required to address issues before they occur. Simply put - Education is preventive maintenance.
Vendors that your Association partners with should offer the Board free or discounted education classes in their areas of expertise.  Many of the law firms specializing in homeowner association law provide training several times a year.  The same should be expected of your property management company, which also benefits by having Boards that understand potential pitfalls and how to avoid them.

As a service to the Atlanta community, Access Management Group hosts free training sessions several times a year, covering many topics such as:
*The difference in responsibilities between ownership, maintenance, and insurance
*Valid reasons for homeowners successfully refusing to pay assessments
*The Association's obligations related to handicap access
*How property violations are handled when a unit is sold
*Circumstances when a homeowner could modify his/her home even though the Board said "No"
*Fair Debt Collections and the Board
*What happens if a court-ordered settlement isn't covered by insurance
*Creating policies and procedures with your Association manager

Georgia court cases are discussed, relating to various community rules: rentals, pets, grills, water damage, satellite dishes, parking, home businesses, security/safety, handicap access, maintenance obligations.

Contact Access Management Group at (770) 777-6890 to attend the next scheduled training course!

Tuesday, August 7, 2012

Controlling the Meeting

Corporate board meetings and government councils normally carry an air of formality rarely interrupted by shouting matches:  Not so with our homeowner associations!  All parties in HOA meetings have a personal stake (their homes), and Board Directors hold the responsibility for controlling the meeting in a fashion that is both respectful and productive.

Too often, a Director will choose confrontation that escalates anger in the room, or feels compelled to return a verbal jab made by an uneducated homeowner.  Very few people enjoy sitting in the midst of tension with no resolution, and the end result is homeowner apathy, or perhaps revolution. Here are some tips as to how to best address homeowner concerns, especially when things get heated!

When dealing with an upset person, assume that what he is saying is true and how it could be true, rather than scoffing.  Repeat back to the individual what is being said to ensure you understood him/her correctly.  Always be respectful and speak in a normal tone.
As you do this, match his preferred language of the senses.  We each have a dominant sense (sight, sound, touch) and our language choice reveals this preference.  Examples (with responses after each):

  • “The budget situation looks bad.” – “The way I see it, it is serious but manageable.”
  • “Are you listening to what we’re saying tonight?” – “I’m all ears.  Everyone sounds worried.”
  • “You need to stay in touch with jobless owners and contact them about payment plans.” – “I feel like that’s a great idea.”
Besides matching body language and using a calm voice, we should avoid our initial reaction to verbal attacks:  attack back, plead, start debating, use the “silent treatment”, leave the room.  Each of these reactions rewards the attacker by showing he successfully pushed your buttons and is in control.  This only encourages future confrontations.  You need to let this person know that bully tactics won’t work.
If a homeowner is on a verbal rampage, ignore the baiting.  Respond directly to false assumptions, rather than being dragged into an argument.  Examples (again with responses after each):
  • “If you really CARED about growing community spirit, you’d get off the backs of all us struggling paycheck to paycheck!” – “Of course I care about growing community spirit” or “When did you start thinking that I don’t care about community spirit?”
  • “You’re not the ONLY person that has PROBLEMS, you know!” – “You’re absolutely right.”
  • “I KNOW we would never dare tell you what to DO – but if you keep spending money on landscaping you’ll REGRET IT!” – “I want you to know how much I appreciate your courtesy.”

Sometimes a homeowner crosses the line on topics, or gets so aggressive that a direct response to any portion of his assertion will only result in a protracted argument.  In these situations, distancing works best.  One method is to ramble on about a lot of unrelated items, sending an underlying message that you know the person was trying to pick a fight, and it’s not going to be fun because you’re not playing.  For example:

“Why are you SO RUDE?” - “You know, I think it’s because of something that happened to me when I was little.  We were headed down to Destin, and…no, wait a minute!  It couldn’t have been on that trip, it must have been when we were coming back from my grandparents’ house, because that was the year the Braves won the World Series.  Well, we were stopped in Greenville on the way back and…”  Keep going as long as it takes, but avoid being sarcastic!

The second way to respond is to be completely unemotional and neutral, avoiding everything personal.  Speak in generalities and hypotheticals, and match with your body language:

“WHY am I always getting slapped with fines for VIOLATIONS from you people?  Do you HARASS PEOPLE just for fun, or WHAT?” – “It is always upsetting to receive violation notices in the mail” or “People get irritated when they receive violation notices” or “Violations are unpleasant for everyone in the community.”

Finally, sometimes a quoted truism (delivered in a humorous manner) is enough to derail an attack:

“You know, you can’t tell which way the train went by looking at the tracks” or “The more you run over a dead cat, the flatter it gets” or “All things being equal, tall people use more soap.”
Remember, the meeting is called to discuss and solve problems.  The more you work to diffuse the situation and keep irate homeowners on track, the likelier your success.  Acknowledging people’s emotions, while not giving in to bad behavior, is the best tack to take.