Tuesday, December 17, 2013

"I'm a Professional..."

A common topic Access Management Group responds to are questions on actions taken by individual Board members:

“Recently one of our Board members, on his own, sent out a message to the community soliciting information about management company interactions.  I’m worried it may have been inappropriate.  What is the rule for communications by the Board?”

If an action by a Board member causes unease, don’t ignore your gut reaction:  Boards must operate in a way that is very definitive, with unified messaging, to avoid needless confusion.   How an email or letter is worded may negatively impact the community’s perception of the Board if it is too “familiar” (using words like “I” rather than “We”) in tone, or can be perceived as political in nature. 

Remember:  A community association is a corporation run in the manner of a business, not a city council.  While the natural desire is to be friendly and informal, any communication from the Board or a Board member will be taken as an official pronouncement by some in the community, regardless of intent.

The best policy is for the Board to designate a single point of contact, whether that is the Board president, secretary, or the community association manager.  Whoever is selected should have excellent composition skills:   Misspellings and grammatical errors will distract from any messaging.  Nothing should be sent to the community without review by the Board as a group.  While not every Board member will respond or agree with a particular notice, all should be focused on maintaining the professional image of the Association.

All of this relates to the broader issue of a Director choosing to act independently of the Board.  The Georgia Real Estate Commission, which oversees the licensing of Community Association Managers, has provided the following on dissenting Directors:

• A Director who does not agree with the decision of the group should request that his/her dissenting vote be identified in the Minutes of the meeting

• Although not required by law, a dissenting Director should keep the discussion at the Board meeting confidential even though he/she disagrees with the final result

• If the dissenting Director uses knowledge obtained at a Board meeting to undermine the association, the dissenting Director could be in breach of his/her duties of care and loyalty and personally liable (without indemnification) for any damages their actions create

• The Board should send a cease and desist letter to the dissenting Director

• The Board might need to vote to remove the dissenting Director (sometimes membership must vote to remove a Board member)

• The Board might need to obtain a temporary restraining order against the dissenting Director

As you can see, this is a serious topic that needs to be discussed frankly and frequently among all Board members.  Setting expectations in advance of such negative behavior is key to preventing a dysfunctional and disrespected Board.

Tuesday, December 10, 2013

A Corporate World

Consider this real-life scenario: Bob purchased shares of Coca Cola stock without first reviewing the company’s performance and future plans.  He was looking forward to earning dividends along the way, and surely he could sell his shares and get out at anytime with extra money in his pocket.

Leading up to the annual meeting, Bob received a mailing from Coke, detailing plans for further expansion in to South America, and he was upset to discover that no dividends would be issued.  Because of liability the company was addressing, the value of his stock actually dropped.  There were other items as well, and he didn’t agree with any of them. 

He immediately sent a series of messages to the Board of Directors, challenging them on various items, claiming they didn’t have the authority to take certain steps without stockholder approval, and threatening legal action.

The Board didn’t respond, as all of Bob’s challenges were invalidated by the regulations spelled out in the company’s governing documents – an educational experience for Bob that came at the cost of hiring an attorney.  When Bob complained that he hadn’t known about these regulations, he learned it was up to him to discover such things.  Ignorance of the law is no excuse.

Unfortunately, many prospective homeowners are like Bob, not taking time to research the community that they plan to purchase in to.  They are shocked to discover the level of authority a homeowners association carries.  Disagreements over budgets, assessments or compliance violations often result from misunderstanding the roles and rules that a person agrees to when moving in to a deed-restricted community.  

Just like Coca Cola, homeowner associations (HOAs) are corporations and operate under the same set of laws.  Many of the restrictions you would face as an employee or an investor in a company apply to HOAs.  While a firm may have a clothing dress code, your association has a housing dress code.  Your employer won’t allow you to set up a camper trailer in the parking lot, and the same trailer would not be permitted in HOA’s common area.   The similarities go on.

With some exceptions, a person is able to contract away many of the rights granted by the U.S. Constitution.   A homeowner may stand up in a community meeting, waiving a copy of the Declaration of Independence or Constitution, and demand the right to post any type of signage he wants in his yard.  However, he is bound by the covenants he entered into when purchasing his home.  These covenants are a contract between all homeowners in the community, and if they require signage to be posted only in the window of a home, the homeowners will need to come together as a group to alter the terms of the contract to permit signs elsewhere. 

Such amendments are not easy to pass, and anyone buying in to a community should assume that the regulations will remain unaltered.   This is not necessarily a negative situation:  It prevents the implementation of truly horrific regulations that would create misery for the neighbors and drive down home values.  The amendment process is intentionally cumbersome, encouraging thoughtful deliberation over a span of months or years.  Slow change is preferable to a whirlwind that leaves your community in shambles.  For items worth changing, working through the process, rather than railing against Board volunteers, is the path to success.

Tuesday, December 3, 2013

Actions Speak Louder

When homeowners contact the management company or the Board of Directors to lodge a complaint, instead of dismissing them, ask them to volunteer for a committee. This gives them a constructive outlet to be part of a solution on something they are passionate about.  Sometimes in serving on a committee, they discover their complaints are not as valid and what they are trying to accomplish is not as easy as they originally thought; but at least they were provided the choice and know that they were heard.

Boards are typically empowered by the governing documents to appoint residents to serve on committees.  Although it may not be detailed in the governing documents, members of the same household serving on a committee could be considered a conflict of interest, so Boards will usually steer clear of making such assignments.   If a committee member is not doing his job or takes action that could jeopardize the Association, the Board has the ability dismiss this volunteer.

These committees then appoint a chairperson to run meetings and report back to the Board.  Examples of committees are Architectural Control, Finance, Landscaping, Pool and Social.  There are also temporary committees (called ad hoc committees) that are developed for specific purposes or special projects, such as a Budget committee.   Each committee has its own budget which is submitted to the Board for approval annually.

Now for a few examples of concerned homeowners being asked to serve on committees:
One homeowner who had been on the lease waiting list for five years asked if the covenants could be amended to increase the number of homes permitted to lease at any one time.  With the Board’s blessing, she was permitted to send a survey to the community to see how many people were interested in amending the covenants, before the Board went through the expensive and arduous process of getting an amendment passed.  Because of this exercise, the homeowner felt the Board understood her concerns, and she learned first-hand how hard it is to be get people to respond.  In addition, many that did respond were opposed (for various reasons) to changing the covenants.  The matter was dropped. 

Another homeowner complained on how the money was spent and the amount of the assessments.  He was invited to serve on the budget committee.  Despite several attempts to reach him afterward by both the Treasurer and Community Association Manager, he was never heard from again.

A truly legitimate concern calls for a truly legitimate action on the part of the person identifying the problem.  While some homeowners only wish to complain but not help resolve issues, making it a standard that all challenges will be meet with an invitation to a committee will reduce needless negativity and help those who agree to volunteer to gain a better understanding of how and why Associations operate as they do.  

Tuesday, November 26, 2013

Building Harmony

For Community Association Managers, often the largest and most intense parts of the job are enforcing the covenants, design standards and rules of the community.  Even though every homeowner signs a document acknowledging these regulations at the time of a home purchase, it is a daily struggle to enforce rules with some owners.  Most homeowners are great people to work with; however, there are always those “special” situations that are over the top.

In one Atlanta community, the Association has a rule stating no outbuildings are permitted.  A homeowner made several modifications to a property without approval, including installing an outbuilding.  Upon learning of this, the Association asked the homeowner to submit the modifications for approval to the Architectural Control Committee (ACC) (some communities call it an ARC).  As you may guess, the ACC approved the modifications that were within community standards but disapproved the outbuilding.  The homeowner attended an appeals hearing with the Board of Directors, as is often required in most Associations, where he made an impassioned plea to keep the unapproved outbuilding.  The Board reaffirmed the ACC decision to disallow the outbuilding as it did not meet community standards. 
After some time and many letters, the Association filed suit against the homeowner for removal of the outbuilding and damages.  So what makes this situation over the top?  It took over seven years to reach a resolution on this situation!  The outbuilding is now gone and has been replaced by a structure acceptable to both the homeowner and the Association.  The unfortunate outcome is the incredible amount of time and money involved in reaching this resolution, along with the needless stress everyone experienced. 

Lessons?  As a homeowner, it is very important to know and follow the rules of your Association when making any modification to your property.  Simply following the rules in this case could have avoided this entire confrontation.  As an Association, you need to be proactive in resolving disputes.  Be clear on why something is a violation and why it cannot be allowed to continue.  Try to drill down to find the heart of the dispute and work with the owner to find a satisfactory resolution for all.  Unfortunately, a situation like this cannot always be avoided, but in most cases it can.

A decade ago, another Atlanta community had a dispute with a homeowner over flagpoles.  The community rules explicitly stated, “No flagpoles in the front yard”.  The flagpole in question was installed without approval.  The Association required the removal of the flagpole.  Even given the protection of the right to fly the United States flag and the pitched patriotism in the midst of wars in Iraq and Afghanistan, the Association was able to obtain removal of the flagpole. 

Fast forward several years:  Same community, same rules, same situation; much different result.  The Association went to court on the second flagpole case and lost; the flagpole was allowed to stay and all accumulated fines were removed. 

Lessons?  Association rules may tread on the rights of citizens.  It is also true that citizens have the ability to relinquish some of their rights as is done when someone buys a home in an Association.  That being said, rules should be carefully reviewed with a critical eye.  Any rule that could be controversial or sensitive should be well considered. 

In this situation, fighting a veteran flying a flag is certainly not ideal and other options should be considered:  Alternative ways of flying a flag, such as on a pole attached to the house or on a porch, or perhaps determine a way to have flag poles as a harmonious part of an overall landscape plan. 

Proactively harmonizing regulations to reach key goals that enhance the community should be what every Association strives for.  

Tuesday, November 19, 2013

Hard @ Work

Do you know what your covenants say about home-based businesses?  Although covenants vary, most address the topic of commercial activity under the “Use Restrictions” section of the Declaration.

In this economy, homeowners have been very creative about how they earn a living.  Some are able to telecommute and others provide services that require them to store equipment or inventory.  Let’s not forget about the industrious stay-at-home mom who brings in a little bit of extra income on the side selling kitchen tools or adorable kids’ clothes.

This begs the question:  How do you know such business activity is taking place and does it comply with the covenants?  Often the covenants allow for a business so long as it is not visibly apparent to the community or there is not excessive traffic by clients or suppliers to the home. In other instances, the covenants allow Board of Director discretion when determining what is and isn’t acceptable.

When a home business grows into something more than what a house can contain, it’s time to address the problem with the owner.  What began as a favor for a sister-in-law turns into a full blown day care?  Is there excessive parking on the street from those piano students’ parents? Are employees coming to the home on a daily basis?  In all of these cases, other violations can stem from the original use-restriction of business activity.

If a homeowner becomes resistant to following the covenants in the name of earning a living, the board should first address the problem with a violation notice.  If that fails, the next step is to use any fining provisions in the covenants.  Another option is to seek help from local authorities, such as county code enforcement, the environmental health department or the business license office in the local city or county.  In some instances such as child care, even state agencies, such as Bright from the Start, can be involved.  The Board may also opt to sue for injunctive relief.

If a Board fails to act and the home-based business owner is causing a nuisance to his or her neighbors, these neighbors have the option of enforcing the covenants by taking the owner to court themselves. As long as there are deed restrictions on the property that haven’t expired, these will be enforced the judicial system.

Home-based business regulations drafted twenty years ago need to be applied in a fair and consistent manner that fits with today’s reality.  Balancing neighbors’ expectations with a homeowner’s livelihood requires a solution that is fair and respectful for everyone.

Wednesday, November 13, 2013

Making Amendments

Amendments to Association Covenants and Bylaws are very important for keeping up with the needs of a community.   Every community is unique, so it is important that the Community Association Manager (CAM) and Board of Directors monitor for situations where an Amendment may be beneficial.  This is especially true with older communities.  Because of court cases, Association attorneys are constantly refining the standard language that should be included in governing documents.   Another goal in updating documents would be to make them more user-friendly - as many older documents have provisions couched in confusing language.

When considering an Amendment, the CAM and Board of Directors must be sure to cover all bases of the logistics of drafting and presentation.   The most important item to review is the voting process required for passage:  Many Association documents require at least two thirds of membership approval for adoption.  Another important consideration for HOAs and townhome communities is the Georgia’s Property Owners Association Act or POAA.  The POAA is a legal structure drafted specifically for HOA’s to provide protection and enable them to enact critical Association functions not secured under common law.  If your community is not already under the POAA umbrella (not applicable to condominiums), make this a part of your amendment package.  It should be enacted prior to any other Amendments you consider.
Your Amendments should cover all needed updates at once:  Obtaining member approval is a huge undertaking, so it’s important to get the documents as updated as possible - at one time.  For example, if an Association knows that it needs to update its leasing provisions or wants to be in compliance with lender requirements, don’t just stop at that one Amendment.  Contact your Association attorney to do a full review and provide recommendations of other items that may need updating.  Each Amendment item can be voted on separately by the membership, but have the choices listed together on one ballot!

The toughest part of the process is getting people to actually cast their ballots.  Homeowners often don’t want to take the time to read through the Amendment paperwork.  Include a cover sheet that sums up each Amendment, hold special meetings to educate homeowners on each Amendment, and start an Amendment Committee to reach out and encourage homeowners to read over this important proposal, as it will affect each and every one of them.  This will require a Board or committee going door-to-door to remind, answer questions and collect votes.

As an Association, take the time to periodically review items brought to your attention and ask yourself if each of these are enforceable, how they would ideally be enforced, and how often they may arise in the future.  If the same situation comes up on a regular basis, it may be time to think about an Amendment to address it as a unique community need!

Tuesday, November 5, 2013

Violation Notices

Other than paying assessments, the most common reminder that one lives in an association is receiving a letter specifying a needed home maintenance action.  Pointing out contractual obligations can appear confrontational or seem to be a personal attack, more so because we are dealing with a person’s private living space. 

Community Association Managers perform inspections per an Association contract, with direction provided by the Board.  Communities without land covenants, or communities with unenforced covenants, often end up dilapidated, driving down home values.  Property reviews help identify improvements needed to increase aesthetics, keep up property values, and ensure that everyone, including homeowners, are doing their part in the community’s success. A well-maintained community also encourages neighbors to remain current on their assessments.
If the community has not been consistent with its inspections, it can be a very time consuming and challenging process to get the community back into shape.  This is even more difficult if there is no ability to fine or perform self-help (meaning that the Association comes in and performs work on the home, and bills expenses back to the homeowner).  In these instances it is a good idea to amend the governing documents to establish consequences for non-compliance.  Without consequences, notifications will be ignored and homeowners are much less likely to correct violations in a timely manner.   If your community finds itself having to start from scratch, the first action should be to provide a community-wide announcement, setting a date for enforcement activity to begin.  This announcement should list the most frequent violations, so that all homeowners can self-police.
This property review process requires the use of a formal violation notices.  Due to a recent Georgia court decision, it is recommended that the violation log be formally approved by the Board at each meeting.  Compliance letters prevent confusion and provide protection against challenges.  Such notices should carefully detail the violation and provide a solution, so homeowners may easily resolve a situation.  In contentious cases, you may need to file notice in the courthouse land records, so a prospective home buyer is made aware.  Otherwise, the new owner could potentially be exempt from addressing a violation left by the seller.  Another consideration is the two-year statute of limitations.  The clock starts ticking when the violation occurs, not when it is discovered.  If two years pass without the situation resolved, the violation may be unchallengeable.

When receiving a violation letter, a natural response is to look and see if neighbors are being cited for the same issues.  Ensuring everyone is held to the same standards is in the best interest of all – the homeowners, the Board, and the management team. If homeowners have confidence in an impartial process, they are more likely to respond in a positive fashion to violation notices.  Inspections are just a snapshot in time, and the manager is not aware of personal circumstances that may impact compliance.  If someone receives a violation letter that he feel is unwarranted, he should contact the manager to discuss.  Managers are reasonable people, and will work with anyone in the midst of a hardship or special situation.

Wednesday, October 30, 2013

Creepy Crawlers

“When I read how many thousands of dollars a city like New York has to spend to keep underground water pipes free of ailanthus, gingko, and sycamore roots, I cannot help but give a little cheer.  After all, water pipes are almost always an excellent source of water.  In a town where resourcefulness and beating the system are highly prized, these primitive trees can fight city hall and win.”  - Annie Dillard

This quote is from the amazing 1972 memoir (and Pulitzer Prize winner) Pilgrim at Tinker Creek detailing how surrounding survival can be frightening.  Nature competes for resources and we are thick in the battle.  Whether in city government or community management, battling with Nature sends shivers down the spine of the person managing a budget or making a community livable.

Consider these actual Atlanta-area occurrences:

“Water is coming down my dining room walls and out of my chandelier.  It started as a trickle and now it is pouring.”  Source of the problem:  rats made their home in the ceiling, licking the condensation off of the sprinkler pipes.  As the population grew, the condensation was not enough, so the rats chewed into the pressurized pipe.  Vendors paid to track down and resolve this issue included a plumber, fire protection, water damage mitigation, flooring, painter, electrician, insurance and wildlife management.  

“My neighbor’s house sounds like an engine.  I see bees coming and going from a small hole in the siding.”  Issue: Bees founded a honey hive in the space between the siding and the wallboard.  Besides hiring wildlife management to carefully remove the bees and get rid of the hive and the honey, contractors were needed to replace insulation and wallboard sections, repaint the room, and patch the exterior entry hole. 

“I have about a foot of sewage in my townhouse that has flowed out of the toilet.”  Problem:  the sewer line was filled with small roots coiled inside and around the pipe, blocking all waterflow.  After calling out the plumber, vendors were needed to mitigate the sewage, install flooring, replace and paint wallboard, and restore or replace sofas, chairs, and antique dining room furniture. 

Other actual incidents:  A window crashing through wall studs weakened by termites, a fire burning a townhome due to mice-chewed wiring, allergy sufferers discovering squirrel or bat infestations…  

Proactive prevention and early detection are keys to fighting a seemingly invisible force.  Partner with plumbers, pest control providers, wildlife management specialists and arborists to work on plans.  Prevention budgeting is cheaper than fixing problems after the fact, and a lot less stressful for all:  Raise community awareness so we can all avoid becoming nature’s next “victims”!

A special "thank you" to Terrence Spires with Team Pest USA and Dawn Shaddix with Northwest Exterminating for providing the pictures used within this post!

Tuesday, October 22, 2013

Don't Forget to Follow-Up!

A backyard discussion between a homeowner and Board member turns into a screaming match about the owner's newly-installed patio deck.  Sound familiar?  Home modifications are highly-personal issues and the best policy when reviewing architectural modifications is to conduct comments in a neutral, formal setting.

After the review committee approves a home modification - such as installing a fence, replacing the roof, or adding a garage - the final step in the process is to confirm that work matches community expectations.  Normally a member of the review committee (or perhaps a Board member) meets with the homeowner on an evening or weekend.  If a problem is spotted, there may be a brief discussion, but any escalation must be avoided.  The reviewer should politely excuse herself and notify the community association manager to document problems in a letter to the homeowner.  This letter includes details for a homeowner hearing, where cooler heads work through expectations.

Sometimes a Board of Directors wishes to contract with their management company to handle follow-up inspections on home construction projects.  Before taking this step, consider the following:

1.  Depending on the complexity of the project, the manager may not identify construction items that were priority issues for the review committee.  Something as simple as a shade of paint color may appear acceptable to the manager but not the committee.  Once approval is granted, reversing can be difficult since management is an agent of the Association.

2.  Aggressive Boards may decide to combine management architectural inspections with the regular community compliance drive-through. Entering a person's yard unannounced has led to safety issues and criminal trespass charges being filed.  Although the Association may prevail in court, insurance will resist reimbursing the thousands of dollars (in excess of the deductible) in legal defense spending.  Even if a judge does choose to award legal fees to the Association, attempting to actually recover these from the homeowner presents its own challenges. 

3.  Although the Association (and its agents) may have a right to enter particular areas, this should only be done in emergency situations or with advanced homeowner scheduling.  Fencing and pets restrict easy access.  This leads to costly special arrangements for the manager to meet the homeowner during non-business hours, or making additional visits outside of the management contract.  Is it in the best economic interest of the community?

The final step of architectural review does not have to be unpleasant.  Establish clear expectations upon receiving an application.  For unauthorized changes, immediately issue a written notice to cease work.  Otherwise, a court may block the Association’s attempt to reverse the work, particularly if the home improvement was expensive and the Association failed to speak up early in the process.  Always remain cool, no matter how contentious.

Maintaining a consistent and visible review process deters unapproved modifications and provides respectful resolutions for a very personal matter:  Home improvement.

Tuesday, October 15, 2013

Under Development

Access Management Group received the following message from a homeowner living in a developer-controlled community (that we do not currently manage):

I am a concerned resident at the ABC Homeowners Association.   I was under the impression that the recent Annual Meeting was to discuss the budget.  Instead, it was a hodgepodge of resident complaints, an attempt to dispel rumors and issues related to the turnover and an attempt to clarify who and what the developer is responsible for and what the county and the residents are responsible for as it relates to the turnover.
I recommend that we have a series of annual meetings each year, with one specifically addressing the budget.  In that meeting the residents would review the budget line by line.  The other meetings could possibly cover specific homeowner concerns.  
I do not in good conscious approve the proposed budget.  In order to prevent the residents from this sub-division from going into debt, I am proposing a "secured funds" budget.  Using only those funds received between the day the HOA assessment notices are mailed to residents to the day the pool opens each spring.  Those funds received after the pool opens to year end, and funds from previous years would be placed in a "Catastrophic/Emergency" fund in the event of a major sub-division crisis.
I am also asking for guidance in how the budget is created, developed and implemented by a vote of the residents and proposing a change in the charter or governance of how the budget is created, developed, implemented and approved as outlined above.
Our response to this homeowner was as follows:

Thank you for reaching out to us.  As we weren’t in attendance at the meeting and do not directly manage the community, we can only speak in general terms about processes and procedures, and defer to your community manager to answer particulars.
Our understanding is that your community is still under developer control.  If this is true, the process for budgeting is limited:  The developer may construct a budget with or without the input of appointed homeowners.  The developer has final say in the nature of the budget, and is not obligated to hold in-depth discussions or justify processes.
Once control of the association has been turned over to the homeowners, they may elect Board members responsible for drafting future budgets.  This Board may choose to establish a temporary budget committee composed of a few homeowners to put together a proposed budget, but it is ultimately the Board that has the final say.  A budget committee is the appropriate forum for the line-by-line review as requested in your letter.
While the Board may choose to call for a community-wide budget meeting, this is not part of the annual meeting, which is reserved for only high-level business items (electing Board members, and possibly a community vote on budget approval if the documents permit it).   The annual meeting usually lasts perhaps an hour, as is not designed to tackle contentious issues.  It is the one meeting most homeowners choose to attend each year, and the best way to drive up community apathy is to host unpleasant annual meetings.
In many communities, only the Board votes on the budget, with homeowners having the option to vote it down only if a majority of all homeowners call for a vote and vote against it.  Again, your community manager will be able to address particulars on your association’s budget.
Homeowners and Board members frequently do not have a frame of reference for what is “normal” when running a community association.  When working up a solution for a problem in your community, it is always best to first gather information about the typical processes and procedures observed elsewhere.  A great venue for gathering this information is to attend meetings hosted by Community Associations Institute (CAI) –you can use the internet to locate a chapter of this organization operating near you!

Wednesday, October 9, 2013

Pay Up! (Or At Least Budget For It)

Boards of Directors often wonder how their community's budget compares with those of other communities.  They face constant pressure to keep assessments low, to the detriment of reserve (capital project) accounts.  Anemic budgets are then further aggravated by the issue of homeowners not paying their assessments. Delinquencies are the driving factor when forecasting next year’s budget!

Reviewing nearly a tenth of the communities in the Atlanta Metro area (of the approximately 3,000 homeowner associations/condominiums in this region per the Georgia Secretary of State) yielded interesting results.
Communities like to spend as little as possible in collection activity, but even when plans call for only spending one or two percent of the annual budget in this area, a community often ends up spending between four and six percent.  For communities with very high nonpayment rates, it is common to see ten percent or more of the budget allocated to collections.
When it comes to delinquencies (defined as a homeowner past due at least $500), there was no correlation between size / type of community and delinquency rate.  While a handful of communities had zero delinquencies, the majority are experiencing between seven and twelve percent of their homeowners in arrears.  Some communities actually are running above a seventy percent delinquency! 
Obviously, this situation was exacerbated by the Recession beginning in 2008.   Reviewing data trends from 2008 through 2012 revealed that:
  • At the start of the recent Recession delinquencies typically ranged between 3 to 15%
  • In 2012 this range had increased to between 3 and 38%
  • Annual budget increases directly impacted delinquencies & home value
    • Those Boards that continued to increase budgets to keep up with inflation (3% to 5%) resulted in an average 10% drop in home value
    • Those Boards that chose to freeze all increases saw an average 18% drop in home value
    • Communities that slashed budgets by 5% budget averaged a 25% drop
    • A 10% decrease averaged a 33% drop in home values
    • Compare this to the Case-Shiller Index in 2012, showing a drop of 39%
    • Deferred maintenance, neglecting curbside appeal and faltering collections lead to these results

As of September 2013, the average (both mean and median) delinquency rate for condominium homeowners was $4,800.  Surprisingly, those living in detached single family homes also showed high delinquencies:  The average mean was $3,145 / median was $2,585 for delinquent homeowners.  266 homes were identified as owing over $10K, with 42 of these owing over $20K.  Delinquencies in some homes exceeded $60K!
In light of the above, it is critically important that Boards budget for nonpayments to avoid shortfalls in their communities.  Money not set aside for this contingency will result in neglecting maintenance needs, or requiring the use of special assessments or savings set aside for capital projects, which is never a good choice.