Tuesday, January 21, 2014

Board Behavior

Perhaps the most stressful part of Board service is dealing with confrontational situations.  Few people are professionally trained to deal with a screaming irate person, so how do the rest of us cope?
The key is letting the upset individual see he (or she) is being heard and that his concerns are being taken seriously.  This requires Board members to develop the habit of approaching situations in a calm, measured and seeking manner.  You can avoid jumping to incorrect conclusions by:
  • Resisting the surge of instant irritation when someone suggests you are wrong.
  • Thoroughly exploring the issue and waiting until emotions have settled.
  • Using impersonal phrases. Instead of saying “It’s obvious to me that…” say “One possible position is that…”
  • Avoiding an opinion on anything where you don’t know the other side’s argument better than they do.
  • Engaging those of contrary opinion, tactfully encouraging their objections.  Resist the instinct to ignore or argue. Instead rephrase these objections to be sure you understand them.
  • Striving to test or “prove” the opposing view, rather than just looking for ways to defend it.
  • Walking in that other person’s shoes.  Actively play devil’s advocate and argue against yourself as strongly as the unhappy person would.
  • Abstaining from forming an opinion where some information may be missing. Be comfortable saying, “I don’t know.”
  • Avoiding absolute certainty by indicating the degree to which you are certain about an issue. Most decisions should be provisional, based on what information is available at the time.  If circumstances change or new information comes to light, be open to revision.
  • Challenging what is generally accepted or assumed as true. Core beliefs help provide identity and the comforts of clarity and certainty, but these can limit the exploration of solutions.
  • Asking “What other options are there? What have we missed? As opposed to/compared with what?”
  • Being selective or strategic in questioning, targeting claims or positions that are worth challenging, whose rejection may have important or useful implications.
  • Putting extra effort into searching for courses of action outside the standard or obvious ones.  
  • Developing new, mutually acceptable solutions rather than haggling over existing positions.
  • Asking, “What’s the worst thing that could happen here? What’s the best thing?”
  • Looking back from an imaginary future, having discovered that your current position was wrong.  What do you see then that you are missing now?
  • Admitting past errors.  Sometimes we’ve painted ourselves into a corner with a previous decision, and pride gets in the way.
Remember:  Others not directly involved in a particular dispute are watching to see how the Board conducts itself.  Respect and trust, along with credibility and goodwill, will grow among your neighbors as they observe you conducting yourself in a professional manner, making future challenges easier to navigate.

Tuesday, January 14, 2014

Proxy Pox

In the midst of the annual meeting, one homeowner stood up and challenged the practice of homeowners collecting ten, twenty or thirty proxies and conducting block voting for electing members to serve on the Board of Directors.  While a few homeowner associations do restrict the number of proxy votes (perhaps to just two or three) a person may cast, most do not.

This is because of the other part of the equation that needs to be considered:  Quorum.  A quorum is the minimum number of homes that have to be represented in order for the community to conduct business.  If not enough owners are represented in person or by proxy, elections cannot be held, leaving the current Board in place.  This possibly leads to Board members selecting their own replacements without homeowner input.

The required quorum percentage varies widely.  Communities with more homes tend to have lower thresholds, while very small neighborhoods may require 50% or more of their membership to be present.  A 25% or 33% quorum is typical.

Very often quorum cannot be reached without large numbers of proxies being collected.   If quorum is reduced to a low level and proxies are capped, an avenue is created permitting a few discontented homeowners to frequently change the composition of the Board.  Careful deliberation is impossible in such an environment, and very little community business is able to be conducted.                

In one community of 200 homes, the quorum requirement was 5% of eligible (non-delinquent) homes.  Because of delinquencies, only 150 homes were eligible.  This meant that 7.5 homes, rounded up to 8, were required for quorum. 

Because of the high delinquency rate, the Board implemented a firm but fair collections program.  A group of five delinquent homeowners paid off their debt, met the requirements to demand a special meeting, and ousted all Board members, placing themselves in charge.  Their first order of business was to fire the collections attorney and management company, and then proceed to gut all other services, with the goal of slashing assessments in half.  Many homeowners, not considering the long-term impact of unrealistically low assessments, did not challenge these actions.  The result:  It was many years before any quality vendors would agree to work in the community, and less-savory vendors took full advantage of the situation.  Property values rapidly deteriorated along with the infrastructure.  It took the threat of condemnation by the county before homeowners took steps to reverse course.

While the above is an extreme real-life example, similar results occur with other communities operating under low quorum requirements.   Ultimately, everything boils down to apathy, the final part of the equation which must be balanced out with the right mix of proxy usage and quorum threshold.  With the advent of electronic balloting and social media, perhaps this mix can be adjusted, but communities should move carefully in tweaking voting regulations.   

Thursday, January 9, 2014

The Value of Rules

One of the benefits of living in an Association is the enjoyment of amenities at a cost that is also shared with your neighbors. The amenities and other shared spaces are referred to as the "common areas". The governing documents and rules and regulations establish how residents are expected to conduct themselves in these "common areas". Some common restrictions relate to pets, trash cans, smoking, and parking.  These exist to promote a harmonious quality of life for the community - so that everyone is able to enjoy the shared amenities!   Examples include:


In many communities pets must be kept on a leash, owners must pick up and properly dispose of excrement, and excessive pet barking must be curbed to acceptable levels. Off-leash pets pose a threat to everyone, as the owner no longer has control over the dog’s actions. The pet may dart away from the owner and get struck by a car or attack another pet or person. Owners are asked to utilize specific areas to allow their pets to use the bathroom and to pick up after their pets. Besides being unsightly, smelly and offensive, pet excrement harms landscaping and contaminates groundwater. Contrary to popular belief, pet urine is not “good” for the landscaping. Social media guru Garth Johnston states the following in his blog “While urea is rich in nitrogen, and plants require nitrogen for leaf growth, urea is also rich in salt. Remember Carthage? The Romans salted the earth so that no crops would ever grow again. Salt sucks moisture from leaves and roots alike and kills beneficial soil microorganisms. Next time you’re in any park, look at the shrubs at the entrance and on corners; they all have a sad brown arc of dead leaves at the base.” This is due to the fact that this spot is usually a pet favorite when entering or leaving a park. 


Trash cans left outside well beyond pick up time are not attractive and detract from the overall appearance of the neighborhood, sending a message that the community is unmonitored. This encourages a rolling snowball effect, as the area becomes a trash magnet, branching out into other issues such as graffiti.  Untamed trash cans can become a hazard if they are left tipped over in the street. It is important for community members to know when trash pick-up days are and what is acceptable to be left on the curb.  Related to this topic, the placement of unauthorized items in the common area also detract from the overall appearance of the neighborhood.


A common issue in condo and townhome communities is the transference of odor into the common areas and neighboring units. While this is largely a neighbor-to-neighbor issue the Association is sometimes asked to intervene in extreme cases. The governing documents for communities typically have language about the right to “quiet enjoyment” of one’s home and go on to address offensive odors or obnoxious behavior. The smoker’s right to smoke is equal to the non-smoker’s right to avoid exposure. It is important for smokers to take steps to eliminate odors through mini-air filtration systems, frequent filter changes in the primary HVAC unit, purchasing upgraded filters, or the incorporation of outdoor smoke breaks.  Some legal challenges have started cropping up where owners sue neighbors over this issue.

Parking is often a challenge in communities. Parking guidelines are designed to allow continuous ingress and egress through the community. Improperly parked cars that impede flow and usage are not only an inconvenience but often pose a safety hazard. Limited space available for visitor parking at clubhouses and in condo communities also poses challenges. Frequent communications will breed familiarity with the parking guidelines, so homeowners make the appropriate arrangements for their guests.

Living in an Association provides each home with certain rights and responsibilities. It is crucial for the Association to educate the members about rules and regulations that govern the community. When the majority of the membership is educated on the rules and consistently observe them, property values are positively impacted for everyone. At the end of the day, the rules are in place to protect the investment and enjoyment of all residents within the community, and therefore should be taken seriously.

Friday, January 3, 2014

Financial Reversal

As Community Association Managers, we have experienced some interesting economic times in the last several years. The slump in the economy has placed a real strain on everyone, including the Homeowner Association sector. People are deciding which bills they are going to pay first:  “Am I going to pay the mortgage or pay my HOA assessment bill?”   The HOA bill typically goes to the bottom of the pile. This shifts the financial strain from the individual homeowners onto the HOAs themselves (think about the compounding effect of a number of non-paying homeowners within one HOA), forcing the HOAs to tap into reserves.  In many cases they are depleting these reserves completely, leaving no wiggle room when trying to tackle unexpected projects or disasters that come up, let alone the regular monthly bills.  This is a frightening reality for many associations today. 

There are several keys to making sure that you are doing everything you can to recover the funds that homeowners are failing to pay to the association:  
  • Staying in constant contact with the association’s attorney is critical.  Even though they may say they are handling your collections, issue frequent email communications just to make sure things are not going off track.
  • Only send over the amount of accounts you can afford. If you send every delinquent homeowner over to the attorney at once, you may end up over depleting your funds. As each account is collected and you have received the money for these accounts, send one or two more over to the attorney.
  • Have your HOA board set a consistent collections policy. Most attorneys suggest an outside cap of two years for filing liens and three years for filing suit - because after four years you cannot collect due to statute of limitations.
  • Work with the attorney on some kind of deferred fee or advanced contingency plan. Both of these actions typically charge the attorney’s fee back to the homeowner and keep the financial burden away from the HOA.
  • If the homeowner asks for some kind of payment plan, have the board accept a plan that is reasonable enough for the homeowner. Six or twelve months are typically considered to be reasonable payback periods.
  • If the homeowner asks for a settlement, see if there are any fines on the account that can be removed, especially if all violations have been corrected. Since fines are circumstantial and may not survive a court challenge, this becomes a great bargaining tool. Homeowners see this as an act of good faith on the board’s part. Not only will you collect your money, but positive public relations make this a win-win situation.

Besides collections, review your community expenses and see what can be cut. A prime area is landscaping.  If you can get away with not using the landscaper during the winter months, then do so. Tall grass is the biggest landscaping eyesore and since grass does not grow in the winter…   Shutting off the sprinkler system, especially during the winter months is another way to cut expenses.

These are just a couple of the many ways you can tackle financial woes when your HOA hits financial lows.  Some associations that were completely “broke” a few years ago now have tens of thousands of dollars in the bank. It can be done – Don’t give up hope!  There are solutions and as always, Access Management Group is here to help.