The individuals who serve their association in an elected capacity are an absolute cross section of our society. Some people have had extensive business experience, which can be helpful. While others have no experience at all, which in some cases can be just as helpful.

There is no real practical experience or training that will prepare anyone for being on the board of directors of an association. It is a unique business in that you are dealing with friends, neighbors and a group of very different personalities. For the inexperienced, there are common mistakes in administering an association. Some mistakes can be rectified through education and practical experience. Most can be solved with a lot of common sense and on-the-job training.

The most common mistakes for new association officers and directors are the following:

• Not being familiar with the association documents and state statutes. Many owners may be aware of the rules and regulations but not the declaration and bylaws. These documents set forth how your association will be administered and governed.
• Many board members are unaware of their personal liability while serving on the board of directors. Certain decisions and actions by the board can result in litigation, and the Board may be held accountable on a personal basis. Being aware of this may help some to act more judiciously. As a director, you have a fiduciary responsibility to all of the unit owners. Rely on an attorney who specializes in association law, and your professional community association manager to guide you.
• Some new Board members will selectively enforce rules while ignoring others who may be violating the same or different rules. This is not only unfair but it can also warrant legal action against the association.
• Many new board members are unaware of the community association manager’s true function. If there is a management company just what is its contractual responsibilities? Being unaware not only creates friction but also hinders everyone from performing their jobs efficiently. I suggest having the board meet with their respective managers, review their job responsibilities with them and talk about the way the board would like to interface with them or their firm.
• Some officers and directors are unaware of their specific responsibilities. Actual job descriptions can clarify these duties. Usually, the association bylaws will provide a “job description” with a list of duties.
• Conducting association business and meetings in private can get some boards in trouble. Check your documents and state statutes to make sure you are not in conflict with open meeting requirements.
• Directors may be unfamiliar with standard insurance coverage requirements. This one single area will produce most of the litigation against an association, especially if the association is not properly covered.
• Some board members may be unfamiliar with requirements for reserves for capital repairs and the calculations of same.
• Some directors may be unfamiliar with standard accounting practices and procedures. Allow someone with knowledge in this area to take the responsibility for this all important area.

This list is comprised of only the most common mistakes that seem to be repeated by new officers and directors. They are all correctable and with the right experience and guidance, can all be conquered.

Marc Rodriguez, CAM

Assistant Director of Management Services

Know the neighbors in your community association and speak to your children.  Meet your neighbors and be involved in the community.  Generally speaking, we all know or recognize our neighbors and residents in the community.  Likewise, we probably recognize elements that may not belong and could be up to mischief.  Communicating with each other is the key to recognizing possible problems.

Light up your neighborhood and encourage your neighbors to do the same.  Creating a well lit environment can discourage unwanted elements.  If you live near a park or a large area like a parking lot or even a bus stop, people tend to congregate.  Watch how a little light can discourage loitering in the area and make your community more secure.

Did you know that some electric companies will actually file a police report for vandalized equipment?  In Hawaii, when a homeowner contacts the Hawaiian Electric Company (HECO) command center to report a vandalized box, the electric company will not only repair it at no cost to the community, but they will document the property damage with photos and generate a police report.  If the box has graffiti, they will clean and repaint the HECO box.  Check with your electric supplier to inquire of their policy.

Encourage our children to take pride in the community and the common area that you pay for.  Communicating and teaching responsibility to our children in the community will pay dividends in the future to keep our community safe, clean, and maintained.  Please make sure our children know the rules in the community and encourage them to prevent other youths from causing trouble or vandalizing the neighborhood.  Keep in mind, the more money spent in cleaning and repairing vandalism means less money contributed to your household.

By following these simple tips we can keep our community safe, clean and a place to be proud of.

Barbie Hatcher, CMCA®
Vice President
Associa Hawaii

For more ideas on how to build a safer community, visit www.associasupportskids.org and www.nno.org.  Associa is a national sponsor for the 2013 National Night Out program.

But how does the board know how much money they should be putting into the association’s reserve fund? A professional Reserve Study will answer that question. A Reserve Study identifies all the building and ground components that are the association’s responsibility to maintain, measures each of them, assesses their condition, projects a useful life and repair and replacement costs. All this information when projected out with an inflation factor over the long-term (e.g. 20-30 years) provides the board with a road map to follow for the funding, replacement, and repair of the association’s common area components.

Over the years, boards have used various funding options for replacing or repairing common area elements: periodic assessments over the life of the assets; special assessments at the time of the actual replacement; borrowing funds when needed; or a combination of these options. Funding reserves by monthly contributions is the only fair way to address this need. Special assessments penalize those that have to pay them since former owners were able to use and enjoy the amenities without contributing to long-term repair and replacement needs. With a reserve plan that is funded monthly, each owner contributes his or her fair share based on the length of time of ownership. And more importantly, the association has money in its reserve fund when needed.

Professional reserve studies are designed to eliminate special assessments by ensuring that sufficient funds are available when property components need to be repaired or replaced. Elimination of special assessments offers peace of mind to owners and reduces claims of financial mismanagement. Unfortunately, many associations have fallen victim to boards that have failed to adequately plan and save for the inevitable repair and replacement of association property. So those with immediate financial needs resort to financing projects with special assessments or loans.

One must refer to the association’s governing documents to determine if the board has authority to pass special assessments or to borrow funds, or if special assessments or the borrowing of funds requires approval by the membership. Selling homeowners on a special assessment is not a small or easy task.

Special assessments affect only the current property owners, regardless of the amount of time of ownership. Many owners view a special assessment as just a higher expense for them personally, and not in terms of the greater good or need for the repair or replacement. Apathy often runs deep. The board’s hands may be tied and very necessary repairs may go undone for lack of funds. Deferred maintenance has the potential for increased costs down the road, such as mold abatement required as a result of deferred maintenance on leaky roofs. If the board cannot garner sufficient member support to pass a special assessment after careful planning and case making, the facts should be documented in the next board meeting minutes.

When new board members inherit a property without proper reserves and are then faced with many items in need of repair or replacement and there is a severe lack of funds for such, the board needs to arm itself with as much information as possible before approaching the ownership with the issue. A professional reserve study is a great way to assess the overall situation in detail. Although the reserve study can be costly, it provides the board and owners with a true assessment from an outside professional of the condition of the property and the elements for which the association is responsible to maintain.

The overall appearance of the community translates directly into its property value, which is a leading factor in members’ satisfaction with their community. Also, lenders look for signs of financial health when reviewing mortgage applications. Communities with inadequate reserve funds may find themselves at risk for mortgage denials.

Careful planning for the future repair and replacement of association assets is the board of directors’ fiduciary responsibility and it demonstrates good stewardship of the association’s money. There are reserve study professionals readily available to assist community associations in protecting the physical and fiscal needs of their communities for all the years ahead.

Leslie Freed, AMS®, CMCA®
Lewis Management Resources
Tucson, AZ

So, what are a few ways established communities can renovate and upgrade its green spaces?

Have a plan – It’s hard to know where to start if you don’t know what you want. Find a professional to partner with – an architect or seasoned contractor – and share your vision. Your partner will help you navigate the thought process by focusing on high impact areas first, then smaller areas. Breaking large spaces down into sections, prioritizing them and then figuring out what is needed is crucial – and the right partner will develop the plan with you, in order to achieve your vision.

Establish a regular program to replace plant material - Select new plants that tie in to your present landscape configuration. Also, choose plants that will bloom at different times of the year, so there is always some natural color around to brighten the view.

Replace shrubs - Shrubs have a relatively short life span – around ten years. They are often replaced or removed because of declining health or incorrect location. Consider replacing with drought-tolerant shrubs; they can thrive in either sunlight or shade, and also will bloom during the year.

Use ground cover - Converting small lawn areas or other greenbelt areas to ground cover, dwarf shrubs or tall grasses will often reduce maintenance and water costs. Associations with a well-conceived water conservation program can save money and better protect the value of their property.

Replace trees – Traditionally, communities planted Eucalyptus, Ficus and Melaleucas trees, which can grow large enough to crack curbs and gutters, lift sidewalks, and create hazards. When considering replacement tree options, research to find out how big the tree will be in 10 to 15 years, and the required maintenance. For example, trees that drop leaves in the fall mean more maintenance expenses.

Upgrade Irrigation - Old systems typically don’t provide much water conservation, while newer systems can be programmed to make every drop count.  Many communities have reduced water consumption by up to 20 to 30 percent. Your landscape contractor can help to design the best system for you with new sprinklers, a hose system with emitters, or smart clocks.
Landscape is usually one of the largest and often the most visual part of a community. Enhancing it not only brings enjoyment to your residents, but it’s an investment that can increase property values. Check with local landscape professionals for help with making appropriate plant selections.

Lucinda Hoe
Executive VP Property Services
N.N Jaeschke, Inc.

This article can also be found in the San Diego Daily Transcript www.sddt.com.  For green tips or to learn more about the Associa Green Award, visit www.associagreen.com.

Each new Board member brings a dynamic to the meeting that sets the tone for the operation of the Association. These new volunteers are, most of the time, homeowners who have a vested interest in the protection of their property values and the direction the community takes into the future. Each of them can make their role as important as they choose and become as involved in the Association operations as they desire.

The President obviously presides over the meetings and typically works closely with the Association’s manager. This role is an important one and usually the one that is most clearly defined. We all know that the President “runs the ship” at the Board meetings and takes a prominent lead with the attitude of the Board of Directors, which at times, can be a reflection upon the rest of the Community. It is primarily the President’s role to be the liaison with the management agent and this person can often be called upon in an emergency to make a quick decision. The President should be the solid voice of reason for the Community and extend a neighborly hand when tragedy or the unexpected strike the Community. Sometimes it is the President who leads by example and gets involved with the “Community Clean Up” day, for example. Clearly, this role is the most well established and easily determined role for the Board to recognize and respect.

The Vice President serves the role as President in the event the President is not available. However, other responsibilities for this position remain up to the person holding it. It could be the easy thing to do to sit and wait for something to happen and to jump up when called upon – – but as leaders of the community, it is important to set an example. So while the Vice President may not take center stage at the Board meetings, this role as well as the others can be equally as important as that of the President.

The Secretary and Treasurer are sometimes combined into one position or separated depending upon the requirement in the governing documents as well as the preference of the Board. The Secretary holds the responsibility of ensuring adequate notice is provided for meetings, quorum requirements have been met and the minutes of the meeting are adequately taken and maintained. The responsibility that comes with this role is not something to be taken lightly as the records of the Association are precious. It is a necessity to ensure that notices are sent in compliance with not only the governing documents of the Association but also the state requirements as well.

The Treasurer reviews the Association’s financial records, ensures timely payment of invoices, and makes necessary investments of the Association’s funds. The Treasurer also takes a lead role in the development of the financial budget. Clearly the importance of this role should not be overlooked. However, Treasurers may not become as involved with the financial operations of an Association if they don’t feel comfortable in this arena. On the other hand, the complete opposite may occur wherein the Treasurer becomes too involved or advises management of certain practices that could be completely out of line with appropriate business practices. Selecting a treasurer with an accounting background and good business judgment is essential.

In all cases, it is necessary for management to play an active role in the direction the Board takes and to help guide and direct the Association along the best path. Usually, Boards recognize the value of having professionals handle their day to day operations and of being in a position to offer their community the very best in experience and wisdom.

Each of the above roles can be as prevalent and responsive as the amount of effort one puts into them. The newly elected board member can take the position and run with it or not, but in all cases, the expertise of the management staff should be fully utilized. Such guidance is invaluable and a professional manager recognizes that there is nothing more important to an association member than protecting one’s home.

Heather Graham, CMCA, PCAM
President & CEO
Community Management Corporation

The trend in most communities today is an increased amount of deed restriction violations compared to a few years ago. This is largely due to the economic times, which have caused many homeowners to have difficulty in maintaining their homes.  This is a primary reason why it is so important to have a solid and effective Violation Procedure so that the standards can be maintained in a community.

As an HOA management company, one of the first items we review when managing a deed-restricted community is to review the governing documents, the architectural guidelines and any policies, rules and regulations relating to enforcement of use and deed restrictions.  Some of the key elements we recommend are:

• Review the governing documents to determine what the use restrictions are, as well as the authority of the board to enforce the documents and use restrictions;

• Review the architectural guidelines to determine the specific guidelines relating to exterior modifications, which also may tie into the use restrictions;

• Review the violation procedure for the community.  If there is not a formal violation policy, we recommend a formal violation policy, which includes a process for first violation letters, second violations letters, and a fining policy, if needed. The policy should also include a process for the homeowner to appeal the proposed fine to the committee and the Board of Directors if a fine is imposed by the Fining Committee.

Florida Statute 720 has language that permits an association to fine owners who do not comply with the deed restrictions.  The association may impose a fine not to exceed $1,000 and that fine of $1,000 or more may become a lien against the parcel.  It is never the intent of the association to impose a fine on the homeowners; rather, it is their intent to make sure the residents are maintaining the established standards of the community.  We always try to guide the communities on how important it is to have a strong violation procedure so that the standards can be met.  However, it is also very important to work with the residents so that they have an opportunity to meet those standards, even in difficult economic times.

A strong and effective policy would include the following:

• Procedure for inspections of the community by the management team
• First Violation Notice
• Second Violation Notice
• Proposed Fine Process and
• Appeals Process

In most communities, if a fine is imposed, we always recommend the chance to appeal to the board of directors.  The policy should additionally include the procedure when an owner fails to either correct the violation and/or pay an imposed fine.

Although the association may adopt a formal violation policy, their intent should not be to impose a fine, but rather to set expectations for the homeowners on maintaining the exterior of their homes so that the standards can be met.  As owners of the community, one of the association’s primary goals is to protect the investment of all owners and a key element in protecting these investments is making sure the community standards are met and maintained.

What Should the Homeowner/Property Owner do if they receive a Violation Notice?

It is important that if a homeowner receives a violation notice, they should first notify the management company of their intent to correct the violation.  In most of the communities we manage, we include a “Violation Compliance Form” that is to be completed and returned to the community outlining the plan of action the owner will take to correct the violation.  If the homeowner submits the violation compliance, it allows the association to understand that the homeowner is attempting to correct the violation.  Typically, if the homeowner does not provide the communication to the association, then the second notice or, most likely, proposed fine letter is sent to the homeowner.

We have seen many times where the homeowner does submit a Violation Compliance Form and when the manager makes a follow up inspection, it does not appear the violation is corrected.  In those instances, we send out a “Reminder” letter rather than a “Proposed Fine” letter because the homeowner had previously communicated that they were working on correcting the violation.

In summary, communication is the key.  As a homeowner, if you receive a letter of violation from your association, you must communicate with the management company on your plan of action to avoid any further letters or fines.  Please remember that the association wants to work with the residents/owners toward compliance, but communication is the key factor.

It is important on the association’s side to communicate any new rules/policies and use restrictions to the owners and provide tools to the owners, so they can properly maintain the standards of the community.  The association does not want to be in a position where they need to follow these steps; however, it is the board’s fiduciary responsibility to enforce the documents and standards for the community and this is a formal process and requirement in order to make sure the standards are met in your community.

Patty Truax Stewart, CMCA, AMS
Executive Director
Community Management Concepts, Inc. Florida 

Community Associations Institute

One of the best sources of information is Community Associations Institute.  CAI is a national non-profit organization that provides education and resources to community association homeowners and the professionals who work in this industry.  The CAI website (www.caionline.org) has helpful resources online, like a Board Member Basics course, available to CAI members and to nonmembers.  There are also publications on a wide variety of topics geared toward community association volunteers.  CAI members are eligible to take in-person and online classes, attend programs and receive Common Ground magazine.  A CAI membership can be a great investment if you want to know more about community associations and best practices in community association operations.

Community Manager

Another educational resource for board members is the person who serves as your community manager.  He or she is a generalist who is familiar with a wide array of topics encountered every day in community associations.  Need to know about the different kinds of grass that grow in your area?  Do you need help conducting a productive meeting in the shortest time possible?  What are the different types of federal tax forms that are filed by community associations?  Ask your manager.  He or she should either know the answers or be able to get them for you.  Your manager can also help you avoid reinventing the wheel.  He or she is likely to be knowledgeable about how other associations have successfully dealt with problems that your community is experiencing.

Board Training

Some management companies present educational programs from time to time on subjects of interest to board members.  Topics may include free legal advice, how to read a financial statement, tips on taking minutes, and suggestions on how to run a board meeting.  They will often call in local industry experts knowledgeable in fields like finance and law.  At times, they may even call in national experts to discuss board best practices and conflict negotiations.

Research

Yet another source of educational information is the Internet.  Answers to many questions are available online.  For instance, if you have had a soil sample done and want to know the significance of the pH level, there’s a lot of information about this subject on the Web.  Or if you want to educate yourself on the state statutes governing your community, a copy of the law is just a few clicks away.

More than ever before, there are educational opportunities for board members who want to enhance their knowledge.  If you want to do your best for your community association, take advantage of CAI, your manager, your association management company and the Internet.  You’ll be glad you did.

Stewart Wise, PCAM®
Community Manager
Community Group

A committee is a body of persons delegated to consider, investigate and take action on tasks that require a small deliberative assembly.    Although most homeowners association committees are advisory in their functioning, they increase the ability of an association’s directors to complete tasks efficiently. Committees provide the additional data necessary for decision making by the homeowner association.  Committee participation increases information available to the homeowners and participation in decision making for the association.

So what do committees do?

• Committees provide the community the ability to prepare for preventative maintenance, future capital improvements, financial or investment planning; architectural review and landscape design.  A finance committee frequently has the responsibility to oversee income and expenses, and to ensure the reserve fund is satisfactory. An architectural review committee is charged with approving external changes to individual units and making sure that requests meet the architectural guidelines of the community.

• Committees can focus on the social aspects of the community. These types of committees are the heart and soul of the community. They provide a night out for many residents that include dancing and music; to group events that take residents off property to enjoy a day at a casino, cruise ship or concert. A social committee may also offer services to new homeowners by welcoming them and providing them community information that will help them become acclimated to the community.

A large-scale community that provides a resort style feel, multiple amenities including a restaurant and that could be considered a small city would be more demanding than that of a small condominium with one pool and limited common grounds. Not more important, just more demanding. Where the smaller community would possibly require a finance or landscaping committee, the larger community could quite possibly need 10 or more committees. Add into the equation the lifestyle of the owners. Large scale communities of retirees have varied and different social atmospheres than that of a development made up primarily of families who work full-time and are busy with their children’s sports or school activities outside of the community.

Committees function best when the members work with a unity of purpose.  Cooperation within the committee serves the needs of the entire homeowner association.  In their advisory capacity, committees present their findings in the form of a report to the directors of the homeowner association who have the final responsibility for decisions.  The benefits of committees to the homeowner association is that volunteers from the community bring life lessons, professional experience, education and common sense approaches to the tasks they are given.   Associations should be considered a business and with any business, its size and demands determines its needs.   Committees are an essential part of the process, in order for the association to be a successful business.

Heather C. Price, CMCA®
Director of Management Services
Rampart

In our historically reactive industry, people are proactively learning, growing and taking initiatives. More thought, education and innovation is being applied to our industry than ever before. We realize that either we set the standard – or someone else will set it for us. In order to do so, we have to know the trends – and the people that will help make it happen. There are five trends I believe are crucial for effective community management.

Trend #1: CEO-Minded Influencers. These are broad thinkers who see the trees, but within the framework of the forest. They are business leaders, process facilitators – i.e., the ‘Jack McGrory’s of the world – and I’ve found that all have some of these characteristics:

• Business professionals:  They know the three elements that comprise community associations (business, government, community) and how to connect the dots. They understand that managing a community is like running a business, in a political and social environment.
• Trend setters:  The “renegades” of the industry – not because they’re necessarily risk-takers, but because they’re non-traditional. They establish their own standards and implement unique ways to communicate and connect with boards. They are the fuel that propels our industry forward.
• Client advisors:  As professionals in the industry, our duty is to risk advising our clients how to make their communities better.
• Skilled professionals:  This industry is not for the weak. Long hours, night meetings, constant board and homeowner demands – the common opinion is that managers can be overworked and underpaid. Individuals who leverage their strengths as leaders are compensated accordingly.
• Visionary developers:  Sounds lofty, but a truly unique bunch. They think beyond the general landscape, have a clear vision of who the homeowners want to be and most importantly, help others see and adopt that vision.
• Expectation identifiers:  These are masters of the psychological craft. The solid backbone of our industry’s professionals because they do one of two things:  1) identify and meet Board expectations or 2) eliminate and/or change expectations to fit their goals.
• Complicated simplifiers:  These are people who can filter out all the “white noise”, identify the important elements and simplify an issue. They excel, when others who can’t do the same struggle and burn out.

The foundation for all of the above is education and experience.

Immediate Decisions

The first step is immediate – the community manager officially opens the organizational meeting, allowing the board members an opportunity to choose who will serve as officers of the association.  In most cases, there are only four officer positions: president, vice-president, treasurer and secretary. But in some cases the governing documents allow for an assistant treasurer or assistant secretary to fill in the position if the officer is unavailable.  These additional roles play an important part, but as assistants, they do not have voting power and will not count toward quorum of the board.

The next important piece of business is to determine the signors on the bank accounts. The manager should provide a new set of signature cards with a Corporate Resolution to be signed at that meeting. Most banks require copies of driver’s licenses with the submission of the new signatures as well as a copy of the minutes from the Annual and the Organization meeting.

Review and Communication

During the first week of the new board of directors, many items should be reviewed, including existing contracts, delinquencies, financials and any immediate problems for the association.  It’s also important to take advantage of the momentum of the election and begin communicating with homeowners.  An introduction letter announcing the names of the board should be sent out either by the board president or the association manager. This letter is a great opportunity to relate the board’s goals for the association in the short term and in the future.

To make sure everyone is on the same page and of singular focus, the new board president and other board members, if they chose, should schedule appointments with their association management company (if they have one), the association attorney, accountant and insurance agent and any contract vendors they may have. It’s also imperative for board liaisons to standing association committees meet with their committees and discuss the future of the committee.

One of the most important aspects of serving on a board is the opportunity to communicate. When an association has communication, rumors and complaints are few. Newsletters, websites, unit owners education seminars, small get-togethers and other events are all ways to increase communication.

Serving on a board of directors in an association is a volunteer position, a selfless task.  You can either be treated as royalty or as an employee but either way you have accepted a fiduciary responsibility to protect the association, ensure wise spending, and maintain the value of the property by regular maintenance and no “Band-Aid” repairs.

What it Takes

Be prepared to make all types of decisions. You have an obligation to act in the best interest of all owners in your association, who elected you to represent them.  It is important to understand the strengths and weaknesses in your community, to work within the parameters of the budget, to know your governing documents, and to be consistent in your actions and decisions. Board members are humans; they may make a mistake, but should always practice full disclosure.

An ideal Board Member:

• Has a general interest in the community as a whole;
• Is able to look at the big picture;
• Can differentiate between pet peeves and major problems;
• Is not interested in actually managing the community, but allows the Manager and staff to do their jobs and works as a team with fellow board members;
• Never makes a decision based on their own likes or dislikes but rather on what is best for the community;
• Must be willing to give a reasonable amount of time to devote to being a director;
• Understands that majority rules and no one board member can make decisions alone.

A good mission statement, for any board of directors:  Practice justice in governing, be prudent in business decisions and search for harmony in the community.

Joanne L. Willoughby, CMCA, AMS, PCAM
Vice President
Association Services of Florida, AAMC