Featured Member Blog Articles

It is getting more difficult to get volunteers for filling in the 5 seats as a trustee. We have 4 buildings, 30 units per building, a 55+ community. What would it cost us to hire a firm to take over as trustees?

Unfortunately management will not take over as the Trustees or Directors of the Association.  Management works with the Board of Directors to make their job easier and less burdensome. 

The directors will still be the decision makers and responsible parties to insure that the Condo Association or HOA is run properly.  Property or Association Management should do the leg work and provide information to the Board for decisions.  Once a decision is made, the property manager will implement and carry out the decision.  

Fees are typically based on a perceived amount of work that will be necessary on the part of the management company to run the condo association.  In many cases management fees are referred to on a per door basis.  You will find that prices can fluctuate greatly between many companies based upon their experience and level of services provided.  Condo association and HOA boards should always interview several companies. 

The best way to find companies is to speak with friends in other condo associations that are happy with their current management.  Your current attorney may have suggestions for you as well.  Since the question was how much it should cost, a range of pricing for your association would be between $25.00 per unit and $35.00 per unit; however this may change based upon conversations with management regarding your expectations.

Scott Wolf

Whether your condo association is looking for a new Master Insurance Policy or reviewing the one in place, here is a list of important points of any master policy that should be reviewed annually.

1. Replacement cost of each building 

You must take into consideration the square footage, type of construction, number of stories, year built, or other factors of your HOA property or building.  A built in inflation factor to the master insurance policy can elimate some of this but the value should be reviewed every couple of years.
 
2. Employee Dishonesty Limit

This limit is normally based on the amount of money the condo association has in the bank. The limit should equal to the total value. For instance, if the association has over $1M in the bank, they have a much bigger exposure than condo associations with less money.  Either way, it is important to review this value.
 
3. Directors & Officers Coverage

Believe it or not some condo associations do not have this coverage. The cost is minimal but is very important as it protects the interests of the association board members.
 
4. Umbrella

This limit of liabilty goes over and above the limits of the other casualty lines of insurance. If there is a pool, roads, play ground equipment, bike trails, etc. then there is a possibility of a claim arising where the underlining limits of their General Liability policy could be exhausted. If that is the case the Umbrella limits (anywhere from $1,000,000 to $25,000,000+) could be purchased to go above and beyond the underlining limits. This could be very important in the event of a big claim arising from a drowning in a pool, and accident with a child on the playground on HOA property.  Most of the time a $1M umbrella can be purchased for around $500 a year.
 
5. Back-up of sewers or drains

This is a very common occurrence with condominium associations and would kick-in in the event of a back up. Normally this coverage is one that needs to be added to the policy with limits of $25,000, $50,000 or $100,000.
 
6. Earthquake coverage
 
7. Flood coverage

Are you in a flood zone?  If so, work with your agent to make sure you're coverage is complete.
 
8. Wind coverage

Depending on where your Home Owner Association is located this item is either included or you have to purchase it seperately. If your assocation is located in Florida, Texas, East Coast or West Coast it is likely that you might have to purchase this seperately. When you do this you normally have a seperate deductible (ie. 3%, 5% 10% of total loss) specifically for that coverage. The price for this is normally very high because this pays for damage from wind (ie. hurricanes, etc.). The price for this is often determined by the "Hurricane Forecast".
 
9. Wind deductible

If you do have a wind deductible please see if it is a per occurrence or per season deductible. This can make a huge difference.
 
10. Premium

Do you feel you are paying too much for your insurance? If so, check out our Insurance Finder.

11. Your Agent

Are you comfortable with your agent? This is one that is over looked the most. Did you know that you can keep the same company but change agents? This can be done pretty easily without lapse in coverage, without payment interruption, etc., etc. If you believe you agent is not answering your questions or you feel that is not an "expert" and would like an agent that devotes all his time to Condominium and other Habitational insurance then by all means make a change. Some of the money that you pay goes to the agent and if he is not doing a good job or if you feel uncomfortable make a change immediately.
 
12. Property Deductible

Is your current Master Insurance deductible too low/high? Sometimes you can raise your deductible up to $1,000 or $2,500 and you will notice a significant decrease in your premium.

Facebook is a free social networking site that offers a great way to quickly and easily create a member-only community site for HOA's and condo associations.  Here's how it works.

1. Get association members to sign up on Facebook by filling out a  profile page.  It takes 5 minutes or less.
2. After completing your Facebook profile go to Groups and create a private group
3. Invite HOA or condo association members to join.

Now the association has a group page with a calendar of events, discussion boards and the ability to add photos.

Once you're a Facebook member, make sure to become a CondoAssociation.com Fan!

Can an HOA member not pay dues if they're unhappy with the work the HOA board is doing? 

An HOA owner is responsible for paying HOA dues even if he or she is not happy with repairs, maintenance, landscaping, or does not use the pool, facilities or common area. It is not like an apartment where some states have laws allowing escrow or withholding of rents when a place becomes inhabitable.

And when the HOA dues (assessments) are not paid, it can lead to very substantial collection costs, for which the HOA owner then becomes responsible, and can lead to foreclosure if not paid. So it is best to find another way to air your grievances and look for solutions if an owner is unhappy about what the HOA Board is doing (or not doing).

And, an Owner can run for the board if they are not delinquent in assessments or in violation of the association rules (and sometimes that does not even prevent an owner from running for the Board).  

Beth Grimm

What specific questions should you be asking property managers before hiring them?  Here are 14 questions you may consider asking.

1. How many condo associations does each of your property managers handle?
2. How often will the property manager be onsite?
3. Are your managers certified with the CAI?
4. What is your policy on bidding annual contracts?
5. How do you handle unit owner requests for issues within their units?
6. If you do work in a unit how is billing handled?  Is this work handled outside the association operations?
7. Ask for references of other associations or properties that have been under management for atleast 5 years.
8. How does the association or HOA receive monthly financial statements; email, snailmail, etc...?  How many days after the month's end will the financials be delivered?
9. What sets you apart from other property managers?
10.  What's the biggest challenge in managing HOA's and condo associations?
11.  How many onsite meetings do you provide in your contract?
12.  What is included in the monthly management fee and what additional charges may we incurr?
13.  What payment options are available for the collections of assessments?
14.  How do you handle delinquent unit owners?

Scott Wolf

So, you just purchased in a small exiting association and wish to become a recorded Trustee or Director and have the previous seller removed. 

The most inexpensive way to do it would be to go to the Registry of Deeds for your location and search documents to find an Appointment form - one you can copy.  Most registry information can be obtained online.  I would search the book and page for your current documents to see if there is a previous appointment and resignation form since it will make the process of copying a bit easier. 

Another more traditional route would be to hire a condominium attorney to provide the form for you.  This should be provided for a flat fee.  Being a small association it is particularly important to be affiliated with a Condominium specific attorney to assist you with collections and other issues that may arise in the operation of your HOA or condo association. 

If a bank account is not open already, you will need to obtain a tax ID number for the association prior to the bank opening the account.  Otherwise you would have to open the account under one of the directors or trustees' social security numbers.  This is NOT advisable for many reasons.  Unless someone on the board is familiar with obtaining tax ids, it would be advisable to hire an attorney. 

Management companies are not always an option for small associations that feel they can not afford the management fees based on their budget.  Sometimes they find out that they can afford and will benefit from these services.  Certain management companies will also offer consultation on specific issues that a Board is having for a set fee.  Condominium Attorney's are always your best resource. 

 Scott Wolf

In a small or self managed condo association this can be very difficult.  For an HOA trustee or board Member to collect fees from their neighbor or friend can be an uncomfortable situation. 

Condo owners may be embarrassed to tell you they are having financial difficulty or other circumstances.  In my state of Massachusetts, Condominium Law Chapter 183 is very specific in outlining the collections process for an association.  All condo associations should adopt a process that automatically happens no matter what.  By publishing and distributing this policy to all owners, there is no confusion.  It is no longer personal but just the process by which fees are collected. 

Currently we are seeing a much larger percentage of delinquencies and late payments of condo fees due to a weakening economy.  To insure the stability of your condo association you need to diligently collect or pursue collection of your condo fees.    

A sample condo fee collection process would be to send a friendly reminder letter after the first payment is late.  Typically after the 15th of the month when most late fees are applied.  Once the second payment is missed a letter explaining legal action will be taken if not paid. 

If payment is not received within a specified period outlined in the letter, you should automatically turn the account over to an attorney.  Not just any attorney.  Find one that is experienced in condominium collections. 

Scott Wolf

Over the last couple years, we have scheduled and participated in some really useless condo association meetings.  I think the biggest culprit for the bad meetings was the lack of communications between the condo association board and members that should have been flowing in between our meeting dates.

Scheduling condo association meetings is not a substitute or band aid for poor communications.

Most condo association by-laws require an annual meeting.  Other than that, I think there are plenty of communication tools for condo association directors and association members to get the point across, with out the pomp and circumstance of a meeting. 

Does your condo board:

• Have a condo association email distribution at least once per month - even to say no news is good news?
• Maintain a website that gets updated regularly?
• Manage a message board where association members and residents can voice concerns and ask questions when they see fit?
• Have your property manager publish monthly updates or financials that get sent out to all condo association members?
• Use web technology to poll condo association members to understand what's important to them.

There will always be the need for meetings...and that's when they should occur. 

I think most association board members are forced into more meetings because they don't practice good communications with association members regularly.  The above are some proactive communication tips that a condo association board can leverage to keep communications flowing all year long.

Does your Condo Association have a strategy to go green? 

If you live in an older condo building the answer is most likely no, but that can change quickly after understanding a number of fairly easy to implement green initiatives found on the EPA's Energy Star website.  No one expects the condo association an older residential building to go 100% green tomorrow, but there a many small steps that can make your building more energy efficient and a healthier place to live right now.

Condo Building Energy Self-Audit

Energy Star has a self evaluation tool called the Home Energy Yardstick, which helps you determine the overall energy efficiency of your property.  It works well and actually only takes about 5 minutes, like the website claims.  Although it's intended for a single family property, you can make it work for your condo building by calculating an average condo unit, then extrapolating the information to meet the size of your condo building.   

It's a quick and useful calculation of your energy usage, and requires some knowledge of your energy usage over the past year (which will be on your monthly bill), so just make sure you have your energy bills for handy before you get started.

Install Energy Efficient Light Bulbs or Fixtures

Replacing old light bulbs with Energy Efficient Light Bulbs is a no-brainer.  There are a host of Energy Star rated light bulbs that are a little more expensive than your traditional light bulbs, but they should last for a very long time.  According to the EPA, "ENERGY STAR qualified lighting provides bright, warm light but uses about 75% less energy than standard lighting, produces 75% less heat, and lasts up to 10 times longer." 

Seal the Windows and Doors

Energy Star estimates that a homeowner "....can save up to 20% on heating and cooling costs (or up to 10% on their total annual energy bill) by sealing and insulating."  If you live in an older building, it can be much higher percentage than this.  Our building is over 80 years old and when I moved in the building, I could feel a breeze with the window shut.  We sealed the windows and felt an enormous difference.  The sealing of windows and doors should be high on your green priority list.  Here is a link to educate you to the impact of air leaks in the envelope of your condo building.

Switch from Oil to a Gas Burner

We switched to a gas burner two years ago and our energy bill dropped about 15% per annum over the past two year.  Old oil burners are grossly inefficient - emitting more pollution because they don't have modern controls standard today on new boilers.  Due to its size, our old oil burner needed its own room in the basement.  Our new gas boiler is smaller than a footlocker and was mounted to our wall, rendering the room pretty much empty.

There are many other green initiatives you can take, but these few that I mentioned are certainly worth looking at today. 

A typical question I am asked is “what is required to be in reserve for an condo association"?  Well according to the law it would be what is “adequate”. No offense to the lawyers out there but that seems a bit vague. Rightfully so.

There is not way to come up with a one system fits all formula. My opinion would be the more money in reserve the better. Associations should budget each month to put money aside for the future replacement of common areas and facilities. How much is determined by the size of the property and the amount of common areas that will need attention down the road.

The best way to determine this is to have a reserve specialist or engineer provide you with a reserve study. This study will determine the expected lives of your common area facilities. The heating system, the roof, the siding, the chimney, light fixtures, interior painting, etc. It will then apply future costs to each element and determine what needs to be put aside each year to meet these goals.

For smaller associations this can be cost prohibitive. Trustees or condo board members could develop their own version of a reserve study by obtaining pricing on the larger common area elements and adding a lifespan to them. I have seen many Board designed plans that have been very complete and accurate.

If the condo association is professionally managed, your property manager could assist in developing this type of study with the condo association board. Be prepared to pay an additional fee to the management company for this type of work since it is outside the scope of most contracts.

Get to know who lives at the property. This is important on many levels and could come in handy to do a self designed reserve study or other types of projects. You may have an engineer, architect, contractor, lawyer, accountant or one of many other professions that do not have time to be a condo association board member but are very willing to be involved on a committee.

How much should you have in reserve? You have enough money in reserve if you can address a common area or facility issue without having to implement a special assessment. That would be my definition of adequate.

In my state of Massachusetts, a Condo Association Replacement Reserve Fund is a separate and segregated portion of the common funds or the organization of unit owners which shall be used to replace, restore, or rebuild common areas and facilities. 

In Section 10 (i) it states that "All Condominiums shall be required to maintain an adequate replacement reserve fund....." Section 10 (m) it allows on an annual basis for sixty seven percent (67%) in beneficial interest or more, may modify this provision. 

Scott D. Wolf, PCAM

President

Greater Boston Properties, Inc.

www.gbproperties.com