Fairness for Community Associations

Superstorm Sandy has shown once again how community associations are treated unfairly under federal disaster recovery guidelines. CAI has heard from hundreds of members whose communities were damaged by Superstorm Sandy but who have been denied federal disaster assistance.

Local governments have helped associations only to have FEMA refuse funding to offset these expenses. Cooperatives and condominiums have been ruled ineligible for help with uninsured damages.

In each case federal disaster assistance was refused because the damages were in a community association. Tragically, FEMA would have helped these neighborhoods and homeowners if the loss occurred in a non-association community. It is unfair that associations are told to manage disaster recovery on their own.

CAI’s call for fairness in disaster assistance was joined by other organizations and has been heard by key leaders in Congress. CAI is working with New Jersey Senator Robert Menendez to persuade FEMA to reconsider its refusal to provide disaster assistance to community associations. New York Senator Charles Schumer has called on the federal government to provide grants to cooperatives and condominiums to help with disaster recovery.

Every CAI member can contribute to this effort by contacting their representatives in Congress to demand fair access to recovery resources for community associations. Ask your local and State officials to contact FEMA and urge that community associations receive fair treatment. By joining together we can prevent community associations from having to go it alone in the next natural disaster.

Federal Mortgage Rules

In early January, the federal government released new mortgage lending guidelines. As expected, community associations will play an important role in the new mortgage approval process.

Lenders are now required to prove borrowers can make monthly principal and interest payments as well as monthly payments for insurance premiums, taxes, and association assessments. This “ability to repay” test protects borrowers and communities from the dangers of predatory lending.

Community associations should be prepared to provide lenders with information about regular and special assessments. This information is a critical part of the ability to repay test.

At CAI’s request, the federal government will allow lenders to use assessment information from other sources as long as the information is reasonable reliable. For example, a lender may rely on assessment information provided by the buyer or seller rather than the association. Also, associations need only provide information on current assessments.

Federal officials understand that community associations are a growing source of housing in America. Verifying that new homeowners have the ability to pay a fair share of association costs will lead to healthier, stronger, and more stable communities across the country.

The Road Ahead

For CAI, the road ahead in 2013 involves a broader federal agenda than fairness in disaster assistance and implementing new mortgage rules. Every CAI member is vital in driving this agenda as far down the road as we can. To learn more about CAI’s federal affairs agenda and how you can help, visit www.caionline.org or send an email to government@caionline.org.

Under the eminent domain proposal, municipalities would raise funds from investors to provide sufficient resources to condemn individual borrower mortgages. The plan would permit a municipality to condemn any lien secured by real property as long as the holder of the lien is provided just compensation.

Homeowners whose mortgage and other liens have been condemned would then be offered a mortgage loan with a reduced balance, ensuring the owner is in a positive equity position. Municipalities believe reducing the amount of mortgage debt that homeowners carry will stabilize home values, reduce foreclosures, limit community blight, and provide a more stable base of property tax revenue.

In requesting comment on the proposed use of eminent domain to reduce homeowner mortgage balances, FHFA states the agency has “significant concerns with programs that could undermine and have a chilling effect on the extension of credit to borrowers seeking to become homeowners and on investors that support the housing market.” FHFA also reveals that it may direct Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System, which collectively fund more than 60 percent of all mortgages, to “avoid a risk to safe and sound operations and to avoid taxpayer expense.”

To read the FHFA announcement and the Federal Register notice requesting public comment, click here.

As part of our ongoing Mortgage Matters program, CAI is working to protect homeowners in community associations and to ensure access to fair and affordable mortgage products for all current and potential community association residents. You can follow our work and share your thoughts at www.caimortgagematters.org.  CAI will continue to monitor and participate in shaping changing federal housing policies to ensure the perspective of community associations is heard. This is one of the many benefits of belonging to an organization that works for you on the local, state and federal level.

The board of directors of the master association should work like the conductor and each sub-association is a contributing and equally important musician. The sheet music for the master development was written with an idea of all the musicians working together to create a harmonious symphony but one out-of-tune French horn can take your community from melodic to chaotic.

Here are some ways to keep your community pitch perfect:

Communication

For realtors it may be Location, location, location but for associations it is definitely Communication, communication, communication! Building a productive partnership between your master association and your sub-associations starts with building an internal management community—a network of management liaisons for each of the separate entities. Direct and open communication with each of the managing agents will go a long way in building the harmony you seek within the community. An annual leadership summit will help facilitate this objective. Invite the leaders from each association to a meeting, formal or informal, where shared visions can be discussed. For best results, focus on the issues that are germane to all of entities. For example, if your community was developed on an environmental sustainability platform, discuss how different recycling methods can be applied in each group. It may be green recycling of common area debris for the master association and homeowner composting in a condo, but remember that the goal is the same—better community through environmental responsibility. Focusing on the issues that are shared within each group will help foster a cooperative spirit for problem solving and community growth.

Transparency of decisions made by the master association is another item of the utmost importance. Invite members of the sub-associations to informational meetings where these decisions can be discussed openly and focus on how they may affect each neighborhood. Also, be sure to work with each sub-association to provide a quick link on their website pointing owners to the master association website for important notices and updates.

Become a Presence

Encourage your sub-association leaders and management to become a presence at the master association meetings. The master association boards are often times tasked with creating policies that will affect the community as whole but, unfortunately, not all associations or unit types may be represented on the board. Becoming a presence at those meetings will help remind the board that their decisions may impact more than just the players at the table.

This goes for the master association, too. It will be easier to gain community support and buy-in if master association board members and mangers have taken the time to reach out to the sub-associations to ensure that they are aware of issues facing the greater community.

Healthy Competition

Nothing gets a community fired up faster than a little healthy competition! Encourage interaction between different subassociations through events that require homeowner involvement. A holiday lighting contest between neighborhoods or a food drive during the holidays will get owners out of their living rooms and onto their porches. After all, the objective is to bring the community together, to get to know one another, and live in harmony. It’s amazing what can be accomplished when people have common interests and goals that can be shared through this type of interaction. Be sure to post the standings at the community clubhouse or somewhere visible within the community and consider a trophy that celebrates the subassociation victory for the year that is prominently displayed for all to see. Recognition goes a long way.

Divide and Conquer

One of the most important objectives in any association, whether it is a master community or a small condominium, is concern for protecting their assets and prudent management of their budgets. To help facilitate this, the master association may encourage the subassociations to synchronize projects to take advantage of economies of scale. For example small projects such as gutter or window cleaning or even larger projects like exterior painting could be contracted at the same time and with the same vendor to secure discounts. The master association could assist this effort by managing a community message board where different neighborhoods could share their maintenance schedules and vendor information. This may also help your community from turning into a construction zone all year round.

Cross-over Volunteers

Community volunteers are needed for a variety of tasks throughout the year, whether it is manning the ticket booth at one of the community social events or serving on one of the association boards. To ensure your community is diversely represented, recruit volunteers from the sub-associations to work with volunteers from the greater community. Volunteers are the backbone of the community and the more representation the better.

Implementing these methods will ensure that your community is signing on high and it will be sweet music to your ears.

By Rachel Garrett and Erika North

Condominium owner or community associations with properties of 5+ units in Seattle have at least until October 1, 2012* to comply with the energy benchmarking and reporting program. The program requires associations (or their professional managers) to track their building’s energy use, called “benchmarking” with EPA’s Portfolio Manager, a free online tool, and annually report the energy performance to the City. Upon request, an energy performance report must be supplied to potential residents, buyers, lenders or other qualified parties.

*In response to public input that more assistance and time is needed to comply, the City is evaluating the program and considering staggered reporting deadlines based on building size. More information will be posted on the website as soon as it is available.

HOW TO COMPLY 

Associations or their managers are encouraged to start benchmarking before the October 2012 deadline by following these four steps:

1. Gather building information
2. Create a building profile in Portfolio Manager
3. Set up automated benchmarking for utilities serving the building
4. Authorize annual reporting to the City of Seattle

To get started, visit the website to review the four steps above and download the How to Guide. Free workshops and drop-in help is available to assist those new to energy benchmarking (see below). A list of local businesses that provide benchmarking services is available on the Northwest Energy Efficiency Council website at www.neec.net/seattle-benchmarking-providers.

FREE ENERGY BENCHMARKING RESOURCES

Workshops – Visit the links for details and registration. All are held at University of Washington in Seattle.

• June 13^th, 8am – 12pm: http://esbworkshop03.eventbrite.com
•  July 18^th, 8am – 12pm: http://esbenchmarkingworkshop.eventbrite.com
• August 22^nd, 12:30 – 4:30pm: http://esbenchmarkingworkshop02.eventbrite.com
• September 6^th, 8am – 12pm: http://esbenchmarkingworkshop03.eventbrite.com

Drop-In Help

• Wednesdays at the Seattle Municipal Tower, 700 5^th Avenue, 18^th floor, 11am to 1pm

Helpline

• (206) 727-8484 (8am – 4:30pm M-F) or EnergyBenchmarking@seattle.gov

Website

• www.seattle.gov/EnergyBenchmarking

MORE ABOUT THE CITY OF SEATTLE ORDINANCE

Although condos are individually owned, they are still subject to the ordinance so that the building’s total energy use information is readily available to residents and potential buyers in a consistent format. Tracking energy use overtime also provides baseline information to help owner associations evaluate potential energy efficiency investments.

While many owners consider their energy bills a fixed cost, making energy use visible often uncovers ways to reduce utility costs. A 2009 study by Ecotope found that in local multifamily properties common area bills make up 40-60% of the total energy use of a building. For multifamily properties, quick fixes are often in hallways, shared amenities such as pools and spas, parking lots, and other “common” spaces. Making simple changes saves on energy costs, provides greater comfort, and can generate faster sales.

Seattle City Light and Puget Sound Energy offer “automated benchmarking” to directly feed energy usage data into the association’s Portfolio Manager account, eliminating the need to manually input data from bills. These services preserve individual owner’s privacy by summarizing the entire building’s energy use—managers do not need to collect energy bills or gain permission from individual owners. The association—and the City—will be able to see the total energy use, aggregated across all meters serving a building, but individual meter readings will not be disclosed.

Energy benchmarking is an industry best practice and national trend. Seattle is one of five cities nationwide with reporting requirements, and many other cities and states are considering similar measures. The City of Seattle’s goal is that everyone will benefit when the energy use of all our buildings is more visible. Program outcomes include: lowering energy costs to owners and tenants, creating job opportunities, and reducing greenhouse gas impacts. Visit www.seattle.gov/EnergyBenchmarking to learn more.

Submitted by Nicole Ballinger, Outreach Advisor – Energy Benchmarking & Reporting Program

City of Seattle Office of Sustainability & Environment

CAI’s members have a keen interest in the development of CFPB’s rules and regulations that could affect community associations. As a new federal agency, the CFPB is still working to define its approach to protecting consumers from abusive financial products and helping to ensure consumers have the right information to choose the financial products and services that will best meet their needs. While the CFPB’s authority extends from checking accounts to credit cards to payday loans, it also has significant authority over federal housing policy, mortgage lending standards and the home buying process.

CAI is following CFPB’s actions on: the definition of qualified mortgage, the regulation of transfer fees, association assessments, the definition of real estate settlement fees, foreclosure prevention and mortgage servicing standards. As such, the CFPB has the potential to impact community associations and the companies that serve them.

As noted, the CFPB has special authority over mortgage lending standards and real estate closings. The Dodd Frank Act gave the CFPB the responsibility of enforcing the federal Truth in Lending Act (TILA), a powerful consumer protection law. As the federal enforcer of TILA, the CFPB will establish and enforce mortgage lending standards that all lenders and housing market participants must follow.

Congress also transferred rulemaking and enforcement authority under the Real Estate Settlement Procedures Act from the Department of Housing and Urban Development to the CFPB. The bureau is in the process of updating real estate closing disclosures and real estate closing forms.

This combination of authorities means the CFPB sets the standards that govern almost every aspect of the mortgage lending and closing process.

CFPB is unique in that Congress granted the bureau the authority to expand firms under its supervision by regulation. Given the role of community associations in our nation’s housing markets and the authority of associations to foreclose as a remedy to perfect a lien, it is reasonable to expect the CFPB to examine community associations at some point in its review of the housing market.

The CFPB has three ongoing initiatives that can affect how community associations function.

Ability-to-Repay

The first initiative is the CFPB’s work on how association assessments factor into a borrower’s mortgage payment. Under the Dodd Frank Act, all lenders must verify a borrower can afford all payments associated with a mortgage loan, including association assessments. It is the CFPB’s job to write the rules to govern this process, which could include requiring associations to forecast assessment increases and the likelihood of future special assessments.

Transfer Fees

The second initiative CAI is monitoring is the CFPB’s review of transfer fees in community associations. While the bureau has not signaled that it intends to restrict mortgages in associations with a transfer fee, it is studying the use of transfer fees.

Mortgage Complaint Portal

An important new consumer protection developed by the CFPB is an easy-to-use website for homeowners to report mortgage fraud, abusive lending practices and housing discrimination. This will significantly improve consumer protection for homeowners and allow the CFPB to keep track of new mortgage products or any new market abuses. The website will also be a means for disgruntled residents to air complaints against associations. As the CFPB has announced its future rulemakings will be influenced by the nature of complaints it receives through this system, associations should be prepared to respond to CFPB inquiries and work cooperatively with the bureau in resolving legitimate consumer and homeowner complaints.

Because of its potential impact on community associations, CAI has added the CFPB to our Mortgage Matters program. CAI is working to protect homeowners in community associations and to ensure access to fair and affordable mortgage products for all current and potential community association residents. You can follow our work and share your thoughts at www.caimortgagematters.org.

First, in early 2012, CAI expects the federal government to release the final draft regulations on QRM and QM. QRM regulations deal with the structure of mortgages and QM deals with qualification criteria for future borrowers. As drafted, both present a set of challenges to the housing markets in general and to community associations in particular.

As reported by CAI, the pending QRM proposal would have a significant impact on potential buyers. New requirements would mandate minimum down payments of 20 percent prevent financing of closing costs and realtor fees and would disqualify buyers with just one late payment on any installment account. It is estimated that 70 percent of currently qualified borrowers would not meet this standard. While it is expected that the QRM draft will be significantly revised, the ongoing uncertainty hangs like a dark cloud on the horizon.

Revised draft QM regulations will also be released in 2012. These regulations focus on a borrower’s ability to repay a mortgage and contain provisions that include community association related expenses. On the positive side, QM will require that a lender qualify a borrower not just on the mortgage amount, but also on other mandatory fees like association assessments. This should help reduce assessment delinquencies. On the downside, QM requirements may also take action on association transfer fees and require the inclusion of special assessments in the qualification calculation on the basis that the assessment will be in place for the life of the loan.

Finally, in response to CAI members’ ongoing pressure, FHA will be making additional changes to its condominium insurance guidelines. FHA has indicated that they will be issuing additional guidance to address issues with project certifications, transfer fees and management company fidelity bonding. This is good news for CAI members as FHA accounts for up to one-third of all condominium loans. On the downside, due to a pull back in bank lending and the insolvency of Fannie Mae and Freddie Mac, FHA has been forced to fill the vacuum in the mortgage market. This has stressed the agency and pushed its financial reserves to dangerously low levels. If the economy stumbles and FHA’s reserves tip into the red, the agency could need a congressional bailout. With the heated political climate super-charged by election year politics, any solvency issues with FHA would likely set of a firestorm that could sideline the critical lending role FHA is now playing.

There is one point we can be sure of among all this uncertainty and that is that CAI will be working to make sure that CAI members voices are heard in this debate. 

As part of our ongoing Mortgage Matters Program, CAI is working to protect homeowners in community associations and to ensure access to fair and affordable mortgage products for all current and potential community association residents. You can follow our work and share your thoughts at www.caimortgagematters.org.

So just how does a Portfolio Manager stay consistently on top of his/her game?  How does s/he avoid the trap of putting out one community fire after another and completing bigger projects as time allows without ending up in what Pink Floyd described as the “English way” of “hanging on in quiet desperation?” Is it really possible for busy Community Association Managers to maintain healthy levels of pride and optimism for our future when we know full well that as we attend that party, or sleep, or God forbid, take a vacation, that the whirling tornado that is our job is even now touching down in undisclosed locations leaving behind a nasty trail of stress-filled destruction adding even more wreckage to the already huge piles of debris cluttering our minds and offices?

“The mind is an excellent place to process information; it is a terrible place to store it.” ~David Allen 

I can think of no better jumping off point than getting comfortable with the above statement.  It is so important that, at the risk of padding the word-count of this essay, I must repeat it: “The mind is an excellent place to process information; it is a terrible place to store it.”  I’m not much into reciting mantras, but if I was this would be mine.  Your assignment this month is to simply think about what I just said.

The minds of Community Association Managers are positively brimming with stuff; so much stuff that many of us are driven to the point of distraction, some even to despair.  We are carrying around massive quantities of things in our short-term memory.  We’ve got emails to answer, phone calls to make, bids to solicit, bills to code, financial statements to review, reports to write, meetings to attend, packets to assemble, sites to visit, delinquencies to collect, and developers to sue. There is grass to mow, weeds to pull, roofs to clean,  elevators to fix, cars to tow, keys to make, special assessments to consider, websites to update, and violations to enforce, just to name a few!  As our minds begin to resemble a hoarder’s living room our desktops, drawers, and every other flat spot or shelf can become covered with stacks of undefined amorphous blobs of paper.  And then there are those relationships to manage with homeowners, board members, vendors and co-workers, not to mention spouse and kids.  If we Managers are really committed to getting everything done, and our job demands that we are, then each piece of data, each scrap or pile of paper and every thought that has an action-item associated with it represents an open loop in our minds which must be stored someplace for easy retrieval, and at the proper time, or our career could very well go down in flames.  Our employers give us great tools like computers, notepads, sticky notes, file cabinets, calendars, cell phones and middle-managers to help us manage the steady stream of commitments we make but we generally make limited use of each of them.  Subconsciously we all understand that when it comes to actually getting things done for our clients the most important stuff is kept “right up here” (Point at brain).  And that’s all good as far as it goes, but experience proves that using your head as a filing cabinet or personal information manager in a busy environment like ours can come at a tremendous price to our productivity and personal well-being.  The price first shows up as reduced productivity, added stress, and stunted interpersonal relationships.  When stress is buried or otherwise left unchecked it may turn up again as deep personal dissatisfaction with our job, a reduced capacity for meaningful hobbies, a rejection of social interaction, and other destructive patterns of behavior.  In the extreme, stress can become the source of serious illness, burnout, job loss, or worse.  I contend that most of our stress is caused by carrying around hundreds of open loops in our heads.

 Out of Your Head and Into a Single Trusted System

Wouldn’t it be great if this marvelous brain of ours would only remind us of our prior commitments, unfinished projects and tasks when we could actually do something about them?  Unfortunately, our brain isn’t wired that way.  When the over-full kettle that is our brain arbitrarily decides to spill out one of these half-remembered commitments it comes at really strange times; like while we’re driving down the freeway, or in the middle of writing an email, or while we’re eating, or laying in bed, or conversing with a friend, or a hundred other times and places where we are either ill-equipped, indisposed, and least able to do anything meaningful about them.  Because of the random timing of these reminders we usually just resolve to remember to remember, and the thought is pushed back into our subconscious where it remains an open, stress-inducing, loop.  And this is how many of us live our lives, hour by hour, day by day, and month after month.

There is good news.  The cycle can be interrupted.  In fact, the first step to getting off of the work-related stress mill is surprisingly simple.  It is this: Get and keep as much of this data as possible out of your head, off of your desk, out of your email Inbox and into a single trusted system which you review regularly.  It is only when every open loop is captured in a safe place, a place completely trusted by the former storekeeper, that your mind is truly free to do what it does best: process information; create beautiful things; innovate; resolve conflict; interact meaningfully with others, or to just have fun.  If your system is not trusted by your brain and reviewed regularly, it will immediately and permanently take back the controls.

Next month I will introduce you to two excellent tools which are right at your fingertips which, if customized properly and used consistently, can completely revolutionize your ability to get things done in a more relaxed, stress-free way.  For further study, I highly recommend David Allen’s best-selling book, “Getting Things Done,” available online for about $10.

By Mike Walker, CMCA®, AMS®
The CWD Group, Inc., AAMC

Nowhere is this more true than when it comes to preventive maintenance for common area elements for a homeowner or condominium association.  Stating the obvious, materials utilized in the construction of common area equipment and structures age over time.  With a strategy based on basic preventive maintenance, it becomes possible to extend the useful life of these common elements.

In fact, the current condition of the economy has placed additional pressure on Association budgets. Even so, studies show that it is much more cost-effective to address maintenance issues proactively rather than to seek to affect repairs after damage sets in when issues quickly turn from prevention to “emergency” repairs and responses. In fact, when maintenance is not properly conducted or is cut back due to poor planning or budgetary pressure, the failure of structures, parking surfaces, HVAC and other critical equipment will only increase over time.

The term preventive maintenance (also known as preventative maintenance) implies the systematic inspection and detection of potential failures before they occur.  This term is the polar opposite of unplanned maintenance which is a response to an unanticipated problem or emergency.

A preventive strategy in addressing HOA and Condominium Association maintenance is meant to achieve at least three results: a safer environment due to common areas remaining free from defects, a lower cost of replacement, and a more efficient use of time, manpower and materials.

A Safer Environment

Certainly safety for all residents is a key criterion for association boards when considering what and when to implement maintenance activity.  Rough or significantly uneven sidewalks, loose steps on stairways or wooden porches and decks, low-hanging tree limbs near parking spaces, broken tile around pools, and other such items simply must be granted priority attention on any repair list.  Similarly, replacing broken or failed street and parking structure lighting, repairing video surveillance equipment, or addressing inoperable entry gates or security entrances, must also be the focus of first-priority repairs.  Every such situation needing repair, especially those that could adversely affect the safety of the residents or guests of the community, must be given the prompt attention of those overseeing the common area elements of the association.

With such safety factors in mind, preventive maintenance is an essential tool that can actually look-ahead to those items which, if not kept in proper repair and appropriate working order, could result in excessive risk to people who live in or visit the association property.  With these types of items, preventive maintenance is a tool that can keep adverse conditions from ever developing in the first place.  As we commonly hear, this boils down to a matter of placing safety first.

A Lower Cost of Replacement

Having preventive maintenance programs can help to minimize or even eliminate sudden “emergency” repairs that result in after-hour or rush-order and extra costs to the association.  Such a strategy can help to avoid major unplanned repairs and unknown malfunctions in the association’s common areas or common area equipment. 

In contrast to urgent and unplanned repairs, preventive maintenance can help to maintain a constant work flow thus keeping labor and vendor costs in line with an annual budget plan since they can actually be scheduled on a seasonal basis, in accordance with a planned work schedule, and during normal work hours.

Preventive Maintenance Checklist:

• Gutter cleaning
• Power washing
• Touch up painting
• Siding repairs
• Water prevention (caulking)
• Deck and fence repairs
• Wood rot repair
• Dryer vent cleaning
• Drywall repairs
• Tile sealing and grout repair
• Changing light bulbs
• Irrigation repair
• Pest control
• House cleaning (common areas)
• Window cleaning
• Gutter cleaning
• Carpet cleaning (common areas)
• Duct and furnace cleaning and repair

This strategy should also include regularly scheduled inspections that follow routine seasonal schedules. These inspections can also be based on the annual budget, one that includes preventative maintenance; thus eliminating or at least drastically reducing surprise and reaction-based repairs that result in equally surprising costs or cost overruns.

Yet another way that preventive maintenance can save costs is that taking good care of existing common area elements can often extend the useful life of such elements. With simple routine maintenance it is often possible to expand the amount of time that key equipment and structures are able to be used in a productive manner.  This can reduce the cost of replacement which more than justifies the minimal cost of the preventive upkeep that is routinely provided along the way.

Efficient Use of Time, Manpower, and Materials

Scheduled Inspections and scheduled preventive maintenance can be choreographed in a much more time and labor efficient manner.  These efficiencies can save significant costs with both labor and materials.  Obviously, when work is scheduled well in advance, the use of manpower can be coordinated and tasks can be group into common categories which can reduce wasted time and partial day trip or hourly charges.

In a similar manner, materials for maintenance and routine repairs can be ordered well in advance thus saving on rush-order charges or deliveries that are not properly matched to the availability of the workers assigned to the task.

Most, if not all, reserve studies will suggest or even specify items that need attention in the form of maintenance and repair.  These elements can be translated into a seasonally appropriate time-efficient schedule that includes item-by-item checklists that make addressing each item a matter of a scheduled routine.  In cases where the reserve study provider’s report does not include items that may need attention for maintenance, replacement, or repair in a given annual cycle, most quality service vendors will provide options that include inspections and proposed schedules to address elements that need attention.  Simply make certain that such reports or service providers produce not only a list of needed repairs, but that they also supply the association with items where preventative maintenance would be recommended.

Summary

A preventive strategy in addressing HOA and condominium association maintenance can produce three productive results: a safer environment, lower repair and emergency replacement costs, and more efficient use of time, manpower, and materials.

As stated previously, the current condition of the economy has placed additional pressure on Association budgets. Keeping in mind that it is much more cost-effective to address maintenance issues proactively rather than to instituting repairs after damage sets in can help to save precious human and financial association resources.

When it comes to association maintenance and repairs, it truly is correct that an ounce of prevention is worth a pound of cure!

By Sean Hughes, Director of Operations, RW Handyman

In June of 2011, FHA issued major revisions to the Condominium Guidelines, which, according to FHA, would address concerns raised by CAI. While the new guidelines added some flexibility on assessment delinquencies, commercial space and rental restrictions, it also imposed new and troubling criteria on fidelity insurance, project certifications and assessment delinquency calculations.

After the release of the new Guidelines in June, CAI worked with our members to escalate our efforts to persuade FHA to engage in a more rational and transparent process in developing condominium guidelines. First, CAI sent a letter summarizing concerns about the new Guidelines to the FHA commissioner. CAI noted that the requirements FHA imposed on fidelity insurance and project certifications were in conflict with many state laws and with the best practices of condominium associations. CAI also chided FHA for putting the burden of collecting assessments from bank-owned properties on association boards rather than on the banks that get a subsidy from FHA under the condominium loan program. CAI also filed an administrative challenge against the new Guidelines, arguing that FHA failed to do minimal due diligence when drafting the new requirements. Then, working with our state Legislative Action Committees, we took our concerns directly to members of Congress in August. Additionally, when FHA announced during a public training session that it would be looking at the issue of deed-based transfer fees, CAI sent a strongly worded letter urging it to engage in outreach and research before taking any unilateral action.

The arrival of fall saw the return on the investment in our Congressional Outreach. First, FHA backed away from their costly and duplicative management company fidelity bonding mandate. This was followed a few weeks later by key members of Congress and the Senate sending letters critical of the FHA Guidelines and the lack of transparency in their development. It is through these efforts that CAI will continue to move FHA policy to more rational and fair criteria.

As the year end approaches, FHA’s financial position showed significant deterioration, with the organization well below its statutorily-mandated reserve requirements. There were whispers in Washington of a pending bailout, which would be bad news for potential condominium buyers as FHA continues to be the pre-eminent lender for condominium mortgages. This also will likely make CAI’s task for pushing for reforms of FHA lending criteria even more challenging. At the close of 2011, it looks as if 2012 will be yet another year filled with challenges on the mortgage front.

As part of our ongoing Mortgage Matters Program, CAI is working to protect homeowners in community associations and to ensure access to fair and affordable mortgage products for all current and potential community association residents. You can follow our work and share your thoughts at www.caimortgagematters.org.

Roberts prime sponsored House Bill 1309 which clarifies and expands the reserve study disclosure requirements for condominium owners and extends the law to homeowner associations with significant assets. The WSCAI Legislative Action Committee (LAC) worked closely with Rep. Roberts on the bill.

“Representative Roberts went above and beyond for the homeowners this session,” said Jeremy Stilwell, WSCAI LAC Co-Chair. “We are fortunate to have her knowledge and tenacity working on behalf of homeowners in Olympia.”

As a condominium owner herself, Rep. Roberts was able to share her personal perspective on why disclosure of such important information is critical to the financial stability of a community association.

 “We are thankful for Representative Roberts’ ongoing advocacy for the homeowners of this state,” said Michael Brandt, WSCAI LAC Co-Chair. “Her firsthand knowledge of living in a community association and understanding the need to provide transparent disclosure of such important financial documents is immeasurable.”

HB 1309 passed the House of Representatives 95-1 and the Senate 48-1. The bill takes effect January 1, 2012.

Legislature eager to address major revisions to common interest ownership statutes

In June the House Judiciary committee held a work session in Olympia to get an update regarding developments from a group of attorneys who are preparing to submit a substantive update of the Condominium and Homeowner Association Acts to the 2012 Legislature.

The group, now a subcommittee of the Washington State Bar Association (WSBA) Real Property Section, commenced its effort in the spring of 2009 to thoroughly review the Uniform Common Interest Ownership Act (UCIOA), which was adopted by the National Uniform Law Commission. The WSBA group consists of developer attorneys, an individual homeowner attorney and a community association attorney. While there are a few attorneys that have taken the onerous task of drafting the legislation, stakeholders, such as WSCAI, are included in the larger participant group that will offer feedback on the work product as it is developing.  The benefit of adopting some form of UCIOA in Washington State is to provide a model set of laws to govern condominium, cooperative, and planned unit development communities. The passage of such legislation will provide consistency and clarity to those living in and governing these communities.

WSCAI will actively be monitoring and participating in these discussions, so stay tuned for updates.

Efforts to license Community Association Managers could be on the horizon

Legislation took effect in July 2010 that redefined much of the real estate licensing laws. Although there were attempts to add community association management to those duties of a licensed real estate broker, WSCAI was successful in having those references eliminated from the final legislation.

In late 2010, the Department of Licensing received inquiries on whether or not Community Association Managers (CAM) needed to be licensed as real estate brokers. Because there was no specific definition of what a CAM is, or that it is specifically not a real estate broker, the Department is working with WSCAI in seeking clarification. One of the options to avoid having to require CAMs to be licensed brokers is to create a separate licensing requirement for CAMs. WSCAI will be presenting an update on this issue at CA Day and will be updating members accordingly in the Journal.