New Condominium Guidelines Demand More from Lenders and Community Associations

An already difficult condominium market is likely to become more challenging for buyers, sellers, and especially for lenders as a result of new underwriting guidelines adopted recently by Fannie Mae and mirrored, in key respects, by Freddie Mac.  The revised rules respond to the mounting loan delinquencies and defaults that have bruised the bottom lines of Fannie, Freddie, and just about everyone else involved in financing residential mortgages.  But the new policies also reflect concerns — long-standing, though not often enforced aggressively in the past — about the need for lenders to assess the financial strength of community associations as well as the credit profile of the borrowers purchasing units in them. In addition to tightening the qualifying standards for condominium buyers, the new rules will require lenders to assume more responsibility for reviewing the finances of community associations and will, as an indirect result, push community associations to focus more intently on their budgets and their reserve policies than many have tended to do in the past.   Read more

Indiana Supreme Court splits on rental restriction case

In a ruling that could be the first of its kind in the nation, a divided Indiana Supreme Court Thursday afternoon reversed a lower court’s ruling that a Kokomo subdivision’s covenant restricting rentals violated the federal Fair Housing Act because of potential racial implications. The state’s highest court has been quiet on the issue since hearing arguments in October 2006, but it simultaneously decided to grant transfer and issue an opinion in the case of Villas West II of Willowridge v. Edna McGlothin, No. 34S02-0805-CV-266. The case involved a covenant that the Indiana Court of Appeals described as being “subterfuge for excluding minorities from renting homes” and a case of first impression that could affect how neighborhoods across the state implement no-rent provisions.  Read more       Read opinion  (PDF)

When Worlds Collide: The Executive Replacement Metric v. The Association’s Metric

Weekly, if not daily, I am asked this question from a Board member: “What should we be paying our on site manager?” I am usually asked this question for two basic reasons: The Board is looking to either replace or retain their manager, and they have no idea how to go about placing a value on the position they have available.   Read more

The Surprising Truth about Maintenance Fees and Homeowners Dues

Where the heck does all the money go? Your fees or dues seem high, the whole community sends their payment each month to the Management Company, someone MUST be making a lot of money! I was recently speaking with a customer and he said, “…we pay you guys a lot of money!” I replied, “Sir, I believe our piece of the pie is very small compared to other vendors.” Well you can bet as soon as I was off the phone, I ran a pie chart of this particular association’s monthly budget to assure myself I had had not misspoken and also so that I could have a factual and visual instrument that I could send this customer.   Read more

HOA Health Survey

The health of a homeowner association is important to measure from time to time. Fortunately, even poor health is curable but identifying the problem precedes the cure. Here are a series of self-diagnosis questions to help you out:   Read more

Condominium Railing Replacement Avoid Safety Issues and Future Costly Repairs Now

The pictures tell the story. Ugly rust stains drip over the concrete balcony, cracked and broken concrete, and corroded railing posts are all too common sights in communities and high-rises in Florida, especially on or near any part of Florida’s 1,197 miles of coastline. It is estimated that over $1 billion a year is spent on restoration in the state of Florida, although there are no firm figures on railing replacement as part of that restoration.  Read more

Management Evaluation

An interesting feature of homeowner associations is that they are either self-managed or managed by a community association management firm under the direction of elected volunteers of various backgrounds. Experience has shown that there are some drawbacks to this concept: 

• Many associations are run more as social organizations instead of business enterprises that are comprised of assets often valued into the millions of dollars.
• Continuity in running a community association is often difficult to maintain because board members usually serve for a few years at most and there are turnover issues with professional community association management.
• Board members and managers often lack training and education.

Read more

Reaching the Top with a Ladder

Green: The Driving Issue on Grounds

The hottest color for grounds managers is green, as in the plethora of environmentally friendly lawn products and equipment on the market designed to address the evolving challenges managers face. For example, since 1997, the U.S. Environmental Protection Agency (EPA) has been reducing the allowable emissions from small engines. Through 2012, the EPA will phase in a new set of design standards for reductions of exhaust from non-road engines, including mowers and utility vehicles, and handheld equipment, such as backpack blowers, line trimmers, and multi-task tools.   Read more

Why does talent walk?

Retaining talent is a serious concern for organizations. Each time a talented knowledge worker walks out the door, they take valuable expertise and organizational knowledge with them. In the past this wasn't a concern. People were considered replaceable. Organizational assets consisted of tangible things like the property and equipment that an organization owned. Not any more. Now people, particularly talented ones, are often an organization's most valuable present and future assets. So why are organizations having so much trouble hanging onto talent? Why do talent become so disillusioned and leave?   Read more

Why Would Anyone Want to Blog? .... Or Should I Say Blawg?

There are many possible reasons why a person might blog. They may want to reach out and find a social network, communicate with family, stimulate discussion on a subject, find out how other people feel about things, share daily or weekly thoughts, chronicle travels, learn about babies or raising kids, share resources, talk politics, argue politics, vilify politicians, or create a persona very different than the obvious. There are many possible reasons why a person might want to "blawg" (run a law blog). Like me, they may love to write; they may be looking for a web presence and recognizable identity; they may want to enhance their reputation, educate, find a way to compete, market, increase their audience, give something back, help people who don't have easy access to legal or practical information on a difficult subject, increase their own level of knowledge, gather and produce material for books and publications, provide service, and build a specific kind of law practice. They may want to trigger dialogue or comment with other lawyers or the public, or both.   Read more

The Homeowner's Association

When you decide to buy a new house, don't put all your energies into the house; give some thought to the homeowners association in each new home community that you are considering. How well it is managed will affect your enjoyment of the community, and its rules and regulations for homeowners could impinge on your enjoyment of your own house. Check out both before you sign on the dotted line with a builder.   Read more

Why does talent walk?

Retaining talent is a serious concern for organizations. Each time a talented knowledge worker walks out the door, they take valuable expertise and organizational knowledge with them. In the past this wasn't a concern. People were considered replaceable. Organizational assets consisted of tangible things like the property and equipment that an organization owned. Not any more. Now people, particularly talented ones, are often an organization's most valuable present and future assets.  Read more