I have been in this business for many years and while I have heard many agree with me or others on how to rein in delinquencies I also know this is a hotly debated topic. One of our associations refuses to charge any form of late fee and to give them their due they don’t have a ton of delinquencies. However that is not my advice. My advice is simple; be mean and miserable, tough and unrelenting and digress only where there is a well documented reason to be generous and forgiving. My experience in dealing with rentals is we tell them how tough we are going to be, if we have to chase them. If they have a problem and call us before we call them, life will be much easier. We have very, very few delinquencies and only an occasional tenant who pays after the third day.
The first thing that is needed after a reasonable set of CC & R’s that set out the broad aims of the association, to collect on time, is a well written collection policy. In fact if there is not a collection policy in writing good luck going all the way to collect from that delinquent homeowner. My suggestion. 15 days and the dues are late. 30 days and they gather interest at 12%. 60 days and they get a pre-lien letter and 90 days and they are liened at the cost of the homeowner. There are some other provisions that must exist such as examining the record, and holding a hearing or a dispute resolution procedure, but the essence is simple, chase hard and fast. Now that does not mean being inhuman. When an association learns of a tragedy within a family steps should be immediately taken to offer assistance, sympathy, education and perhaps a delay in the imposition of any late fees. It is much easier however to delay the imposition of a penalty for 30 or 60 days than to try and collect when the association’s policy is to do little or nothing for 6 months. For instance if the policy is a pre-lien letter after 60 days a 30 day delay because of hardship or bereavement is perfectly reasonable.
Our company offers collection services whereby we track and pursue delinquencies on behalf of the association. There are also a number of attorney firms some of whom specialize in collection and there are collection agencies that do nothing else.
The filing of a lien early is very important. Many properties are being sold as short sales with the original lending agencies agreeing not to be repaid in full. This does not mean that the association may not seek full repayment. Small claims actions can also produce favorable results.
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PPMHandbook
The key to good communication
The oft spoken complaint from both directors and homeowners in Community associations is “they never return either my phone calls or my emails”.
The truth of the matter is we all delay returning some calls sometimes even with good reason. We want to check the facts, we want another opinion, maybe even a legal one, and we want the customer to cool down first. Most of the time however we just don’t want to take or return the call because we know it is going to be awkward, difficult, stressful, obnoxious and certainly not pleasant. Our day would go a lot better if we attacked the problems first and having dealt with them however bad they might be we now have the ability to focus on managing the routine functions without the dreaded call or email waiting out there for us.
If we could only realize that prompt attention to the difficult saves us from worrying about it all day. The news or complaint or request or demand may not be what we want to hear but now it’s over and we can move on to other things rather than be suspended inanimately waiting to deal with the dastardly call. If we recognized that our job is to sooth the fevered brow, to lower the temperature as I call it, we should be ready and eager to learn how better to do something. Owning up to a mistake, omission failure is in itself cathartic, it allows our emotions to relax and slow down. Instead of building up a fever postponing the inevitable we are able to release some of the tension as the difficult emotion has passed. The goal of management should be to answer all calls and emails in a reasonable time. Each person has their own definition of what is reasonable. A blackberry user probably has a shorter fuse than someone who still has a rotary phone at home. Whatever the standard adopted by the management company it should stick to it. There is even some software that tracks phone calls.
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How to increase reserves – gently
This time I have included the answer in the title. No-one wants an increase ever. No-one wants more taxes ever no-one wants to pay for a bond for a dam, a school (maybe if you have a bunch of young children..) a library, a freeway, the list goes on with people being more or less averse to the additional cost. Almost every association is California is under-funded. Why? Because the law presently does not require fully finding reserves or even that they be funded partially. A new regulation imposed by the government lending agencies requires that a certain percentage of the annual expenses be placed in reserve each year. Presently it’s 10%. But they left the back door open allowing associations to spend that money each year; so no actual increase may ever really occur. Some years ago they introduced a provision that said Boards must now inform the membership how much the funding shortfall is, and what if anything note if anything, the board plans to do about it. Boards didn’t take long to realize they could say with impunity they planned to do nothing about it and while members could read that, some would sigh in relief, knowing they had been spared another increase in their dues. My view. Decide upon a funding plan for 5 to 10 years share it with the members in advance and start collecting. The plan need not solve all the underfunding issues of the association in one stroke but should have the goal of reducing the shortfall by a certain percentage or increasing the funding to a certain figure or percentage by the year… If the goal is reasonable and the members swallow the bitter pill, then keep on until it is complete. As for the future.. Perhaps more of the same a long term plan to reduce the shortfall still further. It may take 50 years to fully fund but at least the association has a plan and its members are on board. If the members balk at the plan in sufficient numbers, elongate it, allow it to take a shade longer but stick to the final version when at least a vast majority are on board.
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How Condo Certs works?
Condocerts.com is an internet company that simplifies the process of ordering and obtaining association documents for homeowners, buyers, agents, escrow firms, title companies and appraisers.
Pilot chose to work with Condo Certs because it alleviated the time it took our staff to process these requests. Condo Certs dispenses this type of information on a daily bases which allows Pilot and their managers to focus on other tasks. If an issue should arise Condo Certs resolves the issue within the same day and they always have a representative available for us to communicate with it. This day in age everything is either done by an email request and with the availability to upload, download documents, they have created a better way to expedite this important request for a buyer or seller. Another incentive is that Pilot is progressing with choice to become Green, before all packages were done in paper form, now with Condo Certs the client has an option to order the documents and have them emailed to them in a PDF format or a paper package. If an owner needs just an individual document they can order and have it downloaded and saved on their computer eliminating all the paperwork to pile up. We are completely satisfied with our decision to use Condocerts.com, and now understand why so many other management companies use them.
On Condo Certs, you will be able to access all governing documents, minutes, budgets, financials, insurance declaration pages, reserve reports and other information that a buyer or seller might need to complete their transaction.
Lenders can obtain a condo questionnaire which Condo Certs created that covers the typical questions that a lender requires to approve a loan. If you should need a specific questionnaire to be manually completed, Condo Certs customer support will be able to assist you with the order. If a buyer, escrow company, lender, agent has additional questions after the order has been completed you can contact Pilot and ask to speak with the Escrow Department.
Using Condocerts.com is simple, you log on to: www.condocerts.com to create an account at no cost. There you will be able to find the association and can begin ordering the documents you need. You have the choice to order a full package or individual documents as well.
Condocerts.com has a great and friendly staff that will assist you with any of your questions. You can also reach us here at Pilot if you should need additional assistance.
How does an emergency phone work?
Most management companies but not all have an emergency telephone system. Some employ an answering service that transmits the message and caller to a selected member of the management team. Other have an emergency phone number advertised in their marketing material. Yet others give out an emergency number at their regular office number. Whatever the method a trained, hopefully, member of the management’s team staff will answer and direct the caller on what to do.
Our company rotates the emergency phone whose number is available from the after hours phone number on a 7 day basis. In other words a member of staff handles the calls for one week at a time. They have a binder with everyone’s telephone number including emergency numbers and a list of the regular vendors for each association. They also have a list of first responders in the event of an emergency that offer to respond to any situation. Our customer service representative then follows up the next day or first workday to determine if the matter has been satisfactorily handled. I am not sure what happens in other companies but I am sure their experience is similar to ours we do get a call or two about billing enquiries and I once had a customer explain in great detail that a fern was leaning over outside her door and could I arrange some emergency water for it. I asked if it could wait until Monday when I would have the landscapers take care of it.
How to deal with aging properties
Many properties are coming of age and by that I mean associations. Associations have been around for 40 or so years but did not become the gold standard until 30 odd years ago. Many are now facing large bills for re-roofing, re-siding, foundation work, re-plumbing including deteriorating sewer lines, repainting, older electrical systems, out of date lighting and one of the most overlooked outgrown landscaping. One of the tools that Pilot uses is its expectation list, a simple tool in which the board suggests their priorities for the forthcoming year or two. Planning is the key. Each item of the reserve study should be carefully viewed to see when it needs next be replaced and secondly are the funds in place now to pay for its replacement. The answer to the second question is often “not yet”. Boards of directors tend without guidance, to look no further than one year when they do their annual budget, knowing perhaps that each of the directors may well not be there in the future, they tend not to think long term. Even a 5 year plan will be much more effective in bringing to light glaring gaps in finances.
The first step then is to identify those items in the capital budget that need replacement, their approximate cost and the method to be used to fund that cost. That means prioritizing the work, getting approximate bids for costs from favored vendors who are asked to provide just a rough estimate of costs not a formal bid as the work is not going to be scheduled for the time being.
Sadly most associations do not have the capital saved to fund all the replacements coming up, and so seek special assessments every time money is needed. Loans from banks are becoming more and more popular but all they really do in addition to provide jobs at the bank is load on an interest charge and an up front fee to the overall cost. That’s not to say that a loan is not actually the best method of funding a time sensitive repair or replacement rather than waiting for funds to accumulate from dues, while the condition of the item continues to deteriorate. I have always believed disclosure, in sharing this information with the membership so that everyone is aware of the future and no-one is surprised to learn how the association is planning to pay for replacement.
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