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6 Sep 2016

Stay the course

Posted by Orlando HOA Services. No Comments

It is really easy to get distracted throughout the year with landscaping improvements, new and improved security systems, and other random projects throughout the year. Your association made a budget for a reason, so try your best to stick to it as best you can.  However, while a pro forma budget is a great guideline for your HOA, it is a living document and you need to be reasonably flexible. If you do have to make an unexpected expenditure, take your time and make the best decision for your HOA or condo association. Find out what caused the unexpected expense in the first place and create ways to prevent it in the future.

Creating and maintaining an HOA budget is an essential part of maintaining a fiscally responsible association.  Even associations that are not as healthy financially as they need to be, with some minor modifications, they too can be financially fit in time.   If you follow the basic steps outlined in the previous blogs this month and continue to evaluate and adjust over time, your community association will thrive financially now and in the years to come.

Do you need an expert? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong and well into the future. Email us at JR@Orlando-HOA.com or visit our webpage at www.Orlando-HOA.com!


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30 Aug 2016

Special Assessments

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We have heard many times “Why can’t we have a special assessment instead of raising our monthly dues?” This philosophy does not work.  If your association is having a problem meeting its expenses because of tight cash flow, you need to raise your assessment amount or your assessment frequency.  Special assessments are just that, special.  They are not for paying your bills.  They are intended for major improvements, or in a case of emergency repairs, not to pay the landscaper.Homeaway-4-10-07.jpg

How do you tell if your HOA needs a special assessment? It depends on if your HOA is financially strong or not. The current Davis-Stirling law requires the HOA to publish a 30-year percent funded report for your reserves with your reserve study. It tells you clearly where you are well-funded and where you are weak. A strong HOA is 73% funded. Below 35% is weak and indicates a good chance that you will need a special assessment in the future. If you want to avoid costly special assessments, make sure your condo’s reserve fund will be there when large replacements are due.

 

Do you need an expert? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong and well into the future. Email us at JR@Orlando-HOA.com or visit our webpage at www.Orlando-HOA.com!


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23 Aug 2016

Project Priority

Posted by Orlando HOA Services. No Comments

Priority-ManagementIdeally, we would be repairing and maintaining our common areas on time and on budget. But stuff happens. Then… what do we do? We have worked with HOA and condo associations that get overwhelmed because they have so many repairs and projects but only a limited amount of budget.

 

 

 

 

Any kind of future projects or repairs needs to be prioritized accordingly. This is where you must separate your association’s needs vs wants.  Everyone wants the landscaping or condo exteriors to look immaculate, but no one gets excited repairing an unsafe stairwell or repairing a leaking sprinkler system.  You must eliminate any safety or potential liabilities before exploring any community beautification projects. Your first priority then is to fix the thing that is doing the most damage and creating the most chaos to your structures.

Finally, if you find your HOA have to defer maintenance, make a plan as to when and how you’re going to make that maintenance up. Put it off one, MAYBE two years, but get it done. Meanwhile, fix the budget issue that is keeping you from doing your regular maintenance. Yes, no one is happy when you raise condominium dues, but they will be much less happy when the structures start to fall down around their ears.

The best way to avoid being in such mess is to have a good financial plan and management. Do you need an expert? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong and well into the future. Email us at JR@Orlando-HOA.com or visit our webpage at www.Orlando-HOA.com!


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16 Aug 2016

Creating an HOA Budget

Posted by Orlando HOA Services. No Comments

This is the number one tip in creating an HOA Budget: Actually doing a budget! This may seem silly, but many associations fail to create a budget before proceeding to the next year. Be aware of when your HOA’s fiscal year starts. Most HOAs start their fiscal year in January, but some HOAs start in strange months (like August). If you don’t have an annual budget, you will find yourself in a mess about halfway through the year when you realize you don’t have enough funds to last the rest of the way.

 

Your HOA budget is also a required legal document. According to current Davis-Stirling law, you have to disclose all of your HOA’s financial documents prior to sale of your home. If you don’t have a budget, you can’t disclose it and you will have difficulty selling.

 

Here is another related tip: Do your reserve study! Reserve Study is another budget planning tool for reserve funds to help your HOA be financially stable for those major common area expenses such as roofing, resurfacing roadways, etc.

 

Having an annual budget and reserve study is important for your HOA’s financial health. If you have some thoughts and questions, go ahead and comment! Do you need an expert? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong well into the future. Email us at JR@Orlando-HOA.com or check out our website at www.Orlando-HOA.com!


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9 Aug 2016

Filling Blanks in Your Plans

Posted by Orlando HOA Services. No Comments

whatplanOften times, problems arise when behind the scenes work are not getting done. Those problems can be minor problems or big problems, but they are usually preventable with proper procedures. We would like to have those things done perfectly, however, most of us have lives outside of our HOA. The Board of Directors doesn’t always have the time or the knowledge to do the job right. But all is not lost, here is a simple list of what every HOA needs to get done and tips to complete them to help your HOA to be financially strong in the years to come.

 

 

  1. Budget – Every HOA needs a budget that maps out their entire year. Assuming the HOA is on a calendar fiscal year, July is often a good time to start planning for the annual budget. You have 6 months of the current year and 6 months of the prior year to help you plan for the next year. Another good reason is that your budget needs to be in homeowners’ hands by the end of November. Don’t procrastinate on this!
  2. Annual Report – HOAs are formal not-for-profit corporations where they have to give an annual disclosure report to their investors, or in the case of HOAs, their homeowners. This report needs to be given 30 – 90 days prior to the start of a fiscal year and includes financial and legal information that takes a while to compile. It will include your annual budget, reserve study, and specific policies in your HOA.
  3. Proactive Planning – Summertime gives you a good snapshot of what future projects to do, so it’s also the best time to plan the details. Prioritize what is needed vs wants. You do not need a fancy new security system when the roofs are leaking. Use common sense!

We hope this gives you a quick picture of what your HOA should be doing. Do you need an expert to help with these things? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong and well into the future. Email us at JR@Orlando-HOA.com or visit our webpage at www.Orlando-HOA.com!


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3 Aug 2016

Your HOA To-Do List

Posted by Orlando HOA Services. No Comments

Often times, problems arise when behind the scenes work are not getting done. Those problems can be minor problems or big problems, but they are usually preventable with proper procedures. We would like to have those things done perfectly, however, most of us have lives outside of our HOA. The Board of Directors doesn’t always have the time or the knowledge to do the job right. But all is not lost, in this and next post, we will share a simple to-do list of what every HOA needs to get done to help your HOA to be financially strong in the years to come.To-Do List

We will start something fairly easy today – Board Meetings – HOAs are required to have at least 4 meetings each year. Schedule it ahead of time! Assuming the HOA is on a calendar fiscal year, plan it out in January! Make people put it on their calendars way ahead so they don’t have last minute excuses like “My cat is on fire” (which can actually be a valid emergency excuse).

Next week, we’ll go over the actual work; work we help our clients do. Do you need an expert? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong and well into the future. Email us at JR@Orlando-HOA.com or visit our webpage at www.Orlando-HOA.com!


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14 Apr 2016

With Great Power Comes Great Responsibility Part 4 of 4

Posted by Orlando HOA Services. No Comments

Glad you can join us for the last post in this series “With Great Power Comes Great Responsibility”. In this final segment we will talk about necessary damage and summing all the other posts that came before. It’s the same thing with how firemen control wildfires, they intentionally burn dead trees so wildfires don’t go out of control when it happens. Similarly, some construction need to be demolished before it can be built up again.

this is fine dog

Damage Done for the Good of the Community

Sometimes CC&Rs don’t address the issues that are presented when a community association must destroy or damage individually owned property for the common good. For example, perhaps there are exclusive use decks that prevent the HOA from accessing the roof membrane. When it’s time to re-roof the building, the association has to demolish the decks. Who pays?

The HOA may take the position that, because the CC&Rs and Civil Code Section 4775 says that the owner of the separate interest must maintain the exclusive use common area decks, the owner must pay.

The owner will say there was nothing wrong with the deck; it had to be demolished to re-roof the building, and the cost is part of the association’s cost of maintaining common area.

Many courts have made analogies between homeowners associations and mini-governments. Under this analysis, we can conclude that the association, in demolishing the decks, is doing something like what a government does when it takes privately owned property for a public purpose. The homeowners association, like the government, must compensate the property owner for the taking. However, if the deck was nearly worn out, the association should pay only for the deck’s remaining useful life, not for a brand-new deck.

Changing the CC&Rs to Reallocate Maintenance Responsibility

Sometimes, HOAs change the allocation of responsibilities by amending the CC&Rs. This may or may not be a good idea.

Sometimes, the original CC&Rs required owners to maintain particular components. If some owners don’t do this in a timely manner, it can damage other people’s property values. Sometimes, the HOA can achieve economies of scale by replacing all decks at the same time; it would cost a lot more if each owner replaced only one deck. It may be particularly appropriate for an association to assume maintenance responsibilities when it’s impractical for individual owners to maintain a component. How reasonable is it to expect individual owners to maintain, repair and replace windows on a multi-story building? Each owner has to scaffold the building in order to replace one window! That makes no sense. If an association is going to assume maintenance of components, be sure to reserve for the new component.

When an area is inaccessible, it’s often easier to have the owner maintain it. But sometimes, associations with financial problems try to solve them by shifting responsibility for components to individuals. This isn’t always wise; it can lower property values because not all owners have pride of ownership, and fixing each component individually loses all ability to get economies of scale.

Summary

Sometimes, figuring out who pays for what in a community association is a big headache, and the answer makes everyone unhappy. The best ways to avoid these problems are the following:

  1. Amend your CC&Rs to make the solutions to these problems as clear as possible.
  2. Require or encourage each owner to obtain his/her own liability insurance and adequate levels of property insurance.
  3. Adopt clear policies about who pays the insurance deductible.
  4. Act fairly and use common sense.

These steps will help you cope with these thorny issues.

http://www.echo-ca.org/article/how-determine-maintenance-responsibility-hoas

Do you need an expert to keep your self-managed condominium association fiscally healthy? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong well into the future. Contact us at JR@Orlando-HOA.com or check out our website at www.Orlando-HOA.com.


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7 Apr 2016

With Great Power Comes Great Responsibility Part 3 of 4

Posted by Orlando HOA Services. No Comments

We can talk about rflooded-house1esponsibilities all we want, but no one is perfect. According to a dear friend named Murphy, anything that can go wrong, will go wrong. (For information about Murphy’s law, click here to wikipedia) This post and the next will talk about what to do when things go wrong. Today we will discuss what happens if an individual in your close knit community did damage and insurance solutions.

 

 

Damage Caused by an Individual

The above principles are modified by the common law of negligence and, sometimes, by other CC&R provisions. Under the common law, everyone has a “duty” to act reasonably to avoid foreseeable risk of harm to other people. The failure to do this is negligence. If someone’s negligence causes property damage, wrongful death, bodily injury, etc., the negligent person is responsible for the consequences.

Thus, even though the separate interest is usually supposed to be maintained by an owner, the rule is usually different if the homeowners association was supposed to maintain the roof, a common area, but did so negligently; and, as a result, the roof leaked and damaged the separate interest. In that case, it’s up to the HOA to fix the damage to the owner’s separate interest and personal property.

This rule doesn’t always help, though. What if an owner’s dishwasher leaks and causes a flood? Can you prove the owner was negligent? Or did the dishwasher leak all of a sudden, with no warning, in which case maybe the owner wasn’t negligent, after all? Fortunately, such damage is often covered by insurance!

Insurance Considerations for HOAs

The CC&Rs usually require a community association to purchase insurance for the common areas. The community association will purchase “property insurance,” which covers the common areas if they are damaged by an insured peril, such as a fire or windstorm. The HOA will also purchase liability insurance, which will cover damage caused by the homeowners association’s negligence. Many times, damage to the common area will be covered by one or both of these policies. Most policies define common area in the same way it is defined in the CC&Rs. However, HOAs should have a written policy, or a CC&R provision, setting forth who pays the deductible in various circumstances. Usually, if the HOA was negligent, or if no one was negligent, the association pays the deductible. If the damage originated in an owner’s unit, then often, the owner is asked to pay the deductible, whether or not the owner was negligent.

Insurance does not cover all possible damage, however. What happens if an owner does not have liability insurance; he hires an uninsured contractor to do work in his unit; the contractor whacks a common area water pipe and causes a flood, and the flood damages the separate interests? The homeowners association’s property policy won’t cover the separate interests. The HOA’s liability policy won’t cover it either—the association did nothing negligent! The owner who hired the contractor is liable, but if the damage is hundreds of thousands of dollars—which can happen, neither he nor the uninsured contractor can afford to pay. Sometimes the individuals whose separate interests are damaged are underinsured. This can result in owners, who are innocent victims being displaced for months, having all their property destroyed, with no good source of obtaining payment! For this reason, although it’s hard to enforce, many homeowners associations amend their CC&Rs to require all owners to purchase liability insurance! Others at least strongly “urge” owners to do so.

 

Article originiated from: http://www.echo-ca.org/article/how-determine-maintenance-responsibility-hoas

Do you need an expert to keep your self-managed condominium association fiscally healthy? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong well into the future. Contact us at JR@Orlando-HOA.com or check out our website at www.Orlando-HOA.com.

 


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22 Mar 2016

With Great Power Comes Great Responsibility Part 2 of 4

Posted by Orlando HOA Services. No Comments

Fairlington_Common_Area

Last time we learned about the importance of referring back to the CC&Rs to help sort out different liabilities. Take a deep breath and hang tight because we will keep going back to basics and help you get all the mumbo jumbo sorted out. This time we will look at the differences between Common Areas and Exclusive Use Common Areas.

How to Determine Common Areas and Exclusive Use Common Areas

How do you figure out what is common area, what is exclusive use common area and what is a separate interest? First, look at your documents. If that doesn’t help, review Civil Code Sections 4075-4190.

Civil Code Section 4185 provides that a separate interest in a condominium is a unit as described with detailed boundaries in the condominium plan (Civil Code Section 4125). In a planned unit development, a separate interest means “a separately owned lot, parcel, area or space.”

Civil Code Section 4185 goes on to say, “Unless the declaration or condominium plan, if any exists, otherwise provides, if walls, floors or ceilings are designated as boundaries of a separate interest, the interior surfaces of the perimeter walls, floors, ceilings, windows, doors, and outlets located within the separate interest are part of the separate interest and any other portions of the walls, floors, or ceilings are part of the common area.”

Thus the surfaces of walls, floors, etc., are separate interest but, unless the documents say something else, the sheetrock, subfloor, etc., are common area.

Learn more about designating maintenance responsibility for condominiums and planned unit developments

Another very helpful provision is found in Civil Code Section 4145, which defines exclusive use common area as follows: “A portion of the common areas designated by the declaration for the exclusive use of one or more, but fewer than all, of the owners of the separate interests and which is or will be appurtenant to the separate interest or interests. Unless the declaration otherwise provides, any shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, patios, exterior doors, door frames, and hardware incident thereto, screens and windows or other fixtures designed to serve a single separate interest, but located outside the boundaries of the separate interest, are exclusive use common areas allocated exclusively to that separate interest” (emphasis added).

The bottom line is that unless the CC&Rs say something else, the owners are responsible to maintain  the exclusive use common area and unless the CC&Rs say something different, the items listed in  Civil Code Section 4145 are all exclusive use common areas.

– See more at: http://www.echo-ca.org/article/how-determine-maintenance-responsibility-hoas#sthash.sApAlfRF.dpuf

 

Do you need an expert to keep your self-managed condominium association fiscally healthy? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong well into the future. Contact us at JR@Orlando-HOA.com or check out our website at www.Orlando-HOA.com.


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8 Mar 2016

With Great Power Comes Great Responsibility Part 1 of 4

Posted by Orlando HOA Services. No Comments

Imagine this: You were sleeping soundly before drips of water falling down woke you up. Apparently one of the water heaters inside the building leaked and damaged the surrounding units. Who is responsible? To clear things up, we’ll start a four-part series to help you understand who is liable for what part.

spiderman

This is one of the most frequently asked questions involving community associations. It can come up at 2 a.m. after a dishwasher flood has damaged four units; when a homeowners association is re-roofing a building and wants to demolish people’s decks to gain roof access; when an owner’s uninsured contractor makes a hole in a pipe and causes a flood; or when mold is found as a result of leaks in common areas and owners’ failure to ventilate units properly.

The question has no easy answers and usually generates heated emotions. Here are some general principles that may help you sort out the answer.

 

What Do the Governing Documents Provide?

The first place to look is in the HOA’s Declaration of Covenants, Conditions and Restrictions (CC&Rs). The most helpful provisions will usually be the following:

Definitions – Is the area in question common area, exclusive use common area or a separate interest? (In a condominium, the separate interest is a unit. In a planned unit development, it’s the lot and the residence.)

Division of Property – This section often explains who owns and maintains various areas of the development.

Powers and Duties of the Association – See what the CC&Rs say about the HOA’s maintenance responsibilities.

Owner Maintenance Responsibilities – See what it says about the owner’s maintenance responsibilities.

Reviewing these provisions will answer a high percentage of questions about who must pay for various items. If your CC&Rs are unclear about specific areas, this should be addressed when you revise your governing documents. The attorneys who prepare the revisions usually don’t know nearly as much about your building as you do; so be sure to bring any ambiguities about this subject to the attention of the attorneys who are preparing the revisions.

Try Looking at Civil Code Section 4775

After you have looked at your governing documents, the next step is to check Civil Code Section 4775. That code section is part of the Davis-Stirling Act, and it currently states:

Unless otherwise provided in the declaration of a common interest development, the association is responsible for repairing, replacing, or maintaining the common area, other than exclusive use common area, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest.

This is one of the few provisions of the Davis-Stirling Act that does not prevail over contradictory provisions of the CC&Rs. But if the CC&Rs don’t “otherwise provide,” then Civil Code Section 4775 controls, except as discussed later in this article.

A bill was signed by Govenor Brown in September of 2014 that will significantly alter Civil Code Section 4775. While the new law will not go into effect until January 1, 2017, it’s important that your HOA is aware of the coming changes to prepare their CC&Rs to accomodate the law. Look to ECHO to provide tools and material to best help your HOA through the process.

Read more about the changes to Civil Code Section 4775

http://www.echo-ca.org/article/how-determine-maintenance-responsibility-hoas

Do you need an expert to keep your self-managed condominium association fiscally healthy? Orlando HOA Services can help you set up good financial practices that will keep your association financially strong well into the future. Contact us at JR@Orlando-HOA.com or check out our website at www.Orlando-HOA.com.


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