Category Archives: CAI National

A community’s last resort: Foreclosing on a home

Nobody wants to foreclose on a home—not a mortgage banker and certainly not a community association. Countless Americans lose their homes when lending institutions are unable to collect mortgage payments. In a perfect world, no one would ever face foreclosure—for any reason.

That’s why foreclosure should always be used as a last resort, applied only when a community association has exhausted all other collection options and only when a homeowner refuses to remedy a significant debt to the association.

CAI does not support people losing their homes to foreclosure for insignificant sums of money. Even when the debt is significant, foreclosure should be considered only after other approaches have failed. In all cases, homeowners facing foreclosure deserve reasonable opportunity to appeal the issue to the leadership of the association.

There is no universal threshold that should trigger a foreclosure. The decision should be based on many factors, including the amount of the debt, the financial health of the association, the reason for the debt, and the homeowner’s willingness and ability to bring the account up to date. The magnitude of this decision requires an approach that is fair, reasonable, and consistent with practices and procedures established by the association’s governing documents.

While there are isolated instances of inappropriate foreclosure, this action is viewed as a last and unavoidable step by the overwhelming majority of community associations. Knowing that people occasionally face financial hardship—a lost job, for instance—many community associations do work with homeowners to develop deferred or special payment plans.

Elected by their neighbors, volunteer community leaders are responsible for ensuring financial stability and the continued delivery of services to residents in the community. An association’s budgetary obligations do not change when assessments aren’t paid. Common areas must still be maintained. Garbage must be collected. Insurance coverage must continue. The pool remains open in the summer. Snow is plowed in the winter.

Homeowners who simply refuse to pay their assessments—as they contractually agreed to do when they purchased their homes in an association—are cheating their neighbors, their community, and themselves. When homeowners are delinquent on their assessments, either their neighbors must make up the difference or services and amenities must be curtailed. That affects everyone in the community, perhaps even leading to a decline in property values.

Used as a last resort, the lien and foreclosure process gives community associations a mechanism to ensure the resources necessary to provide services, protect property values, and meet the expectations of the community as a whole. Placing a lien on property, with the ability to foreclose, is typically enough impetus to get delinquent residents to meet their financial obligations to the community.

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Condominium assessments and bankruptcy: What can associations collect?

Courts across the nation are split on whether post-petition community association assessments constitute dischargeable debts under Chapter 13 of the U.S. Bankruptcy Code. To make matters worse, in November, the Supreme Court denied a petition to review the issue, leaving the community association industry wondering if the existing dispute among the courts will ever have a concise national remedy.

This past July, the Ninth Circuit Court of Appeals, which comprise several Western states, had held in Goudelock v. Sixty-01 Ass’n of Apartment Owners, No. 16-35385 (9th Cir. July 10, 2018), that an individual’s pre-petition debt or claim for assessments—created when a property owner takes title to property and which contractually obligates the owner/debtor to pay assessments—is dischargeable when the owner/debtor successfully completes a confirmed Chapter 13 plan. In November, CAI attorneys drafted and submitted an amicus brief in tandem with the (now denied) petition to the U.S. Supreme Court appealing the Ninth Circuit case.

CAI’s amicus brief made it clear to the Supreme Court that the rationale employed by the Ninth Circuit in Goudelock has far-reaching implications for community associations throughout the U.S., as it threatens the lifeblood of community associations—the continued ability to levy and collect assessments and dues for the maintenance and preservation of community property. Due to the Supreme Court denying the association’s petition, the Goudelock decision stands. This decision is already negatively impacting community associations in the Ninth Circuit, as courts have cited the Goudelock decision in their reasoning for denying community associations the ability to collect debts in Chapter 13 bankruptcies.

Yet not all courts across the country agree with this decision. In February, the U.S. District Court in New Jersey handed down a decision that positively impacts the amount of money a condominium association with a properly recorded lien is entitled to receive when a unit owner files for Chapter 13 bankruptcy.

In an appeal filed by the Oaks at North Brunswick Condominium Association, the New Jersey court reinforced that a condominium association lien that is recorded in accordance with the New Jersey Condominium Act is given elevated priority over other claims and that said lien is partially secured and no amount of the lien can be stripped because of the Anti-Modification Clause. This means that condominium associations should receive the full amount of their lien claim when a unit owner files a Chapter 13 bankruptcy.

For now, these conflicting rulings leave our community association attorneys confused and frustrated. Outcomes such as the Oaks at North Brunswick case provide hope for dischargeable debts in our industry. However, Goudelock provides that pre-petition condominium assessments are dischargeable in Chapter 13 proceedings but leaves some critical questions unanswered. This being the first circuit court case on the issue, chances are the other circuits may weigh in. At the end of the day, attorneys need to be aware of Goudelock and its possible application to every Chapter 13 case where the debtor owes community association assessments.

This post also is running on CAI’s Advocacy blog, where you can read about the latest court cases, state and federal advocacy efforts, public policies, and more.

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Pothole Patrol: What community associations can do to maintain pavement

It’s that time of year again, when rain, snow, and changing temperatures cause potholes to form, wreaking havoc on roadways, parking lots, and driveways. According to the American Automobile Association (AAA), pothole damages cost U.S. motorists roughly $3 billion per year. On a per-pothole-incident basis that comes out to about $300 per driver. Additionally, AAA reports two-thirds of U.S. drivers are concerned about potholes on local roadways.

No asphalt or concrete surface will last forever, but it is easy to prolong the life of your association’s pavement. Community association managers and boards of directors have several pavement maintenance and repair options from which to choose.

Crack Filling
Cracks in the asphalt should be cleaned of dirt and vegetation and allowed to dry completely before filling. Cracks should be filled with emulsified asphalt slurry or a light grade of liquid asphalt mixed with fine sand.

Asphalt Patching
Patching is done in areas with severe alligator cracks and/or potholes. When the patch is cut out, the sub-base material should be examined and compacted thoroughly before patching. The patch should be tack coated, to ensure firm bonding between the old and new surfaces. Base course material is laid and compacted first, and new surface asphalt is laid and compacted on top of that. The patch should be rolled to a smooth finish, and all edges should be coated to minimize water penetration.

Overlays
Overlays are placed over existing asphalt to create a new surface. In recent years paving fabric, placed on the existing asphalt prior to the overlay, has gained popularity as an effective agent to bond the new asphalt to the existing asphalt surface. Once the existing asphalt has been prepared, the paving fabric is laid down and a new surface quality asphalt is laid over it. It is then rolled to a smooth finish to match existing grades of asphalt.

Sealcoating
Sealcoating is a controversial aspect of asphalt maintenance. Generally, sealcoating provides an additional 2-3 years of protection against the elements and use by providing an additional layer of protection. It is also cosmetic, in that it covers old and new asphalt to create a uniform look in the community and increases curb appeal. Sealcoating is best done approximately one year after a new surface has been laid. It should be applied by the squeegee method if possible to ensure the sealing of cracks too small to fill by the traditional method.

For more information on repair road and paving, check out The Road Repair Handbook, available for purchase at CAI Press.

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What to know before you rent your home

If you own a home in a community association and want to rent it out, you can make the leasing experience successful and positive for everyone by understanding your responsibilities. This will help preserve your property value specifically and maintain the association’s property value in general.

Before you make your home available for rentals (short-term or long-term), be sure to check your association rules and local laws. Some communities and municipalities specifically prohibit rentals or may regulate the terms (length, frequency, number of renters, etc.). You also should contact your homeowners insurance carrier to be sure you’re covered for any incidents related to rentals.

Assuming all checks out, follow the simple steps below to ensure you, the tenants, and the association all have a positive experience.

Provide your tenants with copies of association rulesYour tenants may not be familiar with common-interest community living. Take a few minutes to explain to them that living in a community association is very different from living in a rental apartment community.

Ensure that tenants comply with association rules. Your tenants, like all residents, are subject to the rules and regulations of the association. The board and manager can assist you in this area, but the responsibility lies with you.

Advise tenants on the proper use of association facilities. Provide your tenants with written copies of all policies and rules regarding community amenities and common areas. You can obtain copies of these and other useful documents from the board or manager.

Use a written lease agreement, and make sure it requires tenants to comply with all association governing documents. As a landlord of a home in a community association, the lease you use must require tenants to comply with the association’s governing documents.

In the event your tenant fails to comply with these documents, including the bylaws, or its rules and regulations, a representative of the association will first contact your tenants in an attempt to remedy the problem. The association will send you a copy of any notice sent to tenants.

If the tenant doesn’t correct the violation, the association will contact you and expect you to remedy the violation using the recourse available to you through your lease agreement. If you are unable to correct the violation, the association may pursue appropriate legal action against the tenant, and possibly against you.

Provide the association with contact information for your tenants. The association will add your tenants to its mailing list, and they will receive the newsletter, invitations to participate on committees, notices of social activities, and general association-related information. This information also will be used in case of emergency.

If you’re a renter and don’t have a copy of the association rules or if you’d like more information about the association, contact a board member or manager.

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Enforce, collect, and hire help: An association board’s biggest responsibilities

A community association board consists of volunteers elected to serve on behalf of residents to execute a wide variety of tasks. It’s a big job, but most board members are happy to serve and make the community a great place to call home.

The board’s biggest responsibilities include enforcing rules, collecting assessments, and hiring help.

Enforcing rules

One of the most important things the board does is enforce the association rules and regulations.

Rules and regulations help community associations maintain property values and protect a quality of life. These standards are typically described in detail in an association’s governing documents, which all homeowners should have an opportunity to review before purchasing a home in a common-interest community.

While some residents may not like being told what they can and can’t do, ultimately the board is looking out for the greater good. By enforcing the rules, the board is doing its best to keep property values up and conflicts down. Of course, the board wants to make sure the rules are beneficial for the majority—and hopefully all—residents.

You are welcome to raise concerns about the rules at open board meetings. Before you do, come prepared to discuss background information, causes, circumstances, desired solutions, and other considerations.

Collecting assessments

Another major responsibility of the board is to collect assessments from homeowners. Collecting this money is important for the financial stability of the association.

The assessments pay for the common elements enjoyed by all residents. Assessments also help to replenish the reserve funds, which pay for any major repairs the association may need.

The board is responsible for the association’s finances, and collecting assessments is how it ensures that the association remains solvent.

Hiring help

Finally, the board acts on behalf of the association by hiring managers, attorneys, contractors, and other professionals who help better the association. Board members also help conceive and lead many of the projects that will improve the community.

Learn more about what these volunteers do by talking to your board members, attending an open board meeting, or even running for a seat on the board during the next election. The more people we have looking out for our associations, the stronger they will be.

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Seven ways to be heard at your next condo or HOA meeting

Residents are encouraged to attend and observe community association board meetings. If you’d like to bring an issue to your community association governing board’s attention, you’re welcome to speak during the homeowner forum—a time set aside just for you.

So that everyone who attends has an opportunity for a meaningful exchange with the board, typically residents are asked to observe the following guidelines:

Act professionally. Although you’re all neighbors, this is a corporate business meeting. Please behave accordingly.

Sign in. If you’d like to address the board, please sign in when you arrive. You will be called in the order you entered. This allows the board to contact you if further information is needed and to report back to you with an answer.

Be productive. The homeowner forum is an exchange of ideas, not a gripe session. If you’re bringing a problem to the board’s attention, share your ideas for a solution too.

Leave emotions aside. To keep the meeting businesslike, please refrain from speaking if you’re particularly upset about an issue. Consider speaking later, speaking privately with a board member, or putting your concerns in writing and emailing them to the board.

Take your turn. Only one person may speak at a time. Please respect others’ opinions by remaining silent when someone else has the floor.

Keep it brief. Each person will be allowed to speak no more than five minutes. Please respect the volunteers’ time by limiting your remarks. If you need more than five minutes, please put your comments in writing. Include background information, causes, circumstances, desired solutions, and other considerations you believe are important. The board will make your written summary an agenda item at the next meeting.

The board may not be able to solve your concerns on the spot, and it’s not a good practice to argue or debate an issue with you during the homeowner forum. The board usually needs to discuss and vote on the issue first. But every good board should answer you before—or at—the next board meeting.

For more information about managing your community association’s homeowner forum, find the latest on-demand webinars and publications on community association governance.

Don’t miss out on valuable information like this from CAI. Subscribe and receive CAI’s Ungated blog directly to your inbox. Check the subscription box at the right on your screen.

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A ‘kinder, gentler’ community starts with you

“Where is it written that we must act as if we do not care, as if we’re not moved? Well, I am moved. I want a kinder, gentler nation.”

That was the late George H.W. Bush as he accepted the Republican nomination for president in 1988. Bush, of course, would go on to serve in the Oval Office from 1989–1993. His call for civility rang true then and rings true today, perhaps even more so. It applies in politics, society in general, and in community associations.

Many association board members, managers, and business partners report dealing with disruptions at meetings, profane and threatening emails, and other behavior that most people would consider uncivil. In fact, some communities are moving to adopt codes that demand courteousness and respect, ban foul language, and prohibit threats of physical and psychological harm.

Read about these steps and a discussion about civility today in “A Civil Action,” the cover story in the January/February Common Ground TM magazine. 

For the article, we checked in with some experts on the subject, including Daniel Buccino, the current director of the Johns Hopkins Civility Project at Johns Hopkins University in Baltimore, Md.

Is strife becoming more common in American society? Public opinion polls show that most people believe that it is, yet Buccino notes that people have been concerned about civility for a long time, and many think it’s somebody else’s problem.

The university’s project was founded in 1997 by Pier Massimo Forni as an aggregation of academic and community outreach activities aimed at “assessing the significance of civility, manners and politeness in contemporary society.” Forni’s efforts inspired civility-based initiatives on college campuses and in communities around the country.

In his book Choosing Civility, published in 2003, Forni shares and examines 25 rules of considerate conduct. He writes about the need to be agreeable: “We need agreement in our lives because it is gratifying and healing, because human bonds could not be forged without it, and because it is the foundation of social harmony. Of course disagreement can be productive. ‘A little rebellion, now and then, is a good thing,’ observed Thomas Jefferson. In disagreement alone, however, we couldn’t survive.”

Sadly, like Bush, Forni also passed away at the end of 2018. As a new year begins, maybe we can learn to follow their advice. Maybe we can accept that incivility today is our problem. Maybe we all can be a little kinder, gentler, civil, and agreeable.

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What does a community association manager do?

Community associations today employ highly-qualified professional community association managers, and we think residents should know what the manager has—and has not—been hired to do.

Some residents expect the manager to perform certain tasks that just aren’t part of the job. When the manager doesn’t meet those expectations, residents are unhappy. In short, the manager has two primary responsibilities: Carry out policies set by the board and manage the association’s daily operations.

In practice, what does that mean for some common resident questions and concerns?

  • The manager is trained to deal with conflict, but he or she typically will not get involved in quarrels you might be having with your neighbor. However, if association rules are being violated, the manager is the right person to notify.
  • While the manager works closely with the board, he or she is an advisor—not a member of the board. Also, the manager is not your advocate with or conduit to the board. If you have a concern, send a letter or e-mail directly to the board.
  • Although the manager works for the board, he or she is available to residents. That doesn’t mean the manager will drop everything to take your call. If you need to see the manager, call and arrange a meeting.
  • The manager is always happy to answer questions, but he or she is not the information officer. For routine inquiries, like the date of the next meeting, read the newsletter or check the association website or bulletin board.
  • The manager is responsible for monitoring contractors’ performance but not supervising them. Contractors are responsible for supervising their own personnel. If you have a problem with a contractor, notify the manager, who will forward your concerns to the board. The board will decide how to proceed under the terms of the contract.
  • The manager inspects the community regularly but even an experienced manager won’t catch everything. Your help is essential. If you know about a potential maintenance issue, report it to the manager.
  • The manager does not set policy. If you disagree with a policy or rule, you’ll get better results sending a letter or e-mail to the board than arguing with the manager.
  • The manager has a broad range of expertise, but he or she is not a consultant to the residents. Neither is he or she typically an engineer, architect, attorney, or accountant. The manager may offer opinions but don’t expect technical advice in areas where he or she is not qualified.
  • Although the manager is a great resource to the association, he or she is not available 24 hours per day—except for emergencies. Getting locked out of your home may be an emergency to you, but it isn’t an association emergency. An association emergency is defined as a threat to life or property.

For more information on the community association manager’s role, visit www.caionline.org and search “community managers.”

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Clean that clutter! Six steps to a mess-free home

Do you have piles of clothes, papers, and “stuff” collecting in your home? You’re not alone. It’s time to clean up that clutter and make your abode a more enjoyable and relaxing place to live. To help you tackle your next home organization project, follow this quick guide to decluttering:

  • Create a schedule. Depending on how high those piles are, you may not be able to accomplish the task in a single weekend. So, try tackling one room at a time. It may seem like a daunting project, but it will be less scary if you break it down into segments.
  • Practice a one-item-in-one-item-out rule. When you buy an item of clothing, for example, throw out one item of clothing. Not only will it keep down the clutter, but it will also make you rethink whether you really want to buy that new item.
  • Create a stress-free environment in the bedroom. That means no piles of toys and no mounds of clothes. It should be a place where you can rest without worry.
  • Make cleaning up fun for kids by turning it into a game. Kids are often the clutter culprits; involve them in the process to make things neater and more organized.
  • Know your vision for the room. What do you want from a room? Is it a place where you work, a space where you unwind, a playroom for the little ones, or something else? If you can answer that question, you’ll be able to decide what items stay and what items go.
  • Try to make decluttering a part of your everyday life. If you do it at the same time every day—like before you go to bed—the piles won’t accumulate and you won’t have to set aside a block of time to do a major cleaning.

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‘Twas the Night Before (the HOA’s) Christmas

‘Twas the night before the HOA’s Christmas, and through the community
Not a complaint was heard, there appeared just pure unity;
The thank-you notes were placed by the bulletin board with care,
In hopes that the board and manager would soon see them there;

The homeowners were nestled all snug in their beds,
No worries of paint or roofs bothering their heads,
And the Vice President in her condo, and I in mine too,
Had just settled down for a break from reviewing the dues,

When out in the courtyard there arose such a clatter,
I sprang to my balcony to see what was the matter.
Away to the railing I flew like a flash,
Only to see neighbors with gripes to rehash.

I couldn’t figure out in the dark of the night
Exactly what they thought gave them the right,
But I knew from my time on the homeowners board,
Our meetings these neighbors had always ignored,

Then in a flash I noticed a visitor,
Who tried to join that group of inquisitors
He wore a red fur coat over an ample belly, and
His hearty laugh made it shake as it were jelly,

His smile quickly faded as they all turned away,
They told him that tenants had nothing to say,
The jolly man disappeared as quickly as he came here,
Amid the sound of eight snorting… reindeer?

In a moment came another, without much ado,
He arrived with a viewpoint needed and new,
I knew in a flash it was manager, Nick.
He knew what was needed and he brought it quick,

He exclaimed “Now, Member! now, Neighbor! Now, Bylaws and Covenant,
Please read the rules before bringing your comment.
Now back to your homes, and back to your castles,
Please, just for today, have a cease to the hassles”

He said “you by choice bought in a community,
Which works at its best when all live in unity,
Remember that your board serves you for free,
and consider joining a committee – or three.

“You have no busy elves, and HOAs thrive when all work as a team,
If all think only of selves, a nightmare soon it will seem.
Your association is much like a large but rowed boat,
If each rows as a solo, not for long will it float.”

Amidst headshakes and handshakes the courtyard then cleared,
And I hoped that above still flew a sleigh and eight impatient reindeer.

No reindeer or jolly elf’s labors returned to the site,
But folks reached to their neighbors, and started treating them right.
A different air began to take hold in the complex
As the Golden Rule became our theme and our text.

Manager Nick surveyed the scene, pleased,
Knowing the group a happy future had it seized.
And laying his finger aside of his face,
He ran toward his car as if in a race;

He sprang to his auto, heading home in a dash,
And away he drove as quick as a flash.
But I heard him exclaim, ere he drove out of sight,
HAPPY CHRISTMAS TO ALL, AND TO ALL A GOOD-NIGHT!

[Readers: May peace and neighborliness permeate your communities in the coming year!]

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