Latest "Common Foundations" Article

If you have a major paving job for your condo complex, it is best not to wait till the last minute. Now is the time to plan and get your best prices before spring has sprung.

When it comes to paving projects, often the Board needs an education on the paving issues and options available. There is a lot of misinformation out there. There is no better way to have a meeting’s agenda go astray than when no one knows the difference between or benefits of seal coating and a binder top.

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Inflation is something we’ve not paid much attention to for many years. Since the 1980s, inflation has averaged almost negligible amounts in most years. Furthermore, we’ve grown used to making investments that approximate or at least keep us ahead of inflation based on our rate of return.

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Managing a capital budget and expenditures for a community association involves greater responsibility and risk than it does for one’s own home.

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Community living has many benefits.

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With existing buildings consuming 40 percent of our energy supply, they represent a logical and necessary target for energy conservation measures. In this issue of Common Foundations,our goal is not to convince you that energy conservation makes sense. Most of us can agree that it does. However, community associations represent an ownership class with a wide range of needs, opportunities, and responsibilities. In this issue, we try to address what a prudent board might do with regard to energy conservation, depending on the type of associ

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How much should our association keep in our reserve fund? is a question we are often asked. At first blush, the answer seems simple – enough to cover all anticipated expenditures over the reserve period. Upon further analysis, the answer is not so simple at all. A number of inter-related factors may affect this decision dramatically.

1. The condition of the common elements.

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Recently, we spoke with about two dozen community association professionals – property managers, association managers, lawyers, and engineers. Our objective was to learn how they dealt with the real challenges that we must face every day.

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In the last two years, FannieMae has amended its guidelines for selling and serving mortgages on condominiums, cooperatives, and planned unit developments three times. Why should we, as service providers to and managers of community associations, care?

Today, 70 percent of all mortgages are sold on the secondary market. FannieMae and its sister government-sponsored enterprise (GSE), Freddie Mac, control roughly 90 percent of that.

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Homeowners new and old to association living question why they have to pay monthly dues or assessments, particularly for items such as trash removal and sidewalk repair. Aren’t those covered by the local municipal government? In reality, these services are quickly becoming the sole responsibility of community associations across the country.

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It happens to even the most prepared of associations. The roof that was supposed to last 25 years starts leaking after only 15. A harsh winter takes its toll on the parking lot and you’re suddenly faced with a large re-paving project 5 years before anticipated. The elevators in a high-rise are constantly out of order, despite their being only 20 years old.

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Although the housing market has slowed, approximately 80 percent of new construction is still being built as a community association. The recent boom in the housing market has led more people to purchase condominiums and townhouses on impulse, without the benefit of several walk-throughs or an inspection by a Professional Engineer. More than likely, this has happened in your community as well. But what does it mean for the association and its residents?

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Have you ever driven by a community and instinctively known its residents take great pride in where they live? The homes are all in excellent shape, with attractive landscaping and complementary exterior finishes on every one. The roads are free of litter and freshly paved, and the common grassy areas are neatly mowed with bright flowers dotting the perimeter.

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Summer is the peak season for homeowners—barbecues, swimming, ultimate Frisbee tournaments, and relaxing on the front porch. Unfortunately, it’s also a time for increased accidents and personal injuries. Most accidents occur at home, including outdoor and association common areas, and too many of them are preventable.

Start by making safety a priority—take advantage of the warming temperatures and perform a thorough walk-through of all common areas.

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As associations continue to discover the benefit of reserve studies and the long-range planning options they provide, some Boards also unearth some less-pleasant realities about their current funding—especially where siding is concerned. The idea that siding should last “as long as the building” or at least in the 40-year range has been a common misconception of Board members and property managers. The truth is, your building’s siding takes the brunt of the elements and can deteriorate more quickly than expected.

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Some associations struggle with long-range vision, especially if it means spending large amounts of money. It’s not realistic for a board to plan for the exact property value 10 years down the road or rely on an outdated reserve study to predict the remaining useful life of all common elements. But making it up as you go along is clearly a recipe for disaster! What’s a board to do?

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WINTER is drawing to a close, and your residents are eager to replace the snow shovels with tennis rackets. However, it’s not too late to implement an ongoing maintenance plan that will save your association time and money for many seasons to come.

View your association as a complete network with many important pieces working together, and ensure that each system is functioning properly.

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One of the primary business duties of Community Associations is maintaining and preserving property values of the Association’s common property. To do this properly, Associations must develop funding plans for future repair or replacement of major commonarea components. A reserve study is a budget planning tool that identifies the current status of the reserve fund and establishes a stable and equitable funding plan to offset the anticipated future major common-area expenditures.

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