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Self-Managed Association Boards Part 6
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Minnesota Community Living September/October 2011

Self-Managed Association Boards: The Top Six Challenges that Face a Board Today

By Joel Starks, Sharper Management

In this series we are focusing on you the board member and the challenges you face each day when running your homeowners association. We are exploring six challenges and ways to work through them. If you see something that seems common or you identify further challenges, do share. I will add your comments and feedback as the year goes on. You can email your comments to joel@sharpermanagement.com.

A Board President speaks
A small-association board president reported the following struggles—not to mention the earful she gets from frustrated homeowners who don’t know how hard it can be to manage an association and work full time. Today we focus on foreclosures.

1. Enforcing rules: it is difficult to confront friends and neighbors.
2. Knowledge of pertinent statutes: trying to understand the "legalese.”
3. Developing meaningful specs for services/vendors, etc.: Not my area of expertise and requires time.
4. Frequent phone calls from members with matters that need attention: Time.
5. Keeping track of paperwork: Time. 
6. Foreclosures: How can we protect the investment? What if they vacate?

Be Proactive
The key to protecting your community when there are foreclosures is knowledge. You have to know that the unit is vacant. You have to know who owns it—the bank or the owner.

The owner may or may not pay association dues during the process. When you know there are issues with the unit, you should file a lien when they are late. At the same time, you should file a Request for Notice of Foreclosure. With the RFNOF on file with the county, any filing on the property will be sent to the board and will better prepare you for what is next.

Charge It! 
If there is a posted notice on the unit, call the phone number on the notice. That will get you to the local real estate representative. The local rep may have a contact with the servicer of the loan who is in state X. The actual owner could be a bank in state Y. The person who coordinates the maintenance of the unit could be in state Z. They don’t necessarily work together so the trail of responsibility can be confusing. When there is a problem the board shouldn’t hesitate to use its powers of special assessment to get things fixed. Make sure you are charging for all of the effort. Keep a log of all charges, penalties, and damages to the property and repairs.

Prep and Protection
Upkeep on the unit is the most important factor. You need to protect the investments of all individuals. Think about winterizing the unit. Perform periodic inspections and be sure there are no existing issues with water, sewer or exterior that could damage one or more adjacent properties. Think property value preservation and your fiduciary responsibility. It is not your concern if the unit is occupied or not as long as it looks nice and the dues are paid.

This Just In: Casper Not Friendly
Good luck getting the bank to vote on any measure or appear at a meeting. Essentially the unit is a ghost. It is not uncommon for the board to vote or make repair decisions repairs without a bank representative. Keep the association’s best interest as the focus.

An August 2011 article on Bloomberg’s website reports that some associations are being forced to take banks to court after realizing that the banks’ delays in foreclosing have enabled homeowners to stay in their residences for years without paying association dues.

Welcome to the Neighborhood
Finally, it is important to note the new owners when the unit is finally sold so you can start collecting dues and get back to normal in regards to fees collection and maintaining a positive income for that property and the association.

When the board works to protect the investments of all, it enables the home to be sold and assures new owners that they acquired a home that was looked after and managed.

Banks need to be pushed. They will step up, but they need a good push to ensure action is being taken.

Next issue I want to look to you for topics. Help me help you. Submit your ideas and I will get you the answers or at least find basic knowledge that may be of service to you and your board. Want do discuss maintenance calendars? Setting the meetings? Proper meeting etiquette? This next series is called "HOAs: You ask the Questions.”


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