What Are Governing Documents?

Governing documents are the set of rules that homeowners and HOAs must abide by. This set of documents is usually made up of: Articles of Incorporation, Bylaws, Declaration of Covenants, Conditions and Restrictions, and Rules and Regulations. These documents can be confusing and full of legal jargon so here is what you need to know:   Articles of Incorporation: These short documents declare the HOA as a nonprofit mutual-benefit association and identify key players in the HOA such as the initial agent who is authorized to receive legal notice on behalf of the HOA. The Articles of Incorporation establishes the HOA as a legal entity giving it certain rights as well as certain law that they need to follow. The document may be more extensive for some HOAs if they decide to include information on voting and amendments.   Bylaws: HOA Bylaws are the rules that govern the organization of the Association. They list the procedures for filling positions and what the positions entail. This ensures that there is continuity in the way the HOA is governed as people come and go. These also dictate how meetings, voting, and communications with residents are carried out. They have little to do with the residents besides providing…Read more

The Top 8 Tips Guaranteed to Help You Get Your Home Ready to Sell

Selling your home can be a daunting process. There are so many steps to take before, during, and after the move. Here, we’ve broken down 8 of the most tried and tested tips to get your home showing ready and help you sell your house quickly. 1. Declutter Whether you’re downsizing or not, moving is a great time to declutter. Eventually you’ll have to pack up all of your belongings anyway so, to make the process easier in the long haul, decluttering your possessions is a great place to start. Not only will this make your move easier but, will make your home easier to clean for last second showings and make your home feel more inviting. While the belongings of a previous homeowner obviously don’t come with the home, having a cluttered home makes it seem like you have disregarded other areas of the home and may leave potential buyers wondering what repairs are hiding underneath all the mess. 2. Depersonalize When potential buyers are looking at houses, they want to be able to visualize themselves in the space as best as possible. Making the space look like a blank canvas that they could simply replace your furniture with theirs will make your home feel…Read more

Jerry Springer is NOT on the Agenda

Ken Bertolucci, CMCA   The scene was tense, with shouting, threats, and concerns about objects being thrown. Despite repeated pleas for quiet, anger and tension hung over the room. Menacing faces glared at the speaker in front at the head table. Is this a description of the latest episode of the Jerry Springer Show? No, just a dysfunctional association board meeting. If you serve on the board of a condominium, townhome, or homeowner’s association you may have experienced such a chaotic event. This behavioral phenomenon occurs gradually over time, as homeowners and even some board members are not challenged and corrected on their behavior. Thus shouting, threats, and yes, even chair throwing are considered acceptable actions. It does not need to be this way. If your association has fallen into this rut, there are practical and essential steps to regain control.   Stop the disrupters Provide the guidelines at the start of EVERY meeting. The board president of our best-run association opens each meeting with an announcement to this effect: “Before we start, I want to explain how we conduct the meeting. First, the Board will conduct our routine business. You are welcome to observe and take notes, but please hold your questions. When the…Read more

Quorums, Proxies, and the Mysteries of Annual Meetings

For those unfamiliar with basics of conducting annual meetings, there are some key terms to know: A Quorum is the minimum number of owners who must be at a meeting before business can be transacted. State law sets the minimum percentage of owners that must attend in person or by Proxy (more on that later). It’s relatively low (20%), but many associations still have a tough time getting to it. It’s a common problem. Meetings that don’t have a quorum must be adjourned and rescheduled at a later date. This costs the Association money and creates more work. And, achieving a quorum at a second meeting – if it wasn’t possible the first time – is even harder. So, why bother to try again? Because the board is legally obligated to conduct an annual meeting. It’s an important part of conducting association business. During the annual meeting, new board members are elected and (depending on the association’s fiscal year) the coming year’s budget is presented to the homeowners for approval. No quorum – no election, no budget. This means the current directors will have to continue serving until an election can be conducted. The good news: owners can be “at” a meeting and across the country at the same…Read more

We don’t want to be your Vendor

“If you are only looking for the lowest price, we are probably not the right choice for you.” Without trying to sound arrogant or elitist, I have made this statement many times to prospective customers. While we may indeed end up having a lower price depending on who is the current provider and the other companies submitting bids, that is not our focus. We don’t want to win your business on price and be a vendor. We want to be your partner. A vendor bids on your goods and services and both sides try to squeeze as much profit as they can from each other. A partner listens to your needs and proposes the best solution to address them. Dealing with a vendor is transactional. A partner wants a long-term business relationship, not a quick sale and quick exit. Our company has many valued customers that have been with us for 15, 20 and even 30+ years. We know that sustainable business growth does not come from a few years of transactions and then a quick exit. We are looking for long term relationships based on trust. With a partner, trust is supreme. In his book The Speed of Trust Stephen Covey asserts, “the ability…Read more

How to be a Good Neighbor

In a community association, you live in much closer proximity to your neighbors than in a neighborhood of single family homes. With shared resources such as hallways, lobbies, laundry rooms and recreation facilities, a little consideration goes a long way. Read the following tips from eHow.com and NS Management on how to be a good neighbor beyond just a smile and a wave. -Welcome any new neighbors with a personal note or pop by for a personal introduction. -If you have a large party, invite your neighbors to join in the fun, consider them when directing your guests where to park and end the party at a reasonable hour. -Be mindful of noise—loud music, barking dogs, power tools—that may disrupt the neighborhood beyond a reasonable hour. -Loud hallway conversations can be heard by your neighbors. Please be mindful when coming and going, especially after hours. -Do not place any personal belongings in the common areas shared by all residents. -Respect your neighbor’s privacy. -Make sure that the visible areas of your unit are well kept and comply with your association’s declaration, bylaws, and rules. -Return anything you borrow from your neighbor promptly, in the same condition they lent it to you, and express your thanks. -Offer to…Read more

Understanding the Role of a Community Association Manager

There are a lot of moving parts in a community. There are the obvious ones, such as homeowners, their families and the association board, and then there are the roles that might be a little misunderstood. One of those roles is the association (or community) manager. At NS Management, we thought our residents would like to know a little bit more about what we do – and don’t do. An association manager has two main objectives. First, they ensure that the policies that are put in place by the board are carried out. Second, they manage the day-to-day operations in the community, including oversight of contractors, assessment collection, bill payment, and other association services. Sometimes homeowners request involvement by association managers in matters they do not handle because they don’t know the proper responsibilities. Here is a quick summary:   -Association managers are specially trained to address issues involving violation of association rules. We do not handle personal problems you are having with your neighbors unless they are violating a rule. Criminal activity should always be reported to the local police. -Association managers are not members of the board, only advisors. They do not have the capacity to directly represent your concerns or override board…Read more

Tired Board? Let the Experts Help

By: Ken Bertolucci, CMCA When we ask Boards of Directors at self-managed Community Associations about their reasons for making a switch to professional management there is remarkable similarity to their replies. They fall into three basic categories: The Board is tired. Since board members usually live on the property they are often stopped while coming and going with homeowner questions they cannot avoid. With no buffer, they feel they are always on call. Board members also find it awkward to enforce the association rules and policies with neighbors with which they are otherwise friendly. In other instances a key individual has been graciously carrying the burden of handling the association’s business for some time. When they leave the board due to relocation, illness, or death, a huge gap is left behind. Unsure about legal and compliance issues. Board members are often unsure of how far their governing authority extends and what is permissible. This is even more challenging due to the constantly changing laws regarding closed meetings, document requests, and reporting standards. Difficulty complying with budgeting and financial reporting requirements. Even if the Treasurer is a CPA, the Board is often unsure about proper format for association financial statements, annual reporting requirements, the budget process…Read more

6 Ways to Change the Attitude of Apathy in Your Community

It seems like apathy is a very common theme that revolves around community association boards. Even in small amounts, it can easily affect even the best functioning communities. However, it’s important to keep in mind that most of the people involved in your community inherently care. The only thing to remember is that it is ultimately up to the board when it comes to increasing motivation and opportunity to move past apathy. The board needs to take initiative in order to overcome any apathy lingering around the community. If they don’t, it leads down a slippery slope that can result in burnout and overall negative community associations. That’s why we’ve put together a few ways to steer the attitude away from apathy. 1. Communicate Communication is the key to any effective and positive relationship. Whether it’s between members or throughout the community, make sure that you’re engaging with everyone. Even though getting a quorum is always difficult, it can go more smoothly when you think outside of the box. Try online surveys, email blasts, social media or other convenient sites. People like to know that you’re interested in their opinions. 2. Keep Records When you ask for input, you need to make sure that you…Read more

How Millennials Are Changing the Condo and Homeowner Association Demographic

As the years progress, more and more millennials are buying condominiums, townhomes, and single-family homes. With this influx, the Condo Association (COA) and Homeowner’s Association (HOA) demographic has started to saturate and chances are you’re noticing the changes. In case you’re unfamiliar with who falls under the term “millennials,” they are also known as Generation Y. They’ve reached adulthood just as we experienced the turn of the 21st century and are projected to take over the homebuyers market in 2017. Since they are growing up, chances are they will move to a community that has a current Association in place. This represents new changes that tend to fit better with adult lifestyles. However, it is important to realize that this will also bring about a change in the way you currently manage. Communication Millennials fall into a unique category of people. They are the first generation to grow up completely surrounded by technology. Because of this, it tends to also be used to drive their behaviors. This includes the way they communicate, mainly being the fact that emails replace newsletters and texts replace calls. Some would say Millennials hate idle time. They utilize waiting time or work breaks by checking their phones. In order to…Read more

There Is No Way to Shift Blame In Paying For Water Damage

Q: Forgive me, but I’m a bit confused by the advice an insurance company employee gave me about a basic concept of condominium unit coverage. This is something about which you have previously written in your column. In discussing this matter with this representative of a large insurance company, I was told that, for example, if water from my apartment damaged the unit below, that person’s insurance company would legally have to pay the damage, not my insurance company. I also was told that this ruling is found in the Illinois Condominium Property Act. Could you please cite the section of the statute? A: If water from your apartment damaged the unit below, you are personally responsible for the damage. And insurance coverage for the damage is dependent upon the terms of your neighbor’s insurance policy. Section 9.1(a) of the Illinois Condominium Property Act states a unit owner is responsible for damage to another unit or the common elements caused by the operation of the unit. This provision means that a unit owner is responsible for damage to a neighbor caused by an appliance, plumbing apparatus or other cause, regardless of whether or not the owner was negligent. Thus, the unit owner, and not his…Read more

Associations, big and small, must have two funds

Q: I am the acting treasurer of a small condominium association in Chicago. We were recently advised by a Realtor that the new Illinois condominium law requires that we maintain two separate accounts, one for daily expenses and a second for major expenditures. Does this requirement really apply to small associations? If so, what percentage of our condominium assessments should be set aside every month for major expenses?   A: Associations must have operating funds and reserve funds. The purpose of a reserve fund is to require associations to save monies for future capital expenditures and deferred maintenance. All associations have been required to include reserve fundings in their budgets since 1990, so this is not new.   Regardless of size, a reserve fund in place for a major expenditure will help to defer or minimize a special assessment for a major expenditure. There is no mathematical formula for reserve funds in Illinois. To determine reasonable reserves, directors should review the factors in Section 9(c) of the Condominium Act, particularly the repair and replacement costs of major components and building surfaces. The Federal Housing Administration requires associations to allocate at least 10 percent of their operating funds to a reserve account each year. Depending on…Read more

Who does what? Differences between Property Managers and Directors

For most members of the condo community, the Property Manager is the face of the condo corporation or home owner’s association. They are responsible for day-to-day running of things– they look after the bank accounts, handle the checks, field correspondence, and interact with owners more frequently than the Board does. Because of this, I find that people can be confused about the difference between the roles of the Property Manager and the Board of Directors. I’ve heard board members ask “Why can’t I just let my Property Manager look after everything?” and “Isn’t it their job to do this? I don’t have time to look after all of this stuff”. Owners also have trouble knowing who is responsible for what: when should they contact the Board and when should they contact the Property Manager? In this post, I’ll answer these questions, and hopefully, the difference between the roles of the Property Manager and the Board of Directors will be clear by the end. To understand the different roles, I like to think of a condo like a coffee shop. The property management company is like the staff that keeps the shop running: baristas, managers, cleaners, etc. They are the people that interact with everyone on…Read more

No volunteers? Building still must have a board

Q: I am an owner in a condo association where I have lived for 10 years. We had a board that did a fantastic job. The directors held meetings four times a year, completed many improvements and were always active. They were hard-working and dedicated, but they grew tired of the beating their heads against a wall for owners who did not appreciate the effort. Now those who complained have the opportunity to run for the board, but we have no volunteers. What happens when an association does not have a board? Will the state take over? I am very concerned. A: You should be concerned. A condo association cannot operate without a board. If owners do not volunteer to serve on the board, there are two alternatives: The property ceases to be a condominium by a vote of the ownership or a court will appoint an individual to run the property. Section 16 of the Condominium Act says that owners may vote to remove the property from the provisions of the act. For your association, 75 percent of the ownership may then vote to sell the property. In that case, owners will receive a share of the total purchase price equal to their percentage of…Read more

Bullies should not be tolerated in HOA meetings

Q: I’ve been on our HOA board for a number of years. At a recent meeting, one of the homeowners started to yell at me. We have five members on the board but at the time of the meeting, we only had three positions filled. A motion was made and this homeowner made horrible remarks. He kept shouting and pounding on a table. He thought that the board was illegally voting on the motion because we only had three board members. He came across the table. He did not hurt me but I was scared. Our management representative and other board members tried to intervene and we tried to keep the meeting moving but he wouldn’t stop. What should we have done? A: The moment that anyone, be it a homeowner or a board member, acts in a most disrespectful and possibly harmful manner, the meeting needs to be either recessed or adjourned. If recessed, the board and the community manager can try to settle down the member; if this fails, then the meeting needs to be adjourned. A warning letter should have been sent to the member by the association’s legal counsel. The letter should have stated that if he continues to conduct themselves…Read more

Associations and Open Meetings

One of the great truths of the association culture is that the board shall not conduct its’ business behind closed doors or have “secret” meetings as this deprives the owners of their rights. In concept it sounds like a fine principled idea. In practicality, there are more exceptions than rules and more urban myths than exceptions. Beginning with the minimum legal obligation, we can dispel the biggest myth first. Illinois does have a law called the Open Meetings Act. It is set forth in Ch. 50 ILCS 120, et seq. of the Illinois Statutes. It requires open meetings for public bodies only. Public bodies are duly elected or appointed governmental bodies such as village boards, park districts, etc. It does not apply to private organizations such as condominium and homeowners associations. All of the scuttlebutt about violations of the Open Meetings Act at association meetings is not applicable. Associations are subject to certain “open meetings” requirements set forth in other statutes and often in their operating documents. The following requirements appear in the Illinois General Not-for-Profit Corporation Act, the Illinois Condominium Property Act and many declarations and bylaws: 1. All meetings of the Board where business is conducted are open to the members; 2. Notice…Read more

Why we call the Declaration & By-Laws “governing documents”

Too often, new condo owners receive their Declaration & By-Laws at closing and file them away, never to be seen again.  But these documents are the basis for governing your Association.  When there is conflict, the issue can almost always be settled by consulting your Declaration & By-Laws.  Understanding the purpose of these documents will help to decrease conflict among owners.