Friday, November 28, 2014

Do Not Delay Recording Liens . . .

From: The Wake Forest Law Review

November 21, 2014

by David Darr

Today, in Kingston at Wakefield Homeowners Association, Inc. v. Castell, an unpublished per curium opinion, the Fourth Circuit affirmed the decisions of the Eastern District of North Carolina and a North Carolina bankruptcy court finding Kim Castell, the debtor, did not have to pay $678.75 to Kingston at Wakefield Homeowners Association (HOA).

Was There a Lien on the Debtor’s House?

The only issue on appeal was whether the bankruptcy court erred in deciding that there was no lien on Castell’s real property making it unsecured debt because the HOA did not follow proper lien procedures.

Filing for Bankruptcy

On June 20, 2012, Castell filed for Chapter 13 bankruptcy. At that time, she owned the HOA $678.75 in dues associated with her ownership of real property in Kingston at Wakefield Plantation. This property was subject to the Declaration of Covenants, Conditions, and Restriction for Kingston at Wakefield Plantation (Declaration). The HOA claimed that the $678.75 was secured debt by a lien on Castell’s real property, thus not dischargeable in the bankruptcy proceeding. However, the HOA did not follow the statutory procedure of filing this lien with the county. The HOA’s claim was that the Declaration provided that the lien did not have to be filed to be effective, thus forming a valid lien without following the statutory provisions. The bankruptcy court found that there was no lien on Castell’s property. The HOA appealed and the Eastern District of North Carolina affirmed from which the HOA again appealed.

The Statutory Procedure vs. Declaration’s Procedure for Filing a Lien

North Carolina General Statute § 47F-3-116(a) states that a claim of lien must be “filed of record in the office of the clerk of superior court of the county in which the lot is located” and when filed “a claim of lien secures all sums due to the association.” However, it “does not prohibit other actions to recover sums.” In contrast the Declaration, states that unpaid dues shall become a lien on the real property, but also says that notice shall be given and recorded with the county.

No Common Law Procedure for Liens

The HOA argued on appeal that the language in the statute that allows “other actions to recover sums” points to a common law ability of a HOA to place liens on its real property and that the Declaration does not require the HOA to file a lien with the county. The Fourth Circuit disagreed with the HOA on both points. There is no common procedure way to file a lien because the statutory procedure is very specific and extensive and would preempt any common law rights. Secondly, the Fourth Circuit decided that even if there was a common law procedure for liens, the Declaration says to do the exact same thing as the statute. Both the statute and Declaration required filing with the county by their plain language. The HOA did not file with the county so no lien existed.

The Fourth Circuit Affirms

For the reasons stated above, the Fourth Circuit affirmed the decisions of the Eastern District of North Carolina and the bankruptcy court.


Association Management Group, Inc. (AMG) encourages association to (after reasonable notice) promptly file liens to protect the association's rights, even when the debt is relatively small.

Friday, October 24, 2014

Do NC Community Associations with No Employees Need to Buy Workers' Compensation Insurance?

Association Management Group, Inc. wants to bring a recent set of articles to the attention of our friends, clients and colleagues. The full articles appear below.

Paul Mengert President, AMG
An article was written by a North Carolina attorney appeared in the Charlotte Observer September 26, 2014 and indicates associations (even with no employees) should carry workmen's compensation insurance, under the NC Workers' Compensation Act, for its unpaid executive officers, board members and volunteers.
While this is an interesting perspective, over the last 25 years, it has been AMG's observation that this has not typically been recommended by the insurance and legal professionals. We are told the cost of buying such coverage is between $600 and $1200 per year, for most associations with no paid employees.
Jim Slaughter, the national president of the College of Community Association Lawyers and Tim Sellers, both partners in law firms that represent many community associations have written separate articles in response. Please read their articles below.
In quick summary (while AMG is not licensed to and does not make insurance recommendations) it is AMG's experience that workmen's compensation insurance has not normally been recommended by insurance advisors to associations without paid employees; however, as you can see from Mr. Adam M. Beaudoin's article there is statutory basis that associations should consider. We would also like to point out that most community associations (in this part of the country) have not purchased earthquake or flood insurance, for which there is some exposure even though neither are generally covered under standard policies. 
If your association would like to get more information we recommend you discuss these matters with your insurance professional or attorney.  AMG Executive Board Members, please ask your community association manager to arrange an appointment with your insurance professional or attorney, if you would like more information.

Note: Regulations vary by state. Please consult an appropriate legal advisor(s) in your state, if you have legal questions. This blog is intended only to provide general information. Association Management Group does not offer legal advice or a legal opinions. 


Original Article  
From the Charlotte Observer September 26, 2014: EDITOR’S NOTE: The following column is by Adam M. Beaudoin and Kyle R. Still, Ward and Smith, P.A., New Bern.

Adam Beaudoin
The N.C. Workers’ Compensation Act requires all employers with three or more employees to carry workers’ compensation insurance. The purpose is to ensure that employees injured by an accident while working have a safety net to cover lost wages and medical expenses.

The Act, however, has a very technical definition of “employer.” This leads to confusion as to whether non-profit owners associations are covered. In particular, many residential, commercial, and mixed-used property and condominium owners associations (collectively, “POAs”), which often consider themselves to have fewer than three employees, question whether they are covered by the Act and required to purchase insurance.
As explained here, there are good reasons to believe that all North Carolina POAs are subject to the Act, even if they may not have any traditional employees.

Who is an ‘employee’?
The Act specifically defines “employee” to include every “executive officer elected or appointed and empowered in accordance with the charter and bylaws of a corporation.” Because POAs have elected board members pursuant to a charter or bylaws, these board members meet the technical definition of an “employee” under the Act. 

Thus, all non-profit organizations, including POAs with three or more corporate officers or directors, even if the officers and directors are volunteers and unpaid, clearly need to obtain workers’ compensation insurance. 

The good news for North Carolina POAs is that workers’ compensation insurance rates are based on risk, which should be low for this type of entity. Furthermore, the Act allows corporate officers to opt out of coverage. 

Roll the dice?
So what’s the risk of not getting the insurance? First, there is the risk of the costs associated with a workers’ compensation injury. 

Without insurance, the POA would have to pay an injured “worker” for two-thirds of the “worker’s” average weekly wages, as well as all medical expenses related to any work injury. If the “worker” dies, the “worker’s” estate would receive certain payments. 

While the risk of injury to a POA board member may seem minimal, unexpected trips, falls, and other accidents occur frequently in the workplace. Furthermore, it is not uncommon for POAs to have a maintenance employee who would face a much more significant risk of injury on a day-to-day basis or for POAs to hire what they believe to be independent contractors, only to find out after an injury that the “contractor” is deemed to meet the technical legal requirements of an employee, with the POA then finding itself on the hook for any injury sustained.

Possible fines
North Carolina POA board members and officers should also take notice that the Act imposes a daily fine on employers for failing to purchase insurance. This fine varies from $50 to $100 per day, based on the size of the employer. Although the Industrial Commission generally does not assess such fines unless an uninsured claim is filed, these fines could reach back for years and become substantial.
Of greater concern to North Carolina POA board members and officers is the fact that “any person who, with the ability and authority to bring an employer in compliance” with the requirements of purchasing insurance and who “willfully fails” to do so is guilty of a Class H felony. 

Furthermore, the person would be personally liable for 100 percent of the benefits owed to an injured employee who otherwise would be paid by insurance. The POA employer itself also can be liable for a Class H felony and a Class 1 misdemeanor. 

Because of the criminal nature of these penalties, the POA’s Directors and Officers Insurance would not apply. Most POA board members confronted with this information will likely believe that responsibility for substantial workers’ compensation costs, fines, and even criminal liability is more than they signed up for. 

Conclusion: In light of the substantial risk associated with not purchasing workers’ compensation insurance and the relative inexpensiveness of such coverage, it is prudent for all North Carolina POAs to verify that they have sufficient workers’ compensation programs in place.
Article from Jim Slaughter's law firm (Rossabi Black Slaughter, PA):

James H. Slaughter
Jim Slaughter

Must North Carolina HOA and Condominium Associations Have Workers’ Compensation Insurance?

An article from another law firm in the Charlotte Observer last week suggested that all North Carolina HOA and condominium associations must have Workers’ Compensation coverage or suffer the consequences.  The article can be found at this link, but here’s the short version:

1. Employers with three or more employees must carry workers’ compensation insurance.

2. State statute provides that “every executive officer elected or appointed and empowered in accordance with the charter and bylaws of a corporation shall be considered as an employee” under the Act.

3. Therefore, incorporated associations with 3 or more volunteer officers (ALL!) must purchase workers’ comp insurance (or may be guilty of a Class H felony) without regard to whether there are paid employees.

Since the article appeared, we’ve been inundated with questions from managers and associations as to whether they must rush out and purchase Worker’s Comp coverage, and if so, what product and in what amount?  As you can imagine, both of these are complicated questions and could vary by association and circumstances.  (For instance, only NC planned communities created after January 1, 1999 must be incorporated, but most associations are incorporated for a variety of good reasons.)

Must North Carolina HOA and Condominium Associations Have Workers’ Compensation Insurance?

I’ve talked to Industrial Commission professionals as well as some of the best Workers Comp lawyers and insurance agents about this issue (including some from other states) and most all agree that the current law is “murky.”  The general consensus is that the article made an issue explode that likely didn’t need exploding, in that it brought a microscope to an issue that may get fixed before too long.  The Industrial Commission Advisory Council is looking at this specific issue and will likely propose legislation in the 2015 Session to address the issue of “employee misclassification” with nonprofits.  After all, if community association volunteer boards MUST have Workers’ Compensation, then so do volunteer boards for incorporated PTA’s, charities, book clubs, and historical organizations.  For now, however, the circumstances (and language in the statutes) are what they are.

There are two main concerns:

1. Are community associations with volunteer boards (and no paid employees) violating the law or committing a crime by not having Workers’ Compensation coverage?

2. Should an association have Workers’ Compensation coverage, and if so, what type?

None of the industry experts I spoke to think the concern of the Class H felony is likely, in that the statutes were written so that employees won’t be exempted from Workers’ Compensation by claiming they are executive officers (and not that any executive officer is immediately and automatically an employee).  However, the statute says what it says right now.  More than one person told me the Industrial Commission isn’t policing such coverage as they have larger fish to fry, so they would only likely find out about it accidentally or as the result of an accident brought to their attention.

Several excellent Workers’ Comp attorneys have told me that there are valid arguments why volunteer nonprofit executive officers should not count as employees for Worker’s Comp, but no one is certain how the Industrial Commission might rule on the question in a specific case.  Even insurance agents who regularly work with community associations were surprised by this issue because in North Carolina there is no history of recommending Workers’ Compensationcoverage for volunteer nonprofit HOA and condo boards.  As of the date of this article, there is no case in North Carolina in which the Industrial Commission has held that community association boards MUST have Workers’ Comp coverage.

Should North Carolina HOA and Condominium Associations Have Workers’ Compensation Insurance?

The better question is when “should” a community association have Workers’ Comp insurance?  Most in the industry say (no surprise here) that it is better to have WC coverage than not, even if there are only volunteer officers.  That is likely a different answer than they would have given several years ago.  Here are some of the main concerns:

1. Claiming that someone working at the association is an independent contractor may be of little relevance (although important) if the injured contractor files a workers’ comp claim and the Industrial Commission has to determine if they are an employee instead of an independent contractor.

2. If a contractor (with Workers’ Comp insurance) lets the coverage lapse or be cancelled for non-payment, an injured party will look to any possible source of money, including the Association. If the Industrial Commission finds the person to be an employee (because they want to find coverage somewhere), the Association could be on the hook for ongoing partial or permanent disability payments.  In one California case (following that state’s laws) the Court of Appeals held that an association and its management company were liable to pay Workers Comp benefits to an injured worker employed by an uninsured and unlicensed contractor.
3. Typically, association Commercial General Liability (CGL) policies exclude from coverage anyone that should otherwise be insured under Workers’ Comp, so bodily injury to an individual who is later found to be an employee would have to come from Worker’s Comp coverage or association funds (and not other insurance).

4. The CGL policy contains other exclusions actions arising from dual capacity situations such as third-party actions, actions by spouses, etc. These types of CGL exclusions can be insured in the Employers Liability (EL) part of the WC policy.

5. While it is a state issue based on statutes and interpretation by the Commission, volunteers could be classified in a specific case as being an employee of an entity.

6. State administrative bodies that administer Workers’ Comp lean towards finding employment status, especially if there is no other available insurance.

Based on this, associations in other states even without true “employees” often carry an “if any employee” rated Workers’ Comp policy (or an “if any employee WC+EL policy” or “ghost policy”).  An attorney in another state that got surprised by this awhile back told me that “It would almost be malpractice for an insurance agent not to suggest an association buy an ‘if any’ WC policy.  There’s too much danger the Industrial Board will find the association to be the employer just to find a pocket.  I think it’s a great idea for all associations to have at least an ‘if any’ WC policy.”

In calling around to several NC agents, I was repeatedly told that there is no specific, readily-available product that would cover this issue for associations.  As a result, the association might have to go to the Assigned Risk Pool for a Workers’ Comp policy and the cost would be somewhere around $1,250 per year.  (FYI, this is significantly higher than similar insurance in some other states, where I have been told rates range from $300 to $800.  This may be due in part to the lack of history in NC with Workers’ Compensation coverage for volunteer nonprofit boards.  Without getting too complicated here, if the minimum premium for associations without any employees was treated by the Rate Bureau as the “Clerical Class Code” for directors and officers, the minimum premium would be significantly lower than $1,250, and perhaps only several hundred dollars.)  Obviously, you should speak with your association’s insurance advisor about available options.

Another option, once an association board carefully evaluates the risk versus its ability to pay such a premium, is for the executive officers to “opt out” of Workers’ Compensation. Such a decision should not be made lightly, and should be the result of discussions with both the association’s insurance agent and legal counsel.  To effect such a decision, the board would adopt a resolution (preferably prepared with the assistance of an attorney).  Such a decision by the Association would reduce the likelihood that the association is violating the law or committing a crime by not having Workers’ Comp coverage (although it would not fully address the issue of how the Industrial Commission may later treat an injured contractor who claims to be an employee).

Bottom line?  The 2015 session of the NC General Assembly should enact a legislative change to the effect that volunteer nonprofit boards without paid employees should be exempt from the requirement of Workers’ Comp insurance.  Until such a change is adopted, it is highly unlikely that an association and its executive officers will be tracked down and charged criminally for failing to have Workers’ Comp insurance.  Even so, the safest course is for association boards to consider whether they need such coverage, both because of the possible requirement to have it, but more importantly because of the potential issues it will cover in the event of an injury or death.  If the association decides otherwise, it should be the result of a reasoned board decision that weighs the benefits of purchasing Workers’ Compensation coverage against the costs (and even availability) of a specific insurance product as well as potential risks the association faces.


Article from Tim Seller's law firm (Sellers, Hinshaw, Ayers, Dortch & Lyons, P.A):

Tim Sellers
Stephen C. Sellers and Christopher P. Gelwicks

In recent weeks there has been an increase in chatter in the local media, as well as other information outlets, regarding the application of the North Carolina Workers' Compensation Act to homeowners associations in North Carolina. This activity has prompted a flood of inquiries as to whether associations must, or should, obtain worker's compensation insurance.

After discussing this issue at length with John Ayers - a member of our firm with nearly three decades of experience dedicated to workers' compensation claims - we've developed two color-coded risk-assessment categories, Yellow and Red, that we believe cover the landscape in this corner of the law where workers' compensation and community association management overlap. Your association falls within our Yellow risk-assessment category if your only "workers" are members of an executive board comprised of at least three unpaid members or officers. This category represents a relatively low level of risk in this area. Our Red risk-assessment category, however, involves a higher level of potential exposure and reaches any association that hires one or more paid employees to perform services for or on behalf of the association.

This update is intended to help you first determine which risk assessment category applies to your association and then give you the practical information you need to better understand the effect of the North Carolina Workers' Compensation Act on your particular association.

Yellow: Proceed with Caution

The North Carolina Workers' Compensation Act applies to all employers within the State with at least three statutory "employees," which - under the Act - includes unpaid executive officers of non-profit corporations organized in North Carolina.  If your association, like most, is managed by a group of three of more executive officers, you are an "employer" under the Workers' Compensation Act and your association is exposed to potential liability when an employee is injured on the job.  However, for associations in our Yellow risk assessment category, exposure to a worker's compensation claim brought by an injured executive officer presents an almost inconsequential risk.  This is tied to one of the basic principles of workers' compensation law:  An employee's ability to recover under the Act is tied to his or her earning capacity in whatever position the employee held at the time of the injury.  That earning capacity is measured in terms of the employee's average weekly wage.  Since the executive officers of non-profit homeowner's associations are almost always unpaid volunteers, they have no average weekly wage and therefore cannot recover under the Act.
However, even if your association's only workers are the unpaid members of your executive board, there are other considerations that may justify the expense of maintaining workers' compensation insurance despite the low risk of a payout. The Act requires all statutory "employers" to maintain workers' compensation insurance and establishes civil and even criminal penalties for employers who fail to do as the Act requires.  With that said, we believe that there may be legal avenues available to circumvent application of the Act to associations that fall within our Yellow risk assessment category ("ghost policies," etc.), and we are unaware of any enforcement action having been undertaken against a community association in North Carolina for its failure to maintain workers' compensation insurance.  However, the penalties do exist under the statute and your association should consider whether an absolute safeguard against the possible imposition of those penalties is enough to justify the cost of insurance premiums.

Red: Stop and Get Insured

If your association maintains even one paid employee on the association's payroll, the association falls within our Red risk-assessment category and we strongly recommend that your association obtain adequate workers' compensation insurance.  Even if you only pay one or two employees, keep in mind that your executive officers still qualify as statutory "employees" for purposes of satisfying the Act's three employee threshold.  If the threshold is met and one of your paid employees is injured on the job, your association is exposed to significant liability under the Act and, in the absence of insurance, may be required to pay an injured employee's claim directly from association funds.  This alone justifies obtaining workers' compensation insurance if you fall into the Red category.  In addition, your association's failure to maintain adequate workers' compensation insurance under these circumstances is precisely the sort of scenario in which we expect the Act's civil and criminal penalties may be brought to bear.


If your association has hired paid workers to provide services to or on behalf of the association, then we need to discuss your potential exposure under the North Carolina Worker's Compensation Act and encourage you to contact your association's insurance professionals. This article has only scratched the surface of this hot-button issue, and the details of your association's employment arrangements will determine the full impact that the Act has on your community. For example, some of your association's paid workers may qualify as independent contractors who do not qualify as "employees" under the Workers' Compensation Act. Since they're not "employees" under the Act, independent contractors do not count toward the three employee threshold that will determine whether or not the Act applies to your association. In addition, since independent contractors don't come within the Act's definition of an "employee," independent contractors can't bring a successful workers' compensation claim against your association in the event they become injured in the course of their work. However, some paid workers who you think of as independent contractors may actually qualify as statutory "employees" based upon a number of different factors including the degree of control your association maintains over their on-the-job activities. An additional consideration that warrants careful thought is the fact that even an ill-founded and ultimately unsuccessful workers' compensation claim against your association will require some form of legal defense, the cost of which might alone justify the expense of annual insurance premiums. 

Our firm is ready to help you analyze your unique situation and better understand whether you should obtain worker's compensation insurance. Our community association attorneys will work in conjunction with our worker's compensation colleagues and your insurance professionals to provide the specific guidance your association needs to navigate this potentially murky area of the law and minimize your costs.

Thursday, October 9, 2014

Paul Mengert teaches in Harvard Business School Alumni Association of Charlotte's Management Development Program

Paul Mengert, President of Association Management Group, Inc. (AMG) teaches in Harvard Business School Alumni Association of Charlotte's Management Development Program (MDP). It is an exciting opportunity for business professionals to expand their knowledge and skills utilizing the Harvard case method of analysis and lively interactive discussions. The program is similar to an MBA program in an abbreviated format and is taught by local Harvard Business School alumni; many are CEOs, Presidents and Managing Partners. 

    Paul Mengert, president of AMG pictured 
    with program Chair, Professor Bill Berry.

Mengert, who firm is based in based in Greensboro, but has a large presence in Charlotte and throughout the Carolinas, says, "The MDP is an opportunity for students to learn from managers who have put their Harvard Business School education to the test of the real business world." Professionals who have completed the course are recommending it as a program that "expanded their mind and way of thinking, forced them to think critically, and to look at issues from a higher level and broader viewpoint."  

Mengert and AMG manages community associations across the Carolinas. MDP students come from manufacturing and service organizations, profit and non-profit, as well as the legal and medical profession. Some are considering an MBA; others already have advanced degrees. All are looking for the broadening experience that a case study course offers.  

Over fifty local companies have sent executives to the program, including Bank of America, Wells Fargo, Carolina CAT, CC. Dickson Co., Crescent Communities Realty, Crosland Commercial, Duke Energy, Microsoft, National Gypsum, Pfizer, RBC, Springs Industries, and TIAA-CREF.

After paying the expenses of the program, the balance of the proceeds are donated to local charities. The Harvard Business School Alumni Association of Charlotte has donated $350,000 over the years to local non-profits in Charlotte including A Child’s Place, Catherine’s House, Buddy Kemp Caring House, Charlotte Rescue Mission, Christian Adoption Services, The Crisis Assistance Ministry, Jacob's Ladder Job Center, Room at the Inn, Salvation Army, Emergency Shelter, Seed Programs, Inc., Thompson Child & Family Focus and Queen’s University.

The course meets at facilities provided by the MBA program at Queens University’s McColl School. 

Monday, October 6, 2014

Minimizing Meeting Mayhem

For many people, meetings are a fact of life. Whether it’s a board or member meeting here in our association, a volunteer meeting at your child’s school or a department meeting at work, being adept at participating effectively and managing meetings is a useful skill. 

    Paul K. Mengert, President
    Association Management Group, Inc.


Sometimes one or two participants will dominate the discussion, steer it off topic and interrupt others, causing long, uncomfortable or unproductive meetings. Whether you’re the meeting chair or a participant, there are techniques you can use to help engage others, limit intrusions and minimize distractions.


· Table the discussion. If a conversation is getting particularly heated, the chair or a participant can move to table the discussion for a later date. This helps clear the air and allows for a calmer and more meaningful conversation at the next meeting. It also sends the signal that debates will be conducted rationally and with respect.


· Take it offline. When a meeting attendee takes a topic off course, everyone’s time is wasted. A good tool for the chair to use—or for another attendee to suggest—to get the meeting back on track is to invite the member to continue the discussion privately. Saying, “Let’s take this offline so we can talk more,” is an easy way to get back on the subject without alienating the sidetracked speaker.


· Use the agenda. The agenda is a useful tool for keeping a meeting moving efficiently. When a chair begins a meeting by saying, “We have a full agenda today,” he or she sets the stage for productivity. Periodically referring to the agenda during the course of the meeting keeps all attendees focused on the discussion. If the chair doesn’t have an agenda, ask the group pause a minute to create an informal agenda that simply lists the topics to be covered or goals to be accomplished.


· Call on members. To engage more reticent members of the group, and to balance the impact of more vocal participants, it’s helpful to call on members by name to ask for their opinions. “What do you think, Mary?” or “Do you have some input here, Steve?” ensures that all members are valued. And you don’t have be the chair to ask for others’ opinions.

Sunday, October 5, 2014

Why We Need a Architectural (Design) Review Program

Whether first-time homeowners or long-time residents, we all have a hefty investment in your home.  So it’s important to preserve the value of our residences—as well as the surrounding common areas —by keeping buildings well maintained and in a style that is compliant with the community's governing documents that compliments adjacent structures and landscaping.

    Paul K. Mengert, President
    Association Management Group, Inc. 


When our homes’ exteriors are in good shape and the grass is cut, the hedges trimmed, the trash picked up and the sidewalks and roads well-maintained, the community is attractive to prospective buyers and renters, and property values are preserved.


Arichitecual (design) review program is a big part of sustaining the community’s appearance and property values. While design guidelines vary greatly by community the limitations are to allow some flexibility while insuring the character of the community is not adversely impacted.


Please contact your manager or a member of the association’s architectural design review committee or the executive board if you’re considering a project for your home that involves the exterior; redesigning or installing landscaping; constructing a fence, adding a secondary structure (like a garden shed, dog house, swing set or garage); or installing solar panels, ham radio antennas or satellite antenna (although many communities allow such improvements or additions it is always best to check with your community before undertaking any project).


The review committee will provide you with the association’s architectural guidelines, application instructions and review procedures. In many cases the manager or committee members will be glad to help make recommendations that will help you not only make an improvement consistent with your communities guidelines, but also in a manner which will help increase your property value.

Thursday, October 2, 2014

Is a Fee Increase Needed in This Economy?

The Community Associations Institute reports, almost 40% of associations did not increase assessments during the most recent budgetary cycle. Of those that did raise assessments, 33% of respondents say assessments increased 1 to 3%, while 17% report a 4 to 6% hike, 7% a 7 to 10% increase and 4% an increase of 10% or more. About 13% of associations levied a special assessment during the previous 12 months. (

If your association is unsure if a fee increase is indicated this year, a reserve study may help your board make the decision.

    Paul Mengert, President
    Association Management Group, Inc.

Thursday, September 11, 2014

CAI Survey: Association Boards and Managers Are Optimistic

Community Associations Institute's Press Release 

Sept. 11, 2014—The national economy and housing market are improving—however slowly—and that means things are looking up for most associations, which is welcome relief to many communities that weathered some difficult years.

While some associations continue to feel the pinch, almost 90% of community managers and board members say their association’s overall financial health is "excellent" or "good," with 10% saying "fair" and only about 2% indicating "poor" financial health.

 The results are based on responses from almost 1,000 community managers and association board members who completed CAI's 2014 State of Associations Survey.*

 Looking ahead, almost 55% of managers and board members see their association’s financial condition being “much” or "slightly" better in the next five years, while about 42% expect little change. Less than 4% anticipate a turn for the worse in the next five years.

"Like the country as a whole, many associations experienced especially difficult challenges during the downturn," says CAI Chief Executive Officer Thomas Skiba, CAE. "This survey affirms that most associations are better off today, and it’s reassuring to know that most managers and board members express optimism about the next few years. Nobody can predict the future with certainty, but that’s a very positive economic indicator for associations and the professionals who support them."

Assessments and Delinquencies

Almost 40% of associations did not increase assessments during the most recent budgetary cycle. Of those that did raise assessments, 33% of respondents say assessments increased 1 to 3%, while 17% report a 4 to 6% hike, 7% a 7 to 10% increase and 4% an increase of 10% or more. About 13% of associations levied a special assessment during the previous 12 months.

Most managers and board members are confident their homeowners believe they are getting a good value for their assessment dollars, with 26% "overwhelmingly" satisfied, 60% "for the most part" satisfied and 10% "somewhat" satisfied. Almost 5% acknowledge their members are "not really" satisfied with the value they are getting for their assessments.

Understanding that rates of assessment delinquency often reflect the health of a local economy and housing market, respondents were asked the percentage of owners who are behind on their payments to the association. About 81% of respondents say their delinquency rate is 6% or less, with three quarters of those in the 0 to 3% range. About 15% peg the delinquency rate at 7 to 15%, with 4% saying it’s more than 15%.

Asked if their associations pursue delinquencies differently than before the mortgage foreclosure crisis and economic downturn, 44% say they are now "much" or "somewhat" more aggressive, with a near-even split between the two. Almost 55% say their collection policies and approaches have remained largely consistent, while less than 2% say their associations have become less aggressive.

Reserve Funding

Encouragingly, almost 70% of association managers and board members believe their associations are setting aside sufficient funds for future repairs and replacements. The remaining 30% do not believe their communities have sufficient reserves.

"Although 70% is a good number, most community association experts would be concerned that almost three in 10 associations have under-funded reserves," Skiba says. "We strongly encourage associations to budget with a sharp eye toward the future. It’s not easy making choices between immediate and long-term needs, but those bills will become due eventually."

The survey shows that almost 75% of associations base their reserve funding on a formal study or updates conducted by a professional reserve specialist; 25% do not use a reserve specialist.

Leadership Performance

Most community managers and association board members believe their residents are satisfied with the performance of the association leadership team. Almost half of respondents believe 80% or more of their residents are satisfied, while about a third estimate their approval rate at 60 to 80%. About 20% peg their approval rating at less than 60% of residents. According to a March-April 2014 national survey of community association residents conducted for the Foundation for Community Association Research, 90% of association residents rate their overall experience as positive (64%) or neutral (26%).


Leading Challenges

Community associations face a number of challenges, but resident apathy is rated the "most serious" issue for almost a third of the associations represented in the survey—higher than any other issue.

 "While community leaders rightfully seek more volunteers and greater owner participation, I don’t think apathy is necessarily an indication of poor management or owner discontent," Skiba says. "A lack of interest can mean that residents are largely satisfied with how the association is being managed and don’t feel the need to get involved."

The following are the percentages of managers and board members who rated issues as "very" or "somewhat" serious:

·        31% Resident apathy

·        20% Renters and rental-related issues

·        18% Rules enforcement

·        15% Insufficient money to do what is needed

·        13% Deteriorating common elements

·        13% Community appearance and curb appeal

·        12% Assessment delinquencies

·        12% Issues related to aging residents

·        5% Resident discontent

See survey PDF. 


Tuesday, September 2, 2014

Fire Safety Tips for Your Abode

Every homeowner wants to protect his or her residence and family members from the dangers of an unexpected blaze. Considering the number of deaths that occur each year due tohousehold fires, equipping your house against a fire is probably the best way to get rid of the fear.

If you want to make your home fireproof, here are some tips that can help you out:

In the Kitchen

No matter what the time of year it may be, you cook and bake in your kitchen on a daily basis, and being hasty in this environment can lead to a residential fire. When cooking, you should never:

Leave the stove on while you are absent from the kitchen. If you sleepy or in need of rest, turn off the burner and take a nap so that you can resume cooking again once you are well rested and alert.

- Overcook your food, as it can also lead to fires. When you are cooking on the stove, set a timer to alert you regarding the right time when you have to take the food off the stove. When you are using your oven, microwave or even other cooking appliance that does not have a timer, set one inyour cell phone, tablet or alarm clock so that you will knowwhen to go and check on your food.

- Keep cloth rags need a stove. All kinds of fabrics, wood, paper, and plastic are flammable. Keeping these items neara flame or a hot and active stove can result in their catching fire, which may spread out across your residence.

While Lighting Candles

Candles can bring a romantic ambiance and a soft glow to your home, but they can also be deadly, especially when a burningcandle is left unattended, and causes other objects to burn in its proximity. As a rule:

- Always blow out the candles in your home before you go to sleep at night or every time you leave your home.
- Place your candles in an area where all other objects are at a foot’s distance from it.
- Never keep your candles on the surface without using a candleholder and ensure that the holder is firmly placed on a stable, straight, and smooth surface.
- Do not use candles in a home where oxygen tanks are available.
- Prefer to use flashlights in cases of power outages in place of candles.

When Heating Your Home

During the winter months, most homes utilize heating systems tokeep their interiors warm and cozy. However, using portableheaters can be a fire hazard if care is not taken. Use the following tips to secure your home:

- Do not place any item that may burn or melt within three feet of your heater.Do not operate these heaters for an extended period, such as leaving them activated all day or all night.

- Keep your children and pets away from the heater.

- Follow the instruction given on the heater to the letter to ensure that it is operated with safety.

Aside from all of these tips, install fire alarms in your home and maintain them twice a year for additional safety. You can also devise an escape route to exit your home in an emergency and purchase a fire extinguisher to take care of small fires on your own.

For more information consult with your security advisor(s) or your local fire department.

Wednesday, June 4, 2014

How to Organize a Pool Party

How to Organize a Pool Party

Summer parties are a great way to enjoy time with friends and family. If you want to organize a party this summer, then opt for a pool party, as they are easy to organize and loads of fun. However, as with every party, you need to consider a number of things before being ready for the party. Below is a list of things you need to do to organize your very own pool party for the summer:

1.     Find a Pool

If you have a private pool, there can be nothing better. However, if not, then you will need to rent a pool at the local community club or a hotel.

2.     Decide the Date for the Event

When will you host your event? Is your birthday coming in the summer? Do you want to meet up with your friends during your summer holidays? Pick a date for the event as soon as possible, as your invitations and other preparations will be made accordingly.

3.     Make a Guest List

Are you only hosting a party for a few selected friends or a large bash? Create your guest list so that you will have an estimate on the number of people coming to the event.

4.     Create the Invites

You can either print your invites on your own or make your invites by hands. Alternatively, you can hire a professional to print your invitations as well. You can be impersonal and call or text a few selected friends or make it a big event by using proper invitations, the choice is yours.

5.     Finalize Your Menu

As it is a pool party, keep light refreshments and snacks for earlier hours while your guests are in the pool. You can then serve a good meal at lunchtime. The menu depends upon your personal tastes and the preferences of your guests.

6.     Plan for Music and Other Entertainment

Do you solely want to keep the pool as a source of entertainment or are you planning to spice things up with some music in the background? Hire a DJ or assign one person the task on setting up music during the event. If you want to entertain your guests with games and contests, brainstorm on theses ideas and finalize a few good ones. You will need to prepare for these activities in advance to have them ready for the party.

7.     Decorate the Pool Area according to the Theme of Your Party

Use yellow and blue colors to decorate the venue. You can use flowers as well to give it a bright and fresh appearance. Add tables and chairs for your guests near the poolside to provide comfortable seating to your guests.

8.     Other Prerequisites

When writing the invites, remind your guests to bring plenty of sunscreen and keep some in stock just in case your guests need it at the event. Use umbrellas to provide shady areas around the pool if there is not cover provided from the heat of the sun. With a pool party, you need to serve cold refreshments, so have plenty of ice available for use. You can ask local businesses for door prizes. You can also make party favors to give to your guests at the end of the event. Pool parties are a great way to make new friends, and recruit new volunteers for your community. Pass out notices and invite neighbors to help you throw the party. Be sure not to discriminate against any protected class(es) of residents (including children). Make sure to follow all community rules. Check with your lawyer and/or insurance agent before serving or allowing alcohol.

Organize your pool party by following these steps and have fun with your friends. The pool awaits you!

Monday, June 2, 2014

Helpful Insight for New Board Members

Helpful Insight for New Board Members

Congratulations on your new role of serving on your community's board of directors! While you were not likely given much information to help ready yourself for your new “job”, there are right ways and wrong ways to begin your term on your community board. Below are some useful tips to help you gain insight and better prepare you for your new position as a community association director.

Do your homework

Once you join your board of directors, your work is just getting started.  You must be prepared to attend your board meetings as well as any membership meetings; however, it doesn't end there. You will need to review reports, minutes and many other materials pertaining to your role as a director before you weigh in with a decision on them. You should not expect others such as another director or the manager to do your job, but you should consult with them and try to incorporate various points of view.


Familiarize yourself

You should become familiar with your role and your association's documents as soon as possible. There are materials the manager can provide that will help you better understand your role as a community association board member as well as online material. It is best to start with your Community’s Governing Documents. You may also want to consider reading the statute which governs your particular type of association. Do not expect to interpret everything on your own; that is your association attorney's role.


Ask questions

Asking questions is always a good way to learn anything that is new to you. Rather than making assumptions, ask questions about why the board is doing certain things and enforcing or ignoring certain policies. However, questions should remain genuine with the purpose of obtaining information, not veiled accusations or criticism. There will be a time to address issues after all the facts are gathered first. 

Take your role seriously

You cannot fulfill your fiduciary (acting legally, ethically, and in the best interest of the community) obligations if you do not attend meetings, are not adequately prepared, and do not take your role as a director seriously. Keep in mind, that even if you think the role easy, you might learn a hard lesson to the contrary in court. It is your responsibility to be focused on what is in the best interests of the community while putting aside any personal issues. You cannot truly represent your community in good faith if you do not put the interest of the association's homeowners collectively first.

Your voice and your vote count, so use both wisely. Volunteers like you can make a difference. I am also mindful that state legislators, the North Carolina governor, and even the President of the United States, first got their start as community leaders/organizers. The work you do is important and should always be treated accordingly.