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A Checklist For Selling Your Condominium

A Checklist For Selling Your Condominium

[ Blog/News ]

A Checklist For Selling Your Condominium

You’ve been reading countless articles in the paper about overwhelming demand for real estate and, after much thought, you have decided to take advantage of the strong seller’s market and sell your condo. While many local media stories suggest that selling anything in today’s market is as easy as snapping your fingers, the purpose of this blog post is to help you with some of the important considerations that, if planned properly, will help to ensure a smooth sale.

First Things First

Why are you selling and where will you go? If you are selling a condo that is your primary home with an intent to rent your next home, the answer is easy. If you are selling an investment property because timing is right, the answer is easier still. If you are selling to buy something else, understand that you will be entering a very competitive market (think bidding wars) and you might have to bridge the gap between selling your current place and buying a new one. I will stop right here as that’s a completely different topic that I only wanted to mention to get you thinking and planning ahead.

Next, Do Your Best to Properly Time the Market

While it goes without saying that fewer buyers shop around the holidays, there is more to timing the market. Understanding current inventory levels and estimating demand will help you list during the time when you are more likely to attract qualified buyers. If an owner currently has a listing in your Association, have a chat with them; ask them to share their experience with you. If someone recently sold, talk to them if you are keeping in touch (if not, talk to the new neighbor to find out exactly what the market conditions were at the time they bought).

Be Ready to Disclose What you Know and Research What You Don’t

The “Sticking your head in the sand” approach is unproductive 100% of the time, due diligence can keep you out of legal trouble should there be issues later. There are several disclosures that are a part of a condo sale. Many are significantly different than those of single-family homes. Some of the simple ones are “lead-based paint” (for condos built prior to 1978), FIRPTA (US residency/citizenship status) and utilities (mostly important for rural/vacation HOAs). Two major disclosures to know about are Form 17 (homeowner disclosure of what you already know about your unit) and the Resale Certificate (Condo Association disclosure).

If you are a Board member or an active committee member, you likely know what’s going on within your Association and potential issues that the buyer (or at least the real estate agent) needs to know about. If you are not very familiar with current standings of the Association, it’s often worth it to order a resale certificate in advance (learn about that process in advance as cost and turnaround time will vary depending on whether your Association is professionally managed or self-managed).

Some of the things that buyers worry about the most are current (and future) special assessments. A special assessment can make a unit unfinanceable and must be disclosed. When properly explained, and dealt with in advance, a special assessment doesn’t have to be a deal killer.

Make Sure Your Condominium Unit is Financeable

A number of things can make your unit unfinanceable for a buyer including: association delinquencies, litigation, the number of rentals, the number of units owned by a single entity, and percentage of commercial ownership, among others. When you know about those in advance, appropriate steps can be taken to resolve the issue, properly explain the issue to a buyer, adjust marketing strategies accordingly or find specialized lenders that can help a potential buyer with a portfolio loan on short notice.

If you live in an Association where demand is above average, consider doing an inspection and sewer scope (if applicable) early and provide those to potential buyers. Not only will you avoid having a dozen pre-inspections dirtying up your place, you will have an opportunity to address some of the things that can possibly kill a sale. Know about your smoke detectors and install a CO2 detector in advance to avoid issues with an appraisal later (appraisal is another important topic but we will leave it out for now as current market conditions helped decrease the number of low appraisals and other issues, though still possible).

Know Your Associations Rules For Selling Your Unit

It’s important to know any House Rules that might affect the sale. Here are a few rules worth mentioning that are important to know in advance. Are “For Sale” signs allowed? Is there a designated spot where key boxes should be installed? Is there a rental cap and has it been met? Are pets allowed and, if so, what are the restrictions? What is the move-in/out process, how much does it cost and does it need to be coordinated up front? Is there an ACC process and, if so, is there a waiting list to have an ACC application reviewed/approved? Are there other rules that restrict or otherwise play a major role in your use of your condo? Your Association might have unique policies that could be important or should be disclosed. Having these answers early can help your sale go smoother.

Here are a few rules worth mentioning that are important to know in advance. Are “For Sale” signs allowed? Is there a designated spot where key boxes should be installed? Is there a rental cap and has it been met? Are pets allowed and, if so, what are the restrictions? What is the move-in/out process, how much does it cost and does it need to be coordinated up front? Is there an ACC process and, if so, is there a waiting list to have an ACC application reviewed/approved? Are there other rules that restrict or otherwise play a major role in your use of your condo? Your Association might have unique policies that could be important or should be disclosed. Having these answers early can help your sale go smoother.

Prepare A Strategy

Finally, figure out the marketing strategy and decide whether you are selling yourself or hiring a real estate agent. If you go with the latter, do your due diligence. Pick out a real estate agent the same way you’d select a major contractor. Interview multiple people and select someone with condo experience and a proven success record in the condo industry. Your agent will assist you with many of the topics covered above as well as other recommendations, such as staging and photography. You should also consider doing what it takes for maximum buyer exposure, such as a very flexible showing schedule or, ideally, having the place vacant.

With a little research and prep work, selling a condo should be a fun process. Good luck with your sale!

By John Petrov

Managing Broker, Washington Condo Brokers, Inc.

John Petrov is a Condominium Association Industry veteran with a wide-range of experience in management and direct sales. Having managed Associations as small as two units and as large as hundreds of units, in two different states, John has a unique perspective in an industry that requires very special skills. John has been very active in Seattle’s condominium real estate market for the past 4 years and has founded Washington Condo Brokers, Inc., a Condo/HOA exclusive realty company, in January of 2016. As a Managing Broker, his current specialty is condominium real estate sales, consultations and professional resale certificate reviews.
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Reserve Study Washington: “The Top Six Components”

Reserve Study Washington: “The Top Six Components”

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Reserve Study Washington: “The Top Six Components”

A reserve study is a budget and disclosure document, supplementing operating & maintenance budgets for the large expenses that don’t occur each year. In this busy world, focusing on a handful of key items in your reserve study may keep you out of costly trouble.

A typical condominium Reserve Study in Washington has 30 to 50 components that meet the criteria for reserve funding, with their associated expenses occurring at varying intervals throughout the 30-year study period. Planning for this somewhat complicated array of expenses can much more easily begin by simply focusing on the “The Top Six” as they apply to your community. Put together a solid funding plan for these components and you’re likely to avoid special assessment and the myriad of problems that come with it.

Inflation is a key factor in reserve studies and having enough money to complete your projects on time and within budget. Construction is booming again around the Seattle area – a 1% change in inflation can result in a need to revise your contributions about 13%! Work with your provider to ensure your reserve studies are up to date so you have the information you need to be proactive and bring your project costs in at the best value.

Reserve Study Components, What are “The Top Six”?

While reserve studies address all common elements of an association, at minimum if you create a solid funding plan for the “Top Six”, you’re likely to avoid special assessments and the headaches that come with them:

  • Painting
  • Roofing
  • Asphalt
  • Siding
  • Windows
  • Decks

If your community in Washington is a mid or high-rise, you can substitute elevators and mechanical equipment for asphalt; in some cases, plumbing needs to be on that list as well. If you live in an HOA in Washington, your short list is different; likely to include fencing, playground and other recreation equipment, perhaps landscaping items, lighting, signage, a clubhouse, etc…

I took a random sampling of four recently completed condominium reserve studies in preparation for this article to determine just how significant the percentage of the total association assets these components are:

%

8 Units Tacoma Washington

%

12 Units in Seattle Washington

%

35 Units in Renton Washington

%

58 Units in Big Sky Montana

  • 8 units in Tacoma did not have decks
  • 35 units in Renton–the owners are responsible for windows
  • 12 units in Seattle had all of the top six components
  • 58 units in Big Sky Montana–I met a brown bear face to face on the road doing this one…
You can see most assets in these examples fall within the Big Six classification.

Planning for Reserves

It is difficult for many of us to look 20 to 30 years into the future as it relates to planning for our residence. An effective strategy is to begin your focus and discussion with the membership on the next 10 years. Typical ownership periods are often within that 10-year period and one or more of those top six expenses are likely to occur in that time frame. If your community is 11 to 20 years old, more than one is likely to occur. If it is 21 to 30+ years old, you may have to face many of these projects within that 10-year planning window.
Communities focusing on these items will illustrate most of near and mid-term cash flow needs without getting mired in the debate over whether or not the mailboxes should be in the Reserve Study, or why anyone in their right mind would plan for 30 years worth of projects…
Once you determine you community association’s needs,  then you can move on to addressing the other components in the study.

Strategies to Simplify the Process

  • Ignore these confusing terms within the Reserve Study (for now): Percent Funded, Fully Funded Balance, Full Funding, Threshold Funding and Baseline Funding.
  • Open the study to the 30-year income and expense detail, tear out the pages that show the next 10 years of income and expenses year by year and set the rest of the study aside as light reading for a later date.
  • To determine a starting point for a stable reserve contribution rate over that time period, review and sum the expenses projected over the next 10 years, divide by ten, then again by 12 if you are seeking a monthly reserve contribution rate.
  • Now ask yourself how much of a minimum balance in any given year you feel comfortable leaving the community with to guard against surprises, cost overruns, projects needing to be done sooner or at a larger scope than estimated.
You can view this minimum balance question as a percentage of expenses. For example, you might have a policy that states; the ending reserve balance in any given year should not be less than 25% of the projected expenses in that year. Or, you may consider a policy of not letting the reserve balance go below $50,000 or similar (I like the first of these two approaches better). Once you have your beginning point, discuss with the rest of the board, then the entire community, what years 11 thru 20 might bring your way and how it might affect your plan. Communicate and disclose should be your mantra for reserves planning.

Final Thoughts from a Reserve Study Professional

I am somewhat surprised by the number of associations who do not clearly understand their maintenance, repair and replacement responsibilities for the common and limited common elements of their community. Many times, they’re different than what the association believes they are. I strongly advise all associations that have not previously done so, engage a knowledgeable law firm to review their governing documents and draft an association Responsibility Matrix. This legal review and resulting responsibility matrix can be a critical component to the planning process.
Legislation was enacted into law in 2011 requiring the study to be disclosed to all owners during the budget process as well as the board’s funding plan in comparison to the reserve study recommendations to be disclosed and ratified by the membership.
The lessons I’ve learned during the last few years, particularly in my own planning, have resulted in a simplification of my thought process. Consider doing the same for your association and I think you will be on the path to a successful community. I wish you all the best for the time period of 2017 thru 2026, and beyond.

By Jim Talaga, RS

President, Association Reserves Washington, LLC

Jim is president of Association Reserves Washington, LLC and he and his staff have performed over 7,500 Reserve Studies for clients throughout the Pacific Northwest since 1997. Association Reserves, Inc. is the nation’s largest Reserve Study provider.
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Plat Maps – A Series For Homeowners Associations

Plat Maps – A Series For Homeowners Associations

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Plat Maps – A Series For Homeowners Associations

As a child I was fascinated by maps. My mom would buy the Thomas Guide every year and I would actually spend hours thumbing through it just for fun (for you young pups out there, the Thomas Guide is what your parents would use to find a Saturday garage sale before GPS was invented). If I had a class in school that involved marking up a map with landmarks, capitols, rivers and mountain ranges, I was confident I’d be acing that project. Dora the Explorer and her map have nothing on me. So how lucky am I, as an adult, to have a job where I can spend time pouring over maps; plat maps that is!

In my day job, I primarily manage homeowners associations versus condominiums. Instead of being focused on the buildings themselves, I find myself more focused on the land on which they are built. I often tell people I am a “plat manager”. My day is filled with terms like easement, shared side yards, Native Protected Growth Areas, critical areas, ingress and egress, tracts and a whole slew of various LID BMP. What’s that crazy acronym, you may ask? Low Impact Development Best Management Practices- a relatively new set of land use management strategies that not only mandate development that emphasizes conservation, but implements the use of on-site natural features like bioretention, rain gardens, permeable pavement and rainwater harvesting. Natural site features with which the average board member or community manager may not have experience.

Whats a Plat Map?

A plat is a map, usually drawn to scale, showing the divisions of a piece of land. A developer will take a piece of real estate, or assemble several parcels together and have a survey of the land done to identify lot and plat boundaries, easements, flood zones, roadways, rights of way, critical areas and other important property details. It is part of the legal description of a piece of real property and it is required by a jurisdiction if the land is to be divided for the building of homes, creating parks or setting aside rights of way. If your eyes are glazing over, fear not! Plat maps are fun and often contain hidden gems of information, especially for your homeowners association. Plat maps detail where you can find various covenants and “rules” put in place for those mysterious critical areas, detention ponds and weird strips of open space that no one can seem to remember who is responsible to mow.

Deed Restricted Plat Maps

For a very short moment in time, I crossed over to the dark side and worked for a homebuilder who primarily built deed restricted plats – or HOAs. Once our company became the property owner, the platting would begin. Professionals who are much better with numbers and with amazing technical skills like measuring stuff and drawing straight lines would review local city codes, public rights of way, any old easements or covenants recorded on the titles and put together, almost as if it were magic, a plat map. These magicians actually understood where 38 degrees into the northeast quadrant east of north actually was located. With preconstruction meetings with various planning, building and public works officials, input from specialized engineers and just a little bit of fairy dust… shazam! A preliminary plat map was produced.

The Preliminary Plat Map

A preliminary plat is an approximate drawing of a proposed subdivision. It shows the general layout of the streets and alleys, lots, blocks and other elements of the community about to be built. This draft version of the map is the basis for the approval or disapproval of the general layout by the local municipality. This document is reviewed by city staff to ensure that the lots are the right size, that the use is appropriate for the area of town in which it is being built, low impact development requirements are met and assignment of who controls what is detailed and agreed upon. While most declarations will state something akin to, “The common areas include Tract 998 which is a native growth protection area part of which is covered by a Category III wetland area…” the plat map is where the magic happens as it clearly depicts the location of this tract.

The Final Plat Map

Our little preliminary plat map may go through quite a process from here depending on the scope of the project, the city or county in which it’s being built and how many unique features like rivers, lakes or wetlands the area contains. Eventually though, a Final Plat comes forward and is recorded with the county. This binding site plan is drawn to the scale specified by local ordinance. It identifies and shows the areas and locations of all streets, roads, improvements, utilities, open spaces and any other matters specified by local regulations. It’s first page will contain the dedication language that sets forth the limits and conditions for the use of the land and will detail provisions required for development. It’s from these limits and conditions that the Common Area section of your Declaration will be culled. Tracts will be granted and conveyed to the homeowners association upon the recording of the map. Emergency, utility and access easements as well as landscaping buffer zones, critical area setbacks and assignment of responsibility for certain portions of the HOA will also be specified. It’s from all these details that you may happily find that the giant open space that needs to be mowed is actually the responsibility of the city.

Next month’s lesson: The Joy of Color Coding your Plat Map using Sharpies.

By Melissa Musser, CMCA AMS

Suburban Growth Practices Director, Trestle Community Management

As the Suburban Growth Practices Director with Trestle Community Management, Melissa focuses on developer and declarant community formation through transition to owners for homeowner and master Associations. As an elected City Councilperson for the City of Des Moines since 2010, she chairs the city’s Environment Committee and brings her extensive knowledge of plat management, low impact development standards and surface water management to the clients she serves. Melissa is part of the Education Committee and in her spare time she is an avid marathon runner. By marathon, she means Netflix marathons that she enjoys with the love of her life that she met at a WSCAI Business Partners Social. So you could say that Association Management truly is her whole life.
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Housing for Older Persons – FHA Legal Requirements for Condos and HOAs

Housing for Older Persons – FHA Legal Requirements for Condos and HOAs

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Housing for Older Persons – FHA Legal Requirements for Condos and HOAs

It is anticipated that elderly growth rates will increase dramatically over the next 20 years as the Baby-Boom generation ages. It is expected that the proportion of those over 60 years old will increase more than 23 percent in Washington from 2010 through 2030. Many of these individuals will seek “housing for older persons,” as defined in the Fair Housing Act (FHA) and under State law.

This article explains the key requirements for communities to maintain their status—and special legal privileges—as “housing for older persons,” which is of greater importance as the population ages. It is of further importance because the failure to comply with the FHA can result in civil fines, damages, attorney fees and litigation costs.

What is the Fair Housing Act (FHA)

The FHA was passed to prohibit discrimination in the housing market on the basis of race, color, national origin, religion, sex, familial status or handicap. The FHA defines “familial status” as one or more persons under the age of 18 who are domiciled with a parent or legal guardian. In other words, the FHA prohibits discrimination in housing against people living with children. Washington also prohibits discrimination based on familial status.
However, the FHA not only permits but actually encourages age discrimination in certain situations. One of those situations concerns “housing for older persons” as defined by the Housing for Older Persons Act of 1995, an amendment to the FHA.

Washington Also Allows Exemptions for Elderly Housing

Pursuant to the amendments, the FHA exempts housing for older persons from the prohibition against familial status discrimination in the following situations:

  • The U.S Department of Housing and Urban Development specifically determines that a particular community is designed to house elderly person under a Federal or State program
  • The housing is occupied solely by people who are at least 62 years old
  • The housing has at least one person who is 55 years of age in at least 80 percent of the occupied units, with a strict policy demonstrating the intent to house persons who are at least 55 years old

In order for this final provision to apply, three requirements must be satisfied. First, the housing must meet the 80 percent occupancy requirements for those who are at least 55 years old. Next, the community must publish policies and procedures evidencing the intent to maintain elderly housing.Third, the community must consistently follow those policies and procedures.

Factors Considered

Under the Federal regulations, a number of factors and written materials are considered when deciding whether a community demonstrates the intent to operate as housing for residents who are at least 55 years old, such as:

  • the description of the community to prospective residents;
  • advertising materials;
  • lease agreement provisions;
  • the community’s written rules;
  • whether there are public postings in common areas describing the community as housing for persons at least 55 years old; and the actual practices of the community, including consistency in applying its rules.

If 80 percent of the units are occupied by at least one person who is 55 or older, then the community can make its own rules as to the occupancy of the remaining 20 percent of the units, such as allowing children to live there. However, in these situations, the community must take greater steps to ensure compliance with the 80 percent requirement. These steps include the requirement that the community perform bi-annual surveys of the residents and maintain the survey records for agency inspection.

Publish and Practice

Publishing specific policies and adhering to them also helps to avoid disagreements, as uncertainty can lead to disagreements within the community. Examples abound of associations and residents ending up in litigation because elderly residents assist younger family members in contravention of published policies. At times an association or its managing agents may be tempted to turn a blind eye to these transgressions. By the time a complaint occurs, a pattern of leniency may reasonably lead younger family members and their older hosts to believe that they have a right to their living arrangement. These beliefs are not easily abandoned and can result in costly litigation.

By Tony Rafel, Esq.

Managing Partner, Rafel Law Group PLLC

Tony Rafel is the Managing Partner of Rafel Law Group PLLC, a law firm that represents community associations in the State of Washington.
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Uncollected Assessments: HOA Budgeting for Bad Debt

Uncollected Assessments: HOA Budgeting for Bad Debt

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Uncollected Assessments: HOA Budgeting for Bad Debt

Budgeting for bad debt is something that associations should consider doing even in the best of times. Saying that associations need only budget for uncollected assessments in a down economy would be as shortsighted as… well, not budgeting for uncollected assessments.

One of the things I let collection clients know right off the bat is that they are not alone.  According to RealtyTrac, 20,960, or 1/33 of all homes in Washington have received a foreclosure notice during the first six months of 2010 (this does not include properties that are already bank-owned).  Considering that associations make up approximately 25% of the total housing market, this means that over 5,200 association lots/units in Washington are subject to bank foreclosure.  If homeowners are having that much difficulty paying their mortgage, it follows that association assessments are going unpaid.  If your association does not have any delinquencies, consider yourself fortunate, but don’t stop reading.  Budgeting for bad debt may increase the amount owners pay each month in the short term, but in the long term helps alleviate the need for special assessments, which can cripple or destroy the finances of the owners and families that make up our communities.

Why Budget for Uncollected Assessments?

Except for a few common denominators like insurance, taxes, and utilities, different associations spend their money on different items for maintenance, services, and the like.  Unless an association has an external revenue stream such as rental income, all of the money that an association uses to pay its expenses comes from the assessment payments from the members that make up the association.  If even one association member’s assessments go unpaid or short-paid, anticipated projects cannot be carried out, the association may have to withdraw from its reserves to pay for operating expenses, and eventually the membership is required to pay special assessments to make up for the loss in revenue.  Condominiums in Washington are “encouraged” to establish a reserve account to fund major maintenance, repair, and replacement of the common elements.  Associations that are not meeting their operating budgets are likely not funding their reserve accounts.  Further, if a condominium association withdraws from its established reserve fund, the Washington Condominium Act requires that the association notify its members in writing and replace the money in the reserve fund within twenty-four months unless replacing the funds would be an unreasonable burden on the owners.  How will an association raise the money to pay back the reserve fund?  By levying a special assessment.

Uncollected Assessment Scenario

Let’s assume a ten-unit condominium association assesses its units an average of $400.00 per month and has an annual budget of $48,000.00.  In Month 1 the owners of one unit run into financial difficulty and stop paying their assessments and mortgage.  At around Month 6, the bank will start foreclosure, and the trustee’s sale will take place sometime between Month 10 and Month 14.  After the trustee’s sale, the unit could sit vacant and on the market for another six months or more.  If the association was formed under the Washington Condominium Act, or if formed under the Horizontal Property Regimes Act and has amended its declaration to provide for lien priority over foreclosing deeds of trust, the association can recover the assessments that became due in the six months before the trustee’s sale from the purchaser.  Assuming someone buys the unit from the bank in Month 20, the bank will pay the association the assessments during the six months before the foreclosure and the assessments through the date the new owner takes title (Months 9-14 plus Months 15-20).  In this scenario, the association suffered a ten percent reduction in revenue for twenty months, only to recover 55% of the total amount owed by that unit. If the association decides against suing the former unit owners and collecting on a judgment, or if the former unit owners file bankruptcy after the foreclosure, that is all the association will ever get.  The remaining 45% of the unit’s share of the common expenses spread out among the remaining nine units is $400.00 per unit.  Had the association a bad debt contingency of 7.5% of the total budget, the monthly assessments for the units would average $430.00 per month, but the members would not have had to come up with an additional $400.00 per unit on short notice so that the association can pay its electricity bill.

Levying Special Assessments

Another important situation where budgeting for uncollected assessements comes up is when there are insufficient funds in reserves and an association takes out a loan from a lender to fund a maintenance project or capital improvement.  An association needs to levy a special assessment to pay back the lender. This will typically allow the owners to either make a lump sum payment of the full special assessment, or pay over the period where the association repays the lender the balance of the loan plus interest.  A bad debt contingency should be included when the association determines the amount of the special assessment.  In these cases, an association should get input from its owners to determine who can afford the special assessment and remain in the property.  If owners are already underwater on their property they may decide to walk away, so the Association will need to make sure that it generates enough income during the life of the bank loan in order to maintain the monthly payments to the lender during the time where one or more unit’s assessments are going unpaid.

How to Budget for Uncollected Assessments

Because all communities are different, there is no set amount or percentage that an association should budget for uncollected assessments.  Instead, an association should consider the following factors when deciding on what amount to budget for bad debt:

  1.  The total amount needed to pay for the operating expenses and fund the reserve the account.  In adopting a budget, associations need to consider how much it will cost to pay the operating expenses and fund a reserve account, plus account for bad debt, and then work backward to determine each unit’s assessment liability, rather than starting with an “acceptable” amount per unit.
  2. The percentage of delinquent units.  Communities with a high percentage of delinquent units should budget a greater amount for bad debt.
  3. The delinquent amount per unit.  The higher the delinquent amount per unit, the less likely it is for the association to recover its expenses.
  4. The amount that can reasonably be collected from the owners.  Associations should consult their attorney to determine the feasibility of collecting delinquent assessments from owners.

Should an association have questions about budgeting for bad debt, it should consult its attorney, CPA, or manager when configuring its budget.  You can find a list of WSCAI member service providers in their Service Provider Directory.  A properly adopted budget that includes a line item for bad debt will protect an association and its members from special assessments that can lead to financial difficulty for an association’s members, and ultimately the association itself.

By William Justyk, Esq.

William Justyk, Esq., is an Attorney with 12+ years experience in real estate transactions, nonprofit corporate law, and civil litigation.
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Strategic Planning for Condos and HOAs

Strategic Planning for Condos and HOAs

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Strategic Planning for Condos and HOAs

Strategic planning is a systematic planning process involving a number of steps that identify the current status of the association, including its mission, vision for the future, operating values, needs (strengths, weaknesses, opportunities, and threats), goals, prioritized actions and strategies, action plans, and monitoring plans.1

Basics of Strategic Planning

A strategic plan is more than ensuring financial stability and providing for future community maintenance. Every community association needs multi-year strategies, goals, and policies to guide future operational decisions. With a clear and concise strategic plan, your board and other community volunteers will enjoy a roadmap that helps them stay focused on the important tasks and goals that will provide long-term benefits to the community. A strategic plan may also increase volunteerism, enhance relationships and unite community members around common goals and objectives.

Other benefits of a strategic plan:

  • Facilitates progressive advancement of the association’s goals.
  • Exposes factors that may impact resident’s quality of life
  • Reveals the external perception of the community and how it may influence the marketability and value of its homes.

It is important to recognize that even the best strategic plan cannot ensure optimal decisions, anticipate unforeseen events or prevent the impact of an occasional crisis.  However, it may simplify and streamline community association operations and provide the basis for more effective decisions that support the association’s vision and mission.

Strategic Planning and SWOT Analysis

  1. Assess the Association’s Current Status. A great tool that facilitates this effort is SWOT analysis which is an acronym for Strengths, Weaknesses, Opportunities and Threats.
  2. Strengths. Identify the organization’s internal characteristics that enhance the association’s ability to meet its mission and vision or give it a competitive advantage over other communities. Some examples: location, committed volunteers and access to public amenities.
  3. Weaknesses. List the organization’s internal characteristics that detract from the association’s ability to meet its mission and vision or put it at a competitive disadvantage over other communities. Examples include poorly funded replacement reserves and deferred maintenance.
  4. Opportunities.  Record the internal and external factors that may enable the association to meet its mission and vision. Some examples include technological advances, consolidation of functions and subsidies for community enhancement projects.
  5. Threats. Capture the internal and external factors that may prevent the association from meeting its mission and vision. Some examples include theft, a high foreclosure rate, undesirable municipal projects and new communities in close proximity that may undermine resale prices.

Surveys and Brainstorming

Solicit input from owners early in the planning cycle. A couple of good methods are a community brainstorming session (often synergistic and productive if best practices are observed) and a well-designed community survey. Don’t forget about renters in the community. Their perspective may be different and valuable. Both the budget process and the annual meeting are also excellent opportunities to learn what is important to the community and to encourage owners to get involved in their community by serving on a committee or working on a project where they have interest or expertise—including strategic planning.

It may also be useful and enlightening to solicit input from real estate agents that specialize in your community and other external entities that conduct informal, de facto assessments of your community. They may be able to identify SWOT factors that are not readily perceivable by owners and residents due to the residents’ intimate relationship with the community. For example, a real estate agent may identify elements of the community that need an update.

Strategic Planning Steps

  1. Develop Vision and Mission Statements. Vision and mission statements are key elements of the completed plan and may be all that is remembered by many owners and residents. Successful organizations use a vision statement to communicate, organize and inspire. A good vision statement is a simple, clear and concise description of what is important to the community.  It should describe the direction, values, and essence of the association in its desired state.

    An association’s mission statement is a statement of the organization’s purpose. An effective mission statement is both memorable and easy to understand.  The most basic mission for a community association is to “maintain, enhance and protect the value of the property.”

  2. Develop and Prioritize Goals. To be effective, your goals must be prioritized and S.M.A.R.T as described below.
    • Specific. The goal is well defined and clear to all who have basic knowledge of the strategic plan.
    • Measurable. Progress toward the goal is measurable and achievement of the goal will be clearly evident.
    • Achievable. The organization has high confidence that the goal is achievable within the agreed upon time constraint.
    • Relevant. The goal must directly advance the mission and vision of the association and must remain relevant once achieved.
    • Time-bound. Allow adequate time to achieve your goal, but not enough time to lose momentum or render the goal irrelevant.
    • Develop Action Plans. Unless a goal is very simple to achieve, an action plan will be necessary to achieve the goal efficiently.
  3. Communicate the Plan. You may be surprised how often this step is overlooked. Many missions and visions are not realized because the plan was not effectively communicated to those directly and indirectly involved in the planning. Community support of the plan is crucial and will attract additional volunteers to help execute the plan.
  4. Budget.
    • First of all, plan
    • Create your budget
    • Finally, allocate budget dollars in support of the plan.
  5. Implement. Work from the bottom up. Execute the action plans that realize your goals that support your mission and vision. If you have many action plans, consider appointing a project manager to employ some basic project management techniques to stay organized and focused.
  6. Monitor Progress.

Cyclical Process

Strategic plans often are forgotten quickly despite the best intentions of all parties, similar to a New Year’s resolution. As a result, they often become “shelfware.” That is, the attractively bound plan is placed on a shelf, seldom if ever to be consulted again.

Strategic planning is a cyclical process. The board should review the plan annually to ensure it remains timely and relevant, regardless of the planning horizon. Volunteer leaders come and go and each has individual priorities. The following may help maintain continuity.

  • Following each annual meeting, conduct a new-to-the-board orientation to brief new directors on the history and current state of the association. Impress upon all directors that they run a privately held multi-million dollar real estate corporation.
  • Schedule a planning retreat for the board shortly after the new-to-the-board orientation. Fresh volunteer leaders often have the highest levels of energy and commitment. Then allocate half a day (outside of a board meeting) during which discussion of current operational issues is forbidden. The focus must be on strategic planning. Broaden your perspective by encouraging non-linear thinking and creativity. Engaging a facilitator to help guide the meeting may be beneficial.
  • Schedule time to review progress each quarter.

Planning Pitfalls to Avoid

  • Focus on routine current issues
  • Analysis paralysis
  • Failing to solicit and incorporate input from the community

After identifying and evaluating the SWOT for your community and setting SMART goals with well defined action plans—all of which support your mission and vision—your community will be well on its way to becoming a well-oiled machine that meets the needs of the owners and other stakeholders in the community. Depending on the size and complexity of your community, a modest investment in strategic planning can return large dividends in the form of satisfied owners and higher property values.

For much more information on strategic planning, refer to Best Practices Report # 3, Strategic Planning published by the Foundation for Community Association Research (http://www.cairf.org/research/bpstrategic.pdf).


[1] “Best Practices Report # 3, Strategic Planning” (Alexandria: Foundation for Community Association Research, 2001), 4.


By David Rossiter

Community Association Manager

David Rossiter is an experienced Community Association Manager with an emphasis in financial management. He has a strong background in business management and many aspects of information technology. David has been a self-employed small business owner since 1994. His specialties include: Community association financial management, condominium association management, homeowner association management, collections management (not an attorney or collection agent). David is an active member of WSCAI.
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Community Associations Countdown to Year-End!

Community Associations Countdown to Year-End!

[ Blog/News ]

Community Associations Countdown to Year-End!

The end of the year is approaching and before long we will be setting New Year’s resolutions for 2017. But before that new beginning, we need to wrap up 2016. For associations whose year-end is December 31st, there are financial and tax items that need to be addressed by the board and/or management. Let’s count down the top 10:

[10] IRS Revenue 70-604 Election

This is an annual tax election that must be made by the membership. This is a tax-only election which transfers excess operating fund income to the next year. For most associations, it seldom is actually used in the preparation of the tax return, but it is important to have as it may give the tax preparer options. Additionally, it may provide some protection in case of an IRS audit. Thus, we recommend that the election is made annually. Ask your tax preparer if you are unaware of this election.

Key Points:

  • Membership should make the election.
  • This carries over net membership income to the next year.
  • It does NOT transfer monies to reserves.
  • The determination whether or not to use the election is made at the time of preparation of the tax return.
  • Make the election annually, even though the ruling cannot be used on the tax return two years in a row.
  • The membership election may occur either before or after the subject year end. If after year end, it needs to be done before the extended due date of the tax return.

[9] Approve and Schedule Audit and/or Tax Return Preparation

Determine whether your association is going to have an audit. There are various RCW, governing document and good operating practice requirements. If so, approve the audit proposal and get scheduled with a CPA. The association must file a Federal tax return. This is a unique area of tax law, so make sure that the tax preparer is well-versed in association tax law.  NOTE: for 12/31/16 year-ends, the revised tax return due date is now April 15th – not March 15th.

Key Points:

  • A CPA/auditor is independent of the association.
  • To maintain independence, the CPA/auditor cannot prepare the books, or make accounting and management decisions.
  • An audit is not an internal control. The board is responsible for the internal control system.
  • The CPA/auditor strives to be sure that the financial statements are materially correct and in compliance with generally accepted accounting principles.
  • All associations must have a tax return prepared annually.

[8] Budget Ratification

The budget should be prepared by now. The end of the year (or, sooner) is the time to get the information to the membership.

Key Points:

  • Comply with RCW and association’s governing documents.
  • Use the budget as a tool to explain the current and future financial position of the association to the membership.
  • Ensure that management is making the proper changes to the assessment billings.

[7] Bad Debt Allowance and/or Write-Offs

Review outstanding amounts due from unit owners. Determine a reasonable Allowance for Bad Debts. This is an offset to Accounts Receivable on the Balance Sheet. For any accounts where it has been determined that collection time and cost exceeds the benefit, or for those accounts determined to be uncollectible, the board should document in the meeting minutes the approval to write- off.

Key Points:

  • Be conservative!
  • It is better to have a larger Bad Debt Allowance and not overstate assets.
  • If the monies are collected in a later year, bad debt recovery income is recorded.

[6] Year-end Payroll & Contract Labor

If there any year-end bonuses, be sure and document approval of such. Ensure that all required payroll and independent contractor reports are completed in a timely manner.

Key Points:

  • If there is any concern about whether a person is a vendor (contract labor), consider getting professional advice on the matter.
  • Reconcile year-end payroll reports with the general ledger.

[5] Review Internal Controls

Internal controls are the methods and policies that help ensure the integrity of the financial information.

Review the various internal control and authorization processes that are in place. Consider whether a change is needed anywhere.

Key Points:

  • Ensure that the board has control of all cash accounts.
  • Review check signing and/or withdrawal authorization process for operating and reserve accounts. Update authorized account signers if there have been changes.
  • Document who has authority to make payments, adjust the financial statements, reconcile accounts, write-off account balances, etc. Segregate this authority as reasonably possible.

[4] Due Between Funds

This may be on your monthly Balance Sheet and often represents the amount receivable or payable between the Operating Fund and the Replacement (Reserve) Fund. Occasionally, there are other funds involved, such as a Special Assessment. Understand what this amount represents and why it exists. If amounts are due between funds, these should be reviewed by the board for the proper year end accounting.

Key Points:

  • The board and management should review a reconciliation of the Due Between Funds
  • The board and management should determine whether amounts should be written off and/or repaid, according to RCW, GAAP, and board policy, as appropriate.
  • Board actions/approvals with respect to write off, repayment, or other accounting adjustments should always be documented in the board minutes.

[3] Verification of all Bank Account Balances

Ensure that there are bank statements, printout or other verification of balances for ALL cash accounts as of the end of the year. The board should be receiving and reviewing cash account balances at least quarterly; however, at the end of the year is vital. The auditor needs proof of existence of the cash and verification of the amount.

Key Points:

  • Record year-end interest income before closing out the books
  • Make all other adjustments, such as voiding old, outstanding checks.

[2] Final Review of the Year-End Financial Statements

The board should review the final year-end financial statement and ensure that it appears to be materially complete and accurate. While the board can hire a management company or an onsite manager to assist with the accounting, the board still has a responsibility to understand the financial matters of the association.

Key Points:

  • Each material Balance Sheet account should be backed up with a report and/or other documentation.
  • Variation of income and expense from budget should be discussed and documented.

[1] Close Out the Year

Once the determination has been made that the financial statements are completed for the year, the year-end is considered to be “closed”. While many computerized accounting systems no longer close a prior year and it is possible for adjustments to be made to a previous period, this is not a good practice.

Key Points:

  • Once the year-end financial statement is issued to the board, the prior period should not be adjusted.
  • Once the year-end financial statement has been issued to the auditor, the prior period should not be adjusted.

Close out the old year and start the new! Time flies; the “Class of 2020” has now entered high school! Don’t delay, and make this an important annual procedure for your board and management.

By Gayle Cagianut, CPA

Owner, Cagianut & Company

Gayle Cagianut, CPA is the owner of Cagianut & Company, CPA and has worked in the HOA/Condominium industry for over 30 years.
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I’ll see you out of court! Alternative options for resolving legal disputes

I’ll see you out of court! Alternative options for resolving legal disputes

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I’ll see you out of court! Alternative options for resolving legal disputes

Alternative dispute resolution or “ADR” was developed over the last twenty years in an attempt to resolve disputes quicker and cheaper than traditional litigation. ADR has two distinct forms: mediation and arbitration.

Mediation

While some courts require mediation before trial, it is generally undertaken voluntarily. Mediation is always non-binding, meaning the mediator has no power to decide the case. The mediator’s sole role is to try and negotiate a settlement that both parties can live with, though neither party may be particularly happy about.

Mediators engage in “shuttle diplomacy” between parties, who remain in separate rooms, attempting to broker settlements by discussing the relative strengths and weaknesses of each parties’ case along with the inherent risks and costs of litigation. When mediating, the association (and its attorney) should be prepared to discuss the facts underlying the dispute and articulate why those facts and the related law support its position. Formal presentations are not made, rather, the mediation will be an informal conversation about the case. It is helpful to provide the mediator and opposing party a short 3 to 5 page letter explaining the association’s position prior to the mediation.

Mediators do not take sides in a dispute, rather they will push both sides to try and convince them to move closer to a settlement. This generally involves the mediator discussing why you may lose if you proceed to trial; however, he/she is telling the opposing party the same thing. Mediation often proves successful because it provides a venue where parties feel like they have been “heard”, as well as provides them with an independent analysis of the risks and costs they face in continued litigation.

Associations should consider mediation, in consultation with legal counsel, as a way of avoiding the direct costs (time and money) and secondary impacts (stress, lost productivity, etc.) inherent in litigation.

Arbitration

Unlike mediation, arbitration is generally a binding (i.e. not subject to appeal) dispute resolution process. In an effort to reduce the number of cases, many Washington courts require small monetary disputes ($50,000 or less) to be arbitrated. If not required by a local court, arbitration can be required by the terms of a written contract. Associations will most commonly encounter arbitration clauses in contracts with construction companies and other similar service providers.

While less formal than a trial, arbitration closely resembles one. A panel of between one and three licensed attorneys serves as the arbitrator(s) and presides over the arbitration. Each party presents evidence, questions witnesses, and makes argument to the arbitrator(s), who then make a ruling. If the arbitration was required by a contractual term the panel’s decision is, in most cases, final and binding on the parties, (meaning it is not subject to an appeal). If the arbitration is mandated by a court, the parties can appeal the arbitrator’s decision to the courts.

While originally designed to be a quicker and cheaper alternative to the court system, in practice, arbitrations (especially of more complex matters) tend to take a similar amount of time as a trial and can be more expensive. The primary drawback to arbitration is that the losing party has to pay the cost for the arbitration panel’s fees, which typically range from $300 to $500 per hour, per arbitrator. This fee adds up quickly, especially if you have a long mediation with a panel of arbitrators. Arbitration can, however, be a cost effective and quicker alternative to litigation on smaller and less complex disputes.

As discussed, associations commonly encounter mandatory arbitration clauses in construction contracts. Coincidentally, construction defect cases are often some of the most time intensive cases to litigate, resulting in significant additional costs to arbitrate a case as a result of the arbitrators’ fees. If possible, associations should negotiate a clause into their contracts which allows the association to elect whether to resolve disputes through binding arbitration or litigation. This provides the association with the ability to make a decision, with legal counsel, which process will be more advantageous once the facts of the dispute arise.

Which Should An Association Choose?

As a general rule, associations should: i) seek to mediate disputes as early as practicable, and ii) retain a contractual option to choose between binding arbitration and litigation.

By Seth Woolson

Principal, Chmelik Sitkin & Davis P.S.

Seth A. Woolson is a principal at Chmelik Sitkin & Davis P.S. whose practice concentrates on community association representation, construction law and general civil litigation.
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WSCAI’s Earth Day Project

[ Blog/News ]

WSCAI’s Earth Day Project

Each year, in honor of Earth Day, WSCAI’s Community Outreach Committee solicits nominations from member communities that are in need of assistance with landscape and general spring cleanup. From those nominations the Committee reviews and selects a deserving community. A big Congratulations goes out to Silver Glen Cooperative for being the 2016 recipient. This year, the Community Outreach Committee recruited volunteers to assist at the work party scheduled on Wednesday, April 20. Continental breakfast and lunch were provided to all volunteers. If you are interested in participating in future Earth Day Projects or making a donation, you are encouraged to fill out the Earth Day Call for Volunteers Form.

A Special Thanks To All That Volunteered

Earth Day projects are backbreaking, yet fun and collaborative events. Silver Glen’s project brought just shy of 60 volunteers, plus an additional dozen owner volunteers who were very supportive delivering water, serving a delicious lunch and providing direction when necessary.  We thank all of our volunteers for coming out to support our efforts as it was a grueling day.

We would like to extend a special thanks to those WSCAI Business Partners and their extended networks who graciously donated 100% of the cost, equipment and materials necessary for our project. These are: Ruff Construction, SSI, Northwest Landscape Services, Whirlwind Clean & Green, Fischer Plumbing & Restoration, ServPro of Edmonds, Lynwood and Bellevue West, Jergens Painting, Sunbelt Rentals, McBride Construction, Eastside LandCare, Home Depot and Safe Sidewalks. SSI and Ruff Construction’s donations went above and beyond with their volunteerism by donating several days and countless hours of additional support.

We hope that you are inspired to volunteer for next year’s Earth Day event!

Work Party Details: Wednesday, April 20, 2016 9 a.m. – 4 p.m. Silver Glen Cooperative 1750 152nd Ave NE Bellevue, WA 98007 Earth Day Work Project Contact: Shane Lewis: shane@cwdgroup.com WSCAI’s Earth Day Project History: 2015: New Holly HOA, Seattle 2014: Rolling Hills Condominium, Renton 2013: Lea Hill HOA, Auburn 2012: Ambaum Square Condominium, Burien 2011: The Verano at Redmond HOA
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“Getting away” in an HOA: What can associations do about vacation rentals?

“Getting away” in an HOA: What can associations do about vacation rentals?

[ Blog/News ]

“Getting away” in an HOA: What can associations do about vacation rentals?

Vacation rentals are incredibly popular today. They provide extra income to homeowner “hosts” and inexpensive accommodations to vacationing “guests,” but can impose unwanted burdens on community associations.  What can associations do to address these burdens?

First, let’s understand the phenomenon. Companies like Airbnb (privately owned and valued at $24 billion), Homeaway (recently acquired by Expedia for $3.9 billion), VRBO, Housetrip, and Roomorama each provide an online service that connects hosts and paying guests for short-term vacation rentals. Another site, www.couchsurfing.com, offers something more like a dating service. A user creates a profile, including a photo, and sends a “couchrequest” to stay with another user whose profile looks interesting. If the recipient agrees, short-term accommodations are provided without charge. Vacation rentals may include an entire home or condo unit, or sometimes just a room (or couch).

Vacation Rentals and Community Associations

From the perspective of the homeowner hosts, these types of online rental services offer a convenient, low-cost way to earn additional income. In their view, it’s almost the same thing as having family or friends visiting, except that money usually changes hands. From the perspective of the community association, however, these arrangements look quite different. They put extra burdens on vehicle traffic, parking, trash, pet impacts, noise, common amenities, property management, and public services (police, fire, emergency medical response), and the visitors are strangers with no ties to the community. They don’t coach kids’ teams, volunteer at the library, or help neighbors; they use and leave, potentially damaging the residential character of the community.

Aren’t Vacation Rentals Prohibited in Condominiums?

Homeowners in community associations often believe that vacation rentals are forbidden by their CC&Rs. After all, the CC&Rs typically prohibit “short-term rentals and leases” and restrict the property to “single-family residential use” and do not permit “commercial use”? And if that’s what the CC&Rs say, isn’t an Airbnb rental a prohibited short-term commercial use?  In the eyes of the law, probably not.

First, these arrangements are typically not rentals or leases. A lease or rental involves conveyance of a real property interest and the exclusive right to possession. These arrangements are mere licenses to use someone’s home (or a portion of it) for a short time, without the exclusive right to possession. In this respect, they are quite similar to a hotel or motel booking. A careful analysis of the CC&Rs for each association is always necessary, however, because some CC&Rs define the terms “rental” and “lease” broadly to include granting the right to “use” a unit in exchange for the payment of money. In such cases, the CC&Rs may, in fact, prohibit short-term vacation rentals.

Second, in Wilkinson v. Chiwawa Communities Association, the Washington Supreme Court held in 2014 that an owner’s receipt of money from a vacationing guest for the use of the owner’s unit does not change the use from residential to commercial, at least where the owner does not provide “on-site services.” Unfortunately, the court did not specify the nature or extent of on-site services that would convert the use from residential to commercial, but it did say that sleeping and eating are residential uses. Would the provision of maid service or meals by the host convert the use to commercial? Would “concierge” services such as giving tourist advice and making restaurant reservations qualify? These services resemble what is provided by hotels, but it is not clear if they would constitute commercial use. Hopefully, future court decisions will provide more guidance on what distinguishes commercial use from residential use.

The court in Wilkinson also held that a restriction for “single-family use” does not mean that people unrelated to each other cannot reside on the property. Rather, “single-family” refers to the type of structure permitted on the property, not who may reside there.

If an association’s CC&Rs do not prohibit short-term rentals, a possible strategy is to determine if the local zoning code prohibits them. Regardless of the uses that are permitted under a given set of CC&Rs, most CC&Rs require compliance with state and local laws, including local zoning codes.  For example, CC&Rs often provide that “owners shall not permit anything to be done in the units that would be in violation of any applicable laws or regulations.” If “hotel” use is not permitted in the zone where the association is located, and the zoning code defines “hotel” to include any place maintained for the purpose of furnishing lodging to transient guests, the association may be within its rights to prohibit short-term vacation rentals on that basis, through enforcement of the CC&Rs. Enforcement of the CC&Rs is properly viewed as something different than enforcing the zoning code itself, which is a municipal function.

Can an Association Change its CC&Rs to Prohibit Vacation Rentals?

An association can amend its CC&Rs to prohibit short-term vacation use, but such restrictions typically require supermajority approval. For example, under the Condominium Act, an amendment that changes the uses to which a unit is restricted requires 90 percent total voting power approval, plus the approval of each affected unit, pursuant to  RCW 64.34.264(4) and Filmore LLLP v. Centre Pointe Condo (2015). In homeowners’ associations and “Old Act” condos (those created prior to July 1, 1990), the CC&Rs will specify the percentage of approval required to amend. It is not going to be a viable strategy to amend the CC&Rs to restrict vacation rentals if the approval of owners who are already using their units in that manner is required.

Short of amending the CC&Rs to prohibit short-term rentals, what can associations do to mitigate their impacts? In many cases, depending on the governing documents, associations can adopt rules that regulate how vacation rentals are conducted and impose fees to cover the extra burdens such rentals impose on the community, so long as they do not effectively prohibit the use. For example, an association may adopt rules requiring homeowner hosts to register each vacation renter, certify that the occupancy limits imposed by local law are not being exceeded, pay a per-user or annual fee to defray the additional cost burdens created by short-term renters, and maintain property and liability insurance naming the association as an additional insured for any claims arising out of the rental activity. Reasonable fines could be imposed for violation of these rules.

Other Remedies

Another potential remedy may be found in the political process. Some cities are adopting ordinances prohibiting short-term vacation rentals. Seal Beach, California’s ordinance states: “No residentially zoned property, or any portion thereof, shall be leased or rented for a term of 29 days or less for any purpose, including but not limited to any residential or commercial purpose such as vacation rentals, weddings, or other event rentals.” Other cities such as Los Angeles see vacation rentals as a source of additional revenue and are collecting taxes. Others, such as Palm Desert, are requiring hosts to obtain city-issued permits and imposing large fines ($5,000, for example) and suspensions for violations of the permit conditions, which include the host being available 24/7 to respond to any complaints concerning his/her guests. Airbnb recently spent $8 million successfully opposing San Francisco’s Proposition F, which would have limited all private rentals to 75 nights per year and required payment of hotel taxes. If a city does adopt a zoning ordinance prohibiting short-term rentals, rentals then in existence would ordinarily be permitted to continue as nonconforming uses, provided all requirements for doing so are met and the nonconforming use is not discontinued or abandoned.

Airbnb: Movement or Monstrosity?

The popularity of online vacation rentals driven by sites like www.airbnb.com and www.homeaway.com — termed a “movement” by some — is creating serious challenges for community associations. For many associations, it is too late to garner the high percentage of votes needed to amend the governing documents to prohibit such use. In those cases, enforcing CC&R provisions requiring compliance with zoning laws and adopting reasonable rules to mitigate the impacts caused by vacationing guests may be the best available options, absent adoption of municipal laws banning short-term rentals entirely.

The market for low-cost vacation rentals is rapidly increasing on both the supply and demand side and putting pressure on community associations, municipalities and the courts to come up with solutions to address the impacts. Individuals buying into communities will be increasingly sensitive to whether and how vacation rentals are addressed in the association’s governing documents. Communities that have the ability to get “in front” of the issue should act promptly before the window of opportunity closes.

By Tony Rafel, Esq.

Managing Partner, Rafel Law Group PLLC

Tony Rafel is the Managing Partner of Rafel Law Group PLLC, a law firm that represents community associations in the State of Washington.
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UCIOA Update

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UCIOA Update

SB 5263 Update – 2.24.15

The WSCAI LAC actively participated in the political process surrounding Senate Bill 5263, the Uniform Common Interest Ownership Act. A public hearing was conducted in Olympia February 4th with testimony provided by the UCIOA drafting group, representatives of the building and banking industries, homeowners and the LAC co-chairs.

The process revealed great passion on a number of issues with clear identification of those surrounding warranties and lien priority as flash points. After vigorous debate and two amendments to the bill, it did not make it out of the committee hearing phase this session. The bill will carry over to the 2016 legislative session.

The prime sponsoring senator Jamie Pedersen, has pledged to work with stakeholder groups in 2015 to seek an acceptable balance of interests toward this bill becoming law.

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CAI’s Call-To-Action: Oppose Federal HAM Radio Standards for Community Associations

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CAI’s Call-To-Action: Oppose Federal HAM Radio Standards for Community Associations

In 2014, legislation requiring community associations to “reasonably accommodate” installation of HAM radio towers and antennas was cosponsored by 64 U.S. Representatives. While this legislation died at the end of the 113th Congress, the HAM radio lobby is back, aggressively pushing its pre-emption agenda in 2015.

Community Associations Institute asks that you please contact your legislator today, and voice your opposition to Federal HAM Radio Standards for Community Associations, to protect your client communities’ interest. Contact information can be found here: www.caionline.org/govt/advocacy/Pages/AdvocacyCenter.aspx

More background from CAI

The HAM radio lobby claims their legislation only requires that community associations “reasonably accommodate” their hobby.

This disguises the facts.

The Federal Communications Commission has historically interpreted “reasonable accommodation” to mean virtually no restrictions and no prior approval requirements. If a HAM radio “reasonable accommodation” standard becomes federal law, community associations will likely have little to no say on the installation of towers and large, fixed antennas used in HAM radio broadcasting.

The fact is many associations already accommodate HAM radio hobbyists. In a 2014 survey covering communities in 46 states, 64 percent of respondents confirmed their association’s board or architectural review committee had never denied a request to install a HAM radio antenna. An additional 27 percent could find no record of a denial. The survey also found that associations routinely provide space for HAM radio clubs so residents can pursue their radio hobby.

Federal pre-emption of community association architectural standards is a heavy-handed and unnecessary intrusion in community associations. Contact your U.S. Senators and U.S. Representative and tell them to oppose all legislation prohibiting association review or approval of HAM radio towers and large, fixed antennas.

How does the FCC view “reasonable”? See the following “reasonableness” guidance the Commission provides on installation of satellite dishes.(www.fcc.gov/guides/over-air-reception-devices-rule)

Q&A

Q: What types of restrictions unreasonably delay or prevent viewers from using an antenna? Can an antenna user be required to obtain prior approval before installing his antenna?

A: A local restriction that prohibits all antennas would prevent viewers from receiving signals, and is prohibited by the Commission’s rule. Procedural requirements can also unreasonably delay installation, maintenance or use of an antenna covered by this rule. For example, local rules or regulations that require a person to obtain a permit or approval prior to installation create unreasonable delay and are generally prohibited. Permits or prior approval necessary to serve a legitimate written safety or historic preservation purpose may be permissible. Although a simple notification process (e.g. post installation) might be permissible, such a process cannot be used as a prior approval requirement and may not delay or increase the cost of installation. The burden is on the association to show that a notification process does not violate our rule.

Q: What is an unreasonable expense?

A: Any requirement to pay a fee to the local authority for a permit to be allowed to install an antenna would be unreasonable because such permits are generally prohibited. It may also be unreasonable for a local government, community association or landlord to require a viewer to incur additional costs associated with installation. Things to consider in determining the reasonableness of any costs imposed include: (1) the cost of the equipment and services, and (2) whether there are similar requirements for comparable objects, such as air conditioning units or trash receptacles. For example, restrictions cannot require that expensive landscaping screen relatively unobtrusive DBS antennas. A requirement to paint an antenna so that it blends into the background against which it is mounted might be acceptable, provided it will not interfere with reception or impose unreasonable costs.

[From: www.caionline.org/govt/advocacy/Pages/AdvocacyCenter.aspx, 2/2/2015]

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