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Coronavirus Introduces New Legal Considerations for Common-Interest Communities

Coronavirus Introduces New Legal Considerations for Common-Interest Communities

[ Blog/News ]

Coronavirus Introduces New Legal Considerations for Common-Interest Communities

By Allison Peryea, Esq.
The novel coronavirus compelled communities to confront a number of new challenges with legal implications. The overarching challenge has been for an association to figure out its role in a completely new type of environment. While associations always have had to be mindful about making sure people are safe in the common areas, the reality of this pandemic is that associations have had to explore the scope of their authority to preserve that safety. This can involve questions about who to let into shared-access buildings, and what information to report when a resident tests positive for the illness. (The general rule is for the association to exercise its right to regulate the common areas using its reasonable discretion, while staying mindful of people’s privacy considerations.)

Liability Considerations

Other considerations have involved concerns about liability exposure when an association decides to—or declines to—get involved in efforts to bring neighbors together to provide support for each other, whether it is to pick up prescriptions or lend exercise equipment. The general rule in that context is that an association should be comfortable with relaying helpful information among neighbors, but that associations should be wary about serving as the “center of command” for these sorts of efforts.

Stay Home, Stay Healthy” Order Considerations

A third issue involves the governor’s “Stay Home, Stay Healthy” order. A question arises about an association’s right or duty to enforce the terms of the order—for example, if association management sees people gathering in recreational areas in violation of the order. The general rule in that case is that an association is not responsible for enforcing the order—but it can take steps that dovetail with the order with respect to keeping the common areas safe. This could include, for example, requiring people to stand at least six feet away from the concierge.

The question of enforcement of the order does come up with respect to construction projects. While many construction projects are on hold, some are ongoing. It is up to each association to determine whether an ongoing construction project presents an unreasonable danger to residents in the current public-health situation. For instance, it may be appropriate to hold off on projects involve likely contact between workers and residents with immune-system concerns.

Associations & Board Meeting Considerations

A final issue that many communities have faced concerns association and board meetings. Fortunately, today’s technology has facilitated face-to-face meetings over the phone and computer with programs such as Skype and Zoom. The question has arisen however whether Boards and owners have the legal right to hold meetings and take action without an in-person meeting.

The good news is that most communities have the legal right to conduct board and owner meetings over the phone or by computer so long as the means of meeting allows real-time communication. Accordingly, meetings and business may not usually be conducted by email—except that boards may be able to conduct business by email if there is unanimous approval of the action. Communities also have the option of participation through proxies or (depending on the language of the governing documents) voting by mail or email.

Communities may need to get creative if there is a desire to keep votes confidential during a Zoom meeting or teleconference. One option to consider for communities that do not allow for voting by email is to have owners email their vote to the manager and then have the manager have the owner verbally confirm that the emailed vote is their intended vote during the meeting.

Our New Reality

While likely few of us expected that we would ever be in a situation like the current one, this new reality has taught us a lot about the limitations of our governing documents and also creative ways to keep operating and serving owners and communities. In the future, consider working with your association counsel to amend your governing documents to help your community better navigate unusual situations like the one we are currently facing together. End Of Article

By Allison Peryea, Esq.

By Allison Peryea, Esq.

Allison Peryea, Esq. is a partner at Leahy Fjelstad Peryea. She has worked in the community association industry for eight years. Her practice focuses on dispute resolution including litigation, and general counsel. She is a longtime member of the WSCAI Communications Committee and a former editor of the WSCAI Journal.

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3
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  • Business Partners Comm Mtg
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  • Board Meeting
9
10
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  • Bellingham Educational Symposium
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  • MFMD Committee Meeting 9 am or 1 pm?
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  • Education Comm Mtg - WSCAI
  • Social Comm Mtg
15
  • Membership Committee Mtg
  • CA Day Comm Mtg
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  • Law Day Comm Mtg
16
  • Managers Only Meeting
17
18
19
20
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22
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  • 20th Annual Golf Tournament
28
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SBA’s Paycheck Protection Program: Coronavirus Relief Act Offers Loans to Management Companies, Others

SBA’s Paycheck Protection Program: Coronavirus Relief Act Offers Loans to Management Companies, Others

[ Blog/News ]

SBA’s Paycheck Protection Program: Coronavirus Relief Act Offers Loans to Management Companies, Others

By Michelle Ein, J.D. & Ken Harer, CCAL
Management companies and other vendors hit hard by the coronavirus may have some relief headed their way. On Friday, April 3, 2020, the application process opens for the Small Business Administrations’ Paycheck Protection Program (“PPP”). This $350 billion emergency program is part of the federal government’s $2 trillion federal coronavirus relief package, officially known as the CARES Act.

The PPP is not only a loan; it is meant to incentivize business owners to keep employees on the payroll by offering loan forgiveness. Details of the program are still being ironed out, but here is what is known at the time this post goes live:

Who is Eligible?
  • Small businesses with fewer than 500 employees.
    • Note that for some types of industries (restaurants and hotels), locations with fewer than 500 employees may apply for loans even if they belong to a larger chain. This may apply to management companies with a national reach.
  • Includes self-employed individuals, independent contractors and sole proprietors.
  • Entities must have been in business as of February 15, 2020.
Some Features of the Program:
  • Loan amounts up to 250% of the average covered monthly payroll and selected overhead expenses (payroll, benefits, rent, mortgage and interest) not to exceed $10 million.
  • No fees.
  • No prepayment penalties.
  • No business collateral or personal guarantees are required.
  • Use the funds for anything your business needs.
  • Loan forgiveness available for eligible payroll and benefits, rent, mortgage and interest for the 8-week period after origination. Reduced forgiveness amount if payroll costs are lessened through layoffs or wage cuts.
  • Payments may be deferred up to 12 months.
  • Repayment term of 10 years.
What Portions of the Loan May Be Forgiven?

While there’s no limit on what the loan can be used for, loan forgiveness is available for certain expenses paid with loan proceeds within the first 8 weeks after loan origination:

  • Payroll (but not exceeding salaries is excess of $100,000 a year).
  • Health care for employees.
  • Mortgage payments on preexisting loans.
  • Rent on preexisting leases.
  • Utilities.
  • Interest on debt for preexisting loans.
Which Lenders Are Participating?

Any SBA-approved lender. As of this writing, Chase Bank has announced that while it will have the program up and running on April 3, it will not offer PPP loans except to existing business customers. US Bank, the largest SBA lender in the Seattle area, also expects to be up and running on April 3, and will accept all applications, whether or not the borrower is a current US Bank client.

How To Apply
  • Lender applications will be accepted through June 30, 2020 or until funds run out
    • The program is first come, first served, so apply early!
  • The Treasury Department has an application form available:
    https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
    • However, it is unknown whether lenders will be using this form in conjunction with their own applications, or whether the banks’ applications will replace the Treasury Department’s form. It may be worthwhile to check your preferred lender’s website first.
  • At a minimum, you’ll want to have the following information:
    • The date you started your business.
    • Your company’s mailing address.
    • Detailed information in order to calculate the past 12 months’ payroll for your employees, mortgage, rent and utilities.
    • Your company’s annual revenue.
    • 2019 financials, including P&L and balance sheet.
    • Your most recent IRS Form 941 – Employer’s Quarterly Federal Income Tax Return.
  • Lenders applications will be available online.
  • While the PPP application process will be almost entirely self-reported (less verification than is typical for SBA loans is expected), do note that there are criminal penalties of up to $1 million for submitting fraudulent information to a federally-insured lender.
More About Loan Forgiveness

SBA will issue additional guidance on loan forgiveness by April 26, 2020.

For now, we know that the loan amounts will be forgiven so long as:

  1. 75% or more of the loan amounts are used to cover payroll, mortgage interest, rent and utilities during the first 8 weeks after the loan is made.
  2. Employee payroll and compensation is maintained.

Borrowers who reduce the number of full-time employees or salary levels between February 15, 2020 and April 26, 2020, face a reduction in loan forgiveness unless they restore the number of full time employees and salary levels by June 30, 2020.

Loans covering payroll above $100,000 per person will not be forgiven. It is unclear if this is inclusive or exclusive of benefits.

All indications are that this emergency program will be heavily subscribed, and applications will no longer be accepted once all funding is awarded, so apply early. End Of Article

By Michelle Ein, J.D.

By Michelle Ein, J.D.

Michelle Ein, J.D., has represented community associations since 2002. She is the owner of Law Offices of Michelle A. Ein, PLLC in Seattle. Michelle is devoted to helping her association clients solve their legal matters and keep the peace. By listening, diffusing conflict, and finding common ground, Michelle enjoys helping people find reasonable resolutions to tough problems. While she mostly appreciates single family home ownership, she is considering “condominiumizing” her yard, and designating sole and exclusive authority over its maintenance to her husband.

By Ken Harer, CCAL

By Ken Harer, CCAL

Ken Harer, CCAL, is Condo Law’s managing partner. He’s an experienced attorney and has been working with community associations for more than twenty years. His practice, formed in 2000, provides assistance on all types of legal matters for condominium and homeowners associations. He offers legal assistance with contracts, construction disputes, and warranties related to the Washington Condominium Act and general legal advice on interpretation, enforcement, and modification of governing documents. An active WSCAI volunteer, Ken is a frequent speaker at industry events and homeowner association seminars, and contributes regularly to industry periodicals.

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July 2020

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2
3
4
5
6
7
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8
  • Board Meeting
9
10
11
  • Bellingham Educational Symposium
12
13
  • MFMD Committee Meeting 9 am or 1 pm?
14
  • Education Comm Mtg - WSCAI
  • Social Comm Mtg
15
  • Membership Committee Mtg
  • CA Day Comm Mtg
  • Community Outreach Committee Mtg - WSCAI
  • Law Day Comm Mtg
16
  • Managers Only Meeting
17
18
19
20
21
22
23
24
25
26
27
  • 20th Annual Golf Tournament
28
  • Business Partners Comm Mtg
  • Social Committee Mtg
29
30
31
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LAC End of Legislative Session Report 2020

LAC End of Legislative Session Report 2020

[ Blog/News ]

LAC End of Legislative Session Report 2020

Washington’s 2020 Legislative Session ended on March 12. The Washington State Chapter of Community Associations Institute (WSCAI) had a very successful year. The bills described below and outcomes noted are a small snapshot of the hundreds of hours of work by WSCAI’s Legislative Action Committee (LAC) and the Chapter’s professional lobbyists to advance the interests of homeowners living in community associations in Washington State.

Bill Descriptions & Outcomes:

Construction Defect Bills: SB 5219 & HB 1576 (OPPOSE)

Spot Art: Legal Fees and CostsLast Session, several bills were introduced that would have eliminated condominium warranties from projects with 7 or fewer units, including SB 5219 and HB 1576. The Chapter opposed those bills. The bills did not pass last session but they were automatically reintroduced this session under Washington’s biennium legislative procedures. SB 5219 was a point of contention with last minute attempts to amend and pass the bill within hours of the House of Origin Cutoff. We are pleased to report that the bill did not pass.

HB 1165 – Low Water Landscaping (SUPPORT)

Spot Art: Legal Fees and CostsHB 1165 passed out of Senate Agriculture, Water, Natural Resources & Parks Committee, with WSCAI, Department of Ecology, and League of Women voters all testifying in support. Under the bill, community association boards will no longer be allowed to outright ban low-water and wildfire ignition-resistant landscaping but will retain the ability to decide what water-efficient and wildfire ignition-resistant landscaping will be allowed and the aesthetics of the landscaping. In addition, community associations cannot fine residents who are following drought emergency guidelines issued by the Department of Ecology. The bill passed almost unanimously from both chambers (House: 93-4-1 & Senate: 46-2-1) and was signed by the Governor. The law takes effect June 11, 2020.

SB 5168 – Homeowner Notices of Fines (SUPPORT)

Spot Art: Legal Fees and CostsSB 5168 originally added a 45-day notice period before community associations could issue fines. Over the last few years, WSCAI and the Washington Commission on African American Affairs worked on a compromise solution. The bill, supported by WSCAI, stated that notice should be given in a reasonable time frame and a chance to appeal to the board should be provided in a fair manner. The bill made it out of the Senate (47-1-1) but died in the House due to lack of time.

SB 6617 – Accessory Dwelling Units (NEUTRAL)

Spot Art: Legal Fees and CostsHB 2570 and SB 6617 dealt with the issue of facilitating and promoting the use of accessory dwelling units (ADUs) through changes to development and zoning regulations. WSCAI was able to include language making the new requirements “subject to” recorded covenants in common interest communities. That language was challenged by certain parties in the final days of the session but we were able to keep it intact. The bill passed and was signed by the Governor on March 27.

WSCAI’s Legislative Action Committee is made up of homeowners, community managers, and business partners who volunteer their time and expertise to benefit the more than 2.1 million homeowners living in community associations in Washington State whose interests the Chapter represents.

As the session wraps up, let’s all take a moment to thank them for their work! End Of Article

Advocacy

Learn more about WSCAI’s advocacy efforts through our Legislative Action Committee (LAC). 

Donate To WSCAI’s Legislative Action Committee

Your contribution is critical in helping the LAC fulfill their advocacy mission.

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Calendar

July 2020

SunMonTueWedThuFriSat
1
  • Board Leadership Development Workshop Series
2
3
4
5
6
7
  • Business Partners Comm Mtg
8
  • Board Meeting
9
10
11
  • Bellingham Educational Symposium
12
13
  • MFMD Committee Meeting 9 am or 1 pm?
14
  • Education Comm Mtg - WSCAI
  • Social Comm Mtg
15
  • Membership Committee Mtg
  • CA Day Comm Mtg
  • Community Outreach Committee Mtg - WSCAI
  • Law Day Comm Mtg
16
  • Managers Only Meeting
17
18
19
20
21
22
23
24
25
26
27
  • 20th Annual Golf Tournament
28
  • Business Partners Comm Mtg
  • Social Committee Mtg
29
30
31
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Coronavirus & Community Associations

Coronavirus & Community Associations

[ Blog/News ]

Coronavirus & Community Associations

In Washington State, at least 19 people in King and Snohomish counties had been diagnosed with COVID-19 (as of noon Monday), and 9 people have died. CAI is monitoring the outbreak of the COVID-19 coronavirus and its impact on community associations on a national level, while WSCAI is monitoring on the local level.

CAI and WSCAI recommend following the latest guidance and updates issued by the Centers for Disease Control and Prevention. The Seattle Times also has live updates on their website as well as information about the coronavirus.

In the meantime, here is some information on the coronavirus, tips to preventing spreading, as well as some advice for community associations.

Background

The coronavirus is a family of viruses that can cause the common cold and more severe diseases such as COVID-19. Symptoms of COVID-19, which can appear in as few as two days or as many as 14 days after exposure, can include fever, runny nose, cough, and breathing trouble.

Most develop only mild disease. But some people, usually those with other medical complications, develop more severe symptoms, including pneumonia, which can be fatal. There is currently no vaccine for COVID-19.

As of late February, there have been nearly 82,000 confirmed COVID-19 cases and 2,770 deaths around the globe. Only 60 cases have been confirmed in the U.S. Compared to the seasonal flu, CDC estimates that so far this season there have been at least 29 million flu illnesses, 280,000 hospitalizations, and 16,000 deaths.

Stay Up-To-Date!

For the latest, most up-to-date information, visit the following:

Washington State Updates:

National & Global Updates:

The CDC has recommended that travelers avoid all nonessential travel to China and South Korea and is suggesting postponing nonessential travel to Iran, Italy, and Japan.

If you think you have been exposed to COVID-19, contact your health care provider immediately.

You can visit the World Health Organization’s website for the most up-to-date information on COVID-19.

Prevention

Communities and businesses should take the appropriate measures to ensure a hygienic environment, including regular cleaning of common areas and meeting spaces, and refilling of soap and hand sanitizers.

The best way to prevent the spread of illnesses, such as COVID-19, seasonal flu, and other respiratory viruses and germs, is to practice everyday preventive actions, including:

  • Get a flu vaccine.
  • Wash your hands often with soap and water for at least 20 seconds. If soap and water are not available, use an alcohol-based hand sanitizer.
  • Avoid touching your eyes, nose, and mouth with unwashed hands.
  • Avoid close contact with people who are sick.
  • Stay home when you are sick.
  • Cover your mouth or sneeze with a tissue, then throw the tissue in the trash.
  • Clean and disinfect frequently touched objects and surfaces.
  • Follow CDC’s recommendations for using a facemask:
    • CDC does not recommend that people who are well wear a facemask to protect themselves from respiratory diseases, including COVID-19.
    • Facemasks should be used by people who show symptoms of COVID-19 to help prevent the spread of the disease to others. The use of facemasks is also crucial for health workers and people who are taking care of someone in close settings (at home or in a health care facility).

CAI has also posted a story on HOAResources.com“Steps to Safeguard your HOA from Illnesses”

Community Associations

In the event of a widespread outbreak in the U.S., CAI is recommending that community associations review state statutes and governing documents to determine whether it’s possible to conduct association business remotely. Generally, there are several methods by which association members or association boards transact business in the absence of everyone gathering at the same time and location—some form of written consent, electronic meetings, or a vote outside a physical meeting.

In-person meetings are almost always preferred. Announcing and holding a meeting avoids questions about notice and due process. In addition, meetings allow for deliberation where proposals can be discussed and minds changed. Most online and electronic voting simply permits an up or down vote on a proposal. There are circumstances in which a meeting is simply not possible, so it is worth considering what other options exist to transact business.

Classes & Events

WSCAI will continue to monitor the situation, and we will inform you if there are any changes to upcoming classes and events.

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  • Pody & McDonald, PLLC
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JUNE 2020 ISSUE
Journal Advertising Partners:

  • Community Association Underwriters - Logo
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  • 1st Security Bank - Logo
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  • Heritage Bank - Logo
  • Ruff Construction - logo
  • The Copeland Group - Logo
  • Ryan Swanson & Cleveland - Logo
  • Bell-Anderson & Associates - Logo
  • J2 Building Consultants - Logo
  • Farmers/Galluzzo Insurance Agency - Logo
  • Rafel Law Group PLLC - Logo
  • Yalnes, Inc. - Logo
  • Association Reserves - Logo

Calendar

July 2020

SunMonTueWedThuFriSat
1
  • Board Leadership Development Workshop Series
2
3
4
5
6
7
  • Business Partners Comm Mtg
8
  • Board Meeting
9
10
11
  • Bellingham Educational Symposium
12
13
  • MFMD Committee Meeting 9 am or 1 pm?
14
  • Education Comm Mtg - WSCAI
  • Social Comm Mtg
15
  • Membership Committee Mtg
  • CA Day Comm Mtg
  • Community Outreach Committee Mtg - WSCAI
  • Law Day Comm Mtg
16
  • Managers Only Meeting
17
18
19
20
21
22
23
24
25
26
27
  • 20th Annual Golf Tournament
28
  • Business Partners Comm Mtg
  • Social Committee Mtg
29
30
31
Advertise With Us - Click to find out how! WSCAI
The Best 4 Financial Reports For HOAs & Condo Communities

The Best 4 Financial Reports For HOAs & Condo Communities

[ Blog/News ]

The Best 4 Financial Reports For HOAs & Condo Communities

Ihear it all the time, the board gets a stack of paper reports but doesn’t look at them. The reason why? I suspect information overload and not knowing what to look for in each report. It can be overwhelming for a community board member that isn’t used to looking at financial reports.

So how about if you only needed a handful of reports to look at – it would make it simpler and take less time to get a picture of your association’s financial health. The following are my top four financial reports for HOAs and condo communities.

Board members have a fiduciary responsibility to exercise due care and diligence when overseeing the community and its funds. These 4 reports are vital tools for protection of association assets, control and planning:

Best 4 Financial Reports

[1] Aged Delinquency Report

Aged Delinquency Report Example

This aged delinquency report/aged owner balance report shows who is behind in their assessments. Different reports can also break out the delinquency by type of charge owed (assessment, late fees, etc). The board needs to review this at every board meeting to see what action needs to be taken at certain late dates (30, 60 days) like sending a demand letter or turning the account over to a collection attorney or agency.

If you get behind in collections it can cause a problem with services at your community and worse, you may not be able to collect the entire past due amount depending on your state laws and how long it took you to commence a legal action. Some states only guarantee collection of 9 months past due assessments and it takes a few months for the action to work itself through the courts so if you are owed a year you may only get 9 months – ouch!

[2] Comparative Income & Expense Report

Comparative Income & Expense Report Example

This is my favorite report to run for the association. The Income Statement is meant to inform how the association is doing compared to budget. It shows the current period actual expense, budgeted expense and any variance between the two. It also shows the same thing for the year to date.

When you see a variance it is a warning flag to ask why and dig deeper. It can also allow you to make up any shortfall quickly so you don’t cripple your community’s cash flow and vendor payments. For example if you are spending more on snow removal than budgeted due to an extreme winter you can do a special assessment right away to cover the shortfall while it is still cold and owners are more understanding.

[3] Balance Sheet

Balance Sheet Example

A balance sheet is an important part of the financial package. It tells where the association stands with their asset, liability and reserves at a particular point in time. There are three key accounts on a balance sheet that association officials should pay special attention to:

  • Cash in the Operating Checking Account – shows ability to meet current operating expenses.
  • Accounts Payable – shows how much is owed to vendors and service providers.
  • Capital Reserves – shows how much is available for major capital repair and replacement projects in the near and distant future.

[4] Bank Reconciliation Report

Bank Reconciliation Report Example

The Bank Reconciliation report is used to “prove” that the cash assets shown on the association’s books and balance sheet agree with what the bank statement shows. The reconciliation takes into account outstanding checks that have not been processed by the bank as well as deposits of cash that have not been processed by the bank. There should not be any difference it should be $0 but if there is a difference it is a flag for you to look into something further.

Additional Reports to Consider:

Bank Statements

Bank statements are another tool to ensure you are not a victim of theft. Plus, you can easily see how much money you have in the bank. Bank statements are easier to understand than the balance sheet since we’re all used to looking at them and they show the current amount of money in the bank account(s), recent deposits and withdrawals.

Current Capital Reserve Plan

You don’t need a fancy report, but you should have something that shows how much money you have set aside and the anticipated cost for replacements and larger capital projects. This report is far superior than looking at a capital/ reserve bank account which can be deceiving. You may think you have a lot of money saved but if you had a big roofing or paving project it could be wiped out with no funds for other projects.

As a volunteer board member, you only have so much time to dedicate to operating your community. There are emergencies to deal with, vendors, projects and of course financial and administrative tasks. A large part of your responsibility is your fiduciary responsibility to the community. Overseeing that the community funds are safe and being spent properly is of high importance. End Of Article

This article first appeared in the Jan/Feb Issue of Community Associations Journal.

By Russell Munz, CMCA

By Russell Munz, CMCA

Russell Munz, CMCA is the  founder of Community Financials which provides stress-free financial management to self-managed communities and managers nationwide.  Previously, Russell grew a successful 41-person full-service management company over 16 years; he now provides big company systems and processes to a new audience.

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