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  • 09/01/2017 4:07 PM | Anonymous member (Administrator)

    By Michael J. Lowder, Esq., Benson, Kerrane, Storz & Nelson, P.C.

    No one wants to find out that there may be construction defects in their home or community. Unfortunately, construction defects happen, even though local building departments inspect construction projects and most developers take steps to avoid them. Fortunately, as long as you act quickly to resolve construction issues with the developer of the community, homeowners and community associations can typically get construction defect issues resolved, even if the developer has gone bankrupt or out of business.

    Tick-tock: Don’t Let the Statute of Limitations Bug Bite!
    Generally, a property owner must make a claim for construction defects within two years after they first notice a symptom of a problem. That two-year clock can start even if you do not know that the symptom is a construction defect, and even if you do not know the cause of the symptom.  

    For a community association, a report of a problem in an email to a board member or the community manager, or discussion of an issue in meeting minutes can start that two-year clock, so it is important to pay attention to reports of any problems that could be related to construction.  

    An example of such a problem might be a homeowner reporting in an email to the community manager: “There’s a lot of ice in the concrete gutter of the alleyway. Can you have someone salt there?” This could be the symptom of a construction defect (inadequate slope of asphalt or concrete) and could start the two-year clock.

    So, any time that you have complaints about issues in the community that might be related to construction, it is crucial to keep track of those issues so that you do not let too much time pass and lose your claims.

    Working With the Developer.
    When construction problems come up, property owners and community managers usually turn to the builder to resolve the issues. While this can be a good first step, there are three things to keep in mind while you work with the developer.  

    First, developers sometimes will ask you to sign a “release” of claims in order for the developer or builder to fix the construction issues. Developers may ask for a “full and final release” of all claims. If you sign this type of release, you are releasing the developer for all potential claims you may have against it, even issues that you do not even know exist.  

    For example, you may have an issue with concrete spalling, and the developer agrees to fix it if you sign a full and final release of all claims. You sign the release, the concrete gets fixed, and then a year later, you discover that the developer installed the pool heater incorrectly, or that the roofer did not properly flash the roof vents. Since you signed the full and final release in order to get the concrete replaced, you waived your claims related to the pool heater and the roof vents. Therefore, it is important to be very careful about any release the developer asks you to sign. You may want to have it reviewed by an attorney.

    The second thing to keep in mind is that property owners and community managers often have the misunderstanding that working with the developer to resolve issues stops the two-year clock, and your claims will not expire. Unfortunately, under Colorado law, “working with the developer” does not stop claims from expiring. Therefore, it is essential to pay attention to any time that passes after the symptom of the defect is first noticed.  

    “Working with the developer” can take time, and you do not want the two-year clock to run out while you are in this process. If the two-year period expires and you do not resolve the issue, then you may not be able to pursue formal legal action against the developer anymore. If you want to work with the developer for an extended period and do not want to worry about your claims expiring while you do so, ask the developer to enter into a written tolling agreement to toll (pause) the statute of limitations or repose.

    Finally, you want to make sure that whatever repairs the developer is willing to perform will actually fix the underlying problem, and not just cover up the problem or delay symptoms temporarily. It is wise to consult with a contractor or engineer before accepting any repair the developer offers.

    But It Passed Inspection?!
    There isa common misconception that if a home or a community passes the inspections by the local building department, it was built correctly. Unfortunately, this is not always the case.  Building inspectors simply cannot look at every condition in every location on every building, and building inspectors sometimes fail to spot construction defects and building code violations. Building inspectors perform a function similar to the police: they catch some violations, but they do not catch every violation.  Just as citizens are expected to obey the law, whether or not they are caught by the police, developers and builders are expected to follow the minimum standards of the building code, regardless of whether a building official finds a building code violation.  

    No Money in the Bank?
    Another common misconception is that if a developer goes bankrupt, or is out of business, homeowners have no recourse. Fortunately, that is not always the case. Even if a developer is out of business or has declared bankruptcy, owners and community associations with construction defects may be able to recover funds to make repairs from the developer’s insurance company, based on insurance policies the developer bought during construction.  

    Construction defects do not need to be a headache. If you stay on top of the issues in your community and remember to be vigilant with the passage of time, you can put your community in a great position for long-term stability, even in the face of construction defects.

    Michael J. Lowder is a senior associate attorney at Benson, Kerrane, Storz & Nelson, P.C.  Michael represents property owners and community associations suffering from construction defects throughout Colorado and Minnesota, and also serves on CAI-RMC’s Programs & Education Committee.

  • 09/01/2017 4:05 PM | Anonymous member (Administrator)

    By Adam T. Brown, Esq., HindmanSanchez P.C.

    As the saying goes, an ounce of prevention is worth a pound of cure. 

    Whenever a client asks for our assistance in handling a contract dispute with one of the association’s vendor’s, one of the first discoveries we make is that the client did not request a legal review prior to entering the agreement in the first place. In many of these cases, the agreement is either poorly drafted altogether, or contains one or more provisions which would have prevented us from recommending that the Association enter the agreement without further changes. 

    Unfortunately, if proper legal review of a contract is not completed ahead of time, it often locks the Association into unfavorable provisions which hinder their options once a dispute arises. Whether an Association makes this decision due to the legal fees they may incur in the due diligence, or for any other reason, it can often result in major financial and legal consequences to the Association once a dispute arises with the vendor, which may have been avoided altogether if a proper legal review had been conducted. 

    Two of the most common problematic areas we see when reviewing contractor agreements involve provisions related to the term and termination of the agreement, as well as the attorney fees provisions. 

    Poorly-written or inflexible termination provisions are one of the most frequent culprits of frustration in any contract dispute. For instance, many contracts have automatic renewal provisions that automatically lock the Association into another term of years if not terminated properly. Other termination provisions may provide only a limited window of time prior to the end of the contact within which the Association must send notice of termination, or lose their chance entirely. 

    As an example, one of our clients had a waste services agreement in place, which provided for an initial term of five years under the agreement. For the Association to terminate the agreement, it was required to provide notice anywhere from 90-180 days prior to the end of the contract termination date, and if notice was not sent during that timeframe, the agreement was to be automatically renewed for an additional five-year term. Because our client did not give notice during the proper timeframe, the agreement was automatically renewed and prevented them from terminating the agreement for another five years

    As a general rule, for most contracts we recommend that termination is permitted at any time during the term of the contract, with or without cause, upon either thirty or sixty days’ written notice. However, in some certain instances more stringent requirements will be needed. In any case, we always recommend that our clients negotiate with the vendor to modify inflexible termination provisions, and often we will not recommend signing the agreement altogether unless the termination provision is replaced completely. 

    In addition to poor termination provisions, another problematic area tends to be provisions regarding attorney fees. Attorney fee provisions can make or break the Association’s ability to effectively manage a contract dispute and/or litigation. In most cases, a proper attorney fees provision should include language in which the prevailing party is awarded all costs and attorney fees at judgment. However, many contracts do not provide any provisions at all related to attorney fees, which means that even if the Association does end up successfully pursuing damages against a contractor, they will also have to pay the attorney fees expended in recovering those damages. While there are certain attorney fees that may be awarded by operation of statute in some cases, we always recommend that the contract itself provide this. 

    The termination and attorney fees provisions are just two examples of provisions which could drastically alter an Association’s ability to have recourse against a vendor, even when the Association has otherwise upheld its end of the contract and done everything correctly. 

    We encourage our communities to budget the cost of legal review for any contract they may enter into in a given year. It is much more beneficial to all parties involved if disastrous results can be avoided later on by undertaking this minor due diligence at the outset of negotiations with a vendor.  

    Adam Brown is a transactional attorney at HindmanSanchez P.C. and specializes in representation of Homeowners Associations and Community Association law.  Please visit for more information.

  • 09/01/2017 4:00 PM | Anonymous member (Administrator)

    By Peak Pro Painting

    The purpose of exterior painting is to protect your building or home. While changing the colors may be exciting for residents and homeowners, the aesthetics of a paint project are the least important aspect when starting the process. Each project may be different but the steps to a finished product are all the same. 

    Prior to painting, we start with the most important part of a painting project: the preparation process. There are a few steps in the prep process that are significant to assuring the protection of the building or home.  

    First there will be a power wash to make sure there is a clean surface to apply paint properly. Caulking is used in a few different ways to help protect the project. Over time, caulking around window trim and doorframes begins to weather and crack because of the constant exposure to the elements. It is crucial to seal these areas so moisture does not get into the wood and cause dry rot.  

    Next, counter sunk nails will need to be sealed with caulk as well. Sealing counter sunk nails prevents moisture from getting into the area to avoid nails from oxidizing and causing rust stains. It also stops water from sitting in those countersunk areas. After caulking these areas, painters will be begin to focus on peeling and chipping paint. These spots must be scraped of all loose paint before feather sanding. The feather sanding is used to create a surface for the primer to anchor itself. It is necessary to prime any areas of bare wood because the wood needs to be protected from the elements and the paint needs a strong surface to latch on to. It is essential to make sure your contractor is taking these steps because whole-siding and trim replacement is a lot more expensive than taking the detailed steps of preventative maintenance on a painting project.

    Along with the prep process, there are other ways to protect your property from the harsh Colorado winters and summers. The effects of the four seasons in Colorado often cause properties to be damaged a little quicker, unlike other areas of the country. It is usual for Southwest facing sides of properties to get eight to twelve hours of sunlight per day. While it is impossible to prevent fading to occur over time, there are ways to help protect the sides of the property that get the most sun. Prior to painting, a full coat of primer on the siding and trim will add an extra layer of protection from the elements.  

    The finished product of a painting project should have the property’s infrastructure protected from moisture and other elements.  

    And one final note…painting can and will beautify the homes as well! 

  • 08/01/2017 12:20 PM | Anonymous member (Administrator)

    By Bryan Farley, RS, Association Reserves - Colorado

    Will it be the carrot… or the stick? This is an age old question that establishes the best way to motivate people to do something that they may not want to do. Is it best option to string along a carrot in front of someone’s nose to move in the right direction, or is it best to utilize some form of punishment to steer them to correct their course?  After 30 years in this industry educating other professionals, clients, and prospects how to make wise decisions with respect to Reserves, we at Association Reserves believe that in it may be best to change behavior by providing a financial reward.

    While it’s hard to dispute the adage, “In real estate, only three things matter: location, location, and location” there are actions a community association board can and should take to enhance the value of its owners’ homes. For most homeowners, housing is their largest single asset. Most board and owners focus on increasing their home values. A board that acts to maximize home values makes a large and lasting difference in the financial best interests of its members.

    So what can a board do?

    Budget accurately & honestly (Operating and Reserves)

    Assess the funds necessary to maximize curb appeal, minimize or eliminate (costly) deferred maintenance, and thrive. A dated lobby or a regularly broken entry gate leaks more money than a broken pipe. Fortunately, the result of slightly higher assessments (hundreds of dollars per year) is rewarded with thousands of dollars of improved home value. Imagine driving into neighborhood with two neighboring associations on either side. The property on the right has a degraded parking lot, letters missing from the entry monument, and paint peeling off the balcony rails. On the left side you see a property with a well paved parking area, well painted exteriors, and an inviting landscaped  appearance. Obviously, one of the two properties has adequate funds to cover the basic ongoing repair and replacement responsibilities and most likely higher home sale values. 

    Avoid special assessments

     Special assessments are disruptive and divisive and in most cases are predictable years in advance. Real Estate agents familiar with your neighborhood know what goes on in your association and they discourage strong sales offers for homes in associations with a history of special assessments. How do you know if your association is at risk for a special assessment? On average, an association that is a 30% funded or less has a risk of special assessment anywhere from 18% to 50%, whereas an association 70% funded and above has a less than 1% chance of special assessment. 

    Manage well (professionally and transparently)

    The association belongs to the owners, not to the board or management. Create a smooth, well-oiled machine. Publish meeting agendas, minutes, budgets, newsletters, etc. Schedule social events and create a culture of community, with active volunteers being trained up to be board members, all contributing to maximized home values and the improved future of the association. Employ a credentialed manager who helps move the association forward, not just a professional “babysitter”. Treat Real Estate agents as your sales representatives, not adversaries. All of these things take time or money, but a healthy, well-run community is inviting. Buyers will pay more to join such a welcoming community.

    Hire knowledgeable business partners

    Remember that your goal is not to save a few bucks here or there, your goal is to raise home values by thousands of dollars. Use business partners and vendors who are experts in their field, familiar with community associations, and who are appropriately licensed or credentialed. Think of your association as a team. Only hire “varsity” players, all-stars who can contribute to your success.

    Much of the above is just general good advice, but we at Association Reserves have been able to conclusively measure the influence of one specific aspect of association behavior on home values. In a controlled study recently completed, Association Reserves found that home values in associations with well-funded Reserves (above 70% Funded) averaged 12.6%higher than similar homes in associations with poorly funded Reserves (0-30% Funded). Well-funded Reserves mean maximized curb appeal instead of ugly and budget-draining deferred maintenance and a history of special assessments. “Strong Reserves” typically exist in associations that are managed well. The evidence shows that buyers are willing to pay more for homes in a well-run and financially stable association. It may cost an extra $20 to $60/month in homeowner assessments ($240 to $720 per year), but it leads to increasedhomevalues. A 12.6% increase in a $325,000 condo is a sweet $40,950 increase in value. What a tremendous return on investment from an owner’s additional $240 to $720 per year. Now that’s a nice financial incentive to string in front of one’s nose. 

    Bryan Farley (RS #260) is the president of Association Reserves – Colorado. Bryan has completed over 1,000 Capital Reserve Studies, and is a frequent speaker and author on the topic of Reserve planning for community associations. 

  • 08/01/2017 12:17 PM | Anonymous member (Administrator)

    By Maris S. Davies, Esq.HindmanSanchez

    Special assessments are an inevitable fact of life for associations.  Every association has a moment in time when the board comes to the conclusion that: (1) the association has failing infrastructure and cannot afford to pay for a greatly needed overhaul; (2) the association has a sudden expense it cannot cover (such as large insurance deductibles); or (3) the association would like to undertake new capital improvements for the community to update the community, but does not have the funds to do so.  One potential way to resolve monetary shortfalls is to levy a special assessment against the homeowners in the community.  A special assessment is typically assessed against all or a portion of the homeowners in a community to finance major projects or unanticipated and unbudgeted expenses, including but not limited to the scenarios above. 

    When first deciding whether or not levy a special assessment a thorough review of the association’s declaration and all amendments to the declaration is necessary.  The first question that must be answered is does the declaration even allow for a special assessment at all?  Assuming it does, an association must consider the following: (1) does the special assessment provision in the declaration provide the board with the power to levy an assessment for the specific issue at hand; (2) does the special assessment provision require a vote of the homeowners, or can the board levy the assessment with approval; (3) how much will the special assessment be per unit; (4) can the board afford to allow interval payments over time or must the assessment be paid in one lump sum; and (5) if the payment must be made in a lump sum, can the homeowners in the community afford to make it?

    While a special assessment may be beneficial, and potentially necessary, for an association, the initial response from the homeowners will likely be negative and potentially coupled with pushback based on the amount and/or the proposed use.  Unfortunately, this is a typical response.  Assuming the association must secure the vote of the homeowner to move forward with the special assessment (which is typical), the best way to address this initial reaction from the homeowner is to be upfront and transparent about the need for the funds, to have open lines of communication with the homeowners, and to get the homeowners involved in the decision making process.  In addition, an association should strive to provide the homeowner with a payment schedule, or tentative payment schedule, as early on as possible in the process so as to allow a homeowner to budget and/or make arrangements to secure the funds.  The association should also be open to reducing the scope of the assessment if necessary, i.e. outlining the ideal situation, the bare minimum, and then finding some middle ground that accomplishes the association’s goals but will still be approved by the homeowners.  


    Special assessments are an extremely helpful mechanism to secure funds in a precarious situation; however, special assessments are reactionary and associations should take steps to properly budget and fund their reserves so as to avoid special assessments related to unexpected events.  Proper planning both now and for future expenses is paramount.  If the association’s declaration does not contain special assessment language, and the association is a pre-Colorado Common Interest Ownership Act (“CCIOA”) community (i.e. created prior to July 1, 1992) a declaration amendment would be necessary to create the power to levy special assessments.  If the association is a post-CCIOA community (created after July 1, 1992) and the declaration is silent with respect to special assessments, the CCIOA budget process applies.  If the board follows the budget process and the special assessment budget is ratified by the owners, the board may move forward with the special assessment.  


    Maris Davies is an attorney at HindmanSanchez P.C. and specializes in representation of Homeowners Associations and Community Association law.  Please visit for more information.

  • 08/01/2017 12:15 PM | Anonymous member (Administrator)

    By Bryan Farley, RS, Association Reserves - Colorado

    As the population in Colorado continues to grow a steady rate, one may notice the many new housing developments, high rises, and condo complexes popping up around the state. These properties look great, with fresh paint on the walls, roofs that do not leak, and elevators that work when called. However, within a few years these buildings will start to experience the same issues that plague every other building in the area, asset failure. 

    This dilemma is not only limited to new projects, but also to older buildings that have just undergone a renovation or remodel. In fact, all new construction will experience a state of deterioration once the project has been completed. 

    How can owners be motivated to raise Reserve Contributions after the board just special assessed the owners to fund the remodel? How can a board of a brand new condo building justify raising Reserves when the majority of the owners closed on their units six months ago?

    The answer of course is that as soon as the new construction has been finalized, the assets will begin to decay and deteriorate at a predictable rate until all of the assets have failed completely. However, the assets will not all fail at the same time. For example, the roof may last twenty-five years, but the carpet may only last eight years. If the failure and replacement of the assets do not occur at the same time, how will the costs of these assets be evenly distributed throughout the life of the building? 

    It is only fair that each owner pay for the predictable deterioration of the assets that are gradually deteriorating each month/quarter/year. That is fundamentally what a Reserve Study attempts to help owners accomplish, take all those irregular Reserve expenses and distill them down to a steady deterioration rate that the association can then offset be collecting contributions from all the current owners in order to keep pace with the ongoing deterioration of the common area.

    That is why the Reserve contribution rate recommended in a Reserve Study is not for a future expense that is some other unlucky person’s problem. The recommended Reserve contribution is designed so each homeowner pays a fair share of ongoing Reserve component deterioration during the months and years that they own in the association. It’s only fair. In fact, it is unfair for any current owner to pay less than ongoing deterioration, forcing some unlucky future owners to over pay due to past under-reserving.

    Moving forward, how much should current owners contribute to Reserves? In our experience, “adequate” Reserve contributions typically make up anywhere from 15% to 40% of an association’s total budget. The cost of Reserve component deterioration can be expensive, so there are ways to minimize your Reserve contributions:

    • Make sure your Reserve contributions are calculated using the “cash flow” computation method (resulting in fairer, smoother, and lower contributions)
    • Maximize the interest the association is receiving on the Reserve account (if possible)
    • Perform timely maintenance in order to extend the life of your reserve components

    Reserve components are expensive and are deteriorating every day. A Reserve Study will provide guidance on how much money will be needed each year to pay for the ongoing asset failure. Each year, owners should hire a professional to review and update their Reserve Study. 

    By commissioning a Reserve Study, a board takes the first step toward a calmer and proactive future. Prudent planning for inevitable repair and replacement costs will benefit future owners, but present owners benefit also. With a Reserve Study boards and managers can help the present generation of owners understand that they, too, can enjoy their share of the benefits of prudent reserve planning.

    Bryan Farley (RS #260) is the president of Association Reserves – Colorado. Bryan has completed over 1,000 Capital Reserve Studies, and is a frequent speaker and author on the topic of Reserve planning for community associations.

  • 08/01/2017 12:11 PM | Anonymous member (Administrator)

    By April L. Ahrendsen, Mutual of Omaha Bank

    Have you ever heard these words uttered at your Board meeting? If not you are one of the fortunate ones. It seems that for years the badge that most association’s wanted to wear read;

    “We haven’t raised our dues in years!” 

    While this sounds great it can be your downfall and eventually place you in a position where a loan is your only way out. By not raising your dues to keep pace with inflation, your association may have done more harm than good. Even though Colorado does not require a Reserve Study they are necessary for the association to prepare for future expenses. The study outlines a plan to fund the association’s reserve so when an asset needs to be repaired or replaced the association has the money to make it happen.

    But what happens when the asset needs to be repaired or replaced and the association does not have the funds on hand? Well, that’s when the association needs to review its options because the problem is not going away without some type of action.

    Now that the association has identified the need and the cost of reconstruction, what are the Homeowners’ options to meet their portion of the associations funding requirements?

    There are 4 options for every association;

    1. Pay Cash – some members have the ability to simply pay their portion of the funding.
    2. Borrow funds that are secured on real property – such as a second mortgage or equity line of credit on your home.
    3. Participate in the commercial loan that your homeowner association has received. Interest rates are reasonable and can be fixed over the term of the loan. No personal information will be required, nor is a lien placed on your unit by the bank.
    4. Credit cards – would normally be the worst option of all due to high interest rates, zero tax benefits and faster payoff schedules. (Unless you have some special package for earning points for free airfare and prizes!).

    What are the advantages of borrowing?

    a.Downward slide of property values slowed or eliminated.  Structural problems, which must be disclosed to potential buyers, will retard the sales process and lead to falling home prices.  Rapidly improving the appearance and eliminating structural integrity problems can slow or eliminate falling home values.

    b.Needed repairs/improvements completed quickly.  By borrowing the money, total needed funds become available for use much faster than through the traditional special assessment process.  Passing a special assessment will give the board of directors the power to collect the money.  There is still the difficulty of collecting from those homeowners who do not have the ability to pay.

    c.Reduced financial impact on homeowners.  By participating in the loan, homeowners avoid having to make a lump sum special assessment payment.  Homeowners can pay their share over time to reduce the impact on their personal finances.

    What are the disadvantages of borrowing?

    a.May increase monthly assessments. A special or increased assessment may be implemented to support the loan.  Allocating portions of the reserve contributions can offset some or all of the increase.

    b.Interest costs incurred may be high.  This depends upon the loan structure.  However, construction savings may significantly reduce the final effect on the association’s total reconstruction costs if done over a longer period of time.

    How is the loan secured?

    Assignment of association assets that may include but are not limited to monthly assessments.  No liens are placed on individual units by the bank.

    A vote of approval may be required;

    Some banks will require that the Board of Directors be directly empowered to assign association assets by a vote of your membership.  The vote is considered important because: 

    1. The membership has explicitly given the board of directors the power to assign association assets and enter into a loan agreement.
    2. Membership has been notified of the board’s potential action and had an opportunity to discuss the process in an open forum.

    Getting through your special assessment membership meeting;

    The special assessment meeting can be very difficult. However, there are some key steps you can take to improve the probability of your meeting going well and the vote being passed.

    a.Bring allies – banker, attorney, property manager, contractor etc. Your Board does not have the credibility of the “experts”.

    b.A Board representative reviews the process of the steps outlined earlier with the membership as the introduction to the meeting.

    c.Experts present their area of expertise to the membership such as the banker on the loan program.

    d.All questions are fielded by the expert present.

    Selecting a Bank;

    Selecting a bank to provide your loan can be daunting as the vast majority of banks do not offer loans for community associations.  Although these loans appear to be real estate construction loans, the majority of banks who provide these loans treat them as a unique form of a commercial business loan.  Some factors to consider when selecting your bank:

    1. How many community loans have they done?
    2. Do they have someone available to attend your membership meeting?
    3. How many people work in the association lending department?
    4. What fees can be anticipated?
    5. Minimum and maximum loan size?
    6. How fast can the bank complete the loan process?
    7. Financial strength of the bank. (

    Finally, the approval period;

    Usually, it will take up to 30 days from the receipt of all required documents for the loan to be approved.  Loan documents are completed for signing within 10 to 30 days upon receipt of the signed commitment letter by the bank.

    While this article has not answered every possible question with regard to lending, my intention is to give you, the HOA Member, a solid understanding of what it means should you ever heard the words, “We need to borrow money to repair our association!”

    April L Ahrendsen, VP

    Mutual of Omaha Bank

    The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the views of Mutual of Omaha Bank.”

  • 08/01/2017 12:08 PM | Anonymous member (Administrator)

    By Heather L. Hartung, White Bear Ankele Tanaka & Waldron

    You have heard the saying that April showers bring May flowers, but have you thought that possibly pool keys cure delinquencies? Thinking outside the box is key to a successful collection effort on behalf of an association as following the standard collection process is not always the most expeditious way to collect.  

    The “standard” collection process starts with the association or management company sending the required reminder and warning letters noted within the collection policy and providing delinquent owners who qualify with an opportunity to enter into a six month payment plan.  When these letters are ignored, and let’s face it most are likely thrown in the trash, the file is turned over to legal counsel.  At this point, the standard process is for the law firm to send a demand letter and when a response is not received the next step is a personal lawsuit.  None of these actions typically catch the owner’s attention.  There likely is not a reaction until the owner is served with a lawsuit and then that reaction seems to occur at 4:55pm the day before the scheduled return date at court.

    Is it possible to catch a delinquent owner’s attention earlier in this process? In some instances, yes.  This brings us back to pool keys and delinquencies.  If an association’s governing documents provide that access to amenities, such as the community pool, may be withheld when an owner is delinquent USE IT.  Withholding pool privileges September to April will not have much of an impact, but notifying owners a month or so before the pool season or cutting off pool privileges during the pool season will likely result in a response.  At this point, the association can, depending on the language within the governing documents and rules and assuming the association has already complied with the requirement to offer a six month payment plan, either require full payment in order to reinstate pool privileges or offer to reinstate pool privileges if the delinquent owner enters into a payment plan and remains current on the plan.  When the pool season is over the owner may return to his delinquent ways, but at least there was successful collections up until the completion of the pool season.  In addition, during this process associations gain valuable information that may be used later if judgment is obtained and the association seeks to collect through a bank or wage garnishment.

    Accelerating dues is another alternative collection technique available in a majority of the newer declarations.  These provisions typically provide after an account has been delinquent for a specified number of days that the association can call the balance for the remainder of the year due.  Then, that total amount is the amount that is collected.  This is typically most effective during the first or second quarter of the year and is useful when an owner is habitually delinquent.  

    Another alternative collection tool is to proceed with a receivership action when a property is tenant-occupied or vacant.  This is the process by which the court, upon motion, appoints a disinterested, third-party to temporarily divest the owner of control over the property.  The receiver seeks to rent the property (if vacant) and the rent collected is used to pay for the receiver’s time and cost and to pay the owner’s delinquent account to the association. When the property is already rented, the receiver notifies the tenant that all future rent payments until otherwise notified are to be paid to the receiver.  This usually prompts delinquent owners to contact the association and/or receiver. Although not always looked upon favorably by the courts, receivership actions can be successful given the right set of circumstances.

    All in all, successful collections requires thinking outside of the box and utilizing alternative collection tools when available.  So the next time you think about April showers bringing May flowers also think of pool keys curing delinquencies.

    Heather L. Hartung is an associate at the law firm of White Bear Ankele Tanaka & Waldron where her practice focuses on collections for homeowners associations and metropolitan districts.  She may be reached at (303) 858-1800 or

  • 08/01/2017 11:58 AM | Anonymous member (Administrator)

    By Melanie L. Millage, BA, CMCA, CAM, TMMC

    Budget season is quickly approaching.  As a Board Member or Community Manager there are many factors to consider when developing the budget for your Homeowner’s Association.  

    1. Operating vs. Reserves – It is important to understand the difference between the Association’s Operating and Reserve budgets.  The Operating budget is for every-day, recurring expenses, expenses that will repeat annually (or bi-annually).  For example – landscaping, community management, insurance, utilities, and general maintenance of common areas.  The Reserve budget is for repair or replacement of major components such as asphalt, roofs, pool deck resurfacing, fence replacement, and boilers.  Many Association’s will have Reserve Studies conducted (please see your SB-100 Reserve Study policy for your Association’s requirements on a Reserve Study), which is a great guide for determining what items belong in the Reserve budget.  
    2. Start with Expenses – It is important to start with your expenses when building a budget.  Your assessment rates are set based on your budgetary needs.  Once you build your Operating expenses and Reserve contribution needs (see #6 Reserve Studies below), you will base the rate of assessment to cover the expenditures.  
    3. Contracts – Contracts are a good place to start when looking at your expenses, as they can be concrete figures to place in your budget.  Review existing contracts to see if there are incremental or percentage increases set forth in the terms (these increases can even occur mid-year).  If the contract is expiring, will you be re-negotiating or send out request for proposals (RFPs)?  Contracts should be solidified in advance whenever feasible.  Having your contracts set prior to finalizing the budget will allow for a more accurate representation of the budgeted figures as they often represent some of the largest expenses incurred by the Association.  
    4. Historical Figures – Review the historical figures of each account.  Do you see a pattern?  It is important that you not just average, but also look at each individual general ledger account for the years that you are reviewing to see if there were any anomalies to consider.  Also, ensure that when reviewing the accounts from prior years, that you have a good understanding of what the expenses were as some budgeted items will be very specific rather than repetitive (i.e. in the bad debt accounts, your amount can vary based on your current accounts receivable, the condition of the market, where the attorney is in the collection process, etc.)
    5. Projected Increases – Sometimes there are not set increases in written form as the work is not a contracted rate.  Call the providers and see if they are able to provide estimated rates for the upcoming year.  For example utilities; rates for some utility companies are not set for the upcoming year until February, but the departments sometimes will provide you with a range or projected monetary or per unit/service increase that you can use to estimate your budget necessity.  
    6. Reserve Studies and Budgeting for Reserve Expenses – Reserve Studies are an important tool to analyze the repair and replacement needs of major components in the Association.  A reserve study projects the remaining useful life of these existing components and the future cost to repair or replace them.  This tool allows you to review upcoming project needs and budget for the year’s planned repairs and replacements.  If projects are not completed in the suggested year from the reserve study, make sure that it is carried forward for review in the following year.  It is important when planning for upcoming Reserve expenses that the reserve funding is examined.  If the Association is not properly funded, the Board may need to consider postponing projects, increasing assessments to cover the expense, and/or looking into a special assessment.  If the funding is available to complete the projects determined for the upcoming year, then you can include the amount listed in the reserve study as the budgeted amount, OR even better send out RFPs and get bid proposals for the work.
    7. Don’t Straight Line the Figures – It is so simple to straight line a budget, right?  And what does it matter when the year-end figures are close?  It is important on a monthly basis for Associations to review their Budget vs Actual reports to see the financial position they are in, including the cash flow position.  For example, if your $24k insurance payment is due and paid in February, but you straight-line $2k/month, your bottom line net income will look like you are over budget by $20k in February – which is NOT accurate.   Depending on the financial stability of the association, adjustments may need to be made mid-year (postponing projects, re-negotiating contracts, etc.) in order to maintain proper cash-flow.  So it is important to estimate the timing of expenses as you expect them to be incurred (not just averaged across the board).
    8. Income – Once expenses are ironed out, put in known income other than assessments.  These would be items such as rental income and sub-association assessments.  Some Associations also will include late fees, covenant fines and other “soft income” (meaning income that can be waived or negotiated by the Board).   Once these income accounts are set, it is time to determine the assessment rate to cover the difference.  If an assessment increase is determined, please be cognizant of restrictions on assessment increases, as some governing documents cap a maximum assessment rate or have a maximum increase allowed per year.
    9. Keep an Assumption Log and Notes – At its simplest, a budget creates projections by adding assumptions to current data (Harvard Business Review Staff, The Right Way to Prepare Your Budget, Web. 20, June 2015).  While building your budget, make sure to take notes and keep record of your assumptions.  This will allow for the reviewers to easily understand the figures used and allow for questions to be answered.  It will also make future year budgeting easier and quicker to understand how and why prior years’ numbers were determined.

    Melanie L. Millage, BA, CMCA, CAM

    Director of Operations

    TMMC Property Management


    TMMC has been providing HOA Community Management Services to our local communities for over 20 years.  TMMC is dedicated to transforming HOA Community Management through our commitment to professional standards, education and relationships – acting with honesty, integrity and transparency.  Melanie can be reached at

  • 07/01/2017 3:13 PM | Anonymous

    By Sara B. Duginske, M.S., Director, Credentialing Services Community Association Managers International Certification Board (CAMICB)

    If you’re one of many CMCAs gearing up for the Fall and Spring recertification cycles, the summer months are a perfect time to regroup and recharge by participating in fun and educational learning opportunities. It’s never too early to make sure you’re on track to successfully complete the process. Recertification means you’re an accomplished professional committed to developing your skills and knowledge. 

    Recertification is a critical component to promoting and demonstrating continued competency in the community association management profession. In order to maintain the CMCA credential, recertifying CMCAs must participate in continuing education in the field of community association management totaling at least 16 hours of continuing education coursework every two years, and pay the $105 annual maintenance fee. 

    CMCA Recertification: Reinforcing the Value of the Essential Credential 

    The CMCA examination is NCCA-accredited and in the professional credentialing industry, NCCA accreditation represents compliance with best credentialing industry practices. As a CMCA you can continue to enhance your marketability, show your dedication to your profession, and provide the highest level of guidance to your associations by continuing your education and maintaining your certification.  

    Recertification also provides the opportunity for you to reaffirm your commitment to the  CMCA Standards of Professional Conduct  to your community associations, your employers, your peers and the millions of people living in community associations. 

    There are numerous professional development opportunities for CMCAs, ranging from college degrees and coursework, to conferences, professional coaching, community workshops, seminars, symposiums, and webinars. There are many courses offered that cover a wide range of topics including community association management operations, administration, legal requirements, accounting, human resources, and public administration.

     Continuing Education 

    In February 2017, the CAMICB Board of Commissioners approved a new continuing education policy for individuals seeking CMCA recertification.  

    Make sure to familiarize yourself with those changes, many of which are located in the Credit Specification section which can be found here: 

    In addition, it’s important to note that anyone who meets the continuing education requirements to maintain the following credentials will meet the CAMICB continuing education requirement: 

    • CAI’s Association Management Specialist (AMS) 
    • CAI’s Professional CommunityAssociation Manager(PCAM) 
    • National Association of Housing Cooperative’s (NAHC) Registered Cooperative Manager (RCM) designation 
    • Florida’s Community Association Manager license (CAM) 
    • Nevada’s Community Association Manager certificate 

    Not sure of your recertification date? Go to: https://www.camicb. org/find-a-cmca  

    Are you receiving the CAMICB SmartBrief, exclusive to CMCA credential holders? This weekly snapshot of both industry and CAMICB news will keep you up to date on what’s happening in the field of community association management: https://www.camicb. org/Pages/Smartbrief.aspx 

    Upcoming Chapter Events And Approved Educational Programs/ Offerings can be found at 

    Visit for useful resources, links, approved continuing education courses and providers. 

(303) 585-0367

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