What is a "management company" and what do they do?
ANSWER: A management company is contracted by the Board of Directors to provide such services as: Collection of assessments, supervision of subcontractors, obtaining estimates for subcontracted services and providing financial statements/information and income and expense reports. Also, a management company is a general clearing house for problem solving, communications with homeowners and the Board of Directors and to serve in an advisor capacity. The management company reports directly to the Board and/or a designated member of the Board. All decisions are made by a majority vote of the Board of Directors.
What is the Board of Directors?
ANSWER: The Association is most often a corporation by law, and therefore a governing body is needed to oversee the business of the Corporation. The Board of Directors is the elected governing body of the Corporation or a non-incorporated association. These Directors (the number is determined by your Articles of Incorporation and your Bylaws), create the rules and regulations for enforcement within the community, oversee that funds are being properly budgeted and have the duty to enhance, maintain, and protect the property values of the Association.
How is the Amount of My Assessment Determined and What Does it Pay for?
ANSWER: Your monthly assessment covers the operation, maintenance and repairs for which the association is obligated in accordance with the Declaration of your particular association. Items such as insurance, management fees, common electric, trash collection, landscaping, snow removal etc. are just a few items covered by the monthly assessments.
A portion of your monthly assessment should go towards funding a Capital Reserve account, which are for future repair or replacement of major components. The reserves vary for each community association.
What Happens If I Don't Pay My Assessment?
ANSWER: Typically, the Declaration will set forth the sanctions for not paying your assessment. It is common in most Declarations, that not paying the monthly assessment causes the owner to be subject to a lien, as well as interest and possible late charges. A notice of lien and late charge is usually assessed soon after 30 days past due and is the first action taken. If legal action is required a lien is typically in the Court of Common Pleas could eventually result in the loss of personal property through Sheriff's Sale. The governing documents of your Association provides further information as it applies to your homeowners association.
What are the governing documents?
ANSWER: Governing Documents give the Board of Directors authority and direction to govern the association. They consist of:
- Articles of Incorporation
Provide the legal basis for operating within the Commonwealth of Pennsylvania.
- By-Laws
Outline how the association shall be governed and deal with the association as a corporation (i.e.: election procedures, assessment collections, terms of office and duties of officers). Simplified, the By-Laws are specific to the Board. These are the "rules and regulations" the Board must follow in administering your Association.
- Declaration
Address the physical entities that comprise the association, i.e., use restrictions, easements, etc. The Declaration will also contain information about the governance of your association, powers bestowed upon the Board and general rules and regulations which apply to all homeowners.
- Rules and Regulations
Rules and Regulations adopted by the Board of Directors within the guidelines of the Declaration.
- Budget
Annual Budget prepared and distributed in accordance with your governing documents. Your budget consists of anticipated operating expenses for the year as well as an outline of reserve allocations. Operating expenses include utilities, and maintenance of your association's common areas. Your Reserve Fund is a type of savings account that covers major expenditures and replacements, i.e., roadways, sidewalks, and other capital expenditures which are the responsibility of the Association.
Speaking of Rules and Regulations, can you be more specific? Are there any other rules?
ANSWER: Most associations have developed Rules and Regulations as provided for in the Declarations and adopted by the Board of Directors. Rules are established to provide direction to the homeowners for common courtesy with regard to parking, vehicles, pet, etc. In addition, your Association will adopt Architectural Guidelines with procedures for submitting requests to make exterior changes to your home and/or building. Such changes may include patio covers, decks, landscaping, exterior color changes or extensive exterior changes and additions. These rules and guidelines are set up to maintain the aesthetic value and integrity of the community on behalf of all owners, and hopefully protect the market value of your investment as well. Violations of these rules may result in action by the Board of Directors and a fine. In addition, if you proceed with an exterior improvement or change, without written approval of the Board of Directors, as applicable, you may be required to remove or correct the alteration and/or be fined for the violation.
Who is responsible for what in an association?
ANSWER: The Organizational hierarchy of an association consists of:
- Board of Directors establishes policies and procedures.
- Management Company executes policies and procedures as established by the Board of Directors.
- Sub-Contractors are professionals hired to perform services for the association.
- The Accountant and Legal Counsle work independent of the Board of Directors and the Management Company in order to provide a fair and impartial audit and review of your association's finances as well as collection of unpaid assessments.
What types of insurance does an association need to (or should) have?
ANSWER: In order to protect your interests in the association, the following types of insurance cover your association. Insurance requirements vary according to your property type and legal documents. The following examples show various kinds of insurance available common to homeowner associations:
- Property Damage
- General Liability Directors & Officers Errors & Omissions
- Fidelity Bond
I am thinking about running for the Board of Directors. What should I be prepared to do?
ANSWER: Members of the Board of Directors should:
- Come to meetings prepared.
- Maintain a professional demeanor.
- Ask questions ahead of time.
- Put personal issues aside.
- Encourage others to participate by example.
- Be open and fair.
- Avoid surprising other Board Members and/or the Manager at meetings.
- Keep a healthy perspective.
- Keep information provided to you through the management company and Board confidential. It is for your use as a Board Member, not for distribution to others.
What is the primary charge of the Board of Directors?
ANSWER: To preserve, maintain and enhance the common assets of the association. To do this they must rely on the governing documents, advice from experts and the ability to make reasonable business decisions.
What can I expect when I attend the Open Forum portion of the Board of Directors meeting?
ANSWER: If you attend Open Forum, you will be expected to:
- State your concern in clear and simple terms, preferrably limiting your comments to fifteen (15) minutes.
- Please don't interrupt others while they are speaking.
- Please realize that while the Open Forum is a time for you to express an opinion or concern to the Board, you may not receive an immediate response or decision. The Board will take your concerns into consideration, but may not necessarily act upon them at the meeting, unless the concern is vital to an agenda item decision.
How can I get an item added to the Agenda of our Board of Directors meeting?
ANSWER: If you would like an item to be considered by the Board to be on a future agenda for a discussion, submit your request or suggestion in writing to the management at least a week before the next meeting. If you only want to verbally address the Board, without their making a decision at the meeting, your written input can be received up until the day before the Board meeting. Often the Board may be unable to make decisions on items until they have done the proper research and had time to consider their findings.
As a member of the Board of Directors, what can I do to contribute to each meeting?
ANSWER: The following steps will allow you to contribute to the success of your community:
- Please read the prior month's meeting minutes and financial reports prior to the meeting.
- Notify the management company in advance if you know you will be missing a meeting.
- Always maintain confidentiality as a Board Member regarding sensitive issues discussed or reviewed at meetings (i.e., names of delinquent owners, names of owners reporting violations, who voted on Board issues, etc.).
- If you are made aware of an issue that will be raised at a meeting, please notify the management in advance. In this way, management can be prepared and properly address the situation.
What are the most common violations experienced in community associations?
ANSWER: Some of the most common violations are:
- Failure to be current in Association dues and/or assessments.
- Failure to maintain attractive landscape (weeding, fertilizing, trimming, pets soiling lawn).
- Making exterior improvement WITHOUT prior written approval of the Board and/or in violation of governing documents (antennas, fencing, trees, etc.).
- Parking (not utilizing designated space for parking, abuse of guest parking spaces, RV parking).
- Violations involving pets (i.e., clean-up, leashed, noise, waste).
- Driveway oil stains.
