Community Association Managment in Ontario, California

Case Study: LED Technology Shedding Light on Energy & Maintenance Savings

Properties that are looking to save money on their energy bill need to look no further.  Retrofitting your property with LED fixtures can save money on maintenance, and 60 to 80 percent on energy consumption. The types of lights typically found on properties are: Incandescent, Halogen, Fluorescent or HID (High Intensity Discharge) lamps, such as Low Pressure Sodium, Mercury Vapor or Metal Halide. A little bit of information on each bulb is provided below, and following that information this case study will explore the benefits of LED lighting.

Keep in mind with the information provided below that the average building’s parking lot light is on 3,650 hours per year.

Incandescent Lights

A 125-year-old technology originally created by Edison, and most typically found in household lights. The lamp does not need a ballast or transformer to operate, and light is created by a filament that grows when heated by an electrical current.

Burn Hours:  1,000 - 2,500 (approximately 1 year)

Approximate Bulb Replacement Cost: $1- $6

Halogen Lights (Member of Incandescent Family)

Halogen lamps are a step-up from incandescent bulbs, and are typically providing up-lights for signs, trees, canopy fixtures, and bollards. The lamp has a tungsten filament and a small amount of halogen gas.  The lamp does not have a ballast and may have EPA implemented disposal requirements.

Burn Hours: 3,000 - 6000 (approximately 1 year)

Approximate Bulb Replacement Cost: $3 - $12

Flourescent Lights (Canopy Fixtures): Compact & Linear

Fluorescent lights are typically found in canopy fixtures, and are connected to internal or external ballasts. The fluorescent tube is a gas-discharge lamp that uses electricity to react with mercury. This lamp is a good replacement for incandescent lamps, but there are EPA implemented disposal requirements.

Burn Hours: 5,000 – 30,000

Approximate Bulb Replacement Cost: $4 - $30 (approximately 1-3 years)

Approximate Cost to Replace Ballast: $15 - $150 for magnetic or electronic internal/external ballast. Usually come with a 1 to 5 year warranty.

High Intensity Discharge (HID) Lights

HID lights are typically found on parking lot poles, under canopy, wall packs, and are operated off magnetic and electronic ballasts. The lamp is an electrical gas-discharge fixture, and because the gas is toxic and has high levels of mercury, the EPA has implemented disposal standards for ballasts and lamps. There are many different types of HID lamps, but most common are high/low pressure sodium and metal halide lamps. 

Burn Hours: 8,000-15,000 (approximately 3 years)

Approximate Bulb Replacement Cost: $8 to $80 and have a 90 day to 1 year warranty.

Cost to Replace Ballasts: $50- $150 for 400w and below. Ballast can last 10 years with a 3 to 5 year warranty.

Solid State Lighting (SSL)

This type of lighting uses semiconductor light-emitting diodes (LEDs) as sources of illumination rather than filaments or gases. There is no ballast needed for this type of light. These lamps are a “green” alternative to regular lamps because there are no disposal requirements due to the low levels of mercury and phosphorous.

Burn Hours: 50,000 to 80,000 (approximately 11 to 18 years)

Approximate Bulb Replacement Cost: $25 - $150 and have a 5 year warranty.

The average energy savings is 60% to 80% per LED retrofitted fixture.  Additional savings can be realized through rebates that provide five cents for every kWh saved.

Trestle Street Partners believes that the future of energy savings and maintenance savings are realized in Solid State Lighting (SSL), especially parking lot lighting. The exciting part of this technology is that property lighting, and individual lights can be controlled remotely -- if proper equipment is purchased -- allowing the property owner to turn on lights as needed from anywhere wirelessly. Additionally, this technology has the ability to remotely monitor lights that are working or burnt out – eliminating the need for traditional maintenance, and monthly/quarterly on-site inspections. The only maintenance required is every six months fixtures are cleaned to help slow degradation of light out-put, and help maintain the dissipation of heat. 

See graph below for information on each lamp. The most notable savings can be found in switching your parking lot poles from commonly found HID lamps to SSL.

	Incandescent	Halogen	Flourescent	HID	SSL	Notes
Average Burn Hours	2,250	4,500	17,500	11,500	65,000
Average Lamp Cost	$4.00	$9.00	$17.00	$44.00	$100.00	SSL lights cost as low as $25
5 Yr Lamp Replace Cost	$486.67	$547.50	$265.93	$1,047.39	$421.15	15 lamps on 3,650 hrs per yr. Warranty savings not included. Ballast, maint. & disposal costs not included. Lamps only.
Average Ballast Cost	N/A	N/A	$83.00	$100.00	N/A	HID ballast lasts approx. 10 years
Maintenance	1 x month	1 x month	1 x month	1 x month	2 x year
EPA Disposal Reqs	No	Yes	Yes	Yes	No	Approximately $5 for disposal of lamp & ballast under 500w

2012 CHANGES TO CALIFORNIA MECHANICS LIEN LAWS

The article below was provided to me by Scott Levitt at Levitt Law. You can find more information on Levitt Law at http://www.levittlawca.com/.

Effective July 1, 2012 the State of California has created new code sections which cover the lien laws and other related items (stop-notice, bonds, foreclosures, etc.).  The major change is that the Code numbers have been moved from the 3000’s to the 8000’s and 9000’s.  It will take some time for most people to begin referencing the new codes.  However, such must be done as there is no “grace period” for citing old codes.

The actual verbiage of many of the codes has been changed.  Below are the pertinent changes that your company should be aware of.  Please contact Levitt Law, APC for further information regarding these changes to the California mechanics lien laws.

Definition of Completion. The deadline for recording a mechanics lien is generally triggered by the "completion" of a work of improvement.  Under current law, acceptance by the owner is one of the criteria deemed to constitute "completion".   Under new §8180, such is no longer the case.  Each of the following constitute "completion": (1) actual completion of all work on the project, (2) occupation or use coupled with cessation of labor, (3) a cessation of labor for 60 continuous days or (4) for 30 days after recording of a notice of cessation).   Acceptance by a public entity remains unchanged.

Time for Recording Notice of Completion. Under the current law, owners have to record notices of completion within 10 days after actual completion of the project. Under the new law (§8182), that time period is extended to 15 days.

Preliminary Notice. Under existing law, the "Preliminary 20-Day Notice" must be served by most types of lien claimants (not the general contractor) at the outset of their work.  Under the new law, this notice is referred to simply as a "Preliminary Notice” and the required language for the Preliminary Notice has been changed (contact Levitt Law for further information). 

Also, §8200 clearly states that contractors in direct contract with the project owner (GC’s) need only provide a Preliminary Notice to construction lenders, if any.

Waiver and Release of Lien Rights. In order to ensure that a "downstream" subcontractor has validly released its right to assert lien, stop notice, or payment bond rights, the law requires that specific waiver and release language be used. Under the new law (§§8132, et seq.), the required language has been changed slightly; one should be careful to utilize the current form as of July 1, 2012 (contact Levitt Law for further information).

The form utilized for progress payments (as opposed to final payment) does not cover certain disputed or extra work items, or claims based on breach of contract, so “upstream” parties may want to supplement the statutory form with additional releases.

Release Bond. Under the new law (§8424), the amount of the bond required to release property from a lien has been reduced from 150 percent to 125 percent of the lien amount.

Separate Notices of Completion Permitted (Private Works) §8186(a).  In projects where the scope of work is being performed under separate direct contracts with the owner, the owner can now record separate notices of completion upon completion of the scope of work under each separate contract.

Design Professionals’ Liens Can Now Be Converted Into Mechanic’s Liens §8319.  Under existing law, design professional liens were extinguished upon commencement of work. After July 1, 2012, design professionals have the added protection of being allowed to convert their design professional liens into a mechanic’s liens.

Construction Contracts: Space Provided For Identification of Lender §8170(b).  Construction contracts after July 1, 2012, must provide a space for the owner to identify any construction lender.  This requirement does not apply to home improvement contracts or pool contracts.  Also, this section does not relieve a contractor from the service of preliminary notice requirements.  If a construction lender is not identified in the contract, a contractor as part of its due diligence should conduct a search of the county clerk records to identify any undisclosed construction lenders and serve them with the required Preliminary 20-day Notice prior to commencement of work.  For subcontractors, §8202 requires direct contractors to make owner and construction lender information available to subcontractors seeking this information for their Preliminary Notices.

Terminology Updates. The term “stop notice” has been replaced with “stop payment notice.” (§8044).   The term “original contractor” has been replaced with “direct contractor” (§8018).

Errors In A Claim Of Lien Will Not Invalidate The Lien §8422(a)(b).  This new Section codifies existing case law that holds that errors in a claim of lien (i.e., errors in a claimant’s demand, credits, and offsets deducted; the work provided; or the description of the site) do not invalidate the lien.  However, such errors will render the lien invalid if a court determines that: (1) the claim of lien was made with the intent to defraud or slander title; or (2) an innocent third party, without notice, actual or constructive, became the bona fide owner of the property after recordation of the claim of lien, and the claim of lien was so deficient that it did not put the party on further inquiry in any manner.

Attorney's  Fees on Petition to Expunge Lien. The new law removes the current $2,000 limit on the amount of attorney's fees that are recoverable on petitions to expunge stale liens; under the new law, all "reasonable" fees will be recoverable to the prevailing party.  The new law also requires that an owner first make a demand that the lien claimant withdraw the lien at least 10 days before initiating a petition to expunge. 

Inland Empire Association Management

I recently had a condominium association approach me about installing solar panels on the roof of their commercial building. I love these projects because nothing gets me more excited than looking at return on investment.

Electricity Meters in Condo Associations:

Each association is developed differently in regards to utility expenses for condominium complexes. The typical set-up for electricity in condominium complexes is to have one house meter and separate, individual meters for each unit owner. The house meter is paid through the association, and covers electricity usage for parking lot lights, wall packs, irrigation controllers, and other elements that are used for the common benefit of all owners. The individual meters are paid directly by the owner, and cover electricity usage for their interior lights, HVAC, machinery, and anything else that draws power for operating their business. That is how I typically see electricity set-up, but I have seen associations where the electricity is on one meter, and expenses are shared on the pro-rata share outlined in the CC&R's. 

Where does solar energy get complicated for condominium associations?

Most of the boards I’ve worked with on solar projects want a solar energy company to install the system at no cost to the association. In these circumstances a solar energy company owns the equipment they install on the association's roof, and they sell the energy generated from the equipment back to the association at a lower cost than SCE. Here’s the problem: This option requires a lot of electricity use to save any money because the company that installs the solar panels for free needs to recoup their costs. To save money with this option of solar energy every owner that is individually metered needs to contract with the solar energy installer. For example, take a park that has fifteen individual meters and one association meter. Then there would need to be sixteen contracts in place (15 owners + association meter) for this to actually save anyone money. It's all about economies of scale to return on this investment. 

The other complication is there is usually one HVAC unit on the roof for every condo unit.  That usually means there is very limited space for solar panels. Less space on your roof for solar panels means you cannot generate as much electricity. Limited space on the roof typically means solar panels are sectioned off to one area of the roof.  If this is the case running a conduit to service each owners’ electrical meter can become very costly, and off-set the ability for the solar company to be competitive with the rate SCE is charging.

Conclusion:

Solar energy is a great option and can work, but every case is different. Think about what your community is willing to spend, not spend, and the available space you have to make the project work. 

Irvine Property Management

In November 2009 the National Fire Protection Agency (NFPA) released some new additions to the NFPA 72, National Fire Alarm and Signaling Code. The additions made it possible for new communication technologies (GSM & cellular) to be implemented for fire control panel communications. Ratifying this code is beneficial to properties with fire life safety monitoring because it allows for significant cost savings on a monthly basis.

How fire panels work & costs associated with fire panel communication:

Fire panels have two dedicated phone lines to each panel. One phone line is used for primary communication between the building and monitoring company, and the secondary line acts as a back-up to the primary. The monitoring company receives communication from the panel about system status, errors, and possible problems on-site. If there is a problem being reported from the property's fire panel then the monitoring company notifies the property manager or owner, and the necessary steps are taken to address the problem. However, if there is a "water flow" on-site then the fire department is dispatched by the fire monitoring company, and other proper parties (property manager, owner, etc) are notified. The term "water flow" is used to describe water flowing out of fire sprinkler system. If water is flowing out of the sprinkler system then it is safe to usually assume there is a fire.

Understanding the basics of fire monitoring is important because you can better break down the costs associated with these systems. The two basic costs are phone lines and a monitoring contract.

Why it saves money to switch to cellular communication vs. land line:
Land line phone lines have become very expensive to maintain because of copper and how expensive it is to repair/replace. I recently switched a FLS account from 10 hard phone lines to cellular and was able to save $3,780 per year. That is a significant savings, and much larger savings can be achieved on properties that have 20+ phone lines.

How to implement the change to cellular:
You'll want to see the contract you have in place with your current monitoring company. Hopefully you didn't sign an unnecessary long term contract. If you didn't sign a long term contract then you will want to confirm with the monitoring company you're switching to that there are no lock out codes on the fire panel. Some companies lock down panels so other providers can't use the panel in the future. You can get these unlocked but it is difficult to do if you terminate service first. If locked then request them to be unlocked and terminate after.

Also, I've heard of FLS companies telling their clients they will take FLS control panels with them if service is terminated. They aren't allowed to do this because it would leave the system without monitoring capabilities. Push back and you'll win that argument all day. I'm always available if you have more questions and want more details. 

Trestle Street Property Management

We are pleased to announce that Trestle Street Partners has been hired on as the community association manager for four new accounts, effective March 1, 2012! The Board of Directors hired us to facilitate association operations, represent the individual owners, advise the board of California Laws, and manage the common area property.

These four accounts add an additional 2,678,062 square feet of industrial and office product to our management portfolio. We look forward to servicing each account and have provided some information on them below...

Information on New Accounts:

1. This association is located in Ontario, California and consists of twenty-four industrial condominium units. The total building square footage of the property is 163, 411. The association is responsible for maintaining the parking lot, parking lot lighting, landscape, physical building structures, fences, fire life safety systems, and roofs. Each owner is responsible for insuring and maintaining the interior of their units.
2. This association is located in Ontario, California and consists of an eight building industrial park that is structured as a planned unit development. The total building square footage is 278,744. The association is responsible for maintaining the park lot, parking lot lighting, landscape, and fire pump system that services each building in the park. Each owner is responsible for insuring their physical building structure, and is responsible for maintenance of the interior and exterior of their building.
3. This association is a sub-association of the association described in item two above. The association consists of nine industrial condominium units in Ontario, California. The total square footage of the property is 30,690. The association is responsible for maintaining the parking lot, parking lot lighting, landscape, physical building structures, fences, fire life safety systems, and roofs.  Each owner is responsible for insuring and maintaining the interior of the units.
4. This master association is located in Ontario, California and consists of twenty-five parcels. The total parcel square footage is 2,235,907. The association is responsible for maintaining the interior streets, parking lot, street lights, landscape, fences and security service. Each owner is responsible for maintaining their building and parcel improvements.

We understand management of community association business parks is a specialized niche that services sophisticated clientele. Our approach to the industry is uniquely driven by personalized relationships with our clients. We look forward to servicing these new accounts and truly appreciate the great opportunity we have been provided.

Riverside County Community Association Management

Association meetings are conducted by following parliamentary procedure. In the United States the most common parliamentary authority is Robert's Rules of Order (http://www.robertsrules.com/history.html). The process is very formal, and in a neighborly setting can be difficult to employ because most people do not understand or care to follow the process.

The structure of this process is pretty simple. Business is conducted by making a motion, and passing the motion puts something into action. However, just like any vote where a decision is made there is usually a debate. If these debates are not properly managed a simple topic can turn into multiple hour long discussion (not kidding). I have been through hundreds of these meetings, and when a filibuster (a process used to delay legislative action) starts to snowball, I'm always tempted to start referring to myself and others as Senator. For example, I would be Senator Rutherford, part of the Independent Party from the State of Management. Actually, I'm not a voting party so I'm more of a lobbyist or secretary, but the joke resonates with me just the same.

My company employs a very active style of management compared to other association management firms. I draw up an agenda of around twenty topics to discuss; keep the meeting on track; run through agenda line items, and take all the notes for decisions that were made. Other management firms leave the public speaking parts up to the President of the association, and have the association's elected Secretary keep the meeting minutes. I employ this active management style because I know parliamentary procedure, have been through hundreds of these debates, and can keep topics on subject as a moderator. If an independent moderator is not conducting the meeting, you can end up just debating and never taking the topic to vote. Keep in mind these meetings are democratic in nature, and the motion is passed by a majority. Let opinions be vented and voiced, but do not let that stop everyone from making a cumulative decision.

Keeping a meeting timely is important, but more important is staying on topic. SB 563 states that if a topic is not on the posted agenda, then the topic is generally not open for discussion. Simply stating this has helped me move many meetings along in the right direction, and I hope it does the same for you.

Los Angeles Community Association Management

"Why can't we all just get along?"
~ Rodney King

I find myself saying this all the time ... It's important when living or operating in a community association that neighborly respect and non-bias is given to each owner. Conflicts between neighbors are bound to arise, and the insecurity of conflict creates an emotional or rational decision. Let's call the emotional decision a reaction and the rational decision a reflection. By understanding reactive and rational behavior we can better manage our lives, and effectively manage problems/conflicts that arise in community associations.

In my opinion apprehension, a fear that something bad will happen, is the genesis of conflict. The first glimmer of apprehension brings forward a decision between rational or emotional behavior. So, how do "we all just get along" when conflict arises? By dropping apprehension/fear, and moving to rational, reflective authenticity.

The root of fear is Darwinian in nature and grounded in self-survival. Conflict arises, self preservation summits, and an emotional reaction ensues. The emotional reaction is a cold river of guilt, blame, inadequacy, rejection, and fear. In that river of emotion, self preservation is going to surface. Keep in mind that self preservation can be the death of you as you fight the current, tire yourself, and possibly drown. Be rational. Think about rivers ending in calm body's of water. Get to that calm body of water, catch your breath, and take a look at the reflection in the water.

The tumultuous river represents fear, anxiety and the drowning sensation of self preservation. The calm water's reflection represents a mirrored image of peaceful understanding of the problem. Do not drown in the river fighting currents. Use rational behavior or you may never make it to the calm body of water where all your problems are solved.

In my opinion people are subconsciously 90% emotional and 10% rational (that may be a stretch). The same ratio seems to subconsciously exist with people being 90% selfish, and 10% unselfish/altruistic. Don't let self preservation get in the way of altruism. The foundation of community is built on being conscious of mutual, unselfish respect. Focus on rational understanding and reflection, diminish apprehension, and the recipe for getting along seems to intervene.

Remember that people have a decision to make when conflict arises. If you get the emotional decision first, and the rational decision second - don't focus on the emotion. Recognize that the response was likely an emotional fear, and accept the altruistic decision that came later.

San Bernardino County Community Association Management

I want to share with you what buying into a community association means. To effectively get that point across I will compare being a member in an association to marriage. Please keep in mind that this read is meant to provide some laughs, and lighten the load of finer details that many really do not care to read or hear about. With that opening I hope the dialogue provided below will help you better understand what buying into a community association really means.

Love & Marriage & Community Associations:

I will be responding as a property manager to a potential buyer in a community association. Take some time to enjoy, laugh, and digest the life decision I'm depicting below. My responses will be detailed in italics.

What does it mean to buy into a community association?

Have you ever been married or considered marriage?

Yes. I've been married to my husband for 20 long years, and battling with his terrible family that I have loved for the same amount of time.

Good. You will be a natural at living in an association.

What?

Well, think about what you have been presented with. This park has twenty-five different owners that all pay into the same bank account to pay for shared expenses. Buying a unit in this association means you will be married, through a non-profit mutual benefit corporation, to every owner/member in this park.

What if another owner fails to pay their association dues?

Good question! You and your husband both work, correct?

Yes.

If you quit your job then who do you count on for money to pay the bills?

My husbands income.

Same thing runs true in an association. If one owner stops paying then all the other owners are responsible for picking up the slack. You are married to each other, need to co-exist in this park together, and have a fiduciary responsibility to each other.

Am I married to you?

Yep! For now we are engaged, but think of me as your psychologist, or trusted friend that is here to help if you ever run into a problem. Do you lease your space?

Yes. The property manager is terrible and the owner of the property I lease from is a dictator.

Associations are a function of democracy. You have a voice as a member of the corporation, and you no longer have to deal with a property manager that is implementing the rules of a dictator. My function is quite different. I work for each owner in the association/corporation, and enforce the rules created by the board that you elect annually. You have a voice in this community, and you can use me as an extension of your voice if you need anything.

Conclusion:

Marriage can be tough, but, in the end, it's all about compromise and understanding. Take the time to understand what you are buying, and if you have questions, please feel free to contact me.

California SB 563 Property Management

The new year brings new legislation for community associations in the State of California. I'll touch on many of these through-out my blogging, but will focus this post on SB563 (Committee on Transportation & Housing) Open Meetings. The Open Meeting Act was adjusted in five areas to create more transparency by having board business discussed at open meetings. I'll list the five changes with a brief summary below, but will focus my attention -- animosity may be a better word choice -- on no longer being able to make decisions via unanimous written consent.

Effective January 1, 2012: Five Changes to SB 563 Open Meeting Act

1. No more unanimous written consent. This equates to boards no longer being able to make decisions via e-mail. You must notice and call a meeting to make decisions.
2. Telephonic Meetings. Regular, executive and emergency meetings may be held via teleconference. However, there must a physical location where a board member is present for the meeting, and for members to attend in person. This was initiated as a replacement to the unanimous written consent/e-mail meetings.
3. Notice. You must post notice and an agenda for regular and executive session meetings. The plus side of this is it provides for notice to be delivered electronically, but proper consent must be signed by each member first.
4. Agenda. If the topic is not in the agenda sent out before the meeting - you can't discuss the topic at the meeting.
5. Delegation. The board can delegate certain actions to a managing agent, member/person, officer or committee of the board.

Analysis of SB 563 Open Meeting Act Changes:

Let me start out by saying I always encourage transparency, and understand why a lot of these changes were initiated. And since I'm committed to transparency, let me dovetail my understanding with utter disappointment in these legislative decisions. E-decisions (electronic decisions) are made every day in most every type of business environment. Problems are vented through an e-mail, discussions proceed, and an e-decision is made.

Do you remember the dial-up connection process to the Internet? Remember how slow it was and the irritating fluctuations in noise and connectivity? This bill puts managing an association and the e-decision process on a dial-up connection. Actually, it eliminates the Internet, and rewinds time to 1876 when the telephone was invented. Seriously? All these smart legislatures and the solution to transparency was a phone call? I'm disappointed. Shame on you, Sacramento. Shame on you.

I can provide information to anyone that wants to get involved, but a good starting point is http://www.clrc.ca.gov/.

Orange County Association Management

The best thing for managing a community association is communication. I studied Latin in High School so I always look to the root of a word to further define it's intended meaning. Since the first six letters of communication and community are the same, let's have a little Latin history to develop my 10 keys to effective communication and community management.

Latin Lesson:

Communicare: Impart, share or make common
Cum: Together
Mun: Community, meaning
Munus: Duties or gifts offered publicly
(Ms. Schuler would be so proud of me, but probably scold me for talking out of turn)

Community Communication Defined:

A community working together to share gifts and duties offered publicly for common benefit.

Top 10 Communication Skills:

1. Listen. I can't stress this one enough. If you are on the board of a community association you have a fiduciary responsibility to each member in the community. Listen to the membership, take into account their aggravation's, and try to address the problems as they were addressed to you. Property managers typically filter complaints directly to the board, so never underestimate how important it is for your property manager to listen and clearly communicate.
2. Respond. Take time to swirl the thought around your head, and digest what is being asked of you. If someone asks a question they deserve a real answer.
3. Specific. Be specific on what you want and/or repeat back what a person wants from you. Repeating the request shows people you actually listened, and eliminates most miscommunication. Create a specific timeline that both parties can agree to on a completion date.
4. Details. Be detail oriented. Little things matter just as much as big things in communication. If you leave baking powder out of a cake recipe what happens? It turns out flat and is not the product you wanted. Make sure the recipe is complete before you bake.
5. Transparent. Transparency is everything in a working relationship. Be authentic, genuine, respectful, real, ethical and don't be afraid to be yourself.
6. Think. I'm a firm believer in the fewer the words the better when responding. Think ahead, frame your response, and anticipate questions that could unravel by your answer.
7. Point of View. Take the time to understand someones point of view even if it doesn't align with your own. If you take the time to understand why someones point of view is different, you can better communicate your own point of view. In short, ask questions and stop trying to prove your own point all the time.
8. Don't take it personally. You never know what someone has had to deal with on any given day. Be quick to respond respectfully, help solve the problem, and make it a better day for the client.
9. Right or Wrong? Who cares! Get the problem solved. The ability to be humble in communication is often over looked. I listen to sports radio and they are always debating. I'll never forget these two words that came out of one of those debates: point taken. Think about those two words because they really resonated with me. It's the same as "agree to disagree," but better because you can accept their opinion, still have your opinion and move the conversation along.
10. Follow-Up. What happens if you complete every assignment in school and don't hand them in to be graded? You fail the class. You will fail at communication if you don't follow-up and close the loop on communication.

Community Associations Subject to Davis Stirling Act

This blog post will touch on the benefits of being included under the Davis-Stirling Act, and conclude with what it takes to be excluded from the Act.

Most of my blogs come from real, every day experiences. Over the past week I met with an attorney that specializes in the formation of community associations, and followed that meeting up with a real estate investment company. Turns out the relationships created were symbiotic in nature. I looked to the lawyer to refer business to me, the lawyer looked to me to refer business to him, and the real estate investor needed both of us to help him with a recent acquisition. The symbiotic nature of real estate is honestly the favorite part of my job. I cold call and shake people down for business, but at the end of the day I truly enjoy being able to network, help people and solve problems.

Why do I bring this symbiotic relationship up? Well, it all stems from the question that was asked of me by the real estate investor looking to set-up an association. He asked me, "what are the strategic advantages of having an association, and what is an alternative remedy?" Great question! First, let's rephrase the question to: Do I want my commercial buildings subject to the Davis-Stirling Act (the Act)? The Davis-Stirling Act is Civil Code (CC) sections 1350-1378, and this body of law was created to protect/govern community associations. Inherent to creating associations is being subject to this body of law.

Advantages of Being Within the Act:

I'll try to keep my position neutral by outlining a few beneficial sections of the Act:

• CC 1357: Extending the term of the CC&R's
• CC 1358: Transferring interest occurs automatically
• CC 1363: Election procedures, meetings and due process
• CC 1363.03, .04, .05, .07, .09: Elections and conduct of meetings
• CC 1363.1 &1363.2: Managing agent controls
• CC 1363.810 - 1363.850: Internal dispute resolution processes
• CC 1365: Financial reporting
• CC 1365.7 & 1365.9: Association insurance requirements

The Act obviously affords many protections, but many developers/investors don't want all the regulations this Act puts on their property. The real protection for including a property within this Act is courts see creating associations as "sound business judgement."

Exclusion from the Act:

F. Scott Jackson, Esq. wrote a book called Commercial Mixed-Use Common Interest Developments, and I've paraphrased below some items I think are useful to consider:

• The development shouldn't be a condo, stock operative and should have no common area.
• A planned development with an association that has no enforceable lien rights.
• A tenancy in common agreement should be in place.
• A responsible party should be in place that has the right to unilaterally assign its rights to a responsible successor, outside management party, or owner in the project.

Conclusion:

It's imperative to consult an attorney when considering forming an association. The purpose of this blog post is to outline the ways to be excluded from the Act, and the protections the Act affords.

Intro to Community Association CC&R Amendments

It's the New Year and it's time to make some changes! And just like any new resolution or change - you need a game plan. Fortunately you don't have to jump on some weird diet, give up your favorite sweets, or find yourself in a sweaty gym for this one. All you have to do is cut a check to an attorney, put a phone call into your property manager, and vote the amendment in ... I'm making this sound easy because this is the 101 crash course, but the truth is this process can be horrendous; especially if you're trying to amend the percentage share an owner has to pay in association dues.

Examples of Reasons to Amend CC&R's:

1. Laws in California are always changing, and after about fifteen years, governing documents should be amended or restated to keep current.
2. Allowing exclusive use of certain common areas.
3. Amending percentage share of association dues.
4. Controlling smoke in common areas and/or the interior of units.
5. Reducing exposure to the association.
6. Adding parcels/units into the association.
7. Prohibiting pets.
8. Eliminate cumulative voting.
9. Amending a condo plan that's an exhibit to the CC&R's.

The list goes on but I think I've painted the picture.

Steps to Take to Amend CC&R's:

• Look to Civil Code Section's 1355 and 1356. Section 1355 outlines that you need approval from the ownership representing more than 50%.
• Review your CC&R's. I often see CC&R's outline needing approval of more than 75% of the membership.
• Send out the meeting notifications, ballots, and proposed amendment for vote. This should go out 15 days in advance of the meeting and not more than 60 days in advance.
• Hire an attorney.
• Be fair and consider all owners that this amendment could affect. Keep in mind that if a lawsuit arises from a CC&R amendment - all owners are responsible to pay the expenses through the association.
• I'm a big believer in "polling" the membership before moving forward with these types of projects. Hiring a lawyer, starting the process, and then having the amendment not pass is just a waste of money.

Conclusion:

CC&R amendments happen all the time. If your New Year has this project in store, feel at ease knowing you can check this one off your list, and not even break a sweat doing it! I'm always available if you're looking for a highly recommended attorney. Good luck!

Insuring Southern California Community Associations

Insuring the common area of your association's property, and corporation should be reviewed on an annual basis. Where do you start with this process? First, take a look at the associations governing documents. It's important at a minimum to meet the limits in the CC&R's. I always send insurance brokers the section of the CC&R's that is pertinent to insuring the association. I will be touching on each type of insurance typically required, and the limits I commonly see bound for coverage.

General Liability:

I recommend at a minimum having two million per occurrence and a four million aggregate. Long story short, this type of policy protects the association from lawsuits arising from third parties.

Excess / Umbrella Liability:

This policy protects the policy holder beyond the standard limits outlined in the general liability policy. I generally see the limits for this policy at two million.

Directors & Officers:

This policy protects the "directors and officers" from alleged wrongful acts/lawsuits that may come up while acting in the capacity as a director/officer of the corporation. I recommend having this at two million, but I commonly see this policy go up to four million depending on how conservative the directors are.

Property:

This type of coverage affords coverage to replace common area property in the event of a loss. In condo associations property insurance is more expensive because you actually insure the exterior of the building. I do not have a recommended limit on this type of policy because each property is different.

Workers Compensation Insurance:

I always get push back on this one, but it's important to realize the protections this type of policy affords. I pulled this text from Timothy Cline's website:

"Workers’ Compensation is required by law. Any association that has employees on the payroll must maintain a workers' compensation policy. But what if the association does not have any employees and all work is contracted? Should the Association still maintain a workers compensation policy? The answer is a resounding 'yes.'

This scenario is all too common. If an association ever hired a non licensed contractor, or hired a licensed contractor who does not maintain an active workers compensation policy at the time of loss, then the association could be deemed to be the employer. If that contractor misrepresented the fact that they maintained a workers compensation policy, and an accident occurs while on the job, the state of California could still consider the association to be the employer of that injured worker, and liable for all medical payments that result. The law also prohibits the Association from entering into a contract to avoid workers’ compensation insurance.

With this in mind, it is important for all associations, whether big or small to maintain worker’s compensation coverage. Even with a workers' compensation policy in effect, it’s still imperative that the Board contract with ONLY licensed contractor with a workers compensation policy in force. The Board should request a Certificate of Insurance evidencing the workers compensation coverage and such evidence should be in the Board’s possession prior to the work commencing."

Have a look at Timothy Cline's website for more information: http://www.timothycline.com/

Conclusion:

Review your insurance policy and make sure your property manager is on top of expiration dates. This is just a short review of what an association's insurance policy should cover.  This does not include what each owner in an association is required to insure. It's important to get more information from a California licensed insurance agent.

HOA Reserved Parking

Reserved parking in business community association's and homeowner association's is a topic that comes up all the time. When I hear the word "reserved parking," I can already hear the mass of complaints that is about to come my way as a property manager. Unless you absolutely need reserved parking ... Do not do it! I will provide some examples of healthy ways to set up a reserved parking system, and the problems that exist when you move forward with reserved parking.

How to Set-Up a Healthy Reserved Parking System:

1. Poll the membership. See if the majority of the membership wants to initiate this system. I've seen countless boards make decisions based on problems with one owner. Always act in the interest of the majority.
2. Do not mark every space in the association's parking lot as reserved. I promise you this will never work, and it will just create problems. Why? People, clients, and visitors don't pay attention to mass amounts of reserved parking. Rhetorical question: If you went to a business park for a doctors appointment, and the only open space available was for a reserved space marked for another building would you park there? What if you were late?
3. Another factor to consider is stenciling every spot in a parking lot is expensive. Each word generally costs $4.25 for new stencils, and $3.25 for re-painting old stencils.
4. Keep the amount of reserved spaces to an equal number per unit, or create an equation for how many spaces each unit is allowed. For example, people that own 5,000SF are allotted three reserved spaces, and people that own 5,001SF-10,000SF are allotted 4 reserved spaces.
5. If possible, mark the space on the asphalt and have a sign in landscape. The sign is important because people are better trained to pay attention to things right in front of them than on the ground. If you decide to place reserved parking signs, the board needs to come up with design regulations for those signs.
6. Decide up front if you will tow from reserved spaces. I have towed many cars and it never goes smoothly. If the board is up front and says, "hey, not association policy to tow." It cuts down on what people can ask for from the association.

Options to Consider for Reserved Parking:

The reserved parking system is flawed because there is nobody on-site monitoring the parking ... Well, except the person getting their reserved spot taken. When that person arrives nobody knows who the wrongfully parked car belongs to ... So some options to consider:

1. Are you going to install a guard gate and issue parking passes?
2. Will the association pay to have security on-site monitoring the parking passes?
3. Will you charge for parking to cover the expense of the guard?
4. Do you issue parking passes to each unit, and require the pass in the vehicle if parked in the reserved parking spot? Who pays for the passes? The association or owner? Who monitors the passes?
5. Should there be a meter on-site visitor's have to register in when parking? For example, think of a city owned parking lot where they charge by the hour for the space.

Conclusion:

Undoubtedly reserved parking will always create issues when implemented in a community association. Best practices: To have a well thought system, and get everyone involved on the decision. Send out questionnaires/ballots and have everyone involved in the decision. If members aren't involved in the decision then they feel like the system is being forced fed and you may have mutiny on the horizon.

Is it Time to Fire Your Property Manager?

Case Study:

Our firm was retained to take over management for a residential common interest development in Orange County for one reason: Their then current management company was not performing to the standards that the Board of Directors required. Additionally, the management company was not conducting business and maintaining the property in such a manner that attempted to limit the association's liability. Our firm has three goals when managing any project:

1.       Limit the association's liability to as close to zero as possible.

2.       Engage, communicate, and build unity with our boards and members.

3.       Educate, advise, recommend, and take action.

It has been my experience that many management companies tend to "sit" at a meeting, tell the owners the problems associated with the project, and hold their arms up and ask what they should do. Or, some management companies don't do any of that and surprise the board with issues at hand at a meeting. True, it is up to the board/members to make the decisions that affect the association, but it is our job as your association/property management firm to educate, advise, and recommend action to the membership based on our expertise and knowledge. An informed membership is better suited to make decisions that benefit the association as a whole. That information and those recommendations should come from the management company, or a collaborative effort between management and the membership. That's what we're paid to do!

So, when do you fire your management company? You fire your management company when they neglect to act in the best interests of the association and its members. If your management company is not communicating with the board and membership, failing to maintain accurate financial records, failing to maintain the property as directed, failing to stay in compliance with California State Law, or creating mistrust or angst within membership, it's time to move on. The longer an association waits to take action on firing a management firm that is not following our three goals above, the more the association opens itself to liability and disarray.

It's our belief that your business or home should be promoted and protected as much as possible in your association. But just as important, it should be enjoyed. That's why you purchase a home or a commercial building, correct? If you have experienced a poorly managed community, you can understand that it drastically affects your outlook on your investment. A poorly managed association becomes an unnecessary headache and creates an un-enjoyable environment for its members. A poorly managed association needs to fire its management company.