“It’s Alive!”

Posted on December 24, 2008 by Brian P. McLean

The New Homeowners Association — a Burdened Creature, Tripping down Sequoia Lane, with a Knife in its Back

by Brian P. McLean, Leahy.ps

When it comes to homeowner associations, governments are struggling. Competing camps, conflicting policies, and the end result: a crippled creature chased into a burning clubhouse by owners carrying pitchforks and torches . Governments want to limit demand for municipal services, preferring to stack them instead on the shoulders of developers, and eventually associations and their owners. Desiring to increase consumer protection because of actual and perceived abuses by associations, governments simultaneously try to limit the ability of associations to collect assessments, kicking the feet of associations out from underneath them. It’s the unfunded mandate meets inability to tax. (Combine that with no reserve studies, and the amount of the unfunded mandate is difficult to ascertain until the need for the expense is immediate.)

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Delinquent HOA Dues for Units in Attached Condominium Projects

Posted on December 23, 2008 by Brian P. McLean

By Brian P. McLean, Leahy.ps

Fannie Mae is updating its review processes with respect to delinquent HOA dues (Announcement 08-34 | 12/16/08):

Fannie Mae is updating its delinquent HOA dues policy for the CPM Expedited Review and Lender Full Review processes to require that no more than 15 percent of the total units in a project can be 30 days or more past due on the payment of their condominium/association fee payments. This new policy applies to the review of both new and established attached condominium projects.

This was pointed out to me by Loura K. Sanchez of HindmanSanchez (Colorado).

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Reserve Studies in Washington State – 2008 Legislation

Posted on December 20, 2008 by Brian P. McLean

By Brian P. McLean, Leahy.ps

On March 21, 2008, Washington State Governor Christine Gregoire signed into law Senate Bill 6215. The new law took effect on June 12, 2008, and requires condominium associations to update reserve studies annually and make mandatory disclosures to purchasers. This article describes what went into effect on June 12, 2008, what happens later, and some practical advice.

The new law affects reserve study professionals, declarants, associations, sellers, purchasers, and the agents that serve them. It is intended to create through disclosure greater transparency about the true cost of ownership in a condominium. It does not mandate that Associations create reserve accounts or raise association dues.

A copy of the law can be found on the State Legislature’s website: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6215

You can also find the law codified at RCW 64.34.380.

What Took Effect on Saturday, June 12, 2008?

If you’re a declarant, association, or community manager, the effect on June 12, 2008, was modest. After June 12, 2008, each Public Offering Statement or Resale Certificate should include a copy of the associations reserve study for the current fiscal year that meets all of the requirements of the new law, or the following disclaimer:

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Slouching Toward the Annual Budget

Posted on December 20, 2008 by Brian P. McLean

By Brian P. McLean, Leahy.ps

The Best of Times. It’s that time of year again when budgets pass. Property managers are hoisted on the shoulders of associations and doused with Gatorade. Community associations soar. Accountants balance the books.

The Worst of Times. It’s also that time of year when budgets fail. Property managers are left turning, turning in the wind. Community Associations, like wingless rocks, descend into the fiery bowels of budget hell. Attorneys—rather than accountants—balance the books. And the property itself—once a precious jewel glinting in the sun—begins a death spiral toward a certain future that includes a dry community swimming pool filled with leaves and parched frogs.

Slouching Toward Bedlam and Madness. We should celebrate the associations that soar. But celebrating success is boring. Let’s instead dwell for a moment on what’s gone wrong with your budget-making process:

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The Annual Meeting: Constantly Risking Absurdity

Posted on December 20, 2008 by Brian P. McLean

By Brian P. McLean, Leahy.ps

In the circus that is the owners association, no act is more fraught with peril—and more important—than the Annual Meeting, that high-wire balancing walk from last year to next year. The success of any owners association depends in large part on maintaining the right balance between the Board’s actions, on the one hand, and the will of the owners on the other. We know that the Board makes day-to-day decisions regarding the business. The Annual Meeting affords the best political opportunity for the owners – largely re-run observers of last year’s day-to-day decision-making—to restore balance to an off-kilter Board’s sleight-of-foot tricks and other high theatrics.

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Is it legal in Washington State to Ban Smoking in a Condominium?

Posted on December 13, 2008 by Brian P. McLean

Edited by Brian P. McLean, Leahy.ps

This is the question posed to me by The Seattle Times in July 2007, which quoted me extensively on the subject:

Kirkland [Seattle] attorney Brian McLean, of the firm[Leahy McLean Fjelstad], says that “with the unanimous consent of owners, an unconditional restriction on smoking throughout the entire condominium that applies to current and future owners is legal. Where one current owner objects to an unconditional ban, the issue becomes more complicated because condominium living is complicated.”

As McLean explains, a condo is created by a recorded Declaration of Condominium.

“The declaration distinguishes between common areas (e.g., shared streets, sidewalks, green areas, hallways, elevators) and owner units, and includes restrictions on the use of both,” he says. Condominiums are being developed today in the Northwest that include, before the sale of any units, smoke-free restrictions that apply to the entire property. I believe such smoke-free restrictions are legal and enforceable.

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