Association Management

This is the second in a regular series of blogs intended to discuss the important issues affecting community associations.  Last week we discussed the most important factors to consider when putting together your 2015 operating budget.

This week we address an important legal decision that came down very recently.  If your community association has an Amendment to the Declarations limiting the number of rental units allowed, this ruling may very likely affect you.  A Washington State Appeals Court has ruled that at least 90% of the owners must have voted in favor of this Amendment for it to be valid and enforced.  The case is Filmore LLP v. Unit Owners Association of Centre Pointe Condominium.

According to attorneys we have heard from, this ruling applies to all “New Act” (RCW 64.34) community associations.  If your association is “New Act” and you passed a rental cap Amendment with less than 90% owner approval, it now may not be enforceable.  This court ruling is affecting a very large number of communities in the state of Washington.  It is not known whether the Centre Pointe Condominium Association will appeal this ruling to the Washington State Supreme Court.

In the meantime, according to knowledgeable attorneys, the Filmore ruling is currently the law of the land.  We recommend that you contact your community association attorney as soon as possible to seek legal advice about the enforceability of your Declaration Amendment.  Failure to follow proper legal advice has the potential to negatively affect your community.  We urge you to avoid that possibility.

Friday, September 26, 2014

Welcome to the first of a regular series of blogs in which will discuss the world of community associations and ways that professional management can help our client communities prosper and achieve their goals.

With the 2015 budget season now in full swing, here are some important factors to consider during the budget preparation and ratification process:

• Always keep in mind the number one fiduciary responsibility of a board of directors is to make decisions that contribute to the enhancement of each homeowner’s investment.  Establish a working budget committee and include non-board members.
• Don’t just think about the upcoming year.  Rather think about the long term and the financial health of the community.  By doing this, proper reserve funding will always be a high priority.
• Budget from the “bottom up”.  This means that you should determine the appropriate contribution to the reserve fund in the coming year and then establish your estimated operating expenses.  Don’t predetermine an “acceptable” percentage increase or no increase in dues.  Use your up to date professional reserve study as a guideline. 
• Request estimates from your trusted vendors and contractors for all anticipated common area maintenance expenses.  Most contractors will be happy to assist you with budgeting in advance to get their “foot in the door”.
• Allow for an adequate “General Maintenance” budget to account for those unplanned repairs that always come up.
• Contact your local utilities now to request their estimated percentage increases in the year to come.  Typically, they will not have approved figures now, but press them to give you an idea of what to expect.
• Be timely.  Don’t wait until the last minute.  If your CC&R’s allow, schedule the homeowner budget ratification meeting no later than November, so the budget can be sent out a minimum of 30 days in advance of the new fiscal year.
• Always consider the advice of your experienced professional community association manager.

Yates Wood welcomes Park Vista, a 50 unit cooperative located just north of the University of Washington.