Questions from the Listserv

NBC-CAM hosts a listserv for community association managers. The listserv is intended to create a powerful, on-line community for community management professionals to share information. Recently, some questions have been sent to the listserv. Are you able to help? Leave and answer in the comment section below and NBC-CAM staff will post your answer to the listserv.

Question 1: Karen from California

I am working with an Association in the process of amending the Restrictions and the Board is trying to institute a rental cap and we are running up against major opposition from the membership. We have tried to explain the benefits of a rental cap i.e.: Clearly, the imposition of a rental cap has both benefits and burdens. We are not experts in real estate valuation but understand that a community which is primarily non owner occupied is viewed as less desirable, i.e., of a lesser value. Where the residences are occupied by owners, there is typically a pride of ownership. Landscaping and other components are often better maintained, violations of the use restrictions are less frequent, etc. Perhaps the most important factor to consider is the ability of a buyer to obtain financing to purchase a unit. If the ratio of non owner occupied units is too high, FHA will not guaranty a loan and/or a lender will not provide financing.  Do any of us have any guidance to assist us in this endeavor?

Question 2:  John from Florida

How often do you audit your properties? Full audit or financial statement audit only? Our bylaws are not clear whether to full audit every 3 years, yearly, full audit or only financial statement.

Question 3: Lillian from North Carolina

My association’s bank notified me that a homeowner’s check was returned for NSF. The Homeowner claims their bank paid it and debited their account.  The Homeowner’s bank claimed, in a letter, that the check was paid.  The Homeowner’s bank has not responded to my emails/phone messages asking for a copy of the transaction showing they honored the check. My association’s bank also has not provided me with a copy of the transaction being rejected other than their standard form for Returned Checks with a copy of the rejected check.  We are at a stalemate.  I have never had this happen before, in 26 years.  Has anyone else had this experience?  I’m not sure where to go from here.

 

4 thoughts on “Questions from the Listserv

  1. I have 10 condo associations here on the Alabama gulf coast and only have three that has no more than two owners that live there, The rentals are handled by several rental companies and VRBO owner rentals. We as managers of the associations stay out of the rentals and there is no restrictions on rentals. The only problem we have had with FHA is making sure the requirement of 10% of the income of the association goes to the reserve. the association is not requiring the owners to tell if they are renting are not and so we do not know what persentage is rental and what is second home used by the owner and family. You need a landscape committee to help the landscape company keep the property up and i would think you will have to budget more monies than if you has owners helping. you need a active board and i have a property that is 25 years old and looks great because the board spends the monies needed to keep it up. Hope this helps.

  2. In response to ‘John from Florida’s’ question as to how often the Association should be audited, reviewed, etc. I am more than surprised Florida doesn’t have a State Statue controlling this issue. From what I have heard from FCAMS, they are very tightly regulated. So if an issue is not referred to in the Associations Governing Documents then it is very likely State legislation takes precedence.
    Should the Association be incorporated than Corporate law may also be the place to find an answer.

  3. Lillian your best bet is to turn the problem over to the owner to resolve with their bank. As the manager you should be asking for a copy of the cashed check front and back which is the proof of payment showing it was cashed by both banks and into which account the money was deposited.

  4. Q1 Rental Cap – The percentage of units being leased does have an impact on the value of all units and the experience living within the community. Lenders have set limitations on lending based on the number of leased units which can make it harder for a buyer to get a loan or an owner to refinance. Fewer owner-occupants can also mean a smaller pool of volunteers to serve on the board and committees.
    A good rental cap amendment or provision should include a hardship clause giving the board the authority to grant waivers.Often times the only way to pass the amendment is to grandfather existing leased units. As units sell or if the owner occupies the unit is no longer granfathered and subject to the rental restrictions.The rental cap restriction should also establish a 10% ownership limitation, create a waiting list and approval procedure and restrict leasing a unit until 1 yr after purchase to discourage investors.

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