The Community Associations Institute released the new Reserve Study Standards last May to provide communities with an improved outline for effective reserve planning. The updated study includes an emphasis on structural inspections and maintenance. A task force was created after the tragic collapse of the Champlain Towers in 2021 to address specific issues that came to light, and the three main issues addressed and incorporated into the newly released Reserve Study Standards are maintenance, building inspections (structural inspections), and inclusion of long-life components.
The purpose of the Reserve Study Standards is to inform and guide the reserve study provider, such as a Reserve Specialist® (RS), with the minimum requirements necessary for the preparation of a reserve study. A reserve study can be prepared for several reasons throughout the life cycle of a community, beginning prior to construction and initial sales through community maturity. At each stage, the reserve study recommends the funding necessary to sustain the community. Originally published in 1998, these Reserve Study Standards provide a consistent set of terminology, calculations, and expectations so reserve study providers and those they serve together can build a safe and successful future for millions of community association homeowners. It is recognized that, in addition to the reserve study, a proactive preventive maintenance plan and ongoing periodic structural inspections should be incorporated into the community’s long-term planning to properly evaluate and budget for the ongoing care of the common area components as well as the structural safety of the community. To keep the reserve study current and reflect the ongoing changes to the components and the financial needs of the community, the reserve study should be updated on a regular basis.
“A number of our cooperative and condominium clients have asked whether they may ban the smoking of marijuana in their buildings, either because they find it bothersome or because they are concerned about the adverse health effects associated with second-hand smoke.” — Legal Alert from the law firm Smith Gambrell Russell.
The first thing co-op and condo boards need to remember is that the Smoke-Free Air Act of 1995 banned smoking in most public places in New York City, including the common areas of multifamily dwellings, such as lobbies, laundry rooms, stairwells, hallways and elevators. So smoking weed in common areas is out.
Local Law 147, adopted in 2017, required owners of multifamily buildings to create a smoking policy and share it with current and future residents — though it stopped short of requiring owners to ban smoking. In the past six years, many co-op and condo boards have amended their governing documents to ban smoking anywhere on the premises, including inside apartments.
But does the recently legalized smoking of marijuana fall under such bans? What if a resident is under doctor’s orders to use medical marijuana? What if the marijuana smoker is a Rastafarian who claims that smoking is a religious ritual? Would banning such people from smoking marijuana in their homes be cause for discrimination complaints?
“Most of the smoking bans our office has drafted are pretty broad,” says Lisa Smith, a partner at Smith Gambrell Russell. “They include the smoking of any substance, including cigarettes, e-cigarettes, cigars, pipes and marijuana. The ban is not saying you can’t practice your religion. It’s just saying smoke cannot emanate from your apartment.”
As for medical marijuana, Smith says: “People have said they need to smoke marijuana to treat a medical condition, such as glaucoma. The point is that they can ingest it in other ways without smoking it — in pill form, drops, edibles. It’s possible to get all sorts of products, from cupcakes to lemonade to candy, with different levels of THC.”
When advising her co-op and condo board clients who are considering instituting a smoking ban, Smith tries to avoid halfway measures, such as grandfather clauses or allowing smoking on terraces. “A smoking ban has to be all or nothing,” she says. “Otherwise it’s hard to enforce. And you have to be vigilant. In my building, which is nonsmoking, management puts out regular reminders. Lately kids have been smoking marijuana in the stairwells.”
Any smoking ban must be established through an amendment to the governing documents, not merely a house rule. As Smith Gambrell Russell’s Legal Alert states: “Like the use of tobacco, the smoking of marijuana inside apartments…, regardless of whether it can be demonstrated that it leaks into public areas, may be banned by amendment to a cooperative’s proprietary lease or a condominium’s bylaws.”
Some boards don’t stop there. Smith was recently made aware of a fire-fearing condo board that banned the burning of candles and incense inside apartments — and hit violators with a $100 fine. One unit-owner complained that some residents continued to burn candles for Shabbat while she was not allowed to burn incense, a ritual of her Eastern religion. “Just because it’s your religion doesn’t mean that you get to annoy other people,” Smith told The New York Times earlier this year. “You don’t get to do it to the detriment of others.”
But, she adds, that condo board left itself open to a serious legal challenge. “If the board is not going after the people burning candles for Shabbat but bans the burning of incense, they’re treating unit-owners differently. They could get sued for discrimination. That rule banning candles and incense was a crazy rule.”
Frank Gonzalez and Edin Bojic first met at Aviation High School in Queens, and they’ve been resident managers in big New York City buildings for well over half a century combined. For the past year, they’ve been making their wealth of knowledge available to everyone — fellow resident managers, co-op and condo boards, property managers and other real estate professionals — through a popular weekly podcast called “Building Talk.” It’s posted on YouTube at 7 p.m. on Tuesdays and on Spotify at 5:30 a.m. on Wednesdays. Back episodes are available here.
“We’re trying to raise the image of the resident manager,” says Bojic, 58, a native of Montenegro (part of the former Yugoslavia) who goes by Bo. “We want to get rid of the old image of the super as a guy with a ring of 100 keys who lives in the basement.”
“Keeping up with the changes in the technology that come out every year requires that we’re always learning,” Gonzalez adds by way of explaining the podcast’s educational slant.
Gonzalez is now resident manager at a 625-unit condo and rental building in Greenpoint, Brooklyn, while Bojic runs a 600-unit Mitchell-Lama co-op on the Upper East Side of Manhattan. On the podcast they’ve offered advice to colleagues on everything from interviewing job candidates to resolving conflicts with residents and board members ; they’ve interviewed fellow resident managers and numerous vendors; and their conversations have ranged over landscaping, fire prevention, pest extermination, security systems, leak detection and improving a building’s energy efficiency.
Frank and Bo are an echo of Click and Clack from the popular NPR radio show, “Car Talk.” Like their predecessors, Frank and Bo mix avuncular banter with their hard-won insights, an appealing mix that caught the eye of Bobby Hodge, the resident manager at the Bay Club Condominium in Bayside, Queens. He tuned in to “Building Talk” one day when the guest was Jerry Kestenbaum, founder of BuildingLink. Kestenbaum was touting his spinoff company, Aware Buildings, which produces sensors that can detect leaks and alert staff before major damage occurs. Hodge was intrigued because Bay Club, with its large indoor swimming pool, 44 laundry rooms, water storage tanks and domestic hot water tank, has abundant potential for leaks. Hodge got in touch with Aware Buildings, which helped him install some test sensors. The very next day, one of them alerted him to a leak in an overhead pipe that ran to the domestic hot water tank. After the faulty pipe was quickly repaired, the condo board ordered 84 sensors, which Hodge has installed in potential trouble spots.
Much as co-op and condo board members bemoan their mushrooming work loads, Frank and Bo say resident managers are besieged by the city’s endless onslaught of new laws and regulations. “New York City is reactive, not proactive,” Bo says. “If there’s an accident where someone gets hurt, I know there’s going to be a new local law. There are new laws every year, and the resident manager has to interpret what’s going to work best for his building.”
The biggest change in the profession in recent years? “You have to be a psychotherapist, a psychologist and the customer service department,” Frank says with a laugh. “But mainly it’s the changing technology. Now everyone’s more energy conscious and they want to be more energy efficient. Technology changes every single day.”
Bo agrees: “Technology, definitely. There’s so much information that you’re constantly asking, is everything sealed properly? Is everything working properly?”
Is “Building Talk” working properly?
“This is the first podcast of its kind in New York City,” Bo says. “And yes, we’re getting a lot of positive feedback.”
Comms can be a conduit for building culture and keeping morale high during slower seasons.
By Sean Devlin for Ragan Communications
Summer in the United States can mean several different things— tickets to a ballgame, trips to the beach (or down the shore, if you’re from the Philadelphia area like this writer is,) or just time away from the daily grind of work to spend with family and friends. But with all these planned activities and vacations, sometimes engagement around the virtual or in-person office might be flagging.
This begs the question — how can you keep employees motivated when the pace of business slows?
That’s where a strong communications department comes in handy. By sharing messages that address both the needs and desires of employees, you can keep motivation up during the dog days of summer, and work to improve retention and overall culture too.
A key time for professional development
Even if summer sees a lull in business, with clients and coworkers taking well-earned vacation time, it doesn’t mean that it can’t be an opportunity for employees to learn something new to upskill their careers.
Dr. Kerry O’Grady, associate professor of public relations and corporate communications and PR consultant, said that these slower periods could be an excellent opportunity for leadership to build in time to invest in their employees.
“Giving employees the freedom to build their skill sets is so empowering,” she said. “It also helps employees know that they’re valued and that their skill set is valuable to the organization.”
Summer can also provide a timely opportunity for communications to reevaluate their channels to reach out about upskilling offerings. and also provide employees with a moment to voice the areas where they’d like to build their skill sets.
“Summer is a great time to utilize internal comms platforms to facilitate knowledge sharing, team updates, and social interactions,” said Mira Adam, associate director of communications at the Georgetown University McDonough School of Business.” Likewise, creating channels for employees to communicate their ideas and actively listen to their concerns can help contribute positively to engagement,”
Tips for the slow times
If things slow down a bit during the summer at your organization, use it as an opportunity to reassess the challenges you’re up against as a communications department. It can also be a good time for ideation around solutions to those issues.
“Using these kinds of times to organize and work through challenges that have presented themselves in other parts of the year can be really helpful to your overall strategy,” O’Grady said. “By really drilling down and understanding what the root problems might be in our communications, we can work to make things better for the whole organization.”
O’Grady added that times like the summer are also an ideal opportunity to increase collaboration with other departments within the organization to get a feel for how they operate and how communications can help. This can in turn foster understanding between employees for an increased sense of camaraderie and better morale.
“Talk with other parts of the organization,” she said. “Taking the time to sit with people who might work in marketing or finance to get a better sense of how the entire system functions is a great way to spend slower times that might arise.”
Positive reinforcement
Let’s face it, comms people are generally a busy bunch. But slower times of the year also provide an opportunity to present accolades and praise to employees which go a long way toward fostering a positive culture.
Rachael Matthews, vice president of corporate communications at Group 1001, said that even seemingly small recognition can be a huge step towards positive culture building.
“Sometimes we can be so heads down in our work and we might wonder if what we’re doing is even making a difference,” Matthews said. “But even if it’s a small shout-out from the CEO or other recognition from leadership, these gestures can reinforce just how important employees are to the entire operation.”
Simple actions like asking how an employee is doing over lunch or creating space for them to share their desires for their future careers can fit in really well during a summer schedule and help foster good morale.
“Leaders should take this time to say thank you and make their employees feel valued and appreciated, “O’Grady said.. “It’s so important for leaders to spend any potential downtime on the people who do the daily work to foster future growth — now is the time to make people feel indispensable and part of something larger.”
Sean Devlin is an editor at Ragan Communications. In his spare time he enjoys Philly sports, a good pint and ’90s trivia night.
BUILDING OPERATIONS: HOW NYC CO-OP AND CONDOS OPERATE HABITAT Magazine
Good news for co-op and condo boards struggling to retrofit a landmarked building to comply with Local Law 97: the Landmarks Preservation Commission has voted to approve a series of changes aimed at speeding up the review and approval process for alterations to landmarked buildings and properties in historic districts.
The commission voted to approve amendments that tackle the review process for upgrades related to climate resilience and sustainability as well as heating, ventilation and air conditioning, Crain’s reports.
Co-op and condo boards, landlords and homeowners will be able to secure approvals for solar panel installations and changes to an HVAC system, among other upgrades, without a full vote from the commission.
The new rules also amend the review process for what’s known as an expedited certificate of no effect, which is needed when proposed alterations require permitting from the city Department of Buildings. Applicants will no longer be required to submit a sworn statement to secure the certificate and will be allowed to file a written statement instead.
The changes to the commission’s review and approval process are tied to Mayor Eric Adams‘ Get Stuff Built initiative. Robert Holbrook, executive director of Get Stuff Built, lauded the changes to the commission’s review and permitting process. He said that faster approval timelines and policies reduce the costs for building owners to invest in their properties, adding that that a streamlined process also advances the city’s goals to address climate change.
It also reduces the headaches for co-op and condo boards trying to renovate landmarked buildings.
Floridian master gardener Steve Turnipseed has converted 7,000 square feet of bare lawn into a thriving garden full of native plants, despite the restrictive rules of his HOA, Dwell reports.
According to Dwell, Turnipseed is the founder and president of his local chapter of the Florida Native Plant Society. When he moved to the Villages planned retirement community, he was disappointed with the landscaping around his new home.
He immediately began looking for ways to incorporate beautiful native plants without breaking his HOA’s rules — including the rule that he needed to maintain a “lawn-like” appearance with plants under a foot tall.
Even with those restrictions, Turnipseed says, “I knew I could create something stunning.”
To start with, he chose the native ground cover frog fruit, whose flowers attract three species of butterflies and many other insects. His garden also includes clump grasses, trees, and shrubs — almost 100 native species in total.
“Sometimes people will ask why I’m sitting out in my garden,” he told Dwell. “I’ll tell them, ‘This is where the butterflies come.’”
Commenters on Reddit are impressed with his results. “Just gorgeous, within the guidelines, and indigenous to the area!” wrote one user. “God bless him, I wish he could come help me do the same, plus there’s no HOA.”
While Turnipseed may not be making house calls, he does offer Dwell advice for those who want to replace their lawns.
First, he recommends killing the existing grass and its seeds — ideally, leaving the dead grass in the ground to return nutrients to the soil. There are several ways to achieve this, including smothering the lawn with cardboard or plastic.
Floridian master gardener Steve Turnipseed has converted 7,000 square feet of bare lawn into a thriving garden full of native plants, despite the restrictive rules of his HOA, Dwell reports.
According to Dwell, Turnipseed is the founder and president of his local chapter of the Florida Native Plant Society. When he moved to the Villages planned retirement community, he was disappointed with the landscaping around his new home.
He immediately began looking for ways to incorporate beautiful native plants without breaking his HOA’s rules — including the rule that he needed to maintain a “lawn-like” appearance with plants under a foot tall.
Even with those restrictions, Turnipseed says, “I knew I could create something stunning.”
To start with, he chose the native ground cover frog fruit, whose flowers attract three species of butterflies and many other insects. His garden also includes clump grasses, trees, and shrubs — almost 100 native species in total.
“Sometimes people will ask why I’m sitting out in my garden,” he told Dwell. “I’ll tell them, ‘This is where the butterflies come.’”
Commenters on Reddit are impressed with his results. “Just gorgeous, within the guidelines, and indigenous to the area!” wrote one user. “God bless him, I wish he could come help me do the same, plus there’s no HOA.”
While Turnipseed may not be making house calls, he does offer Dwell advice for those who want to replace their lawns.
First, he recommends killing the existing grass and its seeds — ideally, leaving the dead grass in the ground to return nutrients to the soil. There are several ways to achieve this, including smothering the lawn with cardboard or plastic.
Then, plant something low-maintenance in its place. If possible, homeowners should choose a native plant that supports pollinating insects and birds, but he says other hardy plants like Asiatic jasmine are still better than a lawn. This is because they use less water, which is good for your utility bill and the environment.
Turnipseed had been following his HOA’s rules from the beginning and doesn’t report any trouble from the organization. But other homeowners starting eco-friendly home improvement projects sometimes run into resistance.
The good news is that it’s possible to win a legal battle against a restrictive HOA, like the Maryland couple that planted native flowers and the Reddit user who cited state law to defend their solar panels.
By Marlena Weisbrot, CMCA®, Aperion Management Group, LLC, AAMC®, Bend, OR
No one will ever forget the Summer of 2020…the orange sky that hung over us for days. The stench of what remained of a destroyed landscape…the ash falling like snow in the 100-degree heat.
This was too close to home. This was real.
For the Board of Directors and Homeowners of Awbrey Butte Owners Association in Bend, Oregon, the achievement of obtaining a Firewise Designation had been a long-term goal which was sought in order to increase attraction to the Community, boost property values and decrease insurance dues. And of course, to increase fire safety. The Single-Family home Community performed the standard requirements of designation by encouraging all owners to clean up their properties by enticing them with free green waste disposal and providing them some education on how to increase defensible space by inviting local Firewise representatives to do presentations during Annual Meetings. Everything went splendidly- the needles from the thousands of pine trees covering “The Butte” were cleaned up, unsightly bitterbrush and other noxious weeds were pulled or trimmed, and people just felt better…
Until the Summer of 2020 when over 1 million acres burned in Oregon, pulling at least 500,000 of our fellow Oregonians out of their homes to seek safety. One day we were gazing out the window admiring the natural beauty of our Central Oregon forests…the next day we gazed out the same window and recognized the intense power of our Central Oregon ecosystem.
It was time to step up our efforts.
The Board of Directors, Firewise Committee and the Architectural Committee banded together for brainstorming sessions: the goal- keep our community and our homes safe and still beautiful at the same time. Deschutes County Forestry, representatives of local Firewise agency and Bend Fire Department were enlisted in the meetings to help sculpt a plan for long-term fire prevention efforts.
The Plan:
In the Spring of 2022, we had a group of 25 passionate members of the community come together to help the cause. The goal was to ultimately perform individual assessments of each of the 778 homes/lots within the community, render recommendations to the owners for modifications to their landscape and homes, while protecting the CC&R’s requirement for thorough review and approval by the Architectural Committee and keeping the high aesthetic standards of the Community. The Volunteers dedicated their time to training under the Forestry Dept and Fire Department, on what to look for when performing assessments. The trainings are designed to be continual and offered by vetted professionals in the fields of fire safety, and civic agents on a rolling basis. The Team also banded with fellow Firewise Designated HOA’s on their experiences for Home Assessment programs (albeit on a smaller scale.) The Association hired a Wildfire Consultant to join the Architectural Committee who began reviewing all plans with an eye on defensible space and ladder fuel reduction. Ultimately the Association’s Architectural Guidelines and Rules & Regulations were revised to ensure that homes were being built and maintained in a way that would aid in the safety of their structures and their neighbors’ properties. The assessments include checklists and custom notes sections per the Immediate Zone (0-5 feet from home) which covers the fire resistance of the home materials including roofing, siding, windows as well as seemingly insignificant items such as the size of mesh vent screening to ensure that embers are unable to pass through. The Intermediate Zone 2 (5-30 feet from home) checklist includes trees/tree limbs adjacent to the home, flammable plant material and debris and firewood storage. Next is the Extended Zone 3 (30-100 feet from home) which focuses on trees and other potential flammable materials in this native landscape zone. And finally, Zone 4, which covers curbside and Fire Department access.
The Assessors are put into pairs and are assigned to a group of addresses. They schedule their own inspections at theirs and the homeowner’s convenience and perform the assessment right alongside the owner to ensure they can answer any questions that may arise. At the end of the Assessment, a copy of the form is sent to the owner and to Management, who keeps a detailed database of all assessments, photos, owner, and assessor contact details, etc. When an owner submits an Architectural Modification application, Management pulls any assessment reports on file to send to the Arc Committee along with their plans. The plans are reviewed by the Arc Committee’s Wildfire Consultant who then drafts and presents a review to the Committee. Upon approval, the owner is notified. Upon completion of work, Management is notified, and their Fire Assessment files are updated reflecting the action taken. What may seem like a very tedious procedure, we have developed quite a groove where the process is streamlined and semi-automated using task management software.
The Progress:
In the Spring of 2022, during the span of just 3 months the Team had already received over 200 requests for Fire Assessments and have completed over 150 of them. No one had imagined how popular this program would be, but the Team has been at the top of their game in ensuring their assignments are completed as promptly as possible.
The members of the Association have grown more inquisitive about Fire Prevention and, in response- “The Firewise Bugle”, was created. This monthly newsletter shares news and tips for Firewise efforts, as well as links to helpful articles and impactful videos to “Remember our Why”.
The amount of flammable debris and hazardous trees that were removed in May 2022, during the Free Disposal event was double the amount of the year prior- all while maintaining the healthy, natural Central Oregon aesthetic beautifully.
And, of course, the people…the sense of community has strengthened as the neighbors working together have fostered friendships. The Association’s Annual Meeting this year has been moved up to the Summer to allow for greater attendance and to be able to host an in-person dinner for all, rather than a Zoom link in a lost email. We look forward to breaking bread in celebration of our progress while still ensuring adequate preparation for what we are working so hard to avoid.
Over my 8 years in this industry, I have never been prouder of a team as I am of Awbrey Butte Owners Association, their Board, Arc, Firewise Committee and Assessment Team. Additionally, I am in awe of the assistance received by the County, City, Fire Department and local experts by means of grants and training opportunities. By all means, we have a long road to go- but the great strides we have taken have proved the strength in our owners. Surely, I will never forget the ashy Summer of 2020, but it will also serve as a reminder of strength and hard work shown by this group of outstanding homeowners in Spring, 2022.
Co-op Advocate Is Elated by City’s Mandatory Organics Recycling Program
By Bill Morris for HABITAT Magazine
Jacquelyn Ottman persuaded her fellow co-op board members to participate in the city’s voluntary organics recycling program six years ago. “The real challenge to organics recycling starts with co-op and condo boards,” Ottman says. “They need to be convinced that this is not going to attract rats and bad smells. In fact, quite the opposite.”
Next came the hurdle of convincing shareholders in her 120-unit high-rise on the Upper East Side to participate in a program even though it was voluntary. A first step was pointing out that New York City sends a million tons of residential waste to landfills every year, and more than a third of it is biodegradable organic matter — egg shells, coffee grounds, chicken bones, food-smeared paper, grass clippings and such. Only a fraction of the city’s organic waste is now being recycled. In a landfill, that matter generates methane, a greenhouse gas. Recycling converts it into compost or biogas, which can power cars and buses or be turned into electricity or heat. But residents of high-rise buildings need more than an environmental lecture to overcome deeply ingrained misgivings about handling organic waste.
“We held a launch event in our lobby,” Ottman recalls. “We distributed literature, recycling pails and breathable green bags to people who wanted to participate. The key is to make it easy for people. We put four latching brown bins in the basement. The room is kept clean. The real trick is what happens inside apartments. People in our building figured out pretty quick that they’re not going to get cockroaches in their kitchen. That’s a big hurdle in New York City. The program was a big hit.”
Today, after clearing those hurdles, Ottman and her fellow organics recycling advocates are facing their biggest challenge yet. On June 8, the city council, after years of vacillating, finally agreed to make curbside organics recycling mandatory citywide, just like the recycling of glass and plastic, paper and cardboard. The rollout of the program will begin in the fall and be fully operational by October 2024. Department of Sanitation trucks will make curbside pickups between once and three times a week.
Which brings us to another hurdle. Ottman served for more than five years on the Manhattan Solid Waste Advisory Board, a group of citizen volunteers devoted to helping the city reach its goal of zero waste by 2030. Ottman was the principal author of two informational Residential Recycling Guides. One of them, which is an invaluable resource for co-op and condo boards, is titled “Engaging Residents of NYC Multifamily Buildings in Organics Collection.”
The guide walks readers through six steps that will help boards, property managers and building staffs develop a smoothly functioning organics recycling program — while, critically, getting residents to buy in. The steps include recruiting volunteers, training staffs, identifying and correcting errors, and communicating regularly with residents about the amount of waste being recycled and the amount of money being saved.
“Some buildings have a green committee, and you absolutely have to have a committed board,” Ottman says, speaking from experience. “As the citywide rollout approaches, I’m very optimistic because residents of other cities have figured out how to do this.” (Organics recycling is mandatory in San Francisco, Seattle and Los Angeles.) “When the government enacts laws that require behavioral change — wearing seat belts, not smoking indoors — New Yorkers adapt. Eventually it becomes normal.”
BY WOODS LONERGAN PLLC for BRICK UNDERGROUND Real Estate. Real Life. Real New York.
How a condo board can handle common charge arrears will be governed by the bylaws.
Q: Several owners in our condo building are in arrears on their common charges. What’s the best way to collect the money they owe?
A: Common charges are important revenue for condos and are necessary in order for the condo to meet operating expenses, maintain common areas, and pay employees.
“If apartment owners fail to pay common charges, it can deplete the building’s reserve fund and could result in higher common charges or assessments for owners who are paying their obligations,” says James Woods, Esq., a partner at Woods Lonergan PLLC, who is a litigation attorney with a concentration in representing condo and co-op boards, as well as other corporate and business entities.
Woods recommends boards be proactive when a condo owner defaults on their common charges.
“A responsive board signals to residents that the board will remain diligent and vigorously pursue payment when there is this type of delinquency,” he says.
If owners don’t keep up with their payments, there are substantial penalties and the default could ultimately result in unit owners losing their home, says Lauren Tobin, Esq., an associate attorney at Woods Lonergan PLLC, who specializes in representing condo and co-op boards, as well as buyers and sellers.
The specific steps the board takes will be determined by the building’s bylaws. Boards should refer to them for information on notices of arrears, debt collection, late fees, and interest.
“Actions by the condo board are governed by the bylaws, so any actions taken to collect arrears must be consistent with the governing documents,” Tobin says.
Impose late fees and issue a notice of collection
Usually the first step is to issue a notice of arrears or notice of debt collection to the defaulting owner and advise them that late fees will be imposed for non-payment of common charges.
Late fees typically range from $50 to $100. The notice of debt collection should provide the amount owed including a breakdown of any late fees, assessments, parking fees, common charges and other fees. Tobin says this is important because it can help a unit owner understand the statement and that they are in arrears.
“We’ve seen situations where the autopay for common charges wasn’t working—payments were bouncing on the bank’s end or the management company changed—and the unit owner thinks they are paying but in fact they are not,” Tobin says. Advising the unit owner could rectify a simple mistake and solve this problem.
A notice might provide an amicable solution, she says. The notice should also advise them they have 30 days before the board imposes a common charge lien—the next step which would put a claim on the title to their apartment.
File a common charge lien
If the notice of collection is ignored, the next step is to file a common charge lien against the condo unit.
A publicly filed lien serves two important functions. It is an avenue that allows the board to later foreclose on the unit if the lien is not paid in a timely manner and it prevents the owner from selling or refinancing the apartment without first paying the debt owed to the condo.
Banks will not approve a buyer’s loan if there is a lien on the apartment.
“If the unit owner understands the implications of the lien—that it’s the first step to starting a foreclosure action—they are often incentivized to pay what is owed,” Tobin says.
If the bylaws provide for it you can also include late fees, interest and other costs as part of the lien. This means you can add the expenses incurred by the board to the total sum owed by the condo owner.
This might include attorneys fees incurred in the process of collecting the debt—which will include any work involved in issuing notices as well as the process of filing the lien. This could amount to several thousand dollars. There are also recording costs which the bylaws may entitle the board to include in the lien.
“This means these additional amounts will be paid back to the board whether from the condo owner directly or in a foreclosure action,” Woods says.
Take the rent from a tenant in the condo
In a situation where the condo is being rented out to tenants, the board has the statutory right to take rent payments directly from the residents of the apartment if the condo owner is in default.
“The board management must provide notice to the tenant and the condo owner that due to the default in common chargers future rent payments must be made directly to the condo. Payment to the condo will satisfy the tenant’s obligation to pay rent under the lease,” Tobin says.
This can continue until the owner is current with common charges. If the unit owner is living there and it is not rented out, this avenue is not open to the board.
Foreclose on the common charge lien
The next step would be to start a foreclosure action in court to sell the condo owner’s apartment and recoup the funds. Getting the advice of an attorney with expertise in this area is helpful when commencing this type of litigation.
In most circumstances, the first mortgage, if there is one, will take priority and must be satisfied before a lien for common charges can be paid to the condo. Additionally, “more often than not, a default in paying common charges constitutes a default in the mortgage agreement with the bank,” Tobin says.
So in some situations it will be a case of which entity—the bank or the board—begins the foreclosure action. If the amount of the debt owed to the lender is substantial then it may be advantageous for the board to monitor the bank’s foreclosure, as the condo’s lien will be subordinate to the bank’s mortgage.
Pursue a money judgment
Another option is to direct your condo attorney to bring a lawsuit for a money judgment.
“Depending on the amount of the common charge arrears, it can be in civil court or even in a small claims court in lieu of a foreclosure action,” Woods says.
This is a less common route, because if the condo owner doesn’t have the money to pay the common charges, the money judgment won’t carry much weight and the condo board will therefore not receive the money owed.
“The cost to pursue the money judgment will depend on whether the condo owner challenges it in court. “Even in a scenario when it is not contested, the board may expend $5,000 or more in filing action and obtaining the judgment,” Woods says.
Whether it’s inflation, rising interest rates, supply-chain disruptions, geopolitical tensions — there is a lot happening in the global economy. And on top of those forces, consumer expectations are increasing, competition is intense and investors are raising the bar. There’s never been a more challenging time to be a CEO or member of senior management.
Given the complexities, it is no surprise that some companies are performing exceptionally well, a lot are doing just ok and there are others struggling to keep up. Based on my latest discussions with more than 100 clients across industries, what I’ve seen is that the outperforming companies have leadership teams with the following seven factors in common:
They create a “company-first” culture.
Senior leadership teams are typically made up of individuals who are highly skilled in their domain — but what’s different at high-performing companies is these leaders embrace a company-first culture. This means doing what’s right for the business and your people, instead of driving individual agendas or objectives. One CEO of a high-performing industrial company shared that being part of his leadership team is like being on a sports team: “The team comes first, not the star individual.”
They think and act across the enterprise.
High-performing teams recognize that their role extends beyond the individual unit they manage, and they operate across silos. One CEO of a leading digital bank shared with me that his team’s enterprise-focused mindset drove a reimagined customer experience resulting in industry-leading efficiency ratios. They achieved this by sharing data across the enterprise and committing to one set of data governance rules.
They maintain a relentless focus on reinventing the business.
Too often CEOs and senior leadership focus the majority of their time on running the business, while the portfolio and business-model reinvention takes a back seat. Strong companies are putting the bold reimagining of their business at the top of the agenda.
Bold actions include running the business with unparalleled discipline, managing costs, simplifying wherever you can, and pulling on every lever to win. Taking bold action also involves reshaping portfolios while reinventing the back, middle and front offices—with a sense of urgency.
One CEO of a pharmaceutical company, who was looking to innovate and disrupt their industry, implemented a bold new business model powered by a cutting-edge commerce and marketplace platform in a matter of months. This resulted in a direct, better way to reach customers, increased margins, and greater trust and transparency across their entire value chain.
They free up the right people for the hard stuff.
Reinventing your business is a full-time job and needs dedicated minds who aren’t also focused on managing other day jobs. High-performing leadership teams find the time to focus on the hard stuff and delegate the day-to-day operations to others.
A CEO of a major energy company put one of his top business leaders in charge of their enterprise-wide business model transformation to both enable its success and send a clear message to all stakeholders of the importance of the transformation. While it’s difficult to have a leader step away from the work they are doing to take on a transformation effort, the dedicated focus makes all the difference. The energy company’s transformation leader has since positioned the company for significant value accretion and cost optimization through standardization and simplification, all while driving leadership commitment, organizational readiness and business outcome sustainability.
They’re inclusive of different backgrounds and skills.
High-quality teams are inclusive in all ways. This means inclusive of genders and ethnicities, but also of diverse views, backgrounds, and skill sets. It’s critical to have a breadth of leaders in your C-suite that bring forth differentiated expertise and perspectives to enable an organization to innovate more robustly and accelerate transformations. It’s why top leadership teams have a chief technology officer, chief people officer and chief communications officer at the table.
In one instance, a CEO of a major technology company shared with me that too many companies lack a diversity of skills in the C-suite, particularly when it comes to technology. As a result, senior management might not be able to identify what the “art of the possible” is when transforming their business and how different tools, like emerging technologies, could help. In these cases, leadership teams focus on building a “faster horse and buggy”’ rather than reimagining what’s next.
They encourage healthy debate but avoid undermining fellow leaders.
Good teams have healthy debates, transparently talk about pros and cons and explore alternatives together. Before transformation efforts begin, they spend a lot of time agreeing on the desired outcomes and business requirements of the effort.
Getting leadership teams to engage in open, honest discussions is critical. One CEO of a major industrial company shared with me that she never imagined the amount of time she needed to spend helping her team “get along.” What I took from her comment is that leadership is about coaching the team to share their various points of view, challenge each other with healthy debate, and come together once a decision is made to row in the same direction.
They strive to be humble and objective.
Humility is critical at the CEO and senior levels of any company because it filters down to every level of the organization. It helps fight complacency. Most companies have a lot to be proud of, but if the focus is always on the success of the past instead of the opportunity for the future, other companies will quickly pass you by.
Similarly, some leaders struggle with objectively assessing their current performance and where their company and results truly stand. Leading companies are constantly challenging themselves and use objectivity to both drive performance, keep the competition in the rearview mirror and shareholder activists at bay.
I recently spoke with a CEO from a consumer technology company about the importance of having the right people on your company’s board and the critical role the board plays in bringing an outside-in perspective. Board members are in the advantageous position to help the C-suite look around corners, prepare for potential challenges, and discover blind spots.
While we don’t know what the rest of the year will bring, it’s reasonable to assume that the headwinds we’re experiencing will continue. This is an environment that will demand — and reward — high-performing leadership teams. They’ll drive outsized growth, increase shareholder value, and likely have a little more fun along the way — working together and sharing the successes of a team that is creating more value for their customers, employees, and communities.
Tim Ryan is the U.S. chair and senior partner of PwC and the founder of the Trust Leadership Institute, an initiative that convenes a diverse community of executives to explore the evolving world, navigate its complexities, and embrace new opportunities with trust.
