Blog
By Brad Henderson, Network Insurance Services
Several years ago, my wife suggested, "You should run for a position on our HOA's Board of Directors. You attend so many board meetings; you would be great at it!" Today, more than ever, I appreciate those who volunteer to serve their community as a board member. This often thankless position can demand so much time that it feels like a part-time job. I considered my wife's suggestion to run for a board position much longer than I would today. It seems that increasingly over the last couple of years, boards have been faced with a barrage of difficult decisions with far-reaching consequences for their community members.
Early in my insurance career, inviting the insurance broker to present a renewal proposal was often a formality and limited to 15 minutes because "we have a lot on the agenda." As the United States experienced a soft real estate property insurance market with healthy competition, low premiums, and robust coverage availability, discussions regarding maintenance, landscaping, and legal matters often took precedence over the insurance renewal.
The days of quick insurance renewal meetings have, for most communities, come and gone. The once-soft market evolved almost overnight into the hardest insurance market in a generation, putting immense pressure on communities and their financial and insurance positions. What happened?
According to the NOAA, since 1980, the United States has sustained 371 separate weather and climate disasters where the overall costs and damages exceeded $1 billion, averaging about 9 billion-dollar events each year over the last 43 years. The US experienced a record-breaking 22 weather and climate events in 2020 that exceeded $1 billion. With a few months remaining in 2023, this previous record has been surpassed with 23 weather events exceeding the billion-dollar disaster threshold in the United States, exceeding a combined cost of $57 billion.
Disasters of this magnitude are having dramatic repercussions in the insurance market. In 2020, the US Property & Casualty industry experienced a net underwriting loss of $3.8 billion. In 2022, that loss ballooned to $26.9 billion. The US Property & Casualty recorded a $24.5 billion net underwriting loss in the first half of 2023. The number of costly disasters has increased over time, and the resulting underwriting losses have caused dramatic changes in the insurance market.
Underwriting capacity is the maximum amount of liability an insurance company is willing to insure or risk they are willing to assume. The market is experiencing a capacity shortage; carriers are reducing the amount of property coverage they are willing to insure. For example, a carrier that would previously insure a Colorado association with a reconstruction value of $120,000,000 or more has recently reduced their maximum per-account capacity to just $30,000,000.
Rising reinsurance costs have contributed to this dramatic reduction in available capacity. Reinsurance, simply put, is insurance for insurance carriers. Reinsurance transfers some of the risk and financial exposure associated with issuing insurance coverage. Reinsurance plays a valuable role in the overall insurance landscape, giving insurance companies the opportunity to take on additional business and effectively allocate their risk. Reinsurance costs have increased and capacity reduced dramatically, and, in some cases, reinsurance has become unobtainable. The impacts of this are being felt downstream by insurance carriers and their policyholders.
These market conditions have caused many of the most competitive standard market carriers to pull out of the HOA insurance space completely. Communities across the state have experienced non-renewals over the last 24 months. This has caused confusion and frustration for many communities who may have never turned in a claim.
The few standard market carriers left have become increasingly selective about the communities they will insure. Communities with buildings built prior to 1990, with large property schedules, high reconstruction values, located in high wildfire areas, and those with poor claims history are being pushed into the excess and surplus lines marketplace. These 'carriers of last resort' typically provide less coverage for a higher price. Premium increases of 500% or more have become common, forcing board members to make challenging decisions for their communities. Residents often seem to disregard the fact that the volunteer board serving the community are members of the community themselves. The request for security services at meetings by board members has increased nearly as much as insurance premiums. If my wife attended one of these tense community meetings, I suspect she may take back her suggestion for me to join our HOA's board.
Insurance premiums will come down - the insurance market is cyclical and hard markets always soften. The big question is when this will happen? We will need to see a decrease in the cost and/or frequency of catastrophes, or insurers’ ability to collect premiums and offer coverage that can sustain such significant loss activity.
The US property and casualty industry has not yet reached the inflection point between premium increases and claim costs. House Bill 23-1288, establishing the Fair Access to Insurance Requirements (FAIR) Plan, was passed by the Colorado legislature and then signed into law by the Governor in May 2023. Over 30 states currently offer some form of a FAIR plan. This program is designed to provide property insurance coverage when coverage is unavailable from standard insurance companies. While this is aimed at alleviating some of the challenges in the current market, access to FAIR Plan policies in Colorado is not expected until early 2025.
Communities should prepare for another year or two of potentially increasing premiums until the market begins to soften. Allocating funds in the budget earmarked for potential premium increases can help offset sudden spikes in insurance costs. Increasing assessments now in anticipation can prevent a special assessment later. Higher deductibles can result in lower premiums but should be combined with rigorous risk management practices to minimize potential losses. Protecting the master policy’s claims loss ratio is a good investment. Effective and regular communication with residents about insurance-related changes and the importance of properly structuring personal lines policies ensures that both the HOA and unit owners are prepared for any new cost-saving strategies the community implements.
Successfully navigating this volatile insurance landscape requires a partnership with an insurance broker with an established reputation and trustworthiness with underwriting partners across the globe. Securing coverage for a community in a soft market can typically be done by marketing coverage to 3-5 standard market carriers. In the current insurance market, a reputable insurance broker may approach up to 40 carriers worldwide to build a comprehensive policy portfolio that adequately addresses the coverage needs of the community. Plan for quotes to be received closer to the renewal date than your board would like, as many carriers won’t release a quote until sometimes within just a week of renewal. Your broker will be able to give you a pretty close estimate of the premium within 30 days of renewal.
Will rates ever come back down to where they were in 2019? Unlikely, at least in the near future. Will rates come down from where they are today? Absolutely. Enthusiastically, "Yes!" Weathering this hard insurance market with an insurance partner well-versed in the complexities of the HOA marketplace is key to identifying and implementing strategies to position your community for success, both now and when the market begins to cool.
By Aaron Goodlock, Orten Cavanagh Holmes & Hunt, LLC
CAI’s Legislative Action Committee (CLAC) is anticipating another active legislative session in 2024. Both the governor’s office and members of the general assembly have signaled that common interest communities continue to be a significant area of focus for the Colorado legislature.
Legislative reform presents both challenges and opportunities for community associations. Among CLAC’s objectives is to engage proactively with stakeholders and legislators in order to embrace opportunities and limit challenges.
Legislation Expected to be Introduced in 2024
As of October 2023, the Colorado HOA Homeowners’ Rights Task Force members have been appointed and task force meetings are underway, with the first public meeting scheduled for October 24, 2023. Additional task force meetings will be held through the end of 2023 and early 2024.
The HOA Homeowners’ Rights Task Force final report is scheduled to be published no later than April 15, 2024 – in the midst of the 2024 legislative session. Among the primary issues expected to be addressed in the report are legislative recommendations pertaining to:
CAI members are encouraged to participate in the HOA Homeowners’ Rights Task Force survey and share comments or ideas by attending the task force meetings or submitting information online through the HOA Homeowners’ Rights Task Force website:
https://engagedora.org/hoa-task-force
Although it would seem premature to introduce legislation prior to the release of the task force’s final report, legislation affecting common interest communities is expected to be introduced throughout the 2024 legislative session. The following topics have been identified as potentially subject to new/additional legislation based on recent nationwide trends, public policy statements from local and statewide trade organizations, previous legislation introduced in Colorado, and recognized state-specific concerns:
Key strategies and initiatives of CAI for the 2024 legislative session include:
What Else to Expect and Prepare for in 2024
The Colorado Fair Access to Insurance Requirements (FAIR) Plan.
The Colorado Division of Insurance will appoint the board of directors to oversee and implement the Colorado FAIR plan, established by Colorado House Bill 23-1288 and signed into law by the governor on May 12, 2023. The FAIR Plan board of directors is to be appointed by January 1, 2024.
The FAIR Plan will provide residential and commercial property insurance to eligible individuals and entities in Colorado (including community associations) when coverage is unavailable through traditional means.
Once appointed, the FAIR Plan board of directors is required to develop a “plan of operation” to be submitted to the Colorado Division of Insurance on or before July 1, 2024. The plan of operation will identify, among other things, the lines of coverage, coverage limits, policy forms, and covered perils to be made available and offered through the Colorado FAIR plan.
Continued discussion and analysis of future changes to CCIOA based on the HOA Homeowners’ Rights Task Force Final Report.
Community associations should expect ongoing discussion among legislators and interest groups about issues identified in the HOA Homeowners’ Rights Task Force Final Report, after it is published in April, 2024. In addition to the primary topics outlined above, the final report is expected to address and include recommendations regarding possible (future) changes to CCIOA to incorporate and implement aspects of the 2021 Uniform Common Interest Ownership Act.
To ensure that constituents’ voices are heard, CAI members are encouraged to attend and participate in the HOA Homeowners’ Rights Task Force proceedings and contact your local legislators prior to and during the upcoming legislative session.
Aaron J. Goodlock is a partner at Orten Cavanagh Holmes & Hunt, LLC. He provides general counsel and transactional services to community associations throughout Colorado and serves on the Colorado Legislative Action Committee for CAI.
By Ed Jarrett
It has been a year since the tragedy involving Micheal Shinners and many others at 1280 Peachtree located in Atlanta, Georgia. What as an industry have we learned and what are we doing to prevent these events? Unfortunately, since January 1st, the U.S. has experienced at least 484 mass shootings so far this year, according to the Gun Violence Archive. This averages out to almost two mass shootings a day. Mass shootings are defined as an incident in which four or more victims are shot or killed, according to the archive. The vast majority of these shootings occurred at a place of business. Candidly, these events are happening at such a rate that society is becoming desensitized to them. Indeed, many mass shootings are often no longer reported on by media outlets.
Our industry, despite being somewhat of a volatile environment, (especially for onsite staff and managers), has been immune to this phenomenon until now. Over the past five years, several instances of workplace violence that resulted in the loss of life have occurred. Onsite staff perform their professional duties in an environment where they encounter disgruntled homeowners and residents, despite their best efforts. I think all of us in the industry have a story of a disgruntled resident or owner that made us uncomfortable or worse. Many of us have protective orders issued by local courts to help prevent these interactions from escalating. Unfortunately, many of these events are mental health-related, which can be extremely difficult to navigate.
Prevention
Simply put, the term “Active Shooter” is here to stay, and incidents will increase due to the uncertainty of the times. Given the nature of our industry, we should incorporate active shooter training into our standard life safety protocols. Beyond that, employment contracts and management agreements should address this topic expressly, including which entity is responsible for training. These events can be prevented with appropriate training and a proactive response as illustrated below.
Per the FBI, “Study of Pre-Attack Behaviors of Active Shooters in the U.S.”
The above information as provided by the FBI paints a clear picture that most of these events can be prevented. Beyond that, the above for industry professionals is an all too familiar set of facts. I would suspect that most property management professionals have encountered these behaviors in varying degrees, some more than others. The event involving Micheal Shinners as well as the event in Toronto, Canada certainly contained the above warning signs.
These indicators paint a clear picture and corresponding outcome; act accordingly and do not hesitate to reach out to law enforcement. Do not allow societal pressures to influence your decision to report incidents.
Training
Are we prepared as industry professionals to deal with such an event at a property?
Similar to evacuation plans, active shooter training must be incorporated into the safety planning for onsite managers and staff. We should reinforce this training without creating alarm. It must become routine. We create liability for our clients and staff by failing to implement training! In conversations with other professional organizations, workplace violence and active shooter training appear to be widely discussed. Schools, places of worship, and municipal buildings are constantly improving their preparedness and training of staff. Given the size of many of the high rises in most metropolitan environments as well as those large-scale planned developments with sizeable amenity centers and schools, we as an industry should embrace this unfortunate reality. We cannot be a late adopter of workplace training given the consequences.
Training is available at little to NO cost to you, your staff or property. If you are interested, start with your local law enforcement agencies; many offer training and, in some instances, live simulations. If you are looking for industry best practices, contact Alice Training (www.alicetraining.com). Alice Training has evolved as the industry leader in training. They have trained over 18 million individuals over the last twenty years and boast an impressive corporate list of customers ranging from Fortune 500 companies to local schools and places of worship. Alice can help you understand the options, ensuring you keep the individuals in your organization safe with a trauma-informed approach to safety training that works for you.
Get training for your staff, yourself and your community. Be an advocate for an increased awareness of this seldom discussed issue!
In 2017 I managed a luxury high-rise in the Atlanta market that found itself going through many of the scenarios I’ve mentioned in this article, and we were asking these questions and many more. Unfortunately, a man armed with a high-capacity handgun and additional ammunition entered the building with the intent of harming select individuals. Thankfully the staff at the time was able to stop the threat. As the General Manager, I revisited every decision that led to the events of that day. It was a very difficult time as gunshots were fired, and people were harmed. The Board and I were faced with questions we were ill-prepared to address. The one thing we did learn was the need for training and safety protocols that we simply had not considered prior.
#alicetraining, #darkangelmedical,#activeshooter,#stopworkplaceviolence
By David Graf, Moeller Graf
Community association leaders—boards and professional managers-- were never given the memo that their job descriptions changed. Historically, much of the time invested in managing a community was directed towards fiscal management, fund handling, planning for and replacing infrastructure, and performing ongoing maintenance.
Leading up to the pandemic and beyond, political divisiveness, social justice movements, renewed focus on the rights of the individual, and other human factors have shaped community association leadership towards a more human-centric role: governance policies, open meeting design, frequent and much more proactive information delivery, and handling interpersonal conflict.
Many difficult owners with whom community association leaders interact with are in a category that I refer to as “Situationally Difficult,” meaning a person who has a situation that needs to be addressed before they will go back to being an otherwise-productive member of the community. This is not a value judgment on the merits of their situation but is, instead, a recognition that there is a situation in the first place, as opposed to just a difficult human. This allows us to focus our efforts on addressing the situation instead of labeling, castigating, or isolating the individual.
A very vocal and increasing percentage of the difficult owners with whom community association leaders interact with are in a category that I refer to as “Currently Unrepairable,” which means that their issue goes beyond our ability to deliver a result that would end the conflict. Most of the Currently Unrepairable owners that I deal with thrive on the conflict; seeking solutions that would eliminate the conflict is like searching all over your house for your car keys when they were in your pants pocket to begin with. Some of these difficult owners will someday realize that the solution to their problem lies with them and will not be found through any number of contentious battles with their neighbors, the association, or its leadership.
The challenge for community association leaders and professional managers is to recognize the difference between these two types of difficult owners and to minimize the number of difficult owners that we erroneously categorize as “Currently Unrepairable.” The reason that this is a challenge is because in the face of hostility, it is almost impossible to tell one from the other. As our job descriptions have evolved to solving difficult people problems, it is a missed opportunity to give up on finding a solution under the mistaken belief that it won’t matter.
Here are a few ideas to consider both before and after the moment of conflict:
Community association leaders make a large and lasting impact on the lives of the people who live in communities. It can be difficult to see this value during community strife, but that does not mean that it does not exist. What you do matters. Thank you for continuing to do it.
David Graf, Moeller & Graf, has practiced community association law exclusively since 2001. David has been admitted to the College of Community Association Lawyers (“CCAL”). In 2018 and 2020, David was elected by his CCAL peers to the CCAL Board of Governors and is the current President of CCAL. In 2015, David was named CAI’s National Educator of the Year.
By Caitlin Traub, CMCA, AMS, PCAM, RealManage Colorado
In a world where it seems like the average attention span only lasts for the 120 characters that can be tweeted out on X, the social media platform formally known as Twitter, how can we expect already disengaged or apathetic owners to participate any more than that?
In the reality of today’s communities, generally, those owners who regularly attend meetings come in two varieties: owners with ample time on their hands or those who are seemingly trying to orchestrate a coup over their perceived enemies, the Board, which leaves a large contingent of apathetic owners who are happily, or at least not angrily, “going with the flow.” But what if you need those same owners to engage to pass an amendment or special assessment, what then?
The truth is, in order to engage owners who have long been disconnected, you’re often fighting the same challenges that you face in getting volunteer Board members. Much like your Board, owners within your community often lead busy lives so engaging them in easy and different ways is the key to your success.
Embracing The “Enemy”
Yes, social media is often the bane of a community manager’s existence, or at least it seems that way at times. However, the truth is that social media is successful in communicating a message. After all, how many times has a Board member brought up a concern that their community members have only noted on sites like Facebook or NextDoor? These same owners often don’t communicate that same issue with a phone call or email but are clearly engaged neighbors elsewhere. Today, roughly 69% of Americans are Facebook users and 75% of those users are on the site daily. The same can be said of NextDoor where active users are engaging their neighbors nearly 4 times a week.
History has shown it is not realistic to expect single methods of communication, like a mailing, to encourage participation, even on contentious issues. Utilizing multiple mediums for communication that owners have clearly embraced will yield more participation (perhaps even more than you’re really wanting).
Making It Easy
Just as you’ll need to embrace communication alternatives, increasing participation for busy owners will be most successful if you make the process of actively participating in the decision as painless as possible.
On contentious or multi-layered issues like an insurance amendment or special assessment where the breadth of information can be overwhelming, consider breaking down the information into a few infographics on the process that owners can understand and quickly review, where the infographics are visually appealing and can easily fit in a social media post.
Another consideration for communication is utilizing multiple platforms like those mentioned above, or other user-friendly options, for short 10-15 minute informational sessions to gain the most participation. The information sessions may be scheduled at various times, such as during the school day for parents who stay at home, late afternoon or early evening for commuters who could join in during their drive instead of listening to their favorite podcast that day, or before breakfast for the early risers.
Finally, in a world where everyone is always connected, you should strongly consider utilizing online voting on issues if your governing documents allow for it. With the simple click of a few buttons, you have a whole community participating in a way that is quick and easy for its members. In the alternative, if an online vote is not allowed, you may consider making the process a bit easier by providing pre-stamped envelopes or an on-site drop box where the form can be dropped off to at a time that works for the individual owner.
Keeping The Momentum
For a large portion of owners, part of the problem is forgetting why they should be involved in the first place. Now that you’ve reminded them, it is important to actively keep them involved so the next time an issue comes up you aren’t at the starting line again. Was utilizing Facebook the most successful in driving participation this time around? Keep utilizing it! Did people comment on how much they loved the easy infographics? Start utilizing them for landscape tips, meeting reminders, or social events to continue providing information in a way that your community embraces and appreciates. Was online voting a smashing success? Then remember to get a contract for Board elections or other recurring items in order to continue providing online voting.
In the end, behind each door in your community is another human who often wants to engage with their community but in a way that works for their life. By giving them the information they need on a site or in a way that they’re already utilizing for the other facets of their life or making it as easy as possible to fit in their already busy schedule and then continuing to hold their interest, you’ve easily turned these apathetic members into actively engaged neighbors.
Caitlin Traub, CMCA, AMS, PCAM currently serves as the Senior Vice President for RealManage Colorado. Over her career that spans from Texas to Washington State and now Colorado, she has managed associations both large and small and understands the different and unique challenges that each face.
By Melissa Garcia, Altitude Community Law
Covid-19 and forced isolation? The curse of technology on quality connection? Numerous factors could cause loneliness, but the chapter asked me to focus on one: How do negative interactions in our industry impact loneliness? In my opinion, they are a key creator of it.
WHAT IS LONELINESS?
I wasn’t aware of the current loneliness epidemic until I read the Surgeon General’s recent advisory: Our Epidemic of Loneliness and Isolation. The advisory defines “loneliness” as:
…a subjective internal state. It is the distressing experience that results from perceived isolation or unmet need between an individual’s preferred and actual experience.
First, loneliness is subjective. For some, being alone frequently or having few social connections is not loneliness. When I’m alone, for example, I often take comfort in the solitude, as it allows time for both reflection and getting things done. The distraction of people is gone. But being lonely? I could be in a room full of people, or engage in several connections a day, yet still feel lonely. Loneliness is personal.
Second, loneliness is the upsetting experience of perceived isolation; when we perceive a gap between our desire for social connection and our actual experience of it. And, while our individual circumstances could be what brings about loneliness, our HOA experiences can exacerbate it.
The Surgeon General emphasizes how loneliness poses a serious threat to general well-being and long-term physical health. Citing well-documented studies, the advisory states that lack of social connection:
I suggest you read the advisory, as the statistics alone are startling.
If loneliness is a “significant predictor of premature death” (my favorite grim reaper line buried in the advisory), then social connection is the goal. In explaining the level of one’s social connection, the advisory provides these factors:
The third factor seems most relevant to this article. We may have a high volume of interactions but need to draw attention to their quality.
NEGATIVE INTERACTIONS IN THE INDUSTRY
The HOA industry has always been a difficult one, not only because of the numerous conflicts, but also the constant negative portrayal of HOAs. But what is it about today that makes it more difficult? What present factors shape the quality of our HOA social connections?
First, we are living in angry times. Nerds like me who read Gallup polls know that we are living in a sadder, angrier, and more stressful world. The animosity in the air is hard to ignore; the political climate is horrendous; the seeming lack of care (or energy to care) is woeful.
The HOA world is a natural arena for venting anger and disputes. But where there used to be gradations of disagreement (and respectful or at least professional debate), today there is polarization at every turn. And, instead of thoughtful discussion, there is chest-beating, circling of wagons, preparation for a fight. Loneliness can arise in the constant face of, and preparation for, anger and conflict.
Second, we have demanding jobs, often with little help. Our industry focuses on one of the most important things in people’s lives – their homes. So, we are constantly scrutinized for timeliness, responsiveness, and accuracy (which is within our control), but also dispute-resolution skills, patience, and thick skin (which we may not have expected when signing up for the job).
Demands are high, so support is critical. Still, folks are not exactly lining up for the job. It’s difficult to find and retain board members, managers, HOA attorneys, etc. The lack of help, in face of increasing demand, could produce loneliness through:
Third, frequent exposure to negative interactions. In this respect, I’m writing specifically about community association managers - the front line. You may have one boss at the office, but you have thousands of critics in the field, each with the ability to connect with you and make your day infinitely worse, just through the power of words.
And the frequency of interaction comes from the numerous opportunities for contact: at meetings, in the clubhouse, during walk-throughs, in your office, over the phone, via email, on Nextdoor, the list goes on. You may manage 10 communities, but those communities spawn infinite opportunities for negative interaction. Constant criticism, persistent conflict, and a daily environment of hostility, could all lead to loneliness, particularly if you feel like you’re fighting it alone.
I believe we in the HOA industry, because of all of the above, have trained ourselves to be self-reliant and to bury our feelings. This leads to loneliness and isolation.
WHAT DO WE DO ABOUT IT?
So how to combat loneliness in our industry? I don’t have the answers, but I suggest that it takes thoughtful conversation, then deliberate action.
I’m certainly not trying to diminish the numerous resources and opportunities for positive social connection that are available to anyone who works in our world. But we still need to raise awareness of the loneliness epidemic, understand, and respond to it, and adopt a culture that promotes social connection.
The Surgeon General’s advisory includes six pillars to advance social connection, some of which are highly applicable to our industry. I suggest we start there, then keep the conversation going.
Melissa Garcia, Esq. is a shareholder at Altitude Community Law P.C., the premier HOA law firm in Colorado. With almost 25 years of experience representing associations, Melissa frequently writes and teaches on HOA topics, and has earned several Education awards from both Colorado chapters of CAI.
By Angela Stevens, Westwind Management Group, LLC
Having a solid foundation in the relationship between community and management is key to a successful partnership, which is why qualifying the association prior to accepting a management role and knowing when to step out of that role are so vital. Continuing a management relationship that is not fulfilling on either end only serves to burn out the management company and frustrate homeowners. By engaging in vetting client communities before and during management, management companies can ensure they are working with clients that are a good fit for their services and in line with the core values of the company, which will help prevent conflicts, misunderstandings and legal disputes down the road.
When to Break Ties with an HOA - Breaking ties with an HOA can be a difficult decision. However, there are times when it may be necessary to do so. Here are some signs that it may be time to break ties:
1. Lack of Communication: If the HOA is not communicating with the management company or homeowners, it can lead to misunderstandings and conflicts. Lack of communication can make it difficult to manage the community effectively.
2. Financial Issues: If the HOA is experiencing financial issues, it can put a strain on the management company. This can include unpaid dues or unexpected expenses that were not budgeted for, or even strained relationships with vendors whose invoices are not being paid timely.
3. Poor Governance: If the HOA Board is not performing its duty as the duly elected governing body of the community and / or as specified in their Bylaws, it can lead to a decline in the community's appeal and functionality. This dysfunction can also lead to conflicts and disappointment in management by community members.
4. Legal Disputes: If the HOA is involved in legal disputes, it can create a difficult situation for the management company. This can include disputes with homeowners or conflicts with contractors.
If you notice any of these signs, it may be time to evaluate and assist the Association in resolving the challenges, and if there is an unwillingness to do so, possibly to break ties with the HOA. Breaking ties with the HOA can help the management company prevent further conflicts or legal disputes.
Qualifying HOAs on the Front End - To help prevent these issues from arising, it’s important for management companies to qualify HOAs on the front end. Here are some steps to take:
1. Review the HOA’s Financial Statements to ensure it has a solid financial foundation. Look for any red flags, such as unpaid dues or out of control expenses.
2. Review the HOA’s Governing Documents: Review the HOA’s governing documents to ensure they are in line with the management company’s proposed services. Look for any conflicts or inconsistencies that may cause issues down the road.
3. Schedule a Meeting: Schedule a meeting with the HOA board to discuss their needs and expectations. This will help ensure that both parties are on the same page and that the management company can adequately meet the HOA’s needs.
4. Check References: Check the HOA’s references to verify they have a positive reputation in the community. This will help ensure that the management company is working with reputable and trustworthy HOA leadership.
Homeowners association (HOA) management companies are responsible for managing and maintaining community properties. These companies are hired by HOAs to oversee the day-to-day operations of the community, including enforcing rules and regulations, collecting dues, and maintaining common areas. While management companies play a vital role in keeping communities running smoothly, there are times when it may be necessary to break ties with an HOA. Additionally, it's important for management companies to qualify HOAs on the front end to ensure they'll be a good fit for their services.
About the Author: Angela Stevens is the Director of Operations – Northern Colorado at Westwind Management Group, LLC. She has over 20 years of experience in the custom home industry and 10+ years as an Association Business Manager. She has experience with all property types from single-family homes to extensive multi-family home developments and has a passion for helping people live better lives.
By Tom Westing, Advance HOA Management
Roughly a quarter of all Americans live alone and the need for socialization has become more important than ever in our communities. COVID put a spotlight on loneliness and deaths of despair caused by isolation. Increasing the sociability of our communities may not be in your job description, or even on your radar, but it may raise the property value of your community and make your job more enjoyable.
Each community is unique, and younger people may not have the same time and availability as retirees, but each community can create a culture of greater socialization however that may look. Utilizing your communities' recreational facilities and amenities can be a great way to encourage socialization and events.
Here are some strategies to consider in helping your community become more social and engaged:
When a community focuses on engagement and social events, not only do people love living in the community but they tell their friends about it. We often see people moving in specifically to be near friends. While the social scene isn’t the only reason people choose where to live, it can certainly play a role.
Helping your community become more social will take time, but the benefits are worth it.
Tom Westing has been in the HOA industry for about 20 years serving as both a portfolio manager and now an onsite manager at Cherry Hills III. He currently works for Advance HOA Management.
By Damien M. Bielli, VF Law
For the past several years, the homeowner association (HOA) space has seen and continues to see many changes in regulation, including legislation around renewable energy options. Various states have taken a more proactive stance on the installation of solar panels, explicitly targeting HOAs that enforce restrictions on these devices. According to HOA-USA, there are 370,000 HOA-run communities in the U.S., with 53% of all homeowners living in an HOA community. An HOA's ability to regulate solar panel installation requests on an owner's property will be significantly impacted as legislation continues to develop throughout the country. However, HOA communities will still have the ability to restrict or prohibit solar panels in an association's common area. To ensure fair governance, it is crucial that HOAs stay up to date with changing regulations, understand the caveats that come with new laws, and adjust their governing documents accordingly.
Colorado alone has an estimated 10,410 HOA-run communities, with roughly 2.35 million people living in them, equaling approximately 40% of the state's population. Colorado House Bill (HB) 21-1229, which passed in 2021, increased protections for property owners within HOA-guided communities. Specifically, the bill keeps HOAs from prohibiting the installation of various home additions, including renewable energy-generating devices such as solar panels. However, HOAs can still enforce "reasonable" restrictions on installing solar panels. A "reasonable" restriction pertains to aesthetics and safety concerns that do not significantly increase the cost of the device or significantly decrease its efficiency. HB 1229 clarifies "significantly" to mean no more than 10%. Any rule imposed by an HOA that increases the cost of a solar device by more than 10% or decreases its efficiency by more than 10% is not reasonable.
This still allows HOA-run communities to enforce restrictions and standards on solar panel installations, but careful regulation is required. With that in mind, here are some key points to ensure your community regulates solar panels fairly and correctly.
Review Governing Documents
Boards must review their governing documents concerning restrictions or requirements for solar panel installation. If your documents outright prohibit the installation on an owner's property, it is time to amend them to adhere to current law—outright prohibition cannot be enforced. Additionally, any restrictions already included in governing documents must be scrutinized to ensure they are "reasonable." As each situation can vary, bringing in a seasoned HOA law attorney can make this process easier and legally sound, ensuring compliance with the law.
"Reasonable" Restrictions
Keep the 10% rule in mind when adopting restrictions for solar panel installations. Ensure any rules implemented do not explicitly prohibit solar panels from being installed on roofs and require them on the ground. This could effectively prevent owners from installing solar panels outright, making it unlawful and unenforceable. Instead, create rules that specify preferred locations for solar panels; require the solar panels to be painted or otherwise screened from view; limit the total amount of roof space utilized; or establish a preferred distance for solar panels above roof tiles. These rules must ensure they do not reach the 10% threshold. By accomplishing this, HOAs can still establish a uniform policy that all homeowners can follow for solar installations, thus maintaining the desired aesthetics of their communities.
Timely Review of Applications
Another facet of HB 1229 is the requirement that all fully submitted solar installation applications in an HOA be approved or denied within 60 days of submission. While the timeline for approval cannot be extended, it can be truncated if the associations governing documents provide a shorter time for review and approval of architectural submissions. If an HOA fails to take action on a solar application, it is automatically deemed approved after the expiration of the 60 days by state law. HOAs should establish a cohesive, streamlined review process to avoid delays, confusion, or enforceable denials.
Installation Agreements
Lastly, once an HOA board decides they want to enforce restrictions on solar panel installations, it is crucial to establish guidelines and formal agreements for homeowners to follow. Suppose a homeowner wishes to install solar panels on a Townhome roof that is maintained by the Association. In that case, a maintenance and repair agreement can stipulate reasonable restrictions that the homeowner agrees to, address situations such as the removal of solar panels should a homeowner choose to do so, and the homeowner's responsibility to maintain and ensure their solar panels and the portion of the roof affected by their installation. Additionally, specific enforcement mechanisms, unique to each installation, may be addressed in the agreement should a homeowner breach the contract.
As the U.S. continues to shift away from traditional fossil fuel-driven energy sources, HOAs must keep a compliant mindset concerning renewable energy options that homeowners want to install on their properties. Establishing reasonable, unified, and cohesive guidelines for these kinds of installations will better protect HOAs and homeowners from litigation arising due to disputes or outdated governing documents. The legal landscape continues to evolve around renewable energy, so it is important to stay informed about requirements and have trusted legal counsel to advise and protect from litigation.
As a partner in Vial Fotheringham LLP, Damien M. Bielli has a unique background in HOA Law, trial advocacy, insurance defense, professional liability, coverage disputes, labor law, employment law, construction, commercial litigation, and contracts. He may be reached at Damien.Bielli@vf-law.com.
By Ashley Douglas, Reconstruction Experts, Inc.
As our communities age, one of the major capital expenditures that needs to be planned for is the exterior façade of your building envelope assembly. The simple definition of building envelopes is the assemblies that separate the interior from the exterior of the home. These assemblies include things like doors & windows, roofs, floors, foundation, insulation, and the exterior façade. In this article, we will be primarily discussing exterior façade which includes stucco, metal, stone, and siding products.
If the exterior facade of your home isn’t properly maintained, you will begin to see signs of serious damage that will result in costly repairs. Some of these signs include:
Ideally, you’ve already looked in your CAI Membership Directory and hired a reserve study company to plan and budget for your community’s long-term maintenance. If you’re behind in the financial aspect of that plan, you can also consult with one of the qualified banking partners in our industry to inquire about a loan to fund an upcoming project.
Once your plan for funding is established and you begin to look at ways to make efficient use of your community’s money, we want to highlight a product that we believe is a good investment to make into your exterior façade.
LP is a manufacturer of various building envelope products and their Smart Siding line is something we recommend to communities often when they’re considering an upgrade. The LP Smart Siding products are manufactured using their proprietary Smartguard process which produces one of the most durable lines on the market. This durability allows them to provide an upgraded warranty, along with the cost benefit of a longer-lasting product that won’t need to be replaced as often.
Along with functionality, LP Smart Siding comes in 16 different pre-finished colors so you don’t need to paint with installation. There are also various styles available that mimic a cedar look giving a great aesthetic.
Lastly, and the main reason we recommend this to our clients, LP Smart Siding is easier to install providing efficiency in cost to you as the customer. The siding comes in longer pieces resulting in less time cutting and integrating seams. Furthermore, with less seams comes less waste factor leading to less overall materials costs for the installation of the product. When installing any product, there is a certain factor given to “waste” during install. This waste is a result of breakage during installation, and with a more durable product requiring less seams, the cost savings are tangible for you as the homeowner.
There are many different products to be considered so we recommend doing your research and talking to a trusted contractor to see which is best for your specific needs, but if you’re looking to make upgrades to a building or even a single elevation or side of one building at a time, we love this product for our clients.
Ashley Douglas
Colorado Regional Vice President
Reconstruction Experts, Inc.
