Ideally, community association members would occupy their own units, rather than lease them to tenants. That’s because associations often feel that renters won’t take good care of the units they’re renting and that they won’t follow community rules. This may seem like a generalization, but you can’t be too careful when it comes to protecting your community from problems. So is it allowable to limit the number of units at your community that can be leased at any one time? If so, how can you do this fairly?
The Federal Housing Administration (FHA) provides mortgage insurance on loans made by FHA-approved lenders throughout the United States. It insures mortgages on single-family and multifamily homes--including condominiums and homes in planned communities. Since late 2008, the FHA has issued regulatory guidance to set standards associations must meet in order for a prospective member to qualify for FHA financing. The FHA has said that it conducts thorough appraisals to protect both lenders and borrowers.
After a spate of pit bull terrier attacks in recent years, many community associations have questioned the wisdom of permitting members to keep pit bulls and other so-called “restricted breed” dogs, including German shepherds, rottweilers, and Doberman pinschers, as pets. Frequent reports of dog attacks have also reignited the debate between pit bull critics and supporters of the breed. Critics say that while pit bulls don’t bite as often as other dogs, their jaw strength and behavior when they do attack make them the most dangerous of all breeds.
Community associations often face difficulties when members lease their units to renters. Many renters who come to live at an association have lived only in rental buildings before, so they don’t really understand how associations operate. For example, they don’t understand that members in community associations own their own units, and therefore rely on each other to cooperate and follow the association’s rules. Or they don’t understand that they too are required to follow the association’s rules, bylaws, and restrictive covenants.
If you’re like most community association managers, you require contractors you’ve hired to prove that they’re licensed and insured and have any other necessary qualifications to work in the community. However, members sometimes want to hire their own contractors to perform work in their units. This can open up the association to liability. That’s because an association can be held liable if a member’s contractor or one of the contractor’s employees is injured or if another member is injured by the contractor’s subpar work.
Last month, the Insider showed you the importance of using a workplace involvement program to engage employees in both their work and the association. However, regardless of the steps that you take to create a pleasant work environment and motivate your employees, eventually, you’ll have to deal with an employee who doesn’t perform well and must be let go.
Over the past few years, numerous associations have seen an increase in the number of members defaulting on their mortgages and not paying their association fees. As a result, some of these associations have had to cut back on services and amenities that attracted their members to a community lifestyle in the first place. That’s because if even a few members don’t pay their assessments on time an association can face serious financial problems.
Managing your community can be challenging even when things go smoothly and you have the help of competent staff members who are focused on doing their job responsibilities well. Failing to engage employees in activities outside of their day-to-day tasks may, at the very least, leave them unmotivated to do their best work and ambivalent about improving the community; at the worst, it can lead to resentfulness that they’re stuck in the same role without feeling like they’re part of the association.
When a member makes a modification either to the interior or exterior of his unit without notifying the board, it could harm your community. For example, low-quality or hasty and ill-advised construction can drive down property values, increase the premiums on your community's liability insurance, or even render important warranties void. And some types of work, such as a new roof deck, if not done right, can lead to injuries and increase your community's exposure to personal injury liability.
That's according to 74 percent of community association managers surveyed last month by the Insider, who believe community association financial conditions are finally improving. Respondents reported that the number of foreclosures, if not declining, have at least leveled off. As one respondent put it, “More good, dues-paying owners are coming in behind the bad owners who never should've been allowed to purchase during the ‘subprime’ heyday.”