Blog Posts

Dealing with Delinquencies

Have you heard the phrase, “many hands make light work?” That adage also applies to your Association. When all Owners carry their share of the financial responsibility by paying their Association fees on time, your community thrives: amenities are funded, reserves are maintained, routine maintenance is performed on schedule, et cetera. Plus, because everyone shares the community’s costs fairly, everyone’s fees remain lower than they would if you had to cover for people who were not contributing their fair share. But sadly, some people do not pay their fair share, and in those cases, Associations need to deal with the delinquencies. About Delinquencies Delinquent accounts harm communities by straining their financial resources. Communities plagued with delinquent accounts are forced to make the remaining neighbors pay more, or to spend less on community amenities and maintenance or to collect special assessments. It’s important to note that not all delinquencies are created equal. There are several reasons why homeowners may neglect to pay their dues. One innocuous source of missed payments is simple forgetfulness. In these cases, the Association management company simply issues a letter to the Homeowner, the Homeowner receives the notice and pays the fee, and the problem is solved. Most governing documents permit charging late fees for delayed payments to incentivize homeowners to be more prompt with future payments. This type of delinquency is the best-case scenario. Other homeowners may miss payments due to more serious circumstances. Perhaps one neighbor loses her job, or another is dealing with serious health issues and struggling to pay unbudgeted medical expenses. The good news for these homeowners is that many Associations will work with the Homeowner by instituting a payment plan. Boards should feel free to work with delinquent Homeowners, as long as they follow two guiding principles: 1 . All procedures outlined in the Association’s governing documents must be followed consistently 2 . All Homeowners must be treated equally. That means if they offer a payment plan to one neighbor, then that option needs to be available to all neighbors with similar circumstances. Finally, some Homeowners miss payments because of serious financial crises. This situation requires more drastic measures, such as involving the Association attorney, placing liens on the property possibly leading to foreclosure, as well as filing a personal judgement lawsuit. For Homeowners with heart-rending circumstances, some Board members may feel compelled to forgive the delinquent payment altogether. It’s understandable, since Boards are comprised of neighbors who develop friendships and care for one another. But forgiving a delinquent balance is counterproductive in several ways: it may encourage the Homeowner to miss subsequent payments; it’s not fair to the other Homeowners; it may set a dangerous legal precedent; and last, most Associations’ governing documents expressly forbid Boards from excusing Association dues. Dealing with Delinquencies Are there measures that Boards can take to help their Association members avoid delinquencies? According to WPM Controller Karen Green, the answer is “yes and no”: “If Homeowners are dealing with lost wages or unbudgeted expenses, they may not be able to afford the Association fee. Board members may certainly reach out to these Homeowners to encourage them to submit a payment plan, but if they are on the path to foreclosure, there is little that Boards can do.” On the bright side, Boards and the Association Management Company can be proactive about communication. Monthly or quarterly letters to Homeowners can be sent that (1) describe Association concerns, and (2) consistently include messaging about the importance of dues and what they support. Plus, Associations hold regular board meetings to build better community and open the lines of communication between Board members and their neighbors. While there may be nothing Boards can do to alleviate a Homeowner’s financial problems, opening the lines of communication between Board members, the Association Management Company and Homeowners helps delinquent account holders know whom to reach out to, should they encounter problems.

Student Housing: 12 Months of Rent for 10 Months of Occupancy

Why do student housing units usually require college students to sign a 12-month lease, when students will only occupy the unit for the 10-month academic school year? WPM Regional Property Manager Karen Houston explains, “Buildings do not take a summer vacation. More importantly, the costs associated with maintaining a property never take a break. That’s why we allocate expenses across 12 months. The result is a lower monthly payment for students, which makes our units more affordable.” That said, some student housing facilities do, in fact, offer 10-month lease options. However, the 10-month option recoups the two months of lost income by requiring that renters pay a higher monthly rate or signing premium. In effect, 10-month leases end up costing the same as a 12-month lease—but provide less value. So many students get creative to make a 12-month lease work for them. “Students will stay longer into summer break than they otherwise might. Many may pick up a summer minimester course,” says Houston. Another way students can recover some of their 12-month lease payment is by partnering with property managers to find their apartment’s next renter. For Houston’s properties, renters who assist her in finding the new occupant will receive a resident referral fee, which is equivalent to about $250. “Student housing is unique because it is so transitory,” she explains. “Each year, about 50% of the building is turned over to new renters. This high turnover percentage means I am always marketing the properties.” Houston has found that her best marketers are actually the students who live in her properties. “If you want to know how to advertise, talk to your students! They are incredibly smart and tuned-in to technology and social media,” she says. “There is a perception that student renters will be irresponsible and cause damage to the building. But that has not been WPM’s experience. We have found them to be very socially conscious and eager to take their responsibility as renters seriously. They like it when you ask them questions and involve them in the process. Managing student housing properties has given me the opportunity to meet great kids from all over the world. They never fail to impress me.”

Invest in Your Roof

One of the most important activities property managers and maintenance superintendents can perform to protect commercial and large residential facilities is a regular and thorough inspection of their facilities’ roofing systems. Regular, scheduled inspections and routine maintenance can be the difference between a roof that meets or exceeds its rated service life and one that fails prematurely. It will also keep you within your warranty. But the benefits of roof inspections don’t end there. Inspection programs can also reduce the need for emergency repairs, limit damage to the building’s structure and interior, and reduce the risk of an unhealthy living environment for occupants. In most cases, workers should inspect roofs twice each year: once in the fall and once in the spring. The fall inspection helps identify defects that might have developed during the summer, when roofing components undergo high thermal stresses and exposure to prolonged ultraviolet (UV) light. Similarly, the spring inspection identifies defects caused by ice and snow accumulation or shrinkage caused by low temperatures. Staff should perform additional inspections following heavy storms or high winds. The details of the roof inspection program vary with the type of roof and its exposure. Roofs with high levels of foot traffic or concentrations of mechanical equipment require inspectors to look more closely for physical damage to the membrane. Built-up roofs have different inspection requirements than single-ply, metal or vegetative roofs. Despite the differences, these common trouble spots can develop in practically any type of roof: A clogged or restricted drainage system. Debris, such as leaves and construction materials, can build up in or around roof drains. Restricting the flow of water from the roof can cause ponding or allow water to back up under the roof’s protective membrane. Your staff should regularly clear all roof drains and keep the roof free of debris that could eventually make its way into drains. Ponding water on the roof. Prolonged exposure to water can accelerate the breakdown of some roofing materials. The weight of the water standing on the roof can also compress the roof’s insulation, increasing the depth and width of the ponding and causing even more standing water. Exhaust system damage. Inspections also should include a check of building exhaust systems, which often vent through a building’s roof and directly onto the roof surface. Depending on the interior operation the exhaust system serves, these fumes can cause significant damage to the roof membrane. Built-up roofs consist of several layers of reinforcing materials embedded in waterproofing materials. A coating of gravel, granules, or a reflective coating protects the top surface from UV light. Common problems with these systems include: Alligatoring . A series of small cracks can develop in the roof’s surface as the result of shrinkage of the asphalt material. As the problem develops, it looks like dried mud or alligator skin. Left uncorrected, the cracks will grow into splits in the membrane. Blisters . These soft bubbles form in the roof’s membrane due to moisture trapped underneath. They can be as small as a dime or up to several feet across. Bubbles are most noticeable on hot days and can be easily broken by foot traffic. Ridges . These result from two main causes—thermal expansion of the roofing material and separation of the underlying insulation from the roof deck. The stress in the ridge eventually becomes sufficient to tear the roofing materials. It is important to keep a log book or computer file of photographs and notes taken with each inspection. You should also have the repairs done by a roofing contractor certified by the membrane’s manufacturer – and then photograph the finished repair. If you are not comfortable making the inspections, WPM recommends having an independent inspector from a roofing contractor. These recommendations will help maintain your roof’s warranty and prolong its life, saving you lots of money in the long-run. Remember, an investment in your roof is money well spent.

Three Quick Tips for Protecting Association Board Directors and Officers

Serving on an association board is an important job. Board directors and officers are just about always volunteers, who generously donate hours of their time in order to benefit their communities. They oversee important community needs, implementing policies as authorized by the association, and they approve the annual budget and much more. And as Board directors and officers, they deserve the thanks and support of the communities they serve. Unfortunately, being a board director or officer also poses personal risk. That’s because even though your association carries general liability insurance, individual board members may not be fully protected from liability arising from claims brought by community members. So, how can directors and officers protect themselves? The obvious answer is for associations to purchase Directors and Officers insurance that covers individual board members’ actions. If your association does not have this specific type of insurance, you need to have a serious conversation with your insurance agent. But are there steps board members can take to further ensure they never suffer the consequences of contentious litigation? …or to avoid being served with a complaint that forces you to file a claim on that Directors and Officers insurance policy? WPM’s President of Association Management, Barry Yatovitz, asserts that the overarching rule that ought to guide and can protect every board member is the Business Judgement Rule. “This Rule states that directors should always act in the best interest of the company, given all of the available information at the time. If a lawsuit were to come against a board member, a judge would determine if the board member acted as any reasonable person would have, given everything they knew at the time. If the answer is ‘yes,’ than the board member is protected,” says Yatovitz. In addition to this primary guiding principle, Yatovitz offers three tips to help protect Board members, so that they can do their important work with a little more peace of mind. Tip #1: Don’t Break the Law! “This seems so obvious, but it can be tempting for board members to ‘bend’ the rules, if they believe it will save the association money. I don’t need to remind you that it is never ok to break the law! Failure to follow the rules renders an association and its directors vulnerable to any number of consequences, including civil lawsuits and criminal prosecution. Saving money today is not worth the risk in the long run.” Tip #2: One for All and All for One! “Always remember that as a board member, you have a fiduciary responsibility to decide matters for the benefit of all homeowners in your community. To that end, you should be very deliberate and be reasonable with all decisions. Perform your due diligence regarding each decision, so that if you are accused of preferring one member over another, you have documented the data that supports why you made the decisions that you did.” Tip #3: Zip Your Lips! “As a board member, you are entrusted with confidential information that must be protected. Do not share board information with other homeowners or talk about them outside of the board meetings. Be careful with protected documents, as well. Share electronic files using secure servers and maintain any hard files in locked areas.” These simple tips don’t seem so difficult to follow – and they’re not. But they are frequently forgotten. If every board member follows them, your board will be that much closer to protecting itself, and your board members should be a lot more comfortable carrying out the essential services they provide to your community.

Benefits of Having a Community Website

Trying to remember the date of that upcoming neighborhood block party? Wondering when your next community association assessment is due? Can’t find the minutes from the last association meeting? The answers to these questions – and more – just might be on your community website. Community websites built with association management software can empower associations to do more with less. Here are just a few examples: Provide a portal of information for homeowners . A community website is the 24/7, one-stop spot where owners can find just about any information that pertains to their community. Owners can manage their own personal accounts, pay their community assessments online, check the community’s social calendar, get information on community amenities, review board meeting minutes, and track the status of architectural and other requests. What’s more, the transparency and simplicity a website provides can be a selling point for potential buyers. Save (and earn!) your association money . Disseminating your association’s mailings via email instead of snail mail saves you money on printing and postage. Even better, a website has the potential to make money for your community! By running advertisements on the site, you can turn your website into a revenue stream. And everyone benefits: residents appreciate ads that provide new travel and dining opportunities or merchant savings, and advertisers can lower their cost-per-sale by leveraging highly localized and targeted messages. Maximize your board members’ time and effectiveness . Boards are predominantly composed of volunteers, who donate their time and effort. A community website helps community managers maximize board members’ time by making it easier to access and update community information, as well as to communicate with homeowners. Foster a greater sense of community . Finally, community websites can help create a stronger, more interconnected community. When residents can communicate, plan activities, and become involved in the governance of their association, they tend to be more engaged and invested in community life. A Community Website Case Study: WPM Real Estate and SenEarthCo WPM Association Management Support Supervisor and Executive Assistant Rita Dore played an integral role in implementing SenEarthCo, an association website software platform. Thanks to her assistance, nearly half of WPM-managed communities currently use SenEarthCo; the goal is that all of WPM’s association communities will use this platform by the end of the year. Dore can attest to the benefit of the newly instituted websites: “It is so helpful to have all of the community information centralized in one location,” reports Dore. “Board members can keep track of their management responsibilities in real time, such as monitoring contracts, financial reports, delinquencies, work orders and repairs, architectural requests, etc. And residents appreciate the simplified account statements, their ability to pay association dues online, and creating maintenance requests virtually.” Dore does have one additional piece of advice, “The website needs to be regularly maintained in order to be effective. If it’s not, it will quickly become out of date and residents will no longer trust it as the primary source of community information.”

Online Reputation Management

How do you manage your community’s online reputation? The answer may surprise you. Brent Gratton, Director of Multimedia Marketing & Communications “When property management professionals ask me how they can improve their online reviews and feedback, one of the first things I point them to is the resident experience,” says Brent Gratton, WPM Director of Multimedia Marketing and Communications. “To ensure positive reviews on key websites such as ApartmentRatings.com, ensuring that the customer experience is positive is paramount.” Still, no matter how excellent the property management, there will always be the stray complaint or disgruntled resident. And thanks to social media and property rating websites, one resident’s displeasure can spread faster than mold in a flooded basement. That’s why WPM offers the following guidance to property managers about how to use both proactive and reactive strategies for managing customer feedback. Obviously, a proactive approach is the goal. Good managers anticipate residents’ needs before residents have the chance to blast their complaints online. Being proactive requires three things: Great service : By focusing on a great resident experience, managers can greatly influence their organization’s online image. Asking for feedback : While most residents are willing to provide feedback, very few are often asked. Creating a system for collecting residents’ responses is imperative. Quick responses to customer concerns : The more time that elapses between a complaint and its correction, the more likely a resident is to take air their frustration on social media networks. An open line of communication : Residents need to know whom they can contact with questions or problems. If they are unsure, they may seek advice online or default to complaining instead of addressing the issue through the proper channels. But when your first line of defense fails, you’ll need a workable set of reactive strategies. Remember, even if a resident’s poor experience goes viral, you can still salvage your image: First, respond to the reviews : Sometimes, people just want to be heard. When you respond to their negative review with a thoughtful, respectful explanation of what your company is doing to address the problem, you win the trust of the resident and points with the cyber audience. Then, make sure you do something about the problem. It’s not enough to make the public promise that you will fix the problem; you actually have to fix the problem. And quickly! As time passes, a disgruntled resident’s frustration is likely to spill over onto more websites. Finally, when working with unhappy residents, Gratton encourages property managers to remember Bill Gates’ advice: “Your most unhappy customers are your greatest source of learning.” Listen carefully to residents’ complaints – online or otherwise – and always try to see things from their point of view. Your online reputation is bound to improve… because your property will improve!