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Monday, April 16, 2007

The Professionals:

The Professionals:

The one item that ties all of these CIC together call them governing, disclosure, covenants, bylaws, resale condo, or hoa documents, which are to be given to new home buyers and in some states the renters, are not reviewed for compliance with existing laws. Often times the changes that are made to the originals, and sometime the originals themselves, are not filed correctly and thus not viable.

If a new owner does not get the correct documents the rules that the community has established can not be enforced In the case of a self run association with limited skills and resources just do not have the ability to review these documents.

Starting with the developers, by getting them to understand that having an attorney supply them with a canned set of documents, sometimes even another associations documents with a name change, can have unforeseen impact. Each community needs to have the correct documents to support the charter and type of development. Today within the legal and educational systems communities are an afterthought.

Each CIC that is being developed needs to have a transition plan from the developer to the residents. This transition will allow the two parties to come together from to move from a building and marketing reality to one of a community that is a business, run by volunteers. During this time the financial obligations that the community is bound to needs to be disclosed and the residents may have to be educated as to what are the specific of running a non stock corporation.

This is no requirement to provide residents of homeowner associations with information about HOA finical or legal obligations. Moreover the translations practice today is to sent a letter announcing to the residents that the development is now in their control and they now need to hold an election to elect a board of directors to run the community.

Once the community is turned over to the residents, the front line of day-to-day management, for most CIC's, is handled by a Residential Property Management Company, whom have traditionally come from apartment management background. Some seem to lord over their communities instead of acting as an Executive Directors for the Association's board as well

Property Managers, not Community Mangers, with regards to community documents here they are seen as an unreported source of income. That is they charge new residents for each set of documents that are required to be provided before closing and pocket the money, as do other services for hire. The biggest problems with this practice is that these document providers do not review the documents they are providing, in fact many state in their contracts that they will provide only what the community or previous management company was using.

Within one of the largest trade groups the endorsed of a document management company that only provides what they were given, even if it means excluding master and amended documents is not unheard of and brings to question what is the unsuspecting home buyers to do. While third party document management companies are needed anyone that supplies the documents should be held accountable for not providing the correct condo or hoa documents.

Within the Management field we are facing a crisis in that more communities are being created then there are Community Managers to manage them. We do not have one university or community college that trains individuals in this type of Management So we do not have a pool or a training program from which to get get new managers.

Today this problem is compounded by the retirement of the owners of the original management companies and with the problem above as it is they do not have the internal employees to take them over. so they are selling their companies to Super Management companies that handle hundreds of communities with tens of thousand residents over multi-state lines which view each community as a number in their book, not highly complex organization with differing needs at each community and different state laws governing them.

The relationship is further complicated by the fact that contracts that communities are responsible for were negotiated and signed by these managers, It is no surprise that many of them favor the management company not the properties. here is no over-sight of these managers they pretty much do what ever they want to do including the moving of monies across state lines and the failure to keep employees for mishandling monies.

A typical association insurance provides that the association must defend their property management company in the face of a legal actions even if the community is suing the management company.

Ironically, the need for managers with foreign language skills would help some of the traditionally under-employed ethnic groups in America find many jobs in these communities as professional community managers. As well, a new bread of management trend is emerging -- one where they are community managers and partners with these communities to ensure the best quality of life for the members. These managers should be studied and used as a model for new and existing communities.
The CICs:

CIC's are Non-Stock Public Corporations in most states. These entities are worth millions of dollars and if they are not run correctly ability of the residents to refinance, sell or even keep their home become an issue. The sheer number of state and local laws, rules, regulations and general business practices that all corporations must adhered too applies to CICs. Since these communities often have government backed loans the potential for the Sarbaines Oxley Act to spill over into CIC's is a real possibility.

The Association of Professional Reserve Annalists has stated that the majority of CIC they review do not have adequate reserve funds. Failing to maintain these reserves means that a community will not have the funds to keep the roads, lights, elevators, common areas, and other amenities in working order. If these do not do not work, the community does not work.

In states with a yearly corporate charter fee and property tax many CICs, or their agents, fail to file or pay the required fee lose standing. So, not only does the community not exist legally, but the officers, very time, they sign a contract as "Association Inc." they are committing fraud and they are being held accountable for doing so.

There has been an alarming trend for community members to gain a seat on their board to reduce fees and services within their community because they simple do not have the background, resources or training to make such decisions. We are also seeing communities trying to go from a property manager to being self-managed, even if their documents require them to have a management company. Or a member sets up a management company to take on duty with no training.

There is an increasing problem of getting residnets to serve on the board of directors which runs the community, senior homes especially, how is it to function with?

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