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O CTOBER 2012 | VOLUME 16 | NUMBER 3

CondoLifestyles

THE SOURCE FOR INFORMATION ON COMMUNITY ASSOCIATIONS, CONDOS, TOWNHOMES, CO-OPS & HOAS

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Facade Facelift Has Lakeside Villas Looking Good F E AT U R E S

Rentals... To Be or Not To Be When Should an Association Become Landlord Associations That Permit Rentals Top 10 Legal Mistakes a Board Can Make & How to Avoid them Don’t Let Your Association Slip on Snow and Ice Condo Lifestyles State of the Industry 12/13/12 FHA Mortgage Guidelines Released, Short Sale Options Expanded

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table of contents COVER STORY

03 Facade Facelift Has Lakeside Villas Looking Good By David Mack S P E C I A L F E AT U R E

06 Rentals… To Be or Not To Be By David Mack 11 When Should an Association Become Landlord By David Mack 13 Associations That Do Permit Rentals By David Mack 16 Industry Happenings Compiled by Michael C. Davids & Sherri Iandolo 18 Editors Message 19 Directory Advertising BOARD BASICS

26 Top 10 Legal Mistakes a Board Can Make & How to Avoid them By Dawn Moody & Gabriella Comstock, Keough & Moody, P.C. 28 Don’t Let Your Association Slip on Snow and Ice By David Lewin, Lewin Law Group and Of Counsel to Querrey & Harrow, Ltd. EVENT HIGHLIGHTS

30 Condo Lifestyles State of the Industry Registration IN MEMORIAM

31 David Berke, Theresa Dixon

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32 FHA Mortgage Guidelines Released, Short Sale Options Expanded By Michael C. Davids

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COVER STORY

By David Mack

Facade Facelift has Lakeside Villas Looking Good When Suzy Reingold and her family decided to seek a more commodious living arrangement than they had a number of years ago, they found just what they wanted at Lakeside Villas in Wheeling.

“

e were looking for a home that would accommodate 3 boys and 2 cats,” says Suzy Reingold, President of the Lakeside Villas HOA. “We wanted a backyard and were pleased to find this and more at Lakeside Villas.”

Property Overview Built in 1971 by Zale Construction, the community association consists of thirtythree two story, full basement townhouse buildings containing two hundred forty-two

three and four bedroom units that come in seven different models. Most have garages and are made primarily of wood with common firebrick between the homes. They are, “very architecturally pleasing as they are each different,” notes Suzy Reingold, who works as a sales consultant for a Chicago car dealership as her regular job. Recreational amenities at Lakeside Villas include a clubhouse with swimming pool, a children’s playground and a basketball court

and, she added, we have four pond/lake areas that are an integral part of Lakeside Villas.”

Maintenance and Restoration One of the most impressive aspects of Lakeside Villas is the way they have kept up with the property’s maintenance and building restoration needs despite a challenging economy and real estate market. “It’s really outstanding,” said Joel Garson of Hillcrest Management, about the way in which the Lakeside Villas board of directors has worked to maintain their property and improve their community in the past few years. Garson continued, “It’s great to see a board that remains committed to taking care of their maintenance and restoration needs during this difficult economic climate.”

Community Minded Leaders The HOA is large enough to form its own community in the larger community surrounding it, which consists of a variety of resi-

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needed to be addressed,” she said, noting that she has been re-elected twice and has been President for four years. “I had some concern over the communication between the board and our association membership and was determined to help improve this.” Communication is an important area for all communities and by all appearances it seems the residents of Lakeside Villas are more engaged under Suzy Reingold and the current board’s leadership.

Good Participation

dential uses ranging from rentals to condominiums, townhomes and single family units. Lakeside Villas has a seven member board of directors whose terms are staggered. Two or three seats are filled each year at the annual meeting. “Our members elect one director for a term of three years for each directorship that expires that year,” said Suzy Reingold. There is never a lack of candidates for positions at election time. “We (always)

have had a good number of individuals who come forward to run for the board.”

Communication Key Issue After moving to the development, Suzy Reingold decided to stand for election to the board because of a few key issues that she perceived were not being dealt with adequately. “I was motivated to run because I felt we had some areas of our community association that

Attendance at board meetings by residents is mixed with as many as one-third showing up for the annual or special purpose meetings. But, said Reingold, “very few homeowners attend the (monthly) meetings,” which typically last about two to two and one-half hours with an open owner’s forum scheduled for one half- hour at the outset. In addition to the board there are numerous committees, including the principal ones of Architectural and Landscape, which monitors and approves homeowner requests to make changes to the exterior of their homes, and Finance, which watches over the association’s funds. There are also Pool,

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COVER STORY

Parking, Clubhouse and Communications Committees. Non-board members sit on the committees. ”We reach out to our homeowners for volunteers,” said Reingold. “We ask their (involvement) through our e-mail listing and newsletters that we print quarterly.”

Architectural Committee The Architectural committee occasionally has to go into an enforcement mode when homeowners make unauthorized alterations to the external appearance of their properties that conflict with HOA standards. This happens because, “on occasion, some people don’t read their Rules and Regulations and don’t follow the Declaration or By-laws,” said Reingold. It is then that the engine of association authority is turned on to invoke the limits set forth in the HOA’s governing documents and rules. “We contact the homeowners, explain the violation through a letter sent from our property manager and ask them to cure the violation.” Most of the time any conflict is quickly resolved through communication with the resident/owner. If needed, a hearing will be held at the transgressor’s request to go over the violation and penalties are sometimes assessed.

Exterior Improvements There are a number of matters that have been requiring the ongoing attention of the HOA, primarily in the physical realm. “Our association is concerned over many issues and is diligently working on maintaining the beauty of our area and actively taking care of our infrastructure,” said Reingold. “We have had to work on roof replacement, driveway,

stoop, sidewalk and curb replacement, lake renovation, landscaping and tree care.” Taking care of the exterior maintenance and restoration needs of the property is something that cannot be emphasized enough. The efforts of the board in this regard will almost certainly pay dividends for all the homeowners. continued on page 14

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By David Mack The Parkshore Condominiums located in Chicago, Illinois

Rentals... To Be or Not To Be “To be or not to be, that is the question.” Or so it was for Hamlet who gave utterance to that famous literary expression via the pen of Shakespeare in the early 17th century. ment notes, “all associations have different needs. No one size fits all.”

Most CA’s Permit With Controls For community associations a variation of that self inquiry they are often faced with, while not having a similar existential significance, might be stated as, “to permit rentals or not to permit rentals, that is the question”. While there are associations that fall at both ends of that spectrum running from allowing them without restraint to banning them altogether, between those polar extremes lies an option that is probably more commonly followed- to permit rentals but control or regulate them. Circumstance will generally dictate what an association does in this area. As Michael Baum of Baum Property Manage-

If Governing Documents are Silent on Leasing Let’s look at an example of an association whose governing documents were silent on the issue of leasing from its very inception, as provided by attorney Pat Costello, a principal in the law firm of Keay & Costello, P.C. The community is 95% occupied with only a handful of renters at any one time who presented no problems for the association. Then, as the result of foreclosures, investors began acquiring units and renting them out until the

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Jordan I. Shifrin of Kovitz Shifrin Nesbit was presented with the Condo Lifestyles Lifetime Achievement award at a special ceremony held at Westwood in Schaumburg, IL on August 2, 2012. Mr. Shifrin received the award for outstanding leadership & support in the Community Association Industry throughout his career and for leadership & participation in MCD Media’s Condo Lifestyles publications & programs. Jordan was a long time leader in CAI, ▲ Shown here is Jordan Shifrin ACTHA, & the Northwest Suburban Bar Associ(left) with Roy “Cookie the ation. He had numerous accomplishments inClown” Brown at the first Condocluding being named a Top Attorney by Super Lifestyles CondOlympics in 1996. Lawyers Magazine & Leading Lawyers Network. He authored two books on community associations and was also appointed Chairman of Condominium Advisory Council by Illinois Legislature.

ABOMA Diamond Jubiliee Celebration The Apartment Building Owners and Managers Association of Illinois (ABOMA) is a not-for-profit association founded in 1937. This year, ABOMA is celebrating 75 Years of service to the multi family residential ▲ Shown above is Bob Wiggs, Jerry Matty, and property industry in the Chicago area. Bob DeCelles at an ABOMA Managers Night ABOMA represents the full spectrum of the Chicago High Rise and Low Out program. Rise Residential Industry with 425 plus member high rise residential buildings containing over 350,000 units and 600,000 owners and residents. For more information visit www.aboma.com

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owner occupancy rate dropped to 70%. Renter turnover was significant and as Baum has noted, “tenants often behave differently, Owners do not have a vested interest in the building(s) and may treat the condominium like an apartment, often creating more challenges to the rules.” As is more typical of renters than owners, the frequency of loud parties, parking and other rule violations and the increasing presence of police grew to a point that was intolerable for the resident unit owners. What can the Board do to reverse this decline in community harmony and propriety?

Managing Tenant Files Tenant files containing the forgoing documents and information will generally be maintained by management. “Maintaining a file on tenants and their leases consists of a significant amount of labor,” said Baum, who added that the hardest part of keeping track of rentals is usually securing the lease itself when an owner in uncooperative. Associations should be expected to pay more for management to take care of this responsibility.

“Maintaining a proper file on all tenants should be an extra expense (for the association) apart from the management fee.”

Screening Important Costello also advises boards to insist that owners vet their tenants. “I recommend that an association require the owners to obtain background and credit checks,” he said. “I prefer that associations stay out of the business of obtaining such information.”

Authority to Regulate or Prohibit It has the option at that point of either regulating or managing existing rental policies that are being ignored or violated or where there is no policy to place restrictions on leasing, including prohibiting it altogether. Where is the legal authority for associations to have a say on rentals? It lies in Section 18(n) of the Illinois Condominium Act for condos and in 1-35(a) of the Common Interest Community Association Act (CICAA) other than for language relating to evictions of tenants, which is absent from the latter law.

Get a Better Handle on Leasing In terms of managing or regulating under the conditions described above, “some associations want to continue to permit leasing but need to get a better handle on the number of tenants at the property, who the tenants are and ensure that (they) understand the covenants and rules,” said Costello. Regulating means, imposing requirements for rentals such as tenant’s information sheets, move in and move out files, duration of leases and restrictions on pets, etc. Owners should be required to provide to the association a copy of the lease with each tenant along with a rider or addendum that should include census information such as names, phone numbers, numbers of occupants, makes and models of cars and pets. “Additionally”, Costello explained, the, “lease rider should include acknowledgement by the owner and the tenant that occupancy remains governed by the association and that both owner and tenant agree to comply with the covenants and rules and regulations of the community.” Owners must provide their tenants with a copy of the covenants and rules.

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Restrict or Prohibit Rentals The authority to restrict or prohibit rentals totally is predicated on a 1995 court case- Apple II Condominium Associates v. Worth Bank & Trust. This decision permits boards to go so far as to ban all leasing either by an amendment to the declaration or by a rule. In terms of the latter, the Court said it would uphold any rule upon its determination that it is, “reasonable in its purpose and application.” If adopted by an amendment to the declaration, the Court, “will presume the restriction is valid and uphold it unless it can be shown that it is arbitrary, against public policy or violates some fundamental constitutional right of the unit owners.”

Why Restrictions? But can rental restrictions have a possible negative impact on the Association? Baum adds , “any rental restriction lessens the supply of potential buyers as it eliminates investors, shrinking the possible pool of buyers which makes selling more difficult, which increases the inventory of homes for sale (and) hurts market prices. In addition, an abnormally

large number of vacant units may also negatively impact the overall neighborhood.” While it is true that those rental restrictions of a long term nature will generally protect property values, those that are short term, “may actually lower resale values,” added Baum, a situation especially true in the last couple of years when many owners have been unable to sell at or near what they paid for their homes but were forced to out of necessity to sell because their associations prohibited leasing. “Allowing short term leasing until property values recover should be on the table.”

Rule or Amendment Options So an association has the rule or amendment options to choose from. If the latter is the approach selected, Costello warns boards to, “make sure that all procedural requirements for amendments are followed and all necessary approvals (from unit owners) are obtained,” so it will withstand a legal challenge. Whether by rule or amendment, a board should decide how it is going to move against violations- “through fines, through forcible entry and detainer or through some

form of injunctive relief, which we do not recommend,” said Costello. A board should make sure that it has the funds and the determination to take action against owners and tenants when its leasing policies are violated.

Variety of Choices A board has a multitude of choices when it comes to establishing leasing restrictions, as Costello explained. Some can be combined in a policy. As noted previously, while a board does not need owner approval for a rule restricting leasing, it does need the concurrence of the specific percentage required in the declaration for enacting amendments. In either case, it is a good idea to take the pulse of the community beforehand as to which of the following approaches would be supported, if any at all. Here is a list of the possibilities/ - prohibit all leases. - prohibit all leases after a certain date. - prohibit all leases but grandfather in existing tenants. Once the current renter moves, the owner will no longer be able to lease out the unit. - prohibit all leases but grandfather in

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existing owners. At the time of policy adoption, existing owners renting out their units may continue to do so as long as they have title to them. - cap rentals by a percentage of the units. This is especially important in relation to the FHA insuring mortgages since that agency places limits on rentals in a condominium. “FHA requires that an association have no more than 51% rental,” said Costello. “Make sure any leasing restriction contains language which will allow a board to comply with any new FHA requirements.”

Hardship Provision Whichever of the foregoing restrictions a board opts for, it should make provision for hardship. “Most associations define hardship as something that happens to an owner such as a medical issue or job transfer rather than a decision that an owner makes such as to purchase another property,” explained Costello. “I think attempting to define all matters which could constitute hardship is a mistake. Hardships should be left to the discretion of the board and whenever that discretion is granted

to the board it should be exercised in a uniform, non-discriminatory manner.” Baum concurs with Costello. “Every rental provision should have a hardship and hearing process,” he said, and, “boards should be flexible on hardships and consider each request on a case by case basis. I personally think that allowing short term rental hardships- two years or less-makes sense so folks can ride out a rough cycle.”

Non Owner Family Members Non-owner family members who occupy a unit without a lease- say a college student for whom parents purchased a unit- should not be considered renters. “In the declaration amendment we draft which restricts leasing, we always provide an exception for family members,” said Costello.

Enforcing Violations How to enforce violations of rules and covenants by individual tenants will depend on the nature of their transgressions as is generally true of infractions by owners. But in both cases owners, to a point are the persons

against whom penalties are assessed. What that means, according to Costello, is that owners are always held to account for the adverse behavior of their tenants and any violations of rules or covenants by the latter can subject the former to a notice of violation and fine. (Obviously, though, the matter of owner responsibility only applies to conduct of a tenant while on the association property.) Where a renter violation occurs, it is the unit owner- the landlord- who must answer for the breach of covenant or rule. Sections 18.4(l) of the condo act and 1-30 (g) of the CICAA specify that owners in these situations are to be offered the opportunity for a hearing before any monetary penalty is imposed. Tenants are not covered in those provisions of the two Acts. “After a hearing is completed, the association should send a formal written notice of the finding to the owner,” Costello noted.

Essentials of Fines When fines are assessed, it is again Sections 18.4(l) and 1-30(g) of the two Acts that govern their severity. Costello pointed out the

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essential aspects of fines. They must be reasonable, intended to compel compliance with the rules and not punitive. If they are excessive, they are less likely to be upheld if legally challenged. And, again, remember that since tenants are not members of the association, fines are not levied against them for their misconduct but against those from whom they rent. Costello also noted that owners can be cited and fined for their own violations under an association’s rental policies- for example by not providing the association with a copy of the lease.

Eviction of Tenants Where a non- legal action against an owner fails to bring about a positive change in a tenant’s behavior, an association can proceed to evict the tenants under the same Forcible Entry & Detainer Statute it has access to in pursuit of the removal of a member for nonpayment of assessments. Section 18(n) of the Condo Act provides for such action although the CICAA contains no such permissive language. However, Costello explained that common interest communities still have the

authority to bring Forcible actions against tenants with a distinction between how it proceeds depending on whether its declaration was recorded before or after 1985. In the former situation it acts just like a condo but in the latter case additional requirements imposed on an association include that it must be registered as a non-profit corporation and the board must vote to have the Act apply and must apprise unit owners of that decision. Tenants can be evicted for any violation of an association’s covenants or rules, an action which Costello’s firm takes occasionally for its condo clients. “We file this type of lawsuit about two to three times a month,” he said. Removal of tenants can also be sought for an owner’s breach of an association’s rental policies but not for an owner’s failure to abide by other aspects of the governing documents that do not pertain to leasing, Costello added. The legal process commences with a 10 day notice either directly served or sent via certified mail to both tenant and owner, ending the former’s occupancy of the unit. It should reference the reasons for the termination of residency. “This is similar to Section 9-

210 of the Forcible Act, which requires any landlord to give a tenant 10 days notice for violation of a lease provision other than the non-payment of rent,” Costello explained. Non-payment of assessments requires a 30 day notice. A suit is filed when the 10 day notice is ignored and seeks removal of all occupants of a unit plus attorney’s fees and court costs from the owner. Costello noted what is necessary for an association to emerge victorious in such a legal action- both owner and tenant must have been served a summons and the plaintiff must be able to show by “the preponderance of evidence” that the 10 day notice was duly delivered as well as prove the cited conduct was in conflict with the association’s governing documents.

Witnesses May be Required Additionally, when conduct breaches by a tenant were seen by other residents of the community, it is necessary that they provide a first hand account of what they observed. “I need the individuals who witnessed the violations to agree to appear in court and testify,”

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said Costello. “I need neighbors and/or other owners willing to come to court and explain what they saw.”

Work a Forcible

trusted verb

Rather than carry through with a law suit to completion, Baum prefers to “work a forcible,” as he put it. “I highly recommend using the forcible as a tool wherever possible,” he said, but added that just threatening eviction with it will often suffice to bring an account current. (see sidebar article).

[truhst·ed]

Injunctive Relief As noted previously, an association could also seek to enjoin a tenant from occupying a unit by a suit seeking injunctive relief according to Section 18(n) of the Condo Act but Costello does not recommend this approach because it is much more time consuming and expensive.

When Should an Association Become a Landlord? An association does have the authority to evict owners and take possession (but not title to) of their units for both covenant and rule violations and also for non-payment of assessments under Section 9.2(a) of the Illinois Condominium Act. Common interest communities, while not covered by 9.2(n), can also move in forcible actions against unit owners. Michael Baum of Baum Property Management, is an advocate of the use of the Forcible Act but more by threatening its application than by going through with it to wrest control of a unit from its owner, especially to collect past due assessments. “Forcibles are a great collection tool,” he said. “The threat of a forcible action does collect dollars especially if properly worked.” This procedure is, “one of the better collection methods available in Illinois and the rest of the country.” How does Baum “work a forcible?” This is done by, “personally visiting each unit and talking to the owner,” he said. “The threat of an eviction is so severe (that) just by using a personal touch (for) each individual eviction often collects all past due amounts and avoids the eviction. In 2010, our company collected 100% of every past due amount when an eviction was scheduled by visiting the owner. After we explained the ramifications of an eviction, folks understood and found the money in every situation before the sheriff came.” Baum feels that a better remedy than eviction for collecting debt is some form of economic remedy such as a wage deduction judgment. “A physical eviction is not the proper remedy for the collection of a debt,” he said, “Besides, an actual eviction does not collect any dollars and may actually increase debt, as you must add the costs of movers, locksmith, attorney, court, etc.”

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Proceeding with Removal But despite an aversion to going through with an eviction to collect assessment debt, there are times when the association board has to consider proceeding with the removal of a condo occupant- either owner or tenant for persistent rule or covenant transgressions. “If a debt is owed and a possession order granted an association may want to take

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possession of a unit to winterize and/or secure a vacant unit,” he said. Frozen and broken pipes can jeopardize other units and common elements. “We have also had units with broken windows where folks and critters were entering the unit.” Having the association take possession eliminated such problems.

Cost/Benefit Analysis of Possession However, before moving to take possession of a unit and becoming landlord, an association and its management agent should do a cost/benefit analysis, Baum said, to determine the cost of any rehab versus the potential rental income if leasing is planned to recover lost assessment income from an evicted owner. An actual budget for repairs should be created before repairs are started. While a unit does not have to be returned to a “like new” condition to rent it out, it obviously must be made habitable under local ordinances for a prospective tenant. If a unit is too deteriorated, rehabbing it for leasing may be financially impractical. However, if it is in

CONDO LIFESTYLES

repairable condition, the managing agent or contractor can likely oversee the work for a fee. In addition, the Association should expect to pay a rental commission and separate management fee. These costs should be added to the account balance.

Have Established System Baum noted some additional points. In the situation where an association and its agent plan to get into the leasing business for any units the association takes possession of, the two should have an established system in place for as quickly and as inexpensively as possible rehabbing a unit as well as a practiced working method for actually entering into leases, especially those of a short term nature. “There is a market for short term rentals,” he said so being prepared for action is important. Time is absolutely of essence, as the clock begins ticking at possession when the unit will be returned to the owner or the bank. He also cautioned that unless an association is serious about rehab and rental, taking possession of any units, “may not make sense.”

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Know Mortgage Status Also, in moving ahead with a “forcible action” to take possession, the association attorney should be aware of the status of the mortgage on a unit. An association may not want to control and spend money on rehab if the lender is within 12 months of foreclosing the mortgage and intends to take possession itself. Baum said, however, that when a bank does trump an association’s possession and rental of a unit, it would be smart to reach out to the institution to try to make a deal on the income. “Banks may prefer income versus a vacant unit (so) attempt to make a deal with the bank for the unit,” he said.

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S P E C I A L F E AT u R E

Associations That Do Permit Rentals Let’s look at an association that does permit rentals and see how the process works there. The ParkShore Condominium Association located in Chicago began to permit rentals [ParkShore always permitted rentals; the amendment restricted the rentals to a minimum 1-year term.] after enacting an amendment to its declaration in 2002 that barred short term arrangements under twelve months. “All leases must be a minimum term of one year,” said property manager for The ParkShore, Christine Friend of Community Specialists. It is currently just under 83% owner occupied. “In the past ten years, that number has fluctuated only slightly, remaining always 80-83% owner occupied.”

Hardship Provision There is a hardship provision which only applies when an owner requests an exemption from the 1 year minimum term. However, “since 2002 the Board has not granted any

hardship exemptions for short term leases,” said Friend, adding that, “hardship is not defined in the leasing amendment (but) it is up to the board to determine hardship,” on an individual case basis.

Short Term Leases There have been circumstances, however, where the Board has approved a few leases that are less than a year. This was done to accommodate owners who were going to have large scale remodeling done to their units and wanted to temporarily move into another that was vacant during the work. “Short term leases have been approved when two ParkShore owners request approval in such a situation,” said Friend.

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Lease Violations are Rules Infractions The Association considers violations of the lease term standards as rules infractions. “Notice is issued and fines are applied for owners found in violation of the lease term requirements,” said Friend. “Fortunately, there have been less than a handful over the last ten years.”

Evictions Friend knows of only one situation in which the association pursued the eviction of a tenant for breaking a rule and that was of the requirement that residents contain smoke or other odors to their individual units. “That action occurred over ten years ago so I do not have personal knowledge of the details,” she said, but, “the process was long and the Association was ultimately successful.” Y

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from page 5

Lake Villa Facades Siding Replacement Project A major siding replacement is underway now because the original cider material has deteriorated due to weather and moisture conditions in the Chicago area that have made this wood an inappropriate product for external use. “We are currently doing a complete new insulated vinyl siding project for all two hundred forty-two homes and our clubhouse,” explained Reingold. “We have ten buildings completed thus far and are very pleased with our new look. We feel as though we’ve come out of the 19th century-Tudor style- and are now in the 21st century- modern and current style.” The comprehensive siding renewal program is being undertaken with borrowed funds from Community Advantage, A Wintrust Company, which has worked closely with the HOA board in arranging this financing. “We researched and decided to first take out a construction loan and convert that to a fixed rate loan to be paid back over ten years,” said Reingold.

Other Curative Work

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CONDO LIFESTYLES

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Other curative work completed in recent years included new bracing for sagging roofs over porches to the homes. Those stoops themselves had been replaced in the past and wooden posts that had been used in the process also deteriorated, requiring concrete be poured around them. With further wear and decay the posts are being replaced with aluminum grooved posts but with some additional fill in work needed. “We have learned that we will need to put a mortar patch around the posts as they do not fit into the framing of the cement,” explained Reingold, who is keeping her fingers crossed that with the siding and stoop projects the association’s current serious physical deficiencies will have been completely resolved, at least for the near future. “We haven’t found any other unusual problems and hope we don’t find any more.”

Finances Financially, Lakeside Villas, is run on an operating budget of over a half million dollars. The monthly assessment is approximately $250 but the HOA does not go in for additional revenue raising from the residents. And it does not want assessments to become an undue burden on homeowners. “The Board does not like special assessments and there-

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COVER STORY

fore does not support the idea of one,” said Reingold, noting that there are delinquencies but they are manageable, being, “less than five percent of the total membership.”

Controlling Expenses and Doing What is Necessary Control of expenditures is a major emphasis of the HOA, as it is for so many associations, especially in the current economy. And the Board and management, while not holding back from spending the funds necessary to keep up the appearance and functioning of the physical plant, are always concerned that available revenues be spent in the most prudent fashion. “While we recognize that we live in difficult economic times, we know that keeping up our homes is the most important investment we need to accomplish,” said Reingold, but, “we are constantly looking for ways to improve (on)what we are spending and (to) make sure it is for the betterment of everyone in Lakeside Villas.”

More Money Matters To further lessen their financial burden, the HOA has served its members in a coordi-

nating capacity to reduce their tax liability. “When the tax appeal process began last year, we assisted the homeowners by contracting with a law firm to successfully help reduce their taxes,” Reingold said. The association’s last reserve study was completed in 2006 so it is due for an updating of that six year old analysis. In fact, “the Board has decided that in 2013 we will do a reserve study,” Reingold said.

Professional Management The HOA has been managed for eight years by Hillcrest Property Management whose representative responsible for the business affairs of Lakeside Villas is Lucia Vineyard. But she is far from being alone in that endeavor. “Our present Board is very hands on and is in daily communication with our property manager to assist her and make sure that anything and everything is handled as quickly as possible and in an extremely professional manner,” said Reingold. “We as an HOA are very demanding and recognize that the Property Manager cannot deal with each and every issue on (her) own, therefore (I) and the other Directors assist whenever possible.”

Home Values As in most neighborhoods and communities in the Chicago area, home values at Lakeside Villas have taken a hit. They currently range from approximately $80,000 to $187,000. “We are constantly working to restore our previous home values that ranged from $175,000 to over $250,000,” said Reingold. But at the current reduced prices residences do find buyers when put up for sale. “Most of our homes do not stay on the market longer than four to six months.” Values are rebounding slowly- they are appreciating according to Reingold.

Ready for the Future Reingold summed up what she said must be the focus of Lakeside Villas as the future unfolds. It is primarily in the area of fiscal restraint and control. “The Board must stay mindful of our financial obligations and commitments to the bank and to our homeowners. It is extremely important that multiple bids are secured for large projects (and) that contracts are reviewed by our attorney. We must keep a mindful watch on delinquencies and continue to be diligent in collecting what is due the association.” Y

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industry happenings Baum Property Management

Werk Management

Baum Property Management held a seminar program “Reserve Studies & Community Association Budgets” on Sept. 5th, 2012 at the Eola Community Center located in Aurora, IL. Presenters of the seminar were Nik Clark of Reserve Advisors and Mark Cantey of Cantey Associates CPA’s. The program moderator was Michael D. Baum.

Shown above are (L to R) Diana Lune, Nicole Frank, Jack Mancione, Lisa Mancione, and Colleen McCormack of Werk Management. Werk Management recently held an open house at their new corporate offices located at 8102 Lemont Road in Woodridge, IL.

McGill Management

Cantey Associates

McGill Management, Inc. recently joined the group of community association management companies who have earned the Accredited Association Management Company (AAMC) designation from Community Associations Institute (CAI). McGill Management is one of only 150 management companies nationwide who have earned the highest level of professional recognition in the community association field.

Aleka Ernst has recently joined Cantey Associates CPA’s as Director of Client Services & Marketing. Ms. Ernst has eleven years of experience with community assoiactions and has served on CAI Illinois chapter committees, 2001-2011; past co-chair of CAI Golf Committee; served on BOMA Suburban Golf Committee, 2008-2010. She is a member of the American Marketing Association and has a B.A. in Arts (Fashion Design) from Columbia College in Chicago.

McGill Management, Inc. currently manages communities from Oswego to Antioch operating out of two offices and has over 50 employees. To earn the AAMC distinction, management companies need three years of experience in community association management and at least 50 percent of their managers must have earned professional designations.

ECS Midwest Frank Gonzalez, AIA recently joined ECS Midwest as their Facilities Department Manager. Frank possesses over 20 years of experience in architecture and construction, ranging from design to restoration and preservation, as well as forensic studies. In recent years, his emphasis has been on high-rise commercial and residential buildings in dense, urban areas.

Wolin-Levin, Inc.

Keough & Moody Keough & Moody, P.C. is proud to announce that Julie Guidry has joined its team again. Julie worked for the firm in the past and has decided to return to her position as a certified paralegal. Julie’s most recent involvement in the industry was as a member of the team at Waldman Engineering Consultants for the past 5 years. Julie is an active member of many industry trade associations and was a co-chair of the Marketing Committee for the Illinois Chapter of CAI.

Wolin-Levin, Inc. held a Vendor Expo on Friday September 14, 2012 at The Abbington Banquets in Geln Ellyn, IL. Over 80 vendors displayed their products & services for managers and employees of Wolin-Levin, Inc. Proceeds from the event benefited Neighborhood Housing Services of Chicago.

Shown above is Mary Carlson, Director of Resource Development and Public Affairs for the Neighborhood Housing Services of Chicago accepting a check for over $15,000 that was donated by Wolin-Levin, Inc. NHS creates opportunities for people to live in affordable homes, improve their lives and strengthen their neighborhoods.

QCI Restoration

QCI Restoration held a Pig Roast BBQ on September 18, 2012 at their corporate office facility in Elgin. The fun filled event featured a band, children’s entertainment, facility tours and raised funds for the Illinois Fire Chiefs scholarship fund.

J.Hershey Architecture J. Hershey Architecture in Libertyville, Illinois is pleased to announce that Erica Horndasch has joined the firm as the Director of Business Development. Erica Horndasch has more than fifteen years of experience representing the Community Association industry in a variety of arenas. In this new role, Erica will continue to serve the industry she is so passionate about while working alongside her fellow peers and other business partner associates.

CONDO LIFESTYLES

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INDuSTRY HAPPENINGS

industry happenings The Habitat Company The Habitat Company recently announced that they have been awarded property management responsibilities for The 21 East Chestnut Condominium Association, a 163-unit condominium located at 21 East Chestnut in Chicago, effective August 1, 2012.

racy of invoice entry, integrates with our Property Management system (YARDI), and fully automates the approval process. Interactive, online review and approval of invoices eliminates the need for copying, signing, filing, and physically storing invoices that can now be accessed with the electronic invoice record in YARDI. Habitat Budget Application

21 East Chestnut was built in 1962. The building offers studio and one bedroom units and the average floor plan provides 772 square feet of living space. Located in the prestigious Gold Coast neighborhood, 21 East Chestnut offers views of Lake Michigan and access to downtown living steps from Michigan Avenue.

In order to automate real-time forecasting, rent-growth projections and provide more effective worksheets for consistent and simplified entry, the Technology Solutions Group developed a proprietary Budget Application. The application integrates with YARDI to provide immediate access to all pertinent financial information.

The Habitat leadership team has made a concentrated effort to expand our condominium management business,” said Mark Segal, President and CEO of the Habitat Company. “We are making considerable progress in this business expansion effort.” 21 East Chestnut joins the Bristol, The Buckingham, and 400 E. Randolph among other premier condominium associations, as part of The Habitat Company’s condominium management portfolio. “We are thrilled to be at the service of the association board members and unit owners at 21 East Chestnut. We look forward to cultivating and strengthening our partnership through our Stewardship Program which is designed to foster open communication and achieve the board’s goals,” said Diane White, senior vice president for Condominium Management for The Habitat Company.

Draft budgets are developed in cooperation with the Board, its treasurer and Budget/Finance committee so that goals and objectives of the Board are met.

“It is The Habitat Company’s distinct pleasure to partner with 21 East Chestnut Condominium Association and continue to build upon the property’s positive reputation,” added White. We look forward to enhancing the quality of life experience for the residents at 21 East Chestnut.

Customer service and responsiveness are the cornerstones of an organization. Habitat partners with a Resident Relations Management company to survey residents at critical touch points to stay abreast of resident’s needs and priorities. Client associations are able to complete automated survey which are distributed after each service request to gauge performance as well as identifying areas for possible improvements.

For 20 years, The Habitat Company’s Condominium Management Group has employed the highest levels of integrity, customer service and expertise to protect and preserve the value of the overall property and each unit owner’s home. Everyone from the corporate office to on-site staff treats each property like it is their own home. Habitat’s condominium management portfolio includes 4,282 condominium units under management in Chicago and Detroit. Customer Focused Service The Habitat Company is committed to focusing on servicing our clients by using technology to better serve our residents and focus on the priorities of our condominium communities. “Habitat focuses on optimizing efficiencies, automating business practices and leveraging our resources to increase our operational efficiency and drive customer service to new heights. We recognize that Board Members are volunteering their time; therefore, we are always looking for innovative ways to do things that make their life easier,” said Michael Carson, Chief Information Officer for Habitat.

Preventive Maintenance Our Director of Operations collaborated with our Technology Solutions Group to create ProActive™, an innovative automated preventive maintenance program. ProActive™ creates a customized preventive maintenance program that is tailored to the specific needs of each asset, including identification, documentation and cataloging of each piece of equipment and its necessary maintenance schedule and warranties. Tapping the expertise of our in-house team, we have successfully automated the process of maintaining building systems and equipment to our high standards.

Habitat’s customer focused service has already made an impact at 21 East Chestnut. “Heavy weights lifted off my shoulders just hearing Habitat’s proposal to be our new management company. I thought the Association could save money and the building would be better if they only delivered half of what I was hearing. Within two months Habitat has exceeded my expectations in every area. Without being given a good paper trail on past budgets, they pulled together for 2013 one of the best budgets I have ever seen. Habitat is a real partner with our Association Board. Lastly, our onsite manager is pro-

viding a consistent welcoming and professional presence for our residents and staff that makes coming home a wonderful experience,” says Susanne Smith, 21 E. Chestnut Association, Board Secretary. New Offerings Habitat now offers condominium associations the opportunity to save money in one of the most costly components of their annual operating budgets. “Habitat’s condominium management clients will now have access to our master insurance program that provides broad coverage at a competitive price,” adds White. The program is fully compliant with the Fannie Mae Condominium Insurance Requirements, and is placed with top rated insurance carriers. Part and parcel of Habitats’ master insurance program is an emphasis on risk management and loss control engineering services. Claims will be handled by a dedicated condominium claims specialist. Loss control engineering services are intended to help identify property exposures and hazards with an eye towards loss prevention. Habitat specializes in customer service, innovation and identifying cost savings for their clients. They look forward to continuing their existing relationships and to bringing the innovative services they provide to new client associations.

“We created several customized applications for our condominium communities that allow our managers to work more efficiently and spend their time focusing on the residents; Automated Payables - Batch Manager program, Proprietary Budget program and an automated Preventive Maintenance program,” adds Carson. Batch Manager The Technology Solutions Group worked with team members at all points of the accounts payable process to create an application that eliminates paper flow for invoices. Our program streamlines the speed and accu-

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CONDO LIFESTYLES

From the Editor

utumn arrived and the intense heat of summer finally broke. Winter is not far off and before long we’ll be shaking off the cold. Fall colors this year were really fantastic. While we have

CondoLifestyles

had some rain it has not made up for the huge deficit and drought conditions

▲ Mike Davids

which continue in many areas of our readership. While some of the effects of his summer’s extreme heat and drought are visible, we will continue to see problems with some landscape plants for years to come. Being an election year has made us think even harder about many of our challenges. There is also

OCTOBER 2012 | VOLUME 16 | NUMBER 3 Editor & Publisher Michael C. Davids Vice President Sherri Iandolo Art Director Rick Dykhuis Special Events Coordinator Mary Knoll Contributing Writers Pamela Dittmer McKuen, Jim Fizzell, David Mack, and Cathy Walker Circulation Arlene Wold Administration Cindy Jacob and Carol Iandolo Condo Lifestyles Magazine is published quarterly by MCD Media, a wholly owned subsidiary MCD Marketing Associates, Inc. For editorial, advertising and subscription information contact: 935 Curtiss Street, Suite 5, Downers Grove, IL 60515. 630/663-0333.

much to be thankful for. Let’s hope that whatever happens in any election that the people are served and come out the winners. What matters most is that we all look inside ourselves and contribute as best we can to the overall good of everyone. Our cover story about Lakeside Villas provides an overview of how this community association operates. One of the most important elements of what Lakeside Villas is doing is that they continue to keep up with necessary maintenance and restoration needs of their buildings and property during this challenging economic climate. While each association faces unique circumstances, it’s paramount to every association to do your best to keep up with necessary maintenance and improvements. Given the current real estate market conditions that have resulted in record numbers of foreclosures, renting and renters has become an issue for an overwhelming number of associations. This edition features an open discussion of issues related to renters and leasing of community association units with three articles on this subject. A fourth article covers the new FHA loan requirements for condominiums that were recently released. FHA loans require a much lower down payment so this is an important area for many. We have two articles from a legal perspective that appear in our Board Basics column in this issue. One piece identifies the top 10 mistakes that many associations make and provides some advice on how to avoid them. The second outlines some important ways to deal with the unpleasant subject of slips and

Circulation: Condo Lifestyles is available for a single issue price of $8.95 or at a $30.00 annual subscription. Distribution is direct mailing and delivery direct through authorized distributors to over 5,000 officers and directors of Common Interest Communities, 500 property managers, 400 realtors, 400 developers and 400 public officials. Total Circulation is 7,000.

falls on ice and snow.

Condo Lifestyles attempts to provide its readership with a wide range of information on community associations, and when appropriate, differing opinions on community association issues.

legislative and operational issues will again dominate our presentations, discussion and resources that are

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this event on page 30 and at www.condolifestyles.net.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is issued with the understanding that the publisher is not engaged in rendering legal or accounting services. If legal advice is required, services should be sought.

Our regular Industry Happenings column can also be found in this issue. State of the Industry Program on December 13 Taking time to review important issues and identify issues that will require more attention in the coming year is the main purpose of our annual Condo Lifestyles State of the Industry program. Economic,

made available on December 13 at the Chicago Cultural Center. We also recognize members of our magazine advisory boards and present our Outstanding Leadership awards. You can find more information on

Thanks to the many new subscribers that have found our publication useful and informative. Special thanks to the companies, associations and groups that are Authorized Distributors of Condo Lifestyles. Those of you who are not current subscribers can find subscription information on our website www.condolifestyles.net. Please enjoy the upcoming holiday season. We encourage you to take this opportunity to make your association and your community all it can be. If you have an idea that would benefit other Community As-

Advertisers assume liability for all content of advertisements printed, and also assume personal liability for any claims arising therefrom against the publisher relating to advertising content. The publisher and editors reserve the right to reject advertising or editorial deemed inappropriate for the publication.

CONDO LIFESTYLES

sociations, a success story to share, or some advice on how to avoid a problem or failure, please send us an e-mail (mdavids@condolifestyles.net) Y Michael C. Davids Editor and publisher

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SERVICE DIRECTORY

ACCOUNTANTS

ARCHITECTS/ENGINEERS

ATTORNEYS

CANTEY ASSOCIATES, CPA’S (630) 681-9400

FULL CIRCLE ARCHITECTS, LLC (847) 564-0884

ANNUAL ACCOUNTING SERVICES:

(847) 564-3880 FAX

FULLETT ROSENLUND ANDERSON, P.C. (847) 259-5100

Audits Reviews Compilations Income Taxes Board of Directors Training Monthly Services: Collection of Assessments Paying of Bills Monthly Financial Statements Consulting for Developer Turnover and Major projects

www.canteycpa.com

Daniel Baigelman, AIA dan@fullcirclearchitects.com Capital Improvements • Reserve Studies Engineering Reports www.fullcirclearchitects.com 85 REVERE DRIVE, SuITE B, NORTHBROOK, IL 60062

ECS MIDWEST, LLC (847) 279-0366

THE HODDER LAW GROUP 206-909-2462

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Specializing in Accounting Services for Homeowner Associations.

Gregory R. Hodder, Atty Community Association Governing Documents, Vendor Contracts, Collections & Litigation

CONDO CPA

J. HERSHEY ARCHITECTURE (847) 549-5900

A Division of Schneider, Cupuro & Associates, LTD.

www.jhersheyarchitecture.com

CHICAGO OFFICE: 312-899-9989

CONTACT BRAD SCHNEIDER Brad@CondoCPA.com

KELLERMEYER GODFRYT & HART, P.C. (847) 318-0033

CERTIFIED PUBLIC ACCOUNTANTS

Investigations and Repair Documents for: Exterior Walls, Windows, Roofs, and Parking Garages Condition Surveys and Reserve Studies www.kghpc.com

MAXIMA CONSULTANTS CORPORATION 312-223-8414

CERTIFIED PUBLIC ACCOUNTANTS

Contact: Steve Silberman, CPA

ARCHITECTS/ENGINEERS CODER TAYLOR ASSOCIATES coder@codertaylor.com

(847) 382-4100 “We Specialize in Emergency Repairs” Architects • Research • Engineering Specifications • Reserve Studies

greg_hodder@hotmail.com

KEOUGH & MOODY, P.C. (630) 369-2700

630-832-2222 EXT 113

FROST, RUTTENBERG & ROTHBLATT, P.C. 847-282-6340

DICKLER, KAHN, SLOWIKOWSKI & ZAVELL, LTD. (847) 593-5595 www.dicklerlaw.com.com

MICHAEL J. COCHRANE, CPA (847) 301-0377

Accounting Solutions for Management Companies & Self-Managed Associations Audit & Accounting Services Income Tax Reduction & Planning

www.frapc.com

Reserve Studies & Transition and Condition Assessment Reports Facade/ Roofing / Windows Garage Evaluations, Water Infiltration Investigations Fire Escape/Balcony/Porch Evaluations, Life Safety Evaluations www.maximaconsultants.com

WALDMAN ENGINEERING CONSULTANTS (630) 922-3000 www.waldmaneng.com

30 North LaSalle, Suite 2340, Chicago, IL 60602

NAPERVILLE OFFICE: 630-369-2700 1250 E. Diehl Rd., Suite 405, Naperville, IL 60540

www.kmlegal.com

LAW OFFICES OF KEAY & COSTELLO (630) 690-6446

KOVITZ SHIFRIN NESBIT (847) 537-0500 www.ksnlaw.com Covenant Drafting & Enforcement Advising & Consulting with Boards Construction Defect Litigation Collecting Delinquent Assessments

ORUM & ROTH, LTD. (312) 922-6262 Intellectual Property Law Trademarks • Patents Condominium Law • General Litigation Contact Mark D. Roth

For Display or Professional Services Directory Advertising Info, Call (630) 202-3006 No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2012©.

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CONDO LIFESTYLES

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CONDO LIFESTYLES

BUILDING RESTORATIONS

CONCRETE

ELEVATORS/CONSULTANTS

BRAL RESTORATION, LLC. (847) 839-1100

FM&J ASPHALT PAVING, INC. 708-544-6700 / 630-279-0303

SMART ELEVATORS CO. (630) 544-6829

Masonry and Concrete Restoration www.bralrestoration.com

Concrete & Asphalt Paving Pavers & Color Stamping Drainage Systems & Sewer Repairs Sealcoating, Crack Filling & Striping www.fmjasphalt.com

www.smartelevatorsco.com smartin@smartelevatorsco.com

ENERGY GAS & ELECTRIC

HARD SURFACE SOLUTIONS (847) 228-7230 / (630) 674-4520

COST CONTAINMENT INTL. LLC (877) 265-2799

Concrete Flatwork Specialists Asphalt Paving Curbs & Driveways | Sidewalks Footings & Foundations Colored Concrete Stamped Concrete Aggregate Finish Concrete www.hsshardsurfacesolutions.com

Contact: Hans Herrmann www.c2intl.com

FORUM GROUP, INC. (773) 732-3051 Peter.Maneyski@ForumGroupInc.com

L E A K R E PA I R S MASONRY, CONCRETE, TuCKPOINTING, CAuLKING See our ad on page 9 for more details or visit our website at: www.ForumGroupInc.com

GOLF CONSTRUCTION (219) 933-3420

SELECT ENERGY PARTNERS LLC (312) 593-6412 Contact: Ryan Anthony www.selectenergypartners.com

CONCRETE RAISING

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CRC CONCRETE RAISING & REPAIR (847) 808-7400

HOLTON BROTHERS, INC. Masonry Repair Services, Tuckpointing, Caulking and Concrete Restoration

CONDO APPROVAL PROFESSIONALS LLC (847)293-2962

Contact: Patty Peterson wwwWeCanRaiseIt.com

(847) 253-3886 TEL / (847) 253-3255 FAX

contact: Steve Stenger

John@holtonbrothers.com www.holtonbrothers.com

www.condo-approval.com

DOORS QUALITY RESTORATIONS (630) 595-0990

HARRIS EXTERIORS & MORE, INC. (630) 372-7050 Serving Community Associations throughout Chicagoland Quality Service at the Right Price Roofing • Siding • Windows Doors • Soffit• Facia • Gutters Repairs • Carpentry • Maintenance www.harrisexteriors.com

RIGGIO/BORON, LTD. (847) 531-5700 A Total Exterior Facade Restoration Company www.RiggioBoron.net

Call Ed or Sam for a free quote.

CONTECH MSI CO. 847-483-3803 Fire Detection & Signaling Systems Fire Alarm Systems Chicago Life Safety Evaluation Solutions Security Systems/CCTV Card Access Systems See our ad on page 9 www.contechco.com

WOODLAND WINDOWS & DOORS 630-529-DOOR (3667)

CARPET CLEANING SUPER STEAM, INC. (847) 568-1440

FIRE SAFETY & PROTECTION

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

EMCOR TEAM MECHANICAL FIRE PROTECTION DIVISION (847) 229-7600 www.emcortmi.com

NORTHERN ILLINOIS FIRE SPRINKLER ADVISORY BOARD (NIFSAB) 866-2NIFSAB (866-264-3722) 708-403-4468 www.firesprinklerassoc.org

CONDO LIFESTYLES

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SERVICE DIRECTORY

FIRE SAFETY & PROTECTION SIMPLEX GRINNELL (630) 948-1235

GARBAGE CHUTE CLEANING BROUWER BROS. STEAMATIC (800) CLEAN54 (708) 396-1477 www.bbsteamatic.com

Fire Alarm / Sprinkler Systems Fire Pumps / Extinguishers Fire Panel Monitoring Installation / Testing / Maintenance 24/7 Service: (630) 948-1200 www.simplexgrinnell.com

GOVERNING DOCUMENTS

FIRE/FLOOD RESTORATION

kcorral@homewisedocs.com www.homewisedocs.com

BROUWER BROS. STEAMATIC (800) CLEAN54

HVAC

HOMEWISE DOCS (773) 936-3270

All types of environmental cleaning. (708) 396-1477 | www.bbsteamatic.com

QCI RESTORATION 847-891-2929 866-832-6724

“GREEN” Janitorial & Sanitizing Services for hospitality businesses, health care providers and commercial, industrial and multi-unit residential buildings. David Melone www.djrcleaning.com

TOWER BUILDING SERVICES 312-404-3943 www.towerservices.net Cost efficient Janitorial & Maintenance services for homeowners associations. Carpet cleaning, pressure washing, snow removal, etc.

Mechanical - Plumbing - Electrical - Building Automation www.althoffind.com

LAKE & POND MANAGEMENT

EMCOR SERVICES TEAM MECHANICAL (847) 229-7600

ACRES GROUP (888) 231-1300 / (847) 526-4554

www.emcortmi.com

THE RESTORATION GROUP, LLC (630) 580-5584

Ceritfied Aquatic Applicator Department of Agriculture www.acresgroup.com

H V A C CLEANING

LANDSCAPE CONTRACTORS

BROUWER BROS. STEAMATIC (800) CLEAN54

SUPER STEAM, INC. (847) 568-1440

ACRES GROUP (888) 231-1300 / (847) 526-4554

(708) 396-1477 www.bbsteamatic.com

Call Ed or Sam for a free quote.

Professional Landscaping and Snow Removal www.acresgroup.com

INSURANCE

FITNESS SOLUTIONS DIRECT FITNESS SOLUTIONS (847) 680-9300 cgallagher@directfitnesssolutions.com www.directfitnesssolutions.com

DJR CLEANING ENTERPRISES (773) 640-1588

ALTHOFF INDUSTRIES 312.332.5700

www.QCIrestoration.com

www.trgrestore.com

JANITORIAL SERVICES

MESIROW FINANCIAL (312) 595-8135

ALAN HORTICULTURAL ENTERPRISES, INC. (630) 739-0205

Nancy Ayers

www.alanhorticultural.com

HOLLINGER SERVICES, INC. (847) 437-2184 Property Casualty • Employee Benefits Workers Compensation www.HollingerInsurance.com

For more information, visit our website at

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CONDO LIFESTYLES

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CONDO LIFESTYLES

LANDSCAPE CONTRACTORS

LAUNDRY SERVICES & EQUIPMENT

PAINTERS

BALANCED ENVIRONMENTS, INC. (847) 395-7120

LAUNDRYLAND ROUTE, LLC. (847) 998-4050

AAA PAINTING CONTRACTORS, INC. (630) 231-8350

Contact Andrew Neuman

www.BalancedEnvironmentsInc.com

LAWN CARE

ILT VIGNOCCHI (847) 487-5200

KINSELLA LANDSCAPE, INC. (708) 371-0830

SEBERT LANDSCAPING, INC. 630-497-1000

Quality Painting & Decorating since 1973 Our Mission: Guaranteed Committment to Quality Now offering Parking Lot Painting www.Abbottpainting.com

MAILBOXES

Creating Lifestyles From The Outside In…™ www.kinsellalandscape.com

www.landscapeconcepts.com

ABBOTT PAINTING, INC. 312-636-8400 773-725-9800

SPRING-GREEN LAWN CARE (800) 830-5914

www.iltvignocchi.com

LANDSCAPE CONCEPTS MANAGEMENT, INC. (847) 223-3800

www.aaapaintco.com

MAILBOX WORKS (630) 355-9989 (773) 528-3111

CERTAPRO PAINTERS 630-742-5119

Large Variety of Commercial and Residential Mailboxes Intercoms and Tele-Entry Address Signage & Engraved Nameplates Installation Services Since 1989

PAVING

www.MailboxWorks.com

www.sebert.com

DUBOIS PAVING (847) 634-6089 (800) 884-4728

MOLD REMEDIATION ZENITH LANDSCAPING GROUP (847) 360-1010

QCI RESTORATION (847) 891-2929 866-832-6724

www.zenithlandscapinggroupcom

www.duboispaving.com

FM&J ASPHALT PAVING, INC. 708-544-6700 / 630-279-0303

www.qcirestoration.com

LAUNDRY SERVICES & EQUIPMENT

NON PROFIT/EDUCATION

FAMILY PRIDE LLC (630) 827-6362

ACTHA 312-987-1906

Contact Paul Anzell paula@hughesenterprises.net

CONDOLIFESTYLES

ry State-of-the-Indust

, 2012 December 13l Center

CONDO LIFESTYLES

Concrete & Asphalt Paving Pavers & Color Stamping Drainage Systems & Sewer Repairs Sealcoating, Crack Filling & Striping www.fmjasphalt.com

Association of Townhome and Condominium Associations

actha@actha.org | www.actha.org

HARD SURFACE SOLUTIONS (630) 674-4520

COMMUNITY ASSOCIATIONS INSTITUTE OF ILLINOIS 847-301-7505 Conference & Exposition @ Arlington Park Racecourse Education, Exhibits, Information

February 1 & 2, 2013 info@cai-illinois.org www.cai-illinois.org

ra Chicago Cultu n visit For more informatioes.net yl st www.condolife

Interior & Exterior Painting • Wallcoverings Stucco, Masonry & EFIS Repair • Drywall Repair www.certapro.com bkurschner@certapro.com

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www.hsshardsurfacesolutions.com

MAUL ASPHALT & SEALCOATING (630) 420-8765 Sealcoating / Crack-sealing / Striping Asphalt Installation www.maulasphalt.com

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SERVICE DIRECTORY

PEST CONTROL

PROPERTY MANAGEMENT

SMITHEREEN PEST MANAGEMENT SERVICES (847) 647-0010 / (800) 336-3500

LEGUM & NORMAN MIDWEST (312) 944-2611

PROPERTY MANAGEMENT WOLIN-LEVIN INC. (312) 335-1950 Contact Jennifer Feldman, Tom Skweres

www.lnchicago.com

www.smithereen.com

www.wolin-levin.com

MCGILL MANAGEMENT, INC. (847) 259-1331

PROPERTY MANAGEMENT BAUM PROPERTY MANAGEMENT, LTD. (630) 897-0500

REAL ESTATE TAX ATTORNEY ELLIOTT & ASSOCIATES (847) 298-8300

www.mcgillmanagement.com

www.BaumProp.com

www.elliottlaw.com

PARAGON PROPERTY MANAGEMENT (847) 465-1483

CARUSO MANAGEMENT GROUP, INC.

REMODELING/REPAIRS

contact: Tracy Davis tracy@paragonmanagement-inc.com www.paragonmanagement-inc.com

RESIDENTIAL & COMMERCIAL

(630) 717-7188

MANCIONE IMPROVEMENTS, INC. (630) 241-0001

www.carusomanagementgroup.com

PROPERTY MANAGEMENT SPECIALISTS, LTD. (847) 845-6067

CHICAGO PROPERTY SERVICES, INC. (312) 455-0107 X102 www.chicagopropertyservices.com

“Premier Community Management”

www.mancioneinc.com

S&S CUSTOM BUILDERS AND RESTORATION SERVICES (847) 568-1440

“A Management Company with Values” contact: James Krech service@pmgrs.com

Call Ed or Sam for a free quote.

CHICAGOLAND COMMUNITY MANAGEMENT (312) 729-1300

PROPERTY SPECIALISTS INC. (847) 806-6121 (630) 633-5450

www.chicagoland-inc.com

www.psimanagement.net

COMMUNITY SPECIALISTS (312) 337-8691

SUDLER PROPERTY MANAGEMENT (312) 751-0900

www.jhersheyarchitecture.com

www.sudlerpropertymanagement.com

RESERVE ADVISORS, INC.

www.communityspecialists.net

RESERVE STUDIES

WOODRIDGE OFFICE

J. HERSHEY ARCHITECTURE (847) 549-5900

Reserve Studies & Transition Defect Studies

TAIRRE MANAGEMENT SERVICES (847) 299-5740

THE HABITAT COMPANY (312) 527-5400 www.habitat.com

Conducted by Professional Engineers Enhanced Report / Most Customized Studies www.reserveadvisors.com Long-term Thinking. Everyday Commitment.

tsutton@tairremgmt.com

HEIL, HEIL, SMART & GOLEE (847) 866-7400

WERK MANAGEMENT (630) 241-0001 For All Your Property Needs www.werkmanagement.com

www.hhsg.net

HILLCREST MANAGEMENT (630) 627-3303 / (312) 379-0692

1-800-221-9882

For more information, visit our website at

www.hillcrestmgmt.com

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CONDO LIFESTYLES

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CONDO LIFESTYLES

SECURITY SERVICES

SWIMMING POOLS

ADMIRAL SECURITY DOOR STAFF SOLUTIONS (847) 588-0888

SPMS 630-692-1500

ROOFING ACTIVE ROOFING CO., INC. (773) 238-0338 (708) 430-8080

Heaters Pumps • Repairs • Chemicals Pool Maintenance • Complete Water Analysis Pool Guards, Inc. ross@spmspools.com

www.admiralsecuritychicago.com

Established 1965 Maintenance & Repairs Roofing/Sheet Metal/Tuckpointing www.activeroofing.com

SIDING / RENOVATIONS

TREE CARE ACCURATE EXTERIORS (630) 830-9191

AUTUMN TREE CARE EXPERTS, INC. (847) 729-1963

B.T. LAKESIDE ROOFING (630) 628-0093 www.lakeroof.com

B.T. LAKESIDE ROOFING (630) 628-0093

CSR ROOFING CONTRACTORS (708) 848-9119 www.csr-roofing.com See our ad on page 8.

www.lakeroof.com

KRAMER TREE SPECIALISTS, INC. 630-293-5444

HARRIS EXTERIORS & MORE, INC. (630) 372-7050

Tree Pruning, Tree Removal, Cable Bracing, Plant Health Care, Tree Planting & Transplanting www.kramertree.com

Serving Community Associations throughout Chicagoland Quality Service at the Right Price Roofing • Siding • Windows Doors • Soffit• Facia • Gutters Repairs • Carpentry • Maintenance www.harrisexteriors.com

PRO★TOP ROOFING (847) 559-9119 We’re Here When You Need us! www.protoproofing.com

A comprehensive aboricultural firm building relationships in every season for more information, please visit our website: www.autumntree.com

TV-BULK CABLE & SATELLITE COMCAST (866) 594-1234 www.comcast.com

WOODLAND WINDOWS & DOORS 630-529-DOOR (3667) Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

SNOW REMOVAL S&D ROOFING SERVICE (630) 279-6600 100,000 roofs installed TEAR OFFS • SHINGLES • FLAT ROOFS Our experience & technical know-how gets the job done right the first time! Serving the area since 1963 www.sdroofing.com sales@sdroofing.com

HARD SURFACE SOLUTIONS (630) 674-4520

RCN (312) 955-2322 rcnchicagoapts@rcn.net www.rcn.com

USA WIRELESS SATELLITE TVS/DIRECT TV 847-831-4561 www.usadishtv.com

THE WINTER WERKS (630) 241-0001 www.mancioneinc.com

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CONDO LIFESTYLES

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SERVICE DIRECTORY

WASTE SERVICES

WINDOWS/REPLACEMENTS

WINDOW RESTORATION

LAKESHORE WASTE SERVICES (773) 685-8811

HARRIS EXTERIORS & MORE, INC. (630) 372-7050

WINDOW WALL SERVICES, INC. THE CAULKING COMPANY (708) 361-9333

WINDOWS/REPLACEMENTS CHICAGO WINDOW SYSTEMS, INC. (312) 915-0591 Window and Patio Door Replacement Aluminum and Wood Clad Steel uL Rated Windows Aluminum Store Fronts www.cwins10@yahoo.com

www.windowwallservices.com All Types of Window Restoration Weather Stripping / Hinges Handles and Adjustments Curtain Wall Repair Specialists

WOODLAND WINDOWS & DOORS 630-529-DOOR (3667)

Window and Related Masonry Interior & Exterior Doors | Siding & Gutters www.woodlandwindows.com

For Display or Professional Services Directory Advertising Info, Call (630) 202-3006

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CONDO LIFESTYLES

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CONDO LIFESTYLES

by Dawn Moody and Gabriella Comstock , Keough & Moody, P.C. As Presented at the Community Association Institute of Illinois’ (CAI-IL)* Legal Forum on September 14, 2012

Top 10 Legal Mistakes a Board Can Make & How to Avoid Them Every Board of Directors has or will make a mistake-maybe even multiple mistakes! The purpose of this article is to identify common mistakes, so that they can be avoided.

“Penny -Wise Dollar Foolish” Mistakes Mistake #1: Not obtaining and using professional advice in order to save money Oftentimes board members believe that the cost incurred to work with an attorney, an engineer or other professional service provider is excessive and unnecessary. However, it is less expensive to hire the professional, obtain the advice and then act. Board members are not expected to know everything. Yet, they should surround themselves with people who are experts and who can help

guide them. As with most things in life, spending a little money up front can save you quite a bit in the long run.

Mistake #2: Not collecting assessments Assessments are the lifeline of every association. After all, associations are not for profit corporations. If assessments are not collected, the association will not be able to meet its financial obligations. Collecting assessments allows the association to meet its maintenance responsibility, which has a positive effect on property values. Collecting assessments ensures that an association does not waive its ability to collect up to six (6) months of

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assessments from a third party purchaser following a foreclosure. A board can be sensitive to these difficult economic times, without forbearing on the collection of assessments. Adopting a collection policy and following it helps a board to balance the needs of the association and the members.

Mistake #3: Ignoring immediate maintenance concerns An association has maintenance duties and responsibilities per the association’s governing documents. Failure to meet these obligations can impair the association’s ability to collect assessments as a recent case in Illinois ruled that an owner may raise this as an affirmative defense in a case filed by the association to collect unpaid assessments. The Board should focus on what work needs to be completed and not who is requesting the work to be completed.

Mistake #4: Failing to plan for the future It is dangerous for a board not to look beyond today. While a board has a duty to take care of the property today, it also wants to make sure that the association is prepared for the future. This may require a board to obtain and follow a reserve study. It also may result in increasing assessments. Putting money aside today will help the Association defray expensive replacement projects in the future. This also makes the association more attractive to a prospective purchaser.

Letting Your Emotions Guide Your Mistakes Mistake #5: Forgetting that you are running a business All board members are owners within the association. However, when making decisions on behalf of the association, they must think like a board member and not as an owner. Failure to do so can cause trouble for the association and the board member. Owners will learn how to play on the board member’s emotions and to “sway” them to get what they want. Also, every board member owes a fiduciary duty to the other members of the association. This requires them to always act in the best interest of the association. The association is a corporation and must be run as one. To avoid this mistake, the board should listen to the advice of the professionals hired to help the association. The Board should also make decisions that benefit the majority of the association and not just the “loud” minority.

Mistake #6: Not thinking reasonably when addressing violations

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CONDO LIFESTYLES

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Identifying rule violations is an easy way for board members to feel as though they are doing good for the association. However, the board’s focus should not only be on the members who live next door to the board president. Instead, the board should consistently enforce the association’s restrictions against all members of the association. Inspection for violations should be done throughout the entire community, on a regular basis, and with respect to all restrictions. Additionally, if there are any personality disputes between a board member and specific unit owners, it might

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BOARD BASICS

be best not to have that board member reporting or inspecting for violations at that owner’s unit. In addition, a board member has to remember he/she is running a business, and cannot treat his/her friends (or enemies) differently!

Mistake #9: Not consulting governing documents “Let’s fly by the seat of our pants” is not the motto to be followed by board members. To avoid any other mistakes listed herein, board members should be familiar with the association’s documents. This promotes consistent enforcement of the documents. This first step to avoiding this mistake is to make sure that the Association’s books and records contain a complete set of the association’s governing documents, including a copy of the declaration which was recorded with the County Recorder of Deed’s Office. When the Board is in doubt as to what the documents mean, it should seek the advice of legal counsel. As noted above, obtaining advice from the professionals in advance of acting can save the association money later. Further, in Illinois if the Board of Directors relies on the advice of counsel, even if incorrect, the Board has not breached its fiduciary duty. Carney v. Donley, 261 Ill.App.3d 1002, 633 N.E.2d 1015, 199 Ill. Dec. 219 (2d Dist. 1994). Likewise, if the Board of Directors acts contrary to the advice of counsel, one can argue this is a violation of the Board member’s fiduciary duty.

Mistake #7: Treating owners differently This mistake is similar to mistake number six. Yet, it is different as in mistake number six, a board member is allowing his emotions to control the decisions he makes (or does not make). Whereas, with this mistake, the board member is focused on the actor rather than the act itself. The board should discuss matters based on the situation rather than based on who is involved in the situation. This will lead to a board using better judgment and make a decision that is more reasonable. Have you noticed the theme here? Inconsistency can lead to common mistakes. Inconsistent enforcement can also lead to setting a precedence that was never intended. Though a policy or resolution can be updated or changed by a new board, documenting the policies in writing can provide a record of current and past policies, to avoid claims of inconsistency.

Neglecting To Play By The Rules Mistakes

Mistake #10: Micro managing the Association Finally, not only should the board surround itself with professionals, it should also let the association’s professionals do their jobs. For most board members, this will be the first time that they run a corporation. While a board is not expected to have all of the answers at all times, it is expected to know where to go to get the answers. For this reason, a board should put together a team of key players including a licensed community association manager, an attorney, an accountant, an engineer, an insurance agent and other vendors such as a landscaper, roofer, paver, etc. Each member of the board’s team plays an important role. Yet, how important a player is depends on how much the board will allow the player to do his job. That is, while the board should not sit back and do nothing because an expert is involved, it also must find a way to balance its involvement without limiting the expert’s role. Y

Mistake #8: Not acting as a Board There is a reason that a board consists of several persons. After all, several board members lead to several opinions. Remember there is no “I” in “board”. Therefore, there is no one person controlling a board. The President is an officer of the board and not a dictator. Though the role of president may be that of a leader, there is no additional power associated with the position. unless otherwise stated in the association’s governing documents, the board can act only with the approval of a majority. This mistake can also be made when a board member undermines the decisions made by the majority of the Board. It is okay for individual board members to have their own opinion, or vote against a decision. However, once a decision has been made, the decision of the majority should be respected.

Tom Engblom

Larry Myers

CMCA AMS PCAM

Assistant Regional Account Executive

Vice President/Regional Account Executive

www.carusomanagementgroup.com

779.435.2937 Toll Free 866.800.4656 ext. 7429 larry.myers@ mutualofomahabank.com

312.209.2623 Toll Free 866.800.4656 ext. 7498 tom.engblom@ mutualofomahabank.com

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CONDO LIFESTYLES

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CONDO LIFESTYLES

By David Lewin, Lewin Law Group and Of Counsel to Querrey & Harrow, Ltd.

Don’t Let Your Association Slip on Snow and Ice As the temperature starts to drop, it is time to give some thought as to how to protect your building when it gets cold. bility if an accident does happen. However, if the building takes appropriate action to make itself aware of conditions and if it enters into solid contracts for snow removal, that risk can be significantly reduced.

hen it snows, the condominium association is faced with goals that at times are contradictory. The first goal is to keep the premises safe. The primary goal of management should always be to keep the building intact and to make sure that each resident and guest returns safely home. However, the other goal is to protect the financial condition of the building and the owners. Unfortunately, under Illinois law those goals may be contradictory. Actions taken to make the building safe may serve as a basis for lia-

Slip and Falls on Snow and Ice: The Basic Rules While we all should be able to agree that removing snow and ice should benefit unit owners, a quirk of Illinois law is that from a liability standpoint, the association may be better off making no efforts. Liability will arise from doing the job wrong, but will rarely arise from

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doing nothing at all. As a general rule in Illinois, there is no obligation to remove natural accumulations of snow and ice. While that may technically be legal, it is usually not practical. Unplowed snow tends to make for unhappy unit owners. Moreover, evading all responsibility should not be the primary goal of an association. When it comes to liability for falls on snow and ice at residential buildings, Illinois distinguishes between falls on sidewalks and on driveways. When it comes to sidewalks, Illinois provides owners with a great deal of protection. Under the Snow and Ice Removal Act, 745 ILCS 75/0.01 et seq., owners and their agents are not liable for personal injuries resulting from removing snow from sidewalks unless the act or omission was “willful or wanton.” Basically under the Act, if you try to do a decent job, you will not be held liable. There is some dispute as to how broadly

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BOARD BASICS

courts should interpret “sidewalks.” For instance, in Flight v. American Community (2008), the court found that a driveway where the plaintiff was walking was sufficiently like a sidewalk that the Act should apply. That is not set in stone, however, since in Gallagher v. Union Square Condominium (2010), the court found that the Act did not apply to a unit owner walking across a driveway to his garage. Flight was a Cook County case. Gallagher was not. As a result, the potential liability of an association for now depends on the location of the association. Outside Cook County, there may be more liability. As a practical matter, if the building does take action to remove snow and ice, regardless as to whether the snow is on a sidewalk or driveway, then the condominium manager and board should make themselves aware of how snow is being removed. If they are aware that building staff or contractors are doing snow removal in a way that makes things more dangerous, they should step in. If a person falls, the Board and management should be able to show that they made reasonable attempts to keep the area safe.

The Snow Removal Contract Whenever a condominium association contracts for anything, the association should be aware that it may be taking on liability. Where a condominium association retains a snow removal contractor, it does not necessarily take on the obligation to remove snow and ice. The contractor, on the other hand, has an obligation not to create unnatural accumulations of snow and ice that might make the premises dangerous. However, if somebody falls both the contractor and the building are likely to be sued. When there is a risk of liability, associations should look to use contracts to shift risk. The goal is to have somebody else pick up the tab if something goes wrong. The best way to do so is by requiring solid insurance clauses and indemnification clauses in the snow removal contract. In a written contract, the snow removal contractor should be required to both indemnify [pay any judgment] and also to name the association and management company as additional insureds under the contractor’s auto and commercial general liability

policies. Those provisions should be drafted by counsel experienced not merely in condominium law but in construction contract law.

What to Do When Somebody Does Fall In Illinois in winter, people will slip on snow and ice. They will slip where a building has a wonderful snow removal plan and they will slip where there is no removal plan. When that happens, what should management do? The key to defending any personal injury claim is to document the conditions and notify the insurers. If the association is represented by counsel experienced in personal injury defense, that attorney should be notified. If at all possible, speak to the person who fell. The quicker the conversation, the better. If the person is able to walk, have the person point out exactly where the person fell. Take photos of the area. Take photos of the surrounding area also, to document the general conditions. If snow is heavy, take a photo using a ruler to show the depth. Do the same with any alleged witnesses. If the injury is serious, consider having continued on page 31

“Yes, yes, I turned off the iron. Now let’s go.” Don’t let a resident’s gap in memory compound gaps in coverage. Mesirow Financial Insurance Services— Superior coverage and advocacy on claims. For more information, contact: Nancy Ayers Direct–312.595.8135 nayers@mesirowfinancial.com Insurance services offered through Mesirow Insurance Services, Inc. Mesirow Financial refers to Mesirow Financial Holdings, Inc. and its divisions, subsidiaries and affiliates. The Mesirow Financial name and logo are registered service marks of Mesirow Financial Holdings, Inc. © 2011, Mesirow Financial Holdings, Inc. All rights reserved.

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11:00am - 3:00pm | December 13, 2012 | chicago cultural center | Call 630-202-3006 for more information

CondoLifestyles

~ S C H E D U L E / A G E N D A ~

» 11:00 am Registration » 11:30 am Luncheon, Awards & Announcements • Introduce 2012 MCD Media Advisory Board Members • 2012 Outstanding Leadership Awards

» 1:00 pm Economic Trends & Challenges: What Happens after the Court Order... The Sheriff’s Role & Other Things You Should know About Foreclosure & Evictions. Also covered: Rentals & Leasing m o d e r ato r :

tairre dever-Sutton - tairre management Services

» 2:00 pm Legislative & Legal Update:

» Chicago Police - CAPS Program william townsell

» Bed Bugs & other Pests Jim Brucker and Scott Seifert - Smithereen pest management

» Fire Protection & Life Safety charles Fetherling - Simplex-grinnell

» Fire & Water Restoration, Mold Remediation » Painting & Decorating

» Digital Cable TV & High Speed Internet » Urban Landscape Ideas

Hand-outs & resources will be provided on the following topics: Renters, Pets & Parking, Board Training, Security, Waste Management, Green Building Technologies, Budgeting & Financial Management, Reserve & Transition Studies, and Managing Capital Improvements.

Additional topics may be added.

Timing -Structure this event is intended to be structured to accommodate various levels of expertise as well as different types of interests in community associations. it is also intended to be flexible to meet time and schedule concerns. we are pleased to accommodate you in this regard. contact our office to make customized arrangements. Why Should You Attend? » to gain valuable, practical insight on how to deal with special issues of community associations » Identify resources needed to help your association(s) solve current challenges that your association(s) is facing » meet and greet condo Lifestyles advisory Board members and other industry experts » to better understand government regulations regarding community associations » to contribute and share your ideas and input in an effort to improve standards in the field of community associations What Should you bring? Your questions. we will provide you with a bag full of paper, pens, and several other items you can use at the program, home or office.

tony Briskovic - chicagoland community management

Ordinance, FHA Mortgage Guidelines

micky tierney -community Specialists

The Chicago Cultural Center is located at 78 East Washington. An MCD registration table will be located outside the Washington & Garland rooms on the fifth floor. Use elevators in South lobby.

» government officials & employees

2012 State-of-the-industry committee

marla Jackson and diane white - the Habitat company

- wolin-Levin, inc

» colleagues & contractors

» Energy Conservation Tips chicagoland Building & environments

Community Act, Chicago Life Safety

elena Lugo

» realtors & realty professionals

» ComEd & Gas Rates for Commercial Properties Jackie Loftis - emcor Services team mechanical

Jeﬀ Semler - Heil Heil Smart & golee

m o d e r ato r :

Luncheon Seating is limited to the first 140 registrants.

» developers

» Bulk TV, Internet Technology & Community Associations Steve trettin - comcast

Manager Licensing, Common Interest

for Condos, and Bed Bugs

Who Should Attend? » community association Board & committee members » property managers

Table Discussion Topics & Information Tables include:

Chicagoland

Buildings Environments

tairre dever-Sutton -tairre management

CondoLifestyles

Brian Kelly - terrace Square condominiums

tom Skweres & elena Lugo - wolin Levin, inc.

We welcome you to join us! Please complete the form and return to our office. If you will attend the seminar, return the registration information with your payment. Seminar (per person) cost is $105.00 for professional colleague or vendor, $85 per additional person from same firm regular registration (includes handouts and other resources to be provided). Qualified community association volunteers are $35.00 per person. MCD Media, 935 Curtiss, Suite 5, Downers Grove, IL 60515, 630-202-3006 or Fax 630.932.5553

No. of CA units you are involved with as a:

No. of CA properties you are involved with as a:

deveLoper; __________

manager; ____________

reaLtor; ____________ coLLeague/ contractor; ________

director ____________

unit owner __________

NAME(S) List additional names on back or seperate sheet

NUMBER OF PROFESSIONAL GUESTS @________________________ = $ __________________ NUMBER OF VOLUNTEER GUESTS @________________________ = $ __________________

ASSOCIATION/COMPANY

ADDRESS

E-MAIL

PHONE

FAX

T O T A L = $ __________________ VISA/MC#

EXPIRATION DATE No part of the publication may be reproduced whatsoever without written consent from the publisher.

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S P E C I A L F E AT u R E

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Snow and Ice counsel or your insurer obtain statements from any favorable witnesses. If you have retained a snow removal company, that company should be put on notice of the potential claim. Your counsel should draft a formal letter to the company demanding that the snow removal company defend your association. Finally, notify insurers for both your association and any snow removal contractors. One of the biggest mistakes that associations make is losing coverage due to late notice to the insurer. If you notify your insurance producer, demand written confirmation that the insurers have been notified. It will snow this winter. People will fall. However, if an association is aware of the law and is able to put solid contracts in place and to respond to accidents effectively, then the financial health of the building can be protected. Y

in Memoriam... David Berke David Berke lost his battle with cancer last month. David meant so much to his family, friends and all of us here at WolinLevin. Through 16 years of dedication to our company, David was more than a valued member of our team, but also a part of our family. David’s contributions will long-last at Wolin-Levin and he will be greatly missed.

Theresa Dixon Terry Dixon lost her battle to cancer on July 3, 2012 Terry has been married to her husband Tim for 35 years. She was in the community management business for over 35 years and most recently worked at Terrace Square in Niles. Terry served on a number of committees for mcd media and was an active writer for Condo Lifestyles. Her hobbies included gardening, golf, reading, and seeing movies with her daughters Jennifer and Michelle.

Make it a home before they even move in. Give residents the entertainment they demand with XFINITY™ TV, Internet and Voice. XFINITY is TV, Internet and Voice service made possible by Comcast’s network upgrade to an all-digital platform. XFINITY offers your residents the fastest Internet speeds, the phone service with the best call clarity and triple the HD channels. Plus, they can enjoy thousands of movies and shows On Demand on TV – and even online – all delivered right to your resident’s door. Keeping Up with the Kardashians Now Available on xfinityTV.com

1.800.XFINITY Restrictions apply. XFINITY service not available in all areas. Not all features available with all XFINITY packages. Based upon August 2010 call clarity analysis by Tektronix. Call for restrictions and complete details. Comcast © 2011. All rights reserved.

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2012©.

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CONDO LIFESTYLES

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CONDO LIFESTYLES

By Michael C. Davids

FHA Mortgage Guidelines Released, Short Sale Options Expanded The Federal Housing Administration (FHA) recently issued new guidelines that will provide more opportunities for homebuyers and sellers and greater stability for condominium communities.

ommunity association industry advocates have been pressing FHA to revise rules that determine if a condominium community meets certain guidelines that enable buyers to obtain FHA-insured mortgage loans. FHA is the only source of low down payment mortgages that many borrowers use to become first-time homeowners. For many Americans, condominiums are often the gateway to home ownership. “This is excellent news for sellers, buyers, condominium communities and the housing

market across the country,” said CAI Chief Executive Officer Thomas Skiba, CAE. Skiba said the FHA revisions appear responsive to several key community association industry issues, including community delinquency rates, insurance coverage, commercial space limitations and condominium certification statements. “These changes should mean that more Americans can obtain FHA-insured mortgages to purchase condominiums.” “We hoped this would happen a lot sooner, but it’s an important step in the right

direction,” added Skiba. “More reasonable FHA condominium policies will spark home sales and help tens of thousands of condominium communities begin to recover from the housing slump, and that can only help the national economy.” FHA staff stated that the new guidelines are intended to provide flexibility for condominiums, and reflect enhanced risk management standards being enforced in all FHA program areas. FHA said it made the “temporary adjustments” to the condominium standards in response to market conditions. CAI and other community association industry advocates are urging the agency to establish a regulatory foundation for its condominium program to provide long-term certainty of process, flexi-

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CONDO LIFESTYLES

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No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2012©.

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M O N E Y M AT T E R S

bility and support for the future of condominium housing, and to resolve critical policy areas not addressed by today’s announcement. Skiba said CAI will support efforts, if needed, to provide FHA the additional statutory authority required to accomplish these goals. In the absence of a condominium regulation, FHA’s administrative authority is limited with respect to the changes it can make. “I think the most important items are the delinquency being increased from 30 to 60 days, the increase in allowable commercial percentage up to 50% of the association from 25%, and allowing single investors to own more than 10% of the units in an association. This has been a deal killer in several instances and is a departure from Fannie and Freddie who don’t accept condos where a single entity owns more than 10% of the units,” said Steve Stenger of Condo Approval Professionals LLC.

» all other persons handling or responsible for funds administered by the association

ment company as an insured; or » the association’s policy includes an endorsement stating that management company employees subject to the direction and control of the association are covered by the policy

» the coverage amount must be no less than three months assessments on all units plus reserve funds unless State law mandates a maximum dollar amount of required coverage.

This is a substantial change to the previous requirements that required management companies to obtain separate fidelity insurance for each condominium. » Project Certification (Appendix A)—FHA will require that the individual submitting a condominium project for approval cer-

If the condominium engages the services of a management company— » the company must have obtained its own fidelity coverage that meets FHA association coverage requirements; or » the association’s policy names the manage-

BE PREPARED

FHA Releases Condo Update The Federal Housing Administration released a long-awaited revision of its condominium project approval guidelines on September 13th. The revisions to FHA condominium guidelines are contained in Mortgagee Letter 2012-18 and expire on August 31, 2014. FHA states it is making temporary adjustments to its condominium standards in response to market conditions. CAI has the new guidelines, Mortgagee Letter 2012-18, under review. FHA appears to have been responsive to several key community association industry concerns including delinquency rates, fidelity insurance coverage, the condominium project certification statement, and limitations on commercial space. Preliminary CAI staff analysis show FHA policy changes in the following areas— » Delinquencies—No more than 15 percent of units may be more than 60 days delinquent. The 15 percent limitation includes all units in the project and FHA will not consider any exceptions to this standard. Previously, the guidelines used 30 day delinquency as a threshold. The change to 60 days is very beneficial to community associations. » Employee Dishonesty Insurance—All new and established condominium projects with more than 20 units shall obtain and maintain employee dishonesty insurance coverage. The association’s policy must— » cover all officers, directors and employees of the association

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2012©.

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CONDO LIFESTYLES

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CONDO LIFESTYLES

tify that— » To the best of their knowledge, the information in the approval request is accurate » They have reviewed the project application and upon the advice given by an attorney it meets all State and local laws

by-case basis, exceptions for mixed-use condominiums with commercial space of up to 50 percent, but requires substantial documentation for consideration. All exception requests must be submitted for review through the Philadelphia Homeownership Center.

» They have reviewed the application and it meets all current FHA condominium approval requirements, and

For more information, read the HUD Mortgagee Letter 2012-18 at 1.usa.gov/OJEcBJ.

» They have no knowledge of circumstances or conditions that may have an adverse impact on the condominium project (construction defects, substantial operational issues, or litigation, mediation, or arbitration issues)

Short Sale Changes

Previous guidelines required much more onerous project certification attestation that had put the individual submitting the project approval for the condominium at risk for legal liability. » Commercial Space Limitations—FHA will consider condominium projects with commercial space of between 25 and 35 percent for projects through the HRAP process only. FHA will consider, on a case-

CONDO LIFESTYLES

In another development, Fannie Mae and Freddie Mac have announced changes to short sale policies to help more borrowers avoid foreclosure and stabilize neighborhoods. Mortgage servicing companies will begin using the new short sale procedures in early November. The new guidelines permit Fannie and Freddie to offer a streamlined process to qualify and approve short sales where the borrower has missed several mortgage payments. The plan also will reduce or eliminate documentation burdens for borrowers with low credit scores or who face serious financial

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hardship. In an important policy change, borrowers who are current on their mortgage payments will be permitted to sell their homes in a short sale, subject to approval from their mortgage servicer. Short sales allow homeowners to sell their homes for amounts less than the value of existing mortgages. While Fannie and Freddie incur losses in a short sale, these losses are lower than the costs of foreclosure, making the short sale a preferred foreclosure alternative for both companies. Community associations should be aware that these sweeping changes to short sale requirements have established a maximum aggregate payment of $6,000 per short sale to satisfy any subordinate lien on the property. This could include any association lien for non-payment of assessments or other amounts due. Y

No part of the publication may be reproduced whatsoever without written consent from the publisher. All material herein is copyrighted 2012©.

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