Local
to Ventura and Los Angeles Counties, consultation services Nationwide
SPECIALIZING IN:
Developer to Owners Transition - Condominiums (COAs) Self-Managed
Associations - Apartments to Condominiums Conversions - POAs/PUDs/Planned
Developments (Townhomes) - Residential Rental Units
INCLUDING: Creating
Policies and Procedures - Commercial Property Associations -
Detached Homes Associations - Professionally Managed HOAs
EXTENSIVE EXPERIENCE IN:
Cost reductions, Elections, Committees, Governing Documents, Rules, Dues,
Mediation, Enforcement, Contracts, Delinquency resolutions, Liens, Laws,
Reserve studies, Budgets, Nuisances, Developer transition, Pets, Interpretation, Litigation Avoidance, Hearings, Parliamentary Procedure, Enforcement, Civil Code, Procedures, Mold and Mildew resolutions, Noise, Maintenance, Utilities, Disputes, Vendor/Contractor Selection, Biding, HOA/Renter issues, Vandalism, Security Options, Major Contract Bidding and Negotiations, Contracts, Policy, etc.
Today in Southern California if you are buying a new residence in a development, chances are you are also becoming a Member of an Association. In the 1970s the developers decided that it was to their benefit to form these Associations to insure uniformity in the appearance of the communities they were marketing. This trend has become prevalent in our area and requires Homeowner involvement from the time the first building phase in completed. Buyers of Association residences generally have little if any knowledge of the transition process from the developer to the Owners or the managing of the Association after the developer’s completion. However, you can be sure that the developer knows the ropes and how to use that knowledge to their benefit, which is often contrary to the buyer’s best interests.
Additionally,
the Owner’s Board of Directors is empowered to implement Rules, Policies, and
Procedures based upon the Association’s Governing documents in compliance with
the Civil Code. If this is done properly, it will result in minimizing overhead
and inconvenience as well as complete, enforceable Rules and Regulations.
About Chris Johnson and Property
Management Consultant Services
My name is Chris Johnson and I was born in Los Angeles in the 1950s. My family moved to Ventura County (Thousand Oaks) in 1964 and I’ve seen the amazing growth and development since that time. In the 1970s I started my career in Real Estate by purchasing fixer-uppers and renovating them for profit or keeping them as rentals. During this time I became a close friend with the Thousand Oaks City Attorney (James Longtin) who published “California Land Use Laws” and is considered the authority on the subject. Mr. Longtin was my partner in many of these investment properties and we still maintain regular contact although he now resides in Berkeley, CA. With him and other partners, I gained substantial insight regarding Real Estate as an investor. I personally managed dozens of rental properties for many years, sold homes as a licensed Realtor, and have worked full time with Homeowners Associations since 1995.
During that time I climbed the ladder in Association Management, working with a few different Property Management firms. This varied exposure has allowed me to observe different Management Techniques and Methods, both quality and inefficient. It also provided opportunities including Managing Apartment to Condominium Conversions, Associations ranging from 12 to 481 single family homes, 22 to 748 unit Townhome and Condominium projects, Commercial Real Estate, Planned Developments, etc. I’ve dealt with Board of Director Recall Elections, many various Litigation issues including Builder Defect, Insurance claims of all kinds, Developer Transitions, and just about everything else imaginable. I can provide many glowing references from my past various Boards of Directors, all welcoming verification.
I have also taken and passed numerous Real Estate courses from the Community Associations Institute (CAI), the Institute of Real Estate Management (IREM), West Coast Schools in Real Estate, Ventura and Moorpark Community Colleges, dozens of Continuing Education courses and seminars, and passed the Real Estate License examination – issued License I.D. #01051622, expiration date January 4, 2008.
I work on an hourly basis
for consultation and providing direction as well as on a guaranteed savings
basis, including Professionally Managed Associations. There is no charge
unless I am unable to find something that is implemented by the Client.
The Developer (Deaclarant) to Owner Transition. Developers typically hire a Management Company to handle the required maintenance, Owner issues, accounting, and the myriad of other tasks involved in the running of an Association. As each phase of the development is completed, the new Owners take over the responsibilities previously handled by the builder. Since the developer hires the initial Management Company, there are inherent conflict of interests for the Management Company. Although the builder is bringing in the business to the Management Company, their fiduciary duty is to the Owners. How can the buyers know if their best interests are being represented by a Management Company that owes a portion of their business to the developer/client that is supposed to adhere to the City’s approved plans. Developers have many methods of creating financially beneficial cost cuttings that the City Inspectors fail to catch, and the City can not in any way be held liable for the builder’s failure to comply with the approved plans. That leaves it up to Owners without experience to determine if the developer is fulfilling all the requirements and to catch items left undone or incomplete. It’s difficult to count on the Management Company to catch the builder’s failure to perform because they don’t want to alienate a source of business revenue and lack the time. The City can not be held liable for work that is not done according to the approved specifications. This is where a proponent of the Owners becomes invaluable, as your advocate’s objective is to catch failures to perform before these issues become the Association’s future nightmares. Associations are well served having a knowledgeable Owner Representative to make sure the Buyers are not being shortchanged by the developer’s omissions or creative cost cutting methods.
At one Association I managed, the developer failed to install root guards around Mellaleuca Trees as required in the approved plans. If the developer had installed them before utilities, paving, etc., their cost would have been about $8,000. Just as the developer’s 10-year statute of limitations expired, the trees began uplifting concrete and asphalt as well as invading the plumbing. The solution cost the Association over $100,000 dollars to install the guards after the utilities and pavement was in place.
Another example involved the developer’s failure to properly prepare a rocky slope for landscaping as per approved plans, they just purchased inexpensive plants days before the final walkthrough. The Association signed off and the plants died quickly. In order to make the slope suitable for permanent landscaping, the Homeowners Association spent almost a quarter million dollars, the developer saved about $200,000 using this method.
Unfortunately, the examples go on forever. Developers can make errors and also have financial incentive to cut costs, the City Inspector is not liable and therefore should not be counted upon to catch all the developer’s errors and omissions.
Self-Managed Associations are not uncommon, especially with Association of 30 units or less. In order to keep the monthly Association assessments at a reasonable level; it can make sense to go the self-managed route. However, the inherent problem with self-management is that the Association still has the same general requirements as per the Civil Code as any other Association (with few exceptions such as an Audit/Review if income is less than $75,000, etc.). Since the Board of Directors is a voluntary entity subject to change every year when the election process takes place, continuity and observance of all the mandated requirements are often misunderstood or inadvertently overlooked.
This creates an obvious potential liability for the Association (as volunteers, the Board of Directors have no individual liability) that can be resolved by hiring a Consultant to educate and direct the Board. After the initial interpretation of the Governing Documents and subsequent implementation of rules, regulations, policies, and procedures are in place; the Association is much better equipped to run properly. The Consultant can also provide the Board of Directors a working format on fulfilling the mandated annual disclosures and such things as Reserve studies and auditing requirements. A few of the many examples of common errors or omissions by self-managed Associations are: Board compensation, inadequately funded Reserves, annual audits/reviews, providing adequate notice, proper Budgets, etc.
A common theme I’ve found is Boards misinterpreting the Associations Governing Documents, which results in the maintenance, repairs, and replacement of components which are the Owner’s responsibility. A Consultant will review and then create a policy, which is very user-friendly and reduces costs dramatically.
Another typical finding is hiring contractors and maintenance companies without proper research, which can prove catastrophic. If their insurance is inadequate or expired, the Association becomes liable. In today’s insurance market, very few claims need be filed before the carrier provides notice of non-renewal. Replacing the insurance can mean large special assessments to each Owner and dues increases as much as 50% or more. One of my Associations (153 units) was paying $38,000 annually for insurance with a primary (State-admitted) company. After five claims in five years, the insurance company paid out a total of $32,000; this means a profit of $178,000 over the five years. Because all five claims were in the last two years of the five-year loss history and involved water damages, the Association was non-renewed. Policy replacement through secondary carriers was $140,000 annually, costing each Owner $55.56 mo. in dues. Great care must be taken in determining coverage and the filing of claims to avoid dramatic cost increases.
Professionally Managed Associations often have a false sense of security, expecting the Management Company to think outside of their contractual obligations. Property Managers are given as many Associations as they can possibly handle to insure profitability for the Management Company and typically have no time to look at things that are not in the job contract. Again, I can provide numerous examples of Associations that I have managed which have implemented ideas that proved very beneficial but had been overlooked by previous professionals. Managers simply don’t have the time to provide the luxury of looking at new ideas that are more efficient as well as cost effective, they typically keep doing things as they have always been done in the past. It’s amazing what a fresh approach can find to benefit the Association when things are examined carefully, I invariably find improvements.
Residential Rentals can be fairly easy to manage if you know the best methods. However, it’s tougher now than it was before the law changed last year requiring Landlords to provide a 60 day notice to vacate if the tenant has been living there for a year or longer. Since the most the Owner can charge for a Security Deposit is the equivalent of two months rent for an unfurnished rental, and typically the tenants stop paying rent upon receiving notice, there is no deposit left when they vacate. Therefore, it’s more critical than ever to screen the prospective tenants and there are ways to greatly increase your odds of finding a good one. If you are inclined to save money and manage your rental(s) yourself, I will gladly provide you with the forms and knowledge that will best protect your investment. I have learned many simple concepts after handling hundreds of leases that allow anyone to handle their rental in the safest, most effective means.
You will learn how to get the most exposure for your advertising costs, how to show the property with a minimum of time and interruption, what checks to run before deciding, how to follow up on the application information, etc., etc. I wish that I had consulted with an experienced expert before starting my rental work, I learned many avoidable and expensive lessons. Also, a Real Estate license is required to manage certain amounts and types of rentals and Landlords want to avoid problems with the Department of Real Estate if possible. Lastly, if the situation is bad with your tenants, eviction is not always the most cost effective means of cutting your loses. There are other options the Owner should be aware of and utilize if needed.
INTERPRETATION OF THE GOVERNING DOCUMENTS, CREATING AND IMPLEMENTING RULES, POLICIES, AND PROCEDURES
The majority of the many Associations that I’ve managed usually continue to do things the way they have always been done, Members of the Board assume that it must be correct. I’ve found that assumption to be erroneous more often than not, keeping up with changing Civil Codes and court rulings requires changes in the manner in which responsibilities are dealt with. It is a matter of correctly interpreting the Association’s duties and responsibilities, which is not a simple matter for the average volunteer without background in matters of this nature. Often the Association takes responsibility for maintenance that is rightfully the Owner’s, correctly implementing policies and procedures in this regard save money. If the Association updates and comprehends the Reserve Study and sticks to the recommended maintenance schedules therein, the maintenance is done to each Common Component throughout the complex at the same time, which results in dramatic savings. An Owner that abuses a Common Component can be accountable.
Often customized documents are required to deal with such issues as Owners effecting improvements to the Common Areas. The changes might be for the better, but often costs for the maintenance become the Association’s if the Owner is negligent or sells the property. There are methods of holding Owners accountable in perpetuity if properly documented and the Association deservedly saves money.
The Board of Directors is empowered to implement Rules and Regulations when necessary but there are guidelines that dictate the enforceability of these additions or changes. A simple example is the rule that mandates dogs have a leash on at all times when in the common area, this rule has been abused by residents that put a leash on the pet and then let it run free. Simply adding the word “held” eliminates this loophole, verbiage is very important as is foresight and experience with those that tend to violate the principles. In every Association there are residents that should not be living in a place carefully regulated and there is always a best way to deal with such individuals. My experience will allow me to provide the best method of wording rules so that they have no loopholes and apply to more than one specific issue or future issues that are similar. Pets, parking, and maintaining the appearance of the Unit's exclusive use areas are all difficult to effectively enforce unless you have found the most effective means of doing so. Noise and nuisance residents are also tough to resolve unless the guidelines are very clear. I can provide testimony of the effectiveness of methods of resolution from past Board Members who will agree that my work provided desired results efficiently.
I can show examples of rules, policies, and procedures that I have drafted for Associations that proved to be very effective whether the result is decreased maintenance costs, solving resident disputes, and other issues that have been problematic. A dramatic improvement becomes evident after the Board of Directors implement and enforce these upgraded community standards.
EXAMPLES OF MY INNOVATIVE SOLUTIONS AND SAVINGS
I would like to provide some specific ideas and ways that I have solved stubborn problems or found methods of reducing expenditures that proved extremely beneficial to the Associations. These examples will be either uncommon or generic; not your specific resolutions but will help to demonstrate my unique approach.
I took over the management of one Association that had an unusual electric and gas setup. The developer had the utility companies provide the electric and gas only to the entrance to the property and hired contractors to finish running the lines to the individual units. A Company was hired to read the individual meters and the charges were included with the monthly dues. I reviewed the records and found that 37 Units had been added to the community some time after the original 160 Units. I noticed that the bills indicated only the original 160 Units, no previous manager had informed the utility companies of the additional 37 for five years. I immediately contacted the Gas Co. and SCE to advise them of this omission, they then corrected the error. This increased the Associations baseline (lowest rate) allotment by over 20% and also provided the submetering discount ($2.79 mo. per unit because they didn’t have to read the meters) for the additional units. The result was a saving of about $10,000 annually for the Association, unfortunately it was not retroactive and about $50,000 was lost because of the oversight. If I can’t find it, then you don’t pay.
Another example is an Association that was replacing a refrigerator and microwave oven the night of my first meeting as their manager. I was told that the previous appliances had been stolen just after the locks had been changed and there was no sign of forced entry. I was perplexed that they would replace them without having resolved the access issue, and would have advised against it had I been handling the account before that evening. Sure enough, the next week both appliances were stolen and the Board requested that I obtain bids for the installation and monitoring of a security system. The best bid was $1,800 for installation and $68 monthly for monitoring. I was onsite a few days later to meet with a contractor that was implementing my next example and spent some time trying to figure out how the thieves were getting in. I looked at the newly installed lock system and figured out that one of the bolts that go into the door frame to secure it didn’t have a stop installed. The thieves were simply stepping on an object so that they could reach the bolt and push it down, which allowed the door to open easily. I went to my car and put a screw where the stop was missing and the problem was solved, not genius but the prior manager was not obligated to figure it out. Managers are so overloaded they don’t have time or inclination for creativity, I charged $.05 for the screw.
Lastly, the example I referred to in the last paragraph. He was implementing an energy solution that most of my Associations now use. Without being too specific, I most that Associations were lighting areas that were targets of vandalism and rules violations. I thought a better method was to black out the areas when not in use and install two motion detectors ($700-900) to activate when the area lighting shut off. Not only have these Associations saved on average 2000 watts of electricity for about 10 hours a night, 365 days per year, and my solution either stopped or greatly diminished the vandalism and violations. Electrical savings averaged $2,000 yearly.
I can provide dozens of other examples of creative thinking that solved problems and/or resulted in substantial savings. If I’m hired to troubleshoot an Association and am unable to provide a method of resolution that is utilized, there’s no charge!
For reviewing governing documents or creating and drafting more efficient rules, policies, and/or procedures I charge hourly and the resulting Association’s savings allow for quick recovery of my fees. There is no charge if not utilized by the Board.