Reviewing Vendor Contracts for Your HOA in Current Times
Have you recently reviewed your vendor contracts? Revisiting vendor contracts can be very important, especially in ever changing times. There are key items you want to look for such as liabilities, how to reduce the risk of litigations, and most importantly, making sure the needs of your community are being met. With the rules and regulations of the country changing as quickly as they are, many of your vendor contracts could be out of date and need refreshing. Let’s review some important information you should look for in your vendors contracts. Start Internally Before diving in and pulling out all your vendor contracts, start by evaluating your HOA and community. Review your goals and conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis. The world is changing fast, and your goals and visions may be changing as well. Consider any threats you might not have thought of in the beginning of the year, as well as strengths that your HOA can thrive from. Once you’ve determined your goals for the rest of the year and conducted a SWOT analysis, you should have a clearer idea of what you’re looking for in a vendor. Reviewing Contracts There are several essential items to look for when reviewing your vendor’s contract. First and foremost, make sure their goals align with the goals of your HOA and your community. The work the vendor is guaranteeing should meet the expectations of the HOA, and in a timely manner. Timing A good contract will detail relevant time frames and answer the following questions: (a) When does the contract become effective? (b) What is the deadline for completion of work? (c) How long will the contract remain in force? (d) Are party notification requirements time sensitive? (e) Is the contract auto-renewing, and if so, when, and for how long? (f) Do material terms (i.e. price) change throughout the effective date of the contract? Review current contracts to ensure jobs are being completed on time and that you are not overpaying for services. Also, check to see if any contracts are expired or about to expire. This can be an opportunity to restructure the contract to meet any new needs of the community. Liability Between pandemics, changing government regulations, uncontrollable acts of nature, protests and riots, or any other unanticipated event, there are a lot of things that could prevent a vendor from being able to complete their work. In the case of this you do not want to be responsible for paying the vendor for work that they were unable to complete. A force majeure clause will cover any of these incidents. Merriam-Webster’s Dictionary defines “force majeure” as “superior or irresistible force” or “an event or effect that cannot be reasonably anticipated or controlled.” Force majeure clauses are designed to relieve a party from penalties for breach of contract when circumstances beyond the party’s control render performance untenable or impossible. This will protect both the HOA and the vendor. Litigation and Attorney Fees In the event there is a contract dispute, you want to make sure you are covered. Contract disputes can become very expensive to litigate. Often, litigation expenses can prohibit a HOA from seeking court assistance to enforce contract terms. To prevent this, a good contract should include attorney’s fee provisions. This will allow a prevailing association to recover court costs, expenses, and attorney’s fees. Having this in the contract will also help avoid the situation all together, since the vendor will not want to have to cover fees if this event were to arise. We can help! Atlantic and Pacific Management can offer expert advice and assistance to help you review vendor contracts and make the best decisions for your HOA. For more information, or anything else HOA related, reach out to Atlantic and Pacific Management.
Best Practices to Managing Your Vendor Agreements
We have passed the halfway point of the year, and your midyear budget review is complete. While reviewing your budget you may have noticed some expenses paid to vendors, or realized you need to hire vendors for community projects like maintenance, road and sidewalk repairs, landscaping, and more. Now is a great time to review, assess, and manage your vendor agreements. If you have any vendor contracts about to expire or a job you need to obtain vendor bids for, how do you choose the right vendor to get the best work done within your HOA’s budget? Let’s look at ways to hire the best vendors for the jobs. Scope of Work The first step in finding the right vendor is to clearly define the scope of work needed. For example, if your HOA wants to add speed bumps to the community, when creating a proposal for vendors to bid on you want to provide as much detail of the project as possible. Include how many speed bumps, what size you expect them to be, where they should be placed, and a date you expect the work done by. This will help your HOA and the bidding vendors to meet expectations on both sides. By providing a detailed scope of work to bidding vendors, your HOA should be able to avoid unexpected costs or having to have jobs redone later on. Choosing a Vendor Now that you have bids and vendors to choose from, it’s time to pick the right one. A good first impression is always important. Pay attention to how the vendor presents themselves and their company, how they maintain their equipment, and how much professionalism they show. Also make sure they have all the necessary paperwork needed. The vendor should have all certifications, licenses, bonds, and insurance that is required by your specific CC&Rs. It’s also important to ask for the contractor’s tax ID number; this information is necessary in order for them to get paid. Don’t just look for the lowest bid or best offer. Research each vendor you are considering. See if they have good reviews or references you can contact. Make sure they can meet the expectations and that there won’t be any hidden costs or expenses. Lastly, make sure the vendor has adequate insurance to cover any incidents that may occur. Review the insurance policy of each contractor to make sure it covers potential damages incurred during their job. Also verify that the contract contains a guarantee by the contractor and that their insurance will protect the association’s assets should circumstances arise. This will protect your HOA and relieve them of liability. Need assistance? For more assistance in finding the right vendor for your community and your budget, Atlantic and Pacific Management can help you assess vendors and work out all the precise details. For more information, or anything else HOA related, reach out to Atlantic and Pacific Management.
How to Start Preparing Your Reserve Study
What is a reserve study? A reserve study outlines a stable, equitable, and proactive Annual Funding Plan to offset your community’s long- term and often costly expenditures. A study made of all the major capital systems in the association, it evaluates how much life they have left and how much they’re likely to cost when they wear out. From that, you can calculate how much money the association has to set aside each year to have enough to replace those items when they do wear out. How to Start Prepping Most states, including California, require associations to conduct reserve studies. These studies can be time consuming and costly, so making sure you properly prepare everything needed is a key to conducting a successful and accurate reserve study. Three areas to start your planning are: 1. Creating a Component List: The reserve study should contain every single component the association has, and it should be as detailed as it can possibly get. This can include roofs that will soon need replaced, surfaces that need to be painted, roads that need to be resurfaced, communities’ updates, etc. Be sure to come up with the most accurate estimates possible for each component. 2. Calculating a Reserve Fund Strength: Reserve fund strength is a calculation comparing an association’s Actual Reserve Balance to its Fully Funded Balance. To get this, take the estimated replacement cost and divide it by the number of years the item is estimated to last. That number is the amount you should reserve each year. Then compare the amount needed to be reserved with what is actually being reserved and see if what is being reserved is accurate or if adjustments need to be made. 3. Creating a Funding Plan: Create a custom funding plan detailing annual reserve contribution, avoiding special assessments when possible. Creating this plan will help stay on track and reduce the potential of running into unforeseen costs. Be sure to check your G/L to make sure you have coded your payments to correct accounts so you won’t have to redo it when it comes time to do your budget. Need assistance? Creating a reserve study can become more complex the deeper you dive into it. Having an expert assist you is a great option to relieve some of the stress and time that comes with putting a reserve study together. Atlantic and Pacific Management can help you asses your assets and components and create your reserve study. For more information, or anything else HOA related, reach out to Atlantic and Pacific Management.
TIPS FOR RECRUTING HOA BOARD MEMBERS
One of the best ways to enhance your community and make it the best that it can be is to volunteer as a member of the HOA board. Becoming a board member can take up a lot of valuable time, but it is worth the investment. Finding people willing to volunteer is challenging, especially when it comes to the HOA board. For community associations, member involvement is crucial to providing responsible and successful management of the HOA. Here are a few tips for recruiting potential HOA board members. Appeal to the Specific Talents of Your Homeowners Sometimes homeowners may not be getting involved in their community because they believe they do not have the right qualifications for the job. However, an HOA board needs people with a variety of skills. Find people in your community who are skilled in construction, design, information technology, or gardening and appeal to their specific skill-set to help get them involved. Direct Complaints into Participatory Roles Sometimes your community may have members that “lightly suggest” a lot of items to your board. While some may see this as complaining, your board should see this as a future recruitment opportunity. These suggestions are all being directed to the board as a means to improve the community. Invite your passionate residents to come aboard and get involved with the development of your neighborhood. An active, caring hand is always important on a board or even a committee. The fact is that if a particular community member knows enough to complain, then they are paying attention to the board and its actions. Provide Low-Commitment Positions Some homeowners are hesitant to jump into the board because it is too much responsibility all at once. What if they did not like being a member? One of the easiest ways to gain lasting support from this type of person is to get them involved in low-commitment activities or positions that can encourage a small spark to become a flame of enthusiasm. Committees are a great start for the hesitant resident. Provide Education for Homeowners In today’s busy world, a majority of community members are working hard to make ends meet and to juggle family obligations. Out-of-site, out-of-mind complacency is not unusual when it comes to HOA boards. To recruit new members, the board should consider “tooting its own horn” in terms of sharing success stories and highlighting accomplishments. The board could then advocate the need for community involvement. Newsletters, social media, and community events are great ways to call attention to the importance of HOA boards and the need for strong, contributing board members. The Importance of Recruiting HOA boards conduct important community business that requires knowledgeable and involved community members. Being a board member comes with serious responsibilities, including fiduciary oversight. Existing board members have enough on their plate and adding recruitment of new members may seem like a daunting task. Recruiting takes time and effort but as members become complacent, board members must not. Investing time in learning more about the expertise of your members, identifying those you want to encourage, and deciding your method of approach are all vital steps to assembling a great board. Boards do not have to go it alone; HOA management services, tools and guidance are available. Start improving your recruiting methods today by implementing the ideas listed above today!
Helpful Steps Creating Your HOA Budget
Prepare a Business Plan What do the board and residents want to accomplish, as a whole? Adding Amenities (e.g. playground or security gate) can be costly, or a luxury. Residents may instead want a budget that enhances the current property at this time Develop processes & Assign Tasks The goal and objective of the association have to be reviewed, numbers must crunched, resident input should be sought and budget reviews meetings need to be scheduled. All of this takes time and effort. Put an organized process in place. Review Financial History Examine budgets and financial statements, from at least the past several years to help determine a starting point. Compare this year’s actual expenditure to date against the original budget, so adjustments can be made as well as in next year’s budget. Project Utility Costs Do you provide water and/or heater to your residents and the common areas? Utility rates are soaring in many cities nationwide. Find out what the trends are in your community. Some increases, should always be built in for utility costs regardless. Review Vendor Contracts Do Landscaper or maintenance company contracts call for a price increase in the coming year? Are any contracts expiring? Review all contracts and seeks bids. Do a Maintenance Review Inspect the entire property. Are the playground or the pool repairs pressing? Any driveways or lots need repairing? Hallways due to be repainted? Preventive maintenance can prevent costlier problems. Evaluate Insurance Policies Like your personal policies, your community’s policies should be reviewed yearly. Are limits and types of coverage sufficient? Do your reserves cover any deductibles that might be needed? Would a lower-premium, higher-deductible plan make sense? Include Legal and Collection Costs Few associations can translate 100 percent of their fees due into actual revenue. Referring to previous legal or collection actions might provide valuable insights into expectations for your future costs. Create a worksheet When you determine known expenses, start inserting the numbers into a spreadsheet and compare them with expected revenue. At least you’ll know how much above or below your projected operating costs you are. Prioritize Projects Something will need upkeep or change every year. Make sure needs – especially those that expose the association to liability (e.g. stairwell, repairs) – are budgeted for before wants (e.g. beautification projects). Expect the Unexpected Set aside funding for some “emergencies” that cannot be identified in advance. One year, mosquito abatement might be necessary; another year, vandalism might present a problem, or a storm might destroy landscaping. Being prepared is a good plan. Plan out Reserves Over a long enough period, projects such as replacing a building’s roofs are as inevitable as they are expensive. Experts suggest a good reserve study should tell you how to fund your expenses. Be Transparent It’s not possible to keep every resident happy, but keeping the budgeting process open and transparent at least gives residents a chance to have their opinions heard. Distribute the Budget Distribute the processed budget to the homeowners for their review and comment. Then, once the association board has approved the new budget, get it into the hands of all homeowners. Follow the Budget Except for emergencies that have not been budgeted for, follow your plan. The budgeting tool keeps the community operations on track. Ask Us How We Can Help Plan Your Next HOA Budget Insert link to the Proposal page http://aphoamgmt.com/index.php/request-for-proposal Based on below layout. We do not want to copy the colors, etc. but if you can match with the website, it would look good.
Annual HOA Budget
Setting an annual budget is a crucial part of the Homeowners Association. The members on the board are in charge reviewing costs, gathering data and projecting expenses for the coming year. Communities, businesses, individuals, families, and organizations of all kinds must have a budget in place in order to navigate both everyday expenses and unexpected costs, while maintaining a certain life or business style. Preparing the budget is by no means an easy task. A well-defined, well-written budget is a powerful financial tool allowing funds to be saved and/or allocated for specific costs and projects; budgeting is a way to estimate expenses and allow for those funds to be available when needed. Here are some helpful tips when setting your HOA Budget: 1.PREPARE A BUSINESS PLAN What do the board and residents want to accomplish, as a whole? Adding Amenities (e.g. playground or security gate) can be costly, or a luxury. Residents may instead want a budget that enhances the current property at this time. 2.DEVELOP PROCESSES & ASSIGN TASKS The goal and objective of the association have to be reviewed, numbers must crunched, resident input should be sought and budget reviews meetings need to be scheduled. All of this takes time and effort. Put an organized process in place. 3.REVIEW FINANCIAL HISTORY Examine budgets and financial statements, from at least the past several years to help determine a starting point. Compare this year’s actual expenditure to date against the original budget, so adjustments can be made as well as in next year’s budget. 4.PROJECT UTILITY COSTS Do you provide water and/or heater to your residents and the common areas? Utility rates are soaring in many cities nationwide. Find out what the trends are in your community. Some increases, should always be built in for utility costs regardless. 5.REVIEW VENDOR CONTRACTS Do Landscaper or maintenance company contracts call for a price increase in the coming year? Are any contracts expiring? Review all contracts and seeks bids. 6.DO A MAINTENANCE REVIEW Inspect the entire property. Are the playground or the pool repairs pressing? Any driveways or lots need repairing? Hallways due to be repainted? Preventive maintenance can prevent costlier problems. 7.EVALUATE INSURANCE POLICIES Like your personal policies, your community’s policies should be reviewed yearly. Are limits and types of coverage sufficient? Do your reserves cover any deductibles that might be needed? Would a lower-premium, higher-deductible plan make sense? 8.INCLUDE LEGAL AND COLLECTION COSTS Few associations can translate 100 percent of their fees due into actual revenue. Referring to previous legal or collection actions might provide valuable insights into expectations for your future costs. 9.CREATE A WORKSHEET When you determine known expenses, start inserting the numbers into a spreadsheet and compare them with expected revenue. At least you’ll know how much above or below your projected operating costs you are. 10.PRIORITIZE PROJECTS Something will need upkeep or change every year. Make sure needs – especially those that expose the association to liability (e.g. stairwell, repairs) – are budgeted for before wants (e.g. beautification projects). 11.EXPECT THE UNEXPECTED Set aside funding for some “emergencies” that cannot be identified in advance. One year, mosquito abatement might be necessary; another year, vandalism might present a problem, or a storm might destroy landscaping. Being prepared is a good plan. 12.PLAN OUT RESERVES Over a long enough period, projects such as replacing a building’s roofs are as inevitable as they are expensive. Experts suggest a good reserve study should tell you how to fund your expenses. 13.BE TRANSPARENT It’s not possible to keep every resident happy, but keeping the budgeting process open and transparent at least gives residents a chance to have their opinions heard. 14.DISTRIBUTE THE BUDGET Distribute the processed budget to the homeowners for their review and comment. Then, once the association board has approved the new budget, get it into the hands of all homeowners. 15.FOLLOW THE BUDGET Except for emergencies that have not been budgeted for, follow your plan. The budgeting tool keeps the community operations on track.
2020 – New Year’s Resolutions for HOA Boards
As 2020 approaches, it’s tradition for many to begin thinking about New Year’s resolutions. Beyond one’s personal resolutions, this is a perfect time to commit to making changes and improving the operations of HOA Boards. Here are some tips that can help HOA Boards build stronger communities: 1 . Re-read Your Community’s Governing Documents Refresh yourself on the procedures for holding annual meetings and Board elections, the types of architectural changes that are allowed, and the procedure for getting changes approved by the Board or the architectural control committee. Also, it can be a good idea to consider whether the rules governing the use of common areas need updating. 2. Check Your Contracts Review current contracts and look for ways to do things better —more efficiently, with less cost, etc. You may also wish to rethink the length of your contracts. For example, you may not desire to have a long-term contract with new vendors, but a longer contract with an existing vendor may be beneficial. A few adjustments can make a difference for associations experiencing financial difficulties. 3. Examine Board Communications If Board members fail to share information with all of the Directors, it can create a lack of understanding that may lead to poor decision-making. This can also create hard feelings that interfere with productive Board member relationships and teamwork. Resolve to create an excellent communication process between Board members to foster an environment in which strong decisions can be made for the betterment of the entire community. 4. Review Reserve Funds Do you, or will you, have enough reserve funds on hand when it’s time to replace the roofing, repave the parking areas, or refurbish the clubhouse? Are you setting aside enough of the monthly assessment income to fund these long-term needs? If the answer to these questions is no, then your board should consider hiring a reserve specialist to analyze your common elements and help you develop a long-term reserve funding plan so that large special assessments on homeowners will not be necessary when something needs to be replaced or repaired. 5. Plan Some Fun Find a convenient time around each major holiday or season and plan an event or activity to bring the community together. For example, a pool party and cookout could make for a wonderful summer gathering. More social events get owners mingling with one another, which encourages camaraderie and decreases the amount of owner complaints and infighting. 6. Stay Informed For residents, the benefits of getting to know the HOA Board are outstanding. For the HOA Board, committing to continually educating themselves and improving their knowledge about HOA management and their community helps everyone! 7. Seek out Professional Advice It can sometimes be challenging for Board members to stay on top of everything that is needed when running an association. Reserve specialists, accountants, HOA property managers, insurance brokers and public adjusters, engineers, architects, attorneys, and pool and landscaping contractors can all help you make better-informed decisions on the best use of your community’s assets and relieve you of the anxiety of dealing with concerns that the board is not equipped to address. Many association boards face a variety of challenges in providing leadership and direction. As with any successful organization, a clear mission statement, the establishment of goals and priorities, and a clear understanding of both the short- and long-term financial challenges ahead will put your Board in a better position to succeed. Follow these tips to have a successful HOA Board in 2020!
Top 3 Tips For Running Successful HOA Board Meetings
When preparing HOA board meetings, it can be hard enough getting everyone together at routine times. One of the best ways to ensure success is by focusing on organization and preparation beforehand. Here are some of the top three tips for planning for an efficient open meeting in your Homeowners’ Association. 1.Have an Agenda Make sure the agenda centers on the most crucial business at hand. It’s best to start with items that are easily accomplished, then move on to more complex or controversial issues, think simple to complex. Having this schedule will help you cover more ground initially instead of taking up extra time on any potentially heated issues that burn up time and leave the majority of agenda items left on the agenda. 2.Choose a Form of Parliamentary Procedure Boards generally have the ability to choose any form of parliamentary procedure to conduct their meetings. Even though boards are required to follow parliamentary procedures most boards will apply a relaxed version of these procedures and will still meet their duty in conducting their meeting quotas. Not only is a board required to run a meeting with some form of parliamentary procedure in California, but utilizing parliamentary procedure, like Roberts Rules of Order, assists boards in conducting professionally executed board meetings with official sounding “motions” made by directors, which require a “second” vote before all the directors vote either for or against the issue.. 3.Meeting Conduct The method(s) for running a successful meeting are just as important as the planning. A suggested schedule for each agenda item would include: The board President presenting the agenda item, then asking his or her questions before asking the board members for their input. Any responses should be directed towards the board President. The President then asks members for questions or statements; depending on the state your Homeowners’ Association is located in, participation from homeowners may be required or just simply requested. To make the discourse most effective, request homeowners to speak from a podium facing the board. After each member’s input, the President may then ask if board members need to add anything. Then, the President will make a request for motion if action needs to be made. If not, the next agenda item will be addressed. With a well-planned protocol, Homeowners’ Association board meetings can run much more effectively. Having a clear agenda and schedule can ensure each member of the meeting has a chance for input. For more ideas, you can contact your HOA management.
A&P HOA Fall Promotion
End of Year Special: Get One Month Free When You Book a New 2020 Annual HOA Management Contract by December 31, 2019! Now is the time to review your HOA management strategies for 2020. Are your expectations being exceeded, and your properties being managed in a knowledgeable and responsive way? We invite you to explore all that Atlantic & Pacific Management can offer you! We have been serving San Diego’s single and multi-family communities, including condos and townhomes, for over three decades – and we’d love to have the opportunity to support your community. Please contact us today for a FREE ANALYSIS to learn more about how we can help support your HOA. Plus, GET ONE MONTH FREE when you book your new 2020 annual HOA management contract with us by December 31, 2019. Our HOA services include annual budgeting, online payment assessments, monthly financial reporting, implementation of policies and bylaws, strategic planning and community preservation, site inspection reports, coordination of meetings, and guidance on capital improvements and assessments. Our service orientation, responsiveness, and thorough property manager training create a symbiotic relationship between your HOA Board, the manager, and our organization – which leads to incredible outcomes for properties and homeowners! Reach out to us now, or call (858) 672-3100 weekdays from 8:00am – 5:00pm.
Tips for Community Security and Ensuring Safety of Residents
The safety and well being of community members is highly important to your HOA. Associations should take every measure possible to adhere to all procedures and policies that keep communities safe. Every association wants to make sure that the best quality services are being provided to the residents to ensure maximum protection for them. The safety and security of the homeowners’ community is in the hands of the HOA or the management company. If your HOA is being managed by a management company there are procedures in place for the prevention of unplanned accidents on the property as well as procedures on how to respond to accidents, fires, adverse weather conditions and other unforeseen situations that may arise. Here are some tips to follow to ensure the safety of the community: Develop a safety and security policy.In it, create a process for an annual review of current and new security systems. Determine what types of security measures you’ll include and the budget you’ll dedicate to maintaining them. Create a safety committee.This group should be responsible for regularly walking the property to identity possible security issues—lights that need replacing, hedges that need trimming, doors or gates that don’t close properly and so on. Establish relationships with local law enforcement.Invite police officers who patrol your area to come speak at board meetings. Identify a community liaison within the police department as your main point of contact for security issues, and check in occasionally. You don’t want your first contact with law enforcement to be the result of an incident. Meet your neighbors.Developing a sense of community helps everyone. Neighbors on friendly terms are more likely to watch out for one another, report suspicious activity and be more aware of what’s going on in their community. Plan community events where neighbors can get to know one another. Remind homeowners about security.Publish a monthly safety tip in your homeowners association publication. Display crime statistics of your community in a common area. Talk about policies meant to keep your community safe, such as not providing door codes to others, keeping gates shut and not allowing strangers through security measures. When it comes to the safety and security of your residents, don’t take any chances. As a property manager or community association leader, you must do everything you can to ensure that your residents are, and feel, safe in their homes. Assess your needs and develop your safety plan to match your area and the residents in it. Safe residents are happy residents and happy residents make for a great community, so get serious about safety.