3 Important Tips for the New Board Member

By Beth Mulcahy, Esq. A position on the board of directors is voluntary, but most newly elected board members want to do their best and start off on a good footing so they often ask me, “What are the most important things a new board member should do?” I have narrowed it to three important tips, and would advise seasoned board members to review these tips as well as new board members. 1.  Read the association documents and the minutes of the previous year. Declaration of Covenants, Conditions and Restrictions (CC&Rs): The CC&Rs define the use of the land. The declaration outlines the standards for the community and establishes restrictions… Read More

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Help! I am a Board Member that is being harassed by an owner in our association… What can I do to stop the harassment?

By Beth Mulcahy, Esq. Unfortunately, this is a question that is frequently presented to our law firm. Usually, the story goes something like this… Disgruntled owner is unhappy about something in the association such as a violation letter received, a planned capital improvement project, a special assessment or an increase in assessment rate. The disgruntled owner becomes abusive to the board or the manager (harassing phone calls or messages, showing up at board member’s home unannounced, bad behavior at a board meeting). Here’s what board members need to know about the best way to handle this situation. Black’s Law Dictionary defines harassment as “words, gestures or actions which tend to… Read More

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Transfer Fees 411

by Beth Mulcahy, Esq. Our Association wants to charge a “transfer fee” or a capital improvements fee to buyers when they purchase a home in our community? Is that allowable? How can we implement this type of fee? A “transfer fee,” is paid to the association for a specified purpose, such as funding the association’s reserves or contributing to the association’s working capital fund. Transfer fees are sometimes also referred to as capital contribution fees, working capital fees, and/or reserve contribution fees. Pursuant to A.R.S. Section 33-442, an association can charge a transfer fee, capital contribution fee or reserve assessment fee that becomes due at a close of escrow when the following requirements… Read More

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Reserve Studies 411

by Beth Mulcahy, Esq. Our association board is considering hiring a company to prepare a reserve study but we aren’t really sure what a reserve study is. Can you define a reserve study for us? How much do reserve studies cost? A reserve study is a budgeting guide that provides a comprehensive plan that shows an association how much is reasonable to place in reserve for a specific replacement or maintenance project. When properly executed, it can give a clear picture for the maintenance, repair or replacement requirements of association assets for the life of the association. A reserve study starts with an accurate inventory of the community’s assets to determine the… Read More

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Summer Board Meetings Made Easy!

By Beth Mulcahy, Esq. During the Summer months, many board members travel outside of Arizona to escape the heat. Due to travel schedules during June, July and August, sometimes it is difficult for the board to obtain a quorum to have a board meeting. Under Arizona law, all meetings of the association must be conducted in the State of Arizona. However, A. R. S. Section 33-1804(D)(3) and 33-1248(D)(3) permits any or all board members to participate in a regular or special board meeting through the use of any means of communication by which all directors and owners participating in the meeting may simultaneously hear each other during the meeting. As… Read More

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Suggestions for Changing Boards of Common Interest Communities

As communities Boards change over time there is often a change in direction for a community with regards to how common areas are funded or which projects are most important to the present community membership. A reserve study completed for new Boards will help to guide them in their specific direction as a reserve study provides an outline of the costs Associated with replacement of common area components as well as includes funding plans based on the client’s goals, statutory requirements and our recommendations based on our experience with similar communities.   Just Completing a Reserve Study is not Enough Just having a reserve study completed is not enough for… Read More

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The Fight Against Inflation – A Silent Assassin

Is the title overdramatic? Perhaps, but inflation is the reason many communities are in such dire financial straits, it’s silent, invisible and hits your pocket book right when you least expect it. The community that has been saving for a roof replacement for twenty four years but doesn’t tackle this silent assassin will find out they only have half the amount needed to replace the roof – slice…inflation… ​ What is Inflation? Inflation is the reduction in your purchasing power over time which causes prices to increase. It’s the main reason why your house is worth more, the car you drive is more expensive and a candy bar is double… Read More

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Protect Condominium Values – Utilize a Reserve Study

Making the appropriate decisions to adequately fund a reserve account is one of the most basic responsibilities of a Board. Reserve funds are utilized to pay for projected common area expenses like roof replacement, paint or asphalt overlays. Unfortunately for most condominium communities this basic community need is not being met as the majority of communities are severely underfunded, where reliance on special assessments and loans is highest. We have seen that the communities which have lower funding levels (ie. their reserve fund balance is significantly lower than an ideal amount) also have issues with financing units for sales/refinance, have marketability issues with Brokers & Buyers and are typically impacted… Read More

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Fire Sprinkler Installation and Earthquake Retrofit – Are They Reserve Account Expenses?

Without a doubt installation of fire sprinklers and earthquake retrofits make buildings safer and could save lives when and if they should ever be needed. Some municipalities have passed rules for installation/upgrading/modernization of these systems but most have chosen to forego putting anything into law as the cost to the owner(s) of the building can be very high. The question we are tackling from our perspective is; should the installation of these systems be paid for from the Reserve Account? Most often we advise that these system installations projects should not be budgeted for and paid from the Reserve Account as they are not current components; the past/current members have… Read More

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Deck / Lanai Refurbishment, Replacement, Maintenance – A Common Budgeting Mistake

  Decks / Lanais systems are typically one of the larger project expenses a community will face. Budgeting for their short and long term care is not always as straightforward as it appears to be as the degree of deterioration of this component is heavily reliant on historical maintenance trends in the community. I will touch on one of the more common budgeting mistakes we see on a regular basis. Maintenance and proper care will actually save a community a significant amount of money in the long run; deciding who (and how) this component is maintained can have a significant impact on the budgeting recommendations in the reserve study as… Read More

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