PODCAST | Ep. 9: Demystifying the Condo HOA – Part II | Condo Artist: The Other Side of Real Estate

Uri Vaknin  00:16

Welcome to another episode of Condo Artist: The Other Side of Real Estate. This episode, Demystifying the Condo HOA Part 2 is the continuation of the discussion that Mark and I had a couple of weeks ago about pulling back the curtain on the condo HOA. This week we are lucky to have a special guest, Lisa, who is a condominium association manager at a prominent downtown Las Vegas condo high rise. In other markets, community association managers are also known as HOA managers. We look forward to literally pulling back the curtain on all the nuts and bolts of the condo HOA in this week’s podcast. So today I’m going to start off the conversation and Mark Bunton our host and Mark Bunton who handles a lot of our HOA issues, I don’t want to say issues, but he handles a lot of our HOA stuff. We’ll take over the conversation from there. All right,

Mark Bunton  01:21

All right, great. Thank you, Uri, Lisa and I have had the pleasure of working together for several years now. And it has always been a very enjoyable and pleasant experience. She’s someone that I enjoy working with and have a lot of respect for. Lisa, we’ve noticed a lot of times in our sales centers when our buyers come in that they’re a little apprehensive and don’t have a lot of knowledge about what a homeowner’s association actually is. And we try to, you know, guide them through that. But could you tell us, you know, from your perspective, what exactly is a is a homeowner’s association? And what does it mean?

Lisa  01:58

Sure, a homeowner’s association is also known as a common interest community. Basically, it’s a group of people that are owners all paying towards a shared interest in a property, whether that’s single family homes, or in this case, we’re talking about high rises. So all of the owners in the high rise or in this association, own an undivided interest in the property. So they’re all responsible for paying into everything that it takes to make the building run if their staff and they elect board members that then make decisions on behalf of all of the owners in the community. So purchasing into a homeowner’s association automatically gives those owners that responsibility, and the rights that come along with living in this kind of community.

Mark Bunton  02:54

listening to you talk, it sounds like a little democracy, whereas you’ve got elected officials who represent the entire building. And and the decisions that are made. Is that right or? Yeah, that’s

Lisa  03:04

absolutely right. The board represents what they feel, hopefully that most of the community, most of the owners in the community want. The board is made up of people that are just regular homeowners. They don’t have typically any special training, although different states offer training for board members so that they can be the best more board members possible. But the board members are just regular homeowners in the community and they make decisions and get information that the majority of the homeowners don’t have access to.

Mark Bunton  03:43

I guess the board run, there must be some type of set of rules or regulations that that pretty much dictates this process of of, you know, you know, that I know there’s parts for rules and regulations, how elections are held, and other different components of the HOA, and how those are to be handled. And you know, I think those are what condo docks or HOA docks?

Lisa  04:07

Yeah, it depends on what state you’re in. There’s different names for each different document in different states. Collectively, they’re known as the declaration and that usually means everything that’s involved in the legal process of the association documents, so that could be the CCNRs, CCNRs stands for covenants, conditions and restrictions. And very simply, that just means the promises between the owners and the association. So the CCNRs are the basic framework of everything that’s going to be required for the owners that live in that Association, and what responsibilities they have and what responsibilities the association has. It’s a two sided it’s not just a one sided relationship. The owners have responsibilities to maintain their portion of the property and the association has his responsibilities to make sure that the budget is funded, that they’re following all of the laws that govern their area, and that they’re maintaining the areas that they’re responsible for.

Mark Bunton  05:11

Who puts these documents together, who drafts them.

Lisa  05:16

When the communities are being built, usually the documents are all drafted by lawyers that typically have Association knowledge, or they specialize in that kind of thing, probably a real estate background, but a lot of them have the same basic information, you know, they, they talk about what each owner can do, they talk about the processes for the budget, they talk about all of the specific rules that will run that association for all of the years to come.

Mark Bunton  05:52

So it sounds like almost it’s there’s a like almost like a template that has been customized for each particular community or building or property where those HOA Doc’s are issued.

Lisa  06:05

Yes. So for communities like high rises, where there’s a lot of rules, and a lot of things that need to be considered, the information is much more in depth.

Mark Bunton  06:14

So all the information that is contained in in condo docks, and I’ve seen different packages of condo docs, I see them all the time, you know, sometimes they’re 200 pages thick. Sometimes they’re 300 pages thick. It’s a lot of information and a wealth of information, you know, which is useful to everybody involved? What exactly is contained in those condo docks, and why is each part of this important.

Lisa  06:44

So I’m going to refer to the package as a resale package just because that’s what I’m most comfortable with. For for resale package. any legal document that is part of the association will be included. So the articles of incorporation, the CCNNRs that we discussed rules and regulations, any policies that have been adopted for the community, along with the budget, reserved study, guidelines, like architectural guidelines, things like that. And the whole purpose of providing this packet of information to new buyers is so they understand what they’re buying into. buying into a high rise into a homeowner’s association is a big commitment. And it’s important that they understand that they will have responsibilities, but also what services will be provided to them. So it’s important for them to understand the budget is also part of that, you know, how the association is doing financially, what obligations, the association is going to have to replace, repair and maintain large components. In a high rise, we have things to worry about, you know, usually pools or club houses. Sometimes there’s security services offered. So all of this though, that information is included, so that you understand what you’re getting, and what you need to do to live in a homeowner’s association in a high rise successfully without being frustrated. You know, it’s important that you understand that there are rules that you’re going to have to abide by to. But the whole purpose of that is all for the greater good. It’s really hard to take a community where you have hundreds of people living together, all doing their own thing. And so everybody needs to understand that their actions affect other people, other homeowners and you know, there’s a guideline for how things should be done so that your actions minimally affect your neighbors.

Uri Vaknin  08:45

Lisa, you mentioned something that I think needs some clarification for our listeners, you said that the resale package the condo docs and CCNRs, whatever you want to call them, that they include the articles of incorporation, which suggest that we know that an HOA is an actual Corporation. Why is it a corporation?

Mark Bunton  09:10

Probably because a corporation can then be held harmless there’s if there’s anybody to be sued, all they can do assault sue the corporation or not any individuals, which I think is the reason the whole reason of having a corporation is to get that responsibility off of partners or owners or sole proprietors? Well, no,

Uri Vaknin  09:29

I think we’re trying to get at it here is so when you’re buying into a condo, you’re not only buying that piece of real estate, you’re also buying and you let you talked about it earlier a little bit. You’re buying a piece of that common that common interest community. So and the only way to have that is as a corporation to everyone actually becomes a member of that Corporation, correct?

Lisa  09:55

Yes. And essentially you’re running a business you know, it’s subject to the Laws of the Corporation for the state that you’re in. And you have to like for in Nevada, you have to file with the Nevada Department of real estate. And you have to make sure that your that there’s no problems with your artists, articles of incorporation,

Uri Vaknin  10:16

is it not for profit corporation, and your goal is to pay for everything. But you can’t actually make money as a corporation. Although I know that when I’ve been on the board, that was one of my questions is like, can’t we do this and make money and the money has to be allotted to something.

Lisa  10:39

Right? Right, it is set up as a not for profit corporation. So at the end of the day, your budget should balance where your expenses and your income are equal and offsetting.

Uri Vaknin  10:51

So what happens if they don’t?

Lisa  10:54

If they don’t, I think it depends on what area of the country you live in, or what state you’re in, there’s probably different rules that govern what happens with that money. In Nevada, the law says that if there’s an overage, that all of that money should be returned or applied to the owners. So the board positions are all voluntary. board members don’t get paid for the services for you know, acting on behalf of the homeowners. And so they can’t just pocket that money or use it for their own gain, all of that money has to go back to the members of the association. And so if there is a lot of money available, you know, you want to make sure that you’re returning that money equally to the owners that paid into that increase, or you know, into making there be a large amount of money available.

Uri Vaknin  11:46

You’re telling me that there are times where the HOA actually gives its members, the owners within the the cabinet, condo association money back.

Lisa  11:59

Sometimes I it’s called a vacation of assessment. And it just happens when there is a surplus of funds. And you know, maybe there isn’t a large repair that’s coming up, you know, you’re doing okay, financially. And, you know, the fair thing to do is to give that money back because you’ve met your obligations and paid for all of the bills for the year. So usually, it’s something that you’re going to look at in the last quarter. And if there’s that surplus, the surplus funds available, you may decide to return some of that to the the owners, the goal is always to have enough money to pay the bills without collecting too much.

Uri Vaknin  12:41

Have you ever seen a vacation of assessments?

Lisa  12:44

I have, I have homeowners are usually pretty happy to get noticed that either they don’t have to pay or that they’re getting money back. And the easiest way to handle it is to just not collect money for you know, a month or two depending on how your finances are. But I have also seen where they actually have to refund money to the owners.

Uri Vaknin  13:05

Well, I think that might be a testament to your success and your prowess as being a Community Association manager. Because that’s not the typical thing.

Lisa  13:16

It definitely doesn’t happen all the time.

Uri Vaknin  13:19

So let’s talk a little bit about Hoa budgets, because that’s the thing that most people really care about their HOA fees. And then you have you know, Mark and I briefly touched on this, in our first podcast on this topic is you’ve got the capital reserves, budget, and then you’ve got the operating budget. Can you kind of tell us a little bit about the difference?

Lisa  13:44

Sure. The capital reserve budget as we call it, the reserve budget in most in most circles that I’m aware of. So the reserve funds are anything that goes to maintain major components of the association, you can’t use daily operating funds to pay for. You can’t use reserve funds to pay for daily operating funds, things like payroll and security costs is the reserve funds are just there to be able to replace those large components to be able to make repairs on things like the pool or the spa, maybe plumbing or the fire system. It just depends on what your community has. The whole goal is there is a company called there’s reserve study specialists and they work with the community manager the board and they go through the community they see what items there are that are going to need to be maintained through the course of the lifetime of that association. And they prepare a budget for it. They say okay, the pool was you know, it’s this many years old and here’s how many years we think it has left. Before it needs to be replaced or before you know the pumps need to be replaced. And here is how much money we think it’s going to cost to make those repairs. And then once they have all of those items together, then they break it down and say, okay, for this year, you’ll need to collect this much money. And then usually that increases, you know, a couple percentage points per year 3%, to make sure that every year you’re collecting the correct amount of money, so that you always have the money to continue to repair and maintain those components. That way, you know, your your homeowners aren’t paying for a pool that they can’t use, because it needs to be repaired, and there’s no money for it. So the goal is to always have that money to, you know, keep your investment where it needs to be, you know, to keep everything working.

Uri Vaknin  15:47

Where does that money come from?

Lisa  15:52

so that money comes from the owners when the budget is prepared. There’s two portions of it, there’s the operating budget, and then there’s the reserve budget. And so the reserve budget is just it’s a separate amount of money. It’s like having a savings account. And a portion of the money that’s collected through the budget is just set aside into a reserve account. And there’s rules about how it can be used. Like I said, you can’t use that money for anything you want. It has to be used specifically for those major components and maintaining them. The operating budget, like I said, it’s the day to day stuff, small repairs, you know, you need to buy parts, you need to buy a new vacuum cleaner. So this porters can vacuum the hallways, I mean, that’s all day to day expenses. And so the budgets are prepared annually, at least here in Nevada, I don’t know. I assume that’s the everywhere. requirements to prepare the budget annually. But here in Nevada, it’s an annual requirement. And there’s a set amount of time to do that before the end of the fiscal year, so that you always know what you owe. So for us, you know, we have to have our budget process done before the end of November, so that the owners have at least 30 days. So they know what they’re going to pay for January, you know, sometimes there’s increases, I think it’s something that you should expect in the high rises, because there are so many components that go into it, not just the actual parts of it. But you know, there’s insurance, there’s staff, there’s, you know, large things that break. So you want to make sure that you have enough money. So all of those items get put on the budget and based on history, and you know, what you’ve done in the past, the community manager and the board works together to analyze what they think that spending is going to need to be for the next year. And that’s where those budget numbers come from. They compare all of the contracts and see Are there going to be increases, and they add all of that together. They take whatever numbers the reserve study calls for. So if it says that, you know, for 2020, you’re going to need to collect 380,000, then you need to include that in the budget. And then the assessment amount that you pay includes a portion that gets set aside for the reserve study or for the reserve account and then a portion that gets set aside for the operating to make sure that you can run the Association for the next year.

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Uri Vaknin  19:16

So people always ask, like, Is there a limited limitless amount of money that a HOA fees can be increased? Is there what’s the mechanism for increasing the HOA fees? And do the homeowners, the members of the HOA Corporation do they get to vote on whether or not they agree with those increases?

Lisa  19:43

So the CCNRs usually will dictate the amount that it can be increased up to I there’s probably some communities that don’t have a cap, but I think that the majority of them do and so that’s where I would look to see what the Increase could not exceed that way, you’ll always know, you know, if you’re if you’re buying into an association, and you know that your amount that you’re going to pay is this, you can look into CCNRs and see if there’s an, you know, a specific amount that they will allow the increase up to, and then you can kind of get an idea for the for the future, okay, well, you know, this is going to come out to maybe $20 a month or $50 a month, and you know, that you can plan for the possibility of that happening so that you’re not caught unaware if there are increases.

Uri Vaknin  20:33

So what are the differences between increases in HOA fees and special assessments?

Lisa  20:41

Especially assessments are usually if there is some kind of an issue that needs to be resolved, and the money gets collected for that specific purpose. Sometimes it requires a vote. It really depends on the situation, the CCNRs and what they allow, and probably the state laws to, they’re definitely gonna all have some information on what can be considered a special assessment and how much money and how it gets how that gets decided. For here in Nevada, I know that typically, the owners have to vote on that to pass a special assessment. Sometimes they don’t it, like I said, it just depends on the situation, if there’s an emergency repair, and there’s no money for it, then the association may have to, you know, do a special assessment where each owner is responsible for a small portion so that they can make a repair that they weren’t prepared for.

Uri Vaknin  21:38

Why wouldn’t there be enough money for it is there is a reserve son, that’s based on the reserve study,

Lisa  21:45

the reserve study is only as good as the people that are involved in putting it together. So for a new community, I mean, hopefully, in a new, newer community, there aren’t issues that are coming up like this. But I think sometimes you don’t understand the problems that you’re going to run into until you actually run into them. So if you have a part that needs to be fixed, and you didn’t know that that part existed, it’s pretty hard to prepare for that, you probably don’t know how much it costs, you may not know that it was your responsibility. So you may just run into a situation where you truly didn’t know. And so in that case, once you realize that that kind of stuff is happening, then you know, you need to go back and work with your reserve study specialist and make sure that they’re including that. So that next time around, you’ve got that money budgeted, and you don’t have that situation where oops, there’s a repair, and we don’t have the money to fix it.

Uri Vaknin  22:38

So it’s a really important point, because our listeners, you know, I think a lot of them are concerned about here, special assessments they hear, you know, HOA fees rising, and they want to understand that, but, um, and working with you and several other obviously Community Association managers, we’ve never had to do a special assessment. But I think part of that has to do a lot with the amount of time, effort and expertise that we’ve put into the reserve study, and really drilling down and really examining it and making sure that it covers everything.

Lisa  23:15

As a Association manager, I think it’s really important to work with the professionals, and really have a thorough walkthrough of the community so that everybody understands, you know, all the different parts that go into it, you know, if your reserve study is only as good as the people that put it together. So if you are using a reserve study specialist that doesn’t have a history in high rise, they may not have information about how much it’s going to cost. For the elevator usage. You know, usually, there’s higher costs that are involved when you have to take a lot of materials up to let’s say, a rooftop to make repairs. So if you’re using a reserve study specialist that’s used to preparing reserve studies for single family communities that are just on the ground and don’t have that aspect, their numbers are probably going to be very different. So I think you need to have a reserve study specialist that really knows what they’re doing so that they anticipate the problems that you may run into as far as repairs and the extra cost that you might run into. And I think it’s important for your association manager to be involved in that because they have such a wealth of knowledge about what repairs they’ve seen, or, you know, maybe they have information that the reserve study specialist doesn’t that needs to be included.

Uri Vaknin  24:35

or teaching about reserve studies. It’s a good guesstimate the the life expectancy of that particular component, whether it’s a pool, whether it’s a pump, or whatever it is, have you found it to be pretty on target.

Lisa  24:54

It really depends on how everything is maintained. If you have items that haven’t been properly Maintain, then you may have to replace them earlier than the reserve study calls for. And sometimes that could be a situation where you might end up with a special assessment.

Uri Vaknin  25:11

Or but sometimes you could also, if you’re in a certain amount of years from the life expectancy expiration date, you can still pull that money, correct.

Lisa  25:21

Right, the reserve study isn’t set in stone, it’s really just a guide is to help you make sure that there’s going to be money there for when you need it. So if you need to use the money before or after, when the reserves say called for, that’s okay. You can do things like update to the reserve study. In about it, we’re required to do a new reserve study every five years. And there’s a couple of other options that we have for reviews and financial updates. So that you can make sure that your numbers and that what you’re collecting is always on target. So if you had unexpected repairs, then you can provide that information to the reserve study specialist and ask them to make those adjustments. So you know, if you’ve spent a lot of money that you weren’t expecting to ahead of time, they can change that so that the next year, the numbers that you’re using in your budget, are going to include, however, that affects the reserve study and the amount that you should be collecting to make sure that you have enough funds to make the repairs for the future.

Uri Vaknin  26:24

So a lot of buyers look at reserve studies, and they want to understand, they look at the number but they don’t really understand how much it should be in the reserve fund, and how much it should be in the operating fund. Is there a very general sort of equation or metric that you can explain.

Lisa  26:46

So the reserve study will tell you usually what the target number is, if you had to repair everything, that most of the time homeowners associations don’t have a fully funded reserve study or a reserve account. And so I think that typically, if you have about 80%, that falls in line with a well managed Association, at least you know, you’ve got the money there for immediate repairs, you may not be able to replace every single thing today if it broke right now. But you would have enough to replace 80% of your major components. So that’s going to ensure that your building continues to run and that all of the components are working, you know that you have enough money to make sure that they are working,

Uri Vaknin  27:31

I think we’re really a really important point for our listeners to understand is that you, you want to look at the reserve study, and you want to use a reserve reserve study as a guide. And then you also want to look at the amount of money you have in the reserve fund. And don’t be alarmed if it’s not 100%. If it is 100%, the ecstatic. It’s a great property, great investment, probably the very well run Hoa in my opinion. Most condominiums are somewhere between 70 and 100%. of 70% is considered adequately funded, I think about 80%. It’s, it’s called funded basically, because very rarely, although I will say research, your credit, you were 100% funded, which is very exciting when you and I work together on a building. But then there’s also the operating budget, which is what you use day to day to pay payroll and all the small things we’ve talked about, um, what should that look like and how do buyer or homeowner understand is the operating budget is where it should be.

Lisa  28:46

Typically, you want to have about three months in the operating account that gives you not too much money, you’re not exceeding what you should have. But you have enough in case there are some unexpected larger bills to pay. And that way, you’ve got that cushion to pay the next couple of months.

Uri Vaknin  29:06

So even earlier, you said that Mark said this about it being like a template, the CCNRs on the resale package. But you know, Mark stated like he’s seen 300 pages. I worked on a community where there were over 1100 pages. So you know those things can be vastly different. And to give you an example, I know the building that you are managing. The board consists of five people. And there’s another building that we have where the board consists of three people is that so that’s obviously not a directive by the state that was just chosen. Why would that be different?

Lisa  29:57

That’s all decided on between the initial A lawyer and the developer when the community is created. And I’m sure there’s reasons that go into why they would want three board members, instead of seven, or instead of five, I’ve seen anywhere from three to nine, the more board members you have the different the more differing opinions you have, and you tend to get some contention, I think the smaller amount you have tends to be a little bit more manageable. And it’s easier to get people on kind of the same track, so that they’re making good decisions and not just arguing.

Uri Vaknin  30:37

It’s interesting, because, you know, board members are not paid on board positions can take up a lot of your time. And what are some of the like the best qualities that a board member should have?

Lisa  30:53

being selfless? I think that it’s really important to not get on the board, because you have an agenda, you need to understand that you are representing every single person that owns a unit in that building, or owns a property and that association, you need to make the best decisions possible, you need to be well educated, you need to follow the advice of professionals, you should always rely on, you know, your attorneys opinions, your professional community managers, you know, we’ve got training and that we are required to get continuing education so that we always know what the current laws are, and so that we’re always, you know, doing the right thing, and hopefully advising the board on what the right thing is. So those are all resources that they should be willing to use. I think that they should be willing to listen, and compromise. You know, there’s lots of different situations that they’re going to hear about through the violation process. And so they need to keep an open mind and not say, you know, well, I don’t like my neighbor. So I’m gonna assess fines against them, or, you know, make decisions that benefit just them, they really need to consider how every decision they make is going to affect everybody in the community

Uri Vaknin  32:07

better. So you brought up an interesting point ease to try to find, um, talk a little bit about, you know, what a condo association, or Hoa, a homeowner’s association does, in order to kind of maintain order within a community.

Lisa  32:25

I talked a little bit earlier about how your actions affect somebody else. So when there’s a situation where your actions have affected somebody in a negative way, and maybe taken away from their peaceful enjoyment of their space, or maybe you’ve, you know, maybe somebody has caused damage to a common area by hitting it with a car or hitting it with avail cards, whatever the case, may be, there is a process laid out in the CCNRs, that dictate how that gets handled. So you can’t continue to play music at two o’clock in the morning, and your neighbors not get any sleep, the association has to take action on something like that, so that the neighbor that isn’t getting sleep, can eventually get sleep again. So there’s a process that you have to go through where you write, you know, an initial letter saying, Hey, you know, we’ve got a notice that you’re playing music, and it’s bothering people on your floor. And you have to refer to the law. And you know, any notice that you send out basically has to be backed up by whatever the rules for the association are, you can’t just make things up as you go along. And then, you know, if they continue to make that noise, that causing a nuisance to the neighbor, then they move on to the next step, which is usually a hearing before the board, where all the information that has to do with that situation gets presented to them. And they’re invited to attend and say, Well, you know, it wasn’t me making noise, I think you heard the guy down the hall, whatever the situation is, that information gets presented to the Board, and then the board has to make a decision on how they want to handle it. If they feel that the person that’s been called to the to hearing before them is at fault, and has broken the rules of the association, then they have the ability to assess fines. And fines are there so that the behavior can stop, you know, if somebody knows that they’re going to get charged $100, every time they leave their trash in the trash chute room instead of taking it to the dumpster like they’re supposed to, then they might think twice about not leaving that trash there the next time. So the whole point of fines is to encourage people to do what they’ve agreed to do. When you purchase in a homeowner’s association. In a high rise. You agree to all of those rules, whether you’ve read all of those 1100 pages that you talked about in the resale package or not, you’re still obligated to follow those rules. So if you’ve purchased you’ve said, I’m not going to play music at two o’clock in the morning, or I’m not going to You know, do whatever, I’m not going to have five dogs in my unit, whatever the case may be. And if you do, then there’s actions that can be taken against you. So that the other people that have bought into the community, maybe because they don’t want their neighbor to be able to have five dogs or to play music at two o’clock in the morning, you know, they’re insured that they’re not going to have to live with that continuously.

Uri Vaknin  35:24

So regular really good point, people can have a tendency to have a love hate relationship with HLA, you know, it’s like, some people say they would never live in a community without an HOA. And then the next thing that they say, they can’t stand their Hoa, what is what is the crux of that? Why is that?

Lisa  35:46

I think at the end of the day, nobody likes to be told how they can live, where they own, especially, whether you’re a tenant or an owner, you just you, you want to be able to do what you want to do in your space. But when you’re living with people all around you, above you, and below you, you have to be considerate. And so you know, you have to understand that there are going to be rules to follow.

Uri Vaknin  36:11

But they’re not. The rules are just like, if you have individual neighbors, you play your music loud, your neighbors gonna call the police.

Lisa  36:19

Right. And initially, homeowners associations were set up so that development could continue, when the demand to build exceeded what the city could provide services for. So when you’re living in a single family homes, and you paint your house green, the city can still come after you and say, hey, you’re not allowed to paint your house green, you were supposed to ask us for permission, in a homeowner’s association, that responsibility just gets shifted on to the actual Association, so that the city isn’t responsible for it, the same rules, typical rules for an association typically exist based on what the rules for that state or that County are. And that’s typically where that basis comes from, you know, are there noise ordinances are, whatever whatever the case may be for that particular county is a little different for a high rise. Because, you know, you’re we’re not talking about letting weeds grow. There’s no landscaping and we’re not talking about painting your house. But there are still county rule, you know, you can’t just start constructing things in a high rise without getting permits, you know, everything that you do affects somebody else.

Uri Vaknin  37:27

I’m talking about that for a second, because that’s like a big component of, you know, especially for when you buy into a new building, and everyone is redoing their condo, there is that the architectural control committee.

Lisa  37:43

So when you’re doing repairs, or improvements in your unit, there’s typically rules in the CCNRs, that dictate how you can do that you have to ask for permission. If you’re planning to replace your floors, you want to make sure that you’re meeting the sound requirements. Again, it all goes back to how you’re affecting the people around you. So if you’re planning to put in tile or wood floors, you have to make sure that you’re using the correct underlayment so that you’re not affecting them. So every footfall that you make the people under, you aren’t hearing it. So the association is responsible for making sure that that all gets done according to the rules as they were written in the CCNRs. Just so you typically have to apply for those kinds of changes. In a high rise, it’s important to do that too, because there’s an extra component of the fire system, you have to make sure that you’re not changing the fire system or changing the plumbing, things that will really affect how the rest of the building is run. Or maybe the safety of other people, if you you know, accidentally paint a sprinkler head and then the sprinklers don’t work if there’s a fire. I mean, those are all things that you have to think about when you’re living in a high rise.

Uri Vaknin  38:51

Well, it’s also to make sure that the people who are working on your home are licensed professionals and telephone bonded. So it protects everyone involved. Um, that brings up a slightly different topic is so when you commute sociation manager, you have to do a major project in the building. Can you just call up anyone and say, Hey, I need your license? No, you’re insured and bonded. And as a community, Community Association manager, can they just come and do the hundred thousand dollar project they need to have done?

Lisa  39:27

No, the board has to decide on big projects like that during a board meeting that way that information gets provided to all of the homeowners, homeowners are always encouraged to attend the board meeting. So if you have a big project coming up, you want to make sure that you’re requesting bids from several competing companies and different states have different laws about how those are collected. And in Nevada, we’re required to get three bids sealed to prevent undercutting, so that one company can’t say well Do it for 20,000. And then you tell them how much that company is going to do it for. And your friend says, Well, I’ll do it for 10 so that they get that business. So there’s rules that go along with how those bids are collected and opened. And the owners have a right to know how much of the money that they’re paying into that budget, are, how the money is going to be spent. And you know, who who’s doing that work? So that’s all decided in an Open Board Meeting, and noticed on an agenda so that the homeowners have that information?

Uri Vaknin  40:32

Because a lot of times when it’s restricted resurfacing project that needs to happen, they question why it takes so long, and they don’t realize it’s for their own benefit, to make sure that, you know, the best quotes demand to make sure that it’s not someone’s friends, brothers getting the project, and that is done through a sealed process. And it’s all correctly done. But oftentimes, you know, we’ve experienced especially, you know, during the heyday of construction the past few years, it was very difficult. We’re still very difficult sometimes, especially on a kind of a niche project to get, you know, someone to bid on some of these things.

Lisa  41:17

Absolutely. A lot of times in the high rise, the companies that you would call for a single family community don’t have the experience to work in a high rise. So you want to make sure that the companies that you’re asking to bid have the correct amount of insurance, definitely that they have workers comp insurance, and you know that they have all the proper licenses to do whatever work it is that needs to be done. In

Uri Vaknin  41:39

Nevada, in a high rise, you have to have a special level of contractor license that is a very expensive, leveled contractor license, and not many have that and therefore it’s very difficult sometimes to get this

Lisa  41:53

absolutely.

Shahn Douglas  41:57

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Uri Vaknin  42:48

So let me ask you a question to one, how do you get elected to the board? to how long is a board term? Three, let’s say you don’t get elected to the board. How can you get your voice heard in the community if you have a concern?

Lisa  43:09

To get elected to the board. That process is usually dictated in the bylaws. The bylaws are one of those other legal documents that make up the condo docks. And it lays out the process for elections and usually for the budget to for any legal process that happens in the association. So the bylaws will usually tell what the terms are, and how many days in advance, the nomination forms have to go out. So any owner that’s in good standing in the community can typically run for the board. Definitely refer to your documents to see what the specifics are. But you’ll put in a nomination form for yourself. In some communities, I think you can nominate somebody else for the board. I don’t see that happen very often. Typically in Nevada, you know, people nominating themselves because they have something that maybe they see a problem with and they want to fix. And that motivates them to want to be on the board or maybe they just want to have a better understanding of how the association is run. Or they just want to provide a service to the community. Maybe they have a background a in finance, and they think that they can help improve the finances for that community. And so the term is different depending on what the documents say. Typically, you’ll have an election every year, and not everybody is up at once. The whole point is to stagger board members so that it’s not always the same people running at the same time. You know, you know, maybe one year you’ll have three people run and the next year you’ll have two people run and that way you have some established board members that remain. While you know maybe you have two new they get elected for that year.

Uri Vaknin  44:56

So will you meet with a new homeowner I’m about to move into the building, you have an orientation, what do you cover in the rotation?

Lisa  45:07

When I do an orientation with a new owner, I try to tell them everything that I think they need to know. So that they’re happy living in an association, if they were coming from a different environment, this might be a change to them that they’re not ready for, you know, like I said, There is definitely going to be some noise associated with living in a high rise, whether it’s noise, and you know, the hallways or noise of the elevators, things like that. And so I try to let them know what to expect, so that when it happens, they aren’t annoyed with it, they’ve already, you know, got some information about whatever it is, you know, here’s the process for how we handle the garbage pickups. Here’s the process for how we handle move ins. You know, you can’t just have people show up, there’s access rules, you can’t, you know, just give your keys to anybody. To get into the elevator, you have to go through the process of the concierge. So whatever I need them to know, so that we’re not sending them violation letters, because they’re constantly breaking the rules. That’s what I really tried to let them know more than anything, because I think that affects their day to day living here. I always tell them how much they their assessments are. So that they know, you know, once the money that has been collected at title is been applied to their account, you know, what their monthly obligation is, hopefully, that’s something that they’re already aware of. But it’s definitely something that I bring up just so that, you know, we’re all on the same page. And when they get that first bill from the association, they’re not taken by surprise. And it’s a different amount than what they thought, I let them know what to do, if they need our help, you know, who can they contact, our services are available 24 hours here. So you know, if it’s between this time, and this time, here’s how you get ahold of somebody, I think it’s just a really good idea to educate new homeowners so that they know, like I said, how to be happy here how to be how to be content, because sometimes it’s difficult to live in a new environment if it’s not something that they’re used to.

Uri Vaknin  47:21

But there’s so many great benefits to live in an HOA, especially in a condominium where sometimes people just have to come from a single family house and they lived in our nation. They need a real education. And they have to get over that fear.

Lisa  47:43

Right? Right. And there’s a lot of things that you don’t have to worry about when you live in a homeowner’s or in a high rise. You know, you don’t have to worry about landscaping, because we’re going to take care of it, we have a company that does it monthly or you know that does it weekly, and part of your association fees go towards that. So you don’t have to worry about paying that bill or you know, oh, the trees need to be trimmed. You don’t have to go out there with your tree trimmer. You don’t have to worry about depending on the services that are offered, you know, security, there’s typically security and a high rise and somebody that at least is walking around and making sure that things are as they should be or looking for leaks or, you know, making sure that the doors are secured. So there’s a lot of benefits to living in a high rise and homeowners association. And so it’s important to know what what you’re getting? Well,

Uri Vaknin  48:36

I’m actually going to tell a story. So one of your current board members who bought from from us, when I met him, he was actually taking a photograph of me for publication. And he was telling me about how he’s always dreamed of living in a condo, and all this stuff. And he said, but you know, they have a house and they just couldn’t imagine moving to a condo. But how cool would be to live in a condo downtown. And he said, I just could never pay HOA fees, and I could never live in an HOA. And so I said, Oh very interesting. So he told me he lived in this community that was kind of like all a horse centric community or was years ago, and he had a pool and he had all this landscaping. And so I was like, Oh, so I think what do you pay for your pool every month? And I did this in our last podcast, too. I told a similar story. But this story is really kind of funny because this homeowner is one of your board members now and went down the path of like all the things he paid for. And they said, Well, how much do you pay for your concierge? Why my concierge? He said, Well, you have a concierge, don’t you? I was kind of joking. And he goes no. I said well, and how much do you pay for your 24 hour security that walks around your home? And he was like funny or a and so Lola Hold, it took him a minute, but a year later, he bought to the community, I think he’s probably the number one proponent of living in a condo, I’m in a high rise, condo, and then he got elected to your board. And so it was really interesting to see, you know, the transformation of someone through said, I’m going to live in my house, I’m not going to pay HOA fees, I’m not going to deal with an HOA to then buying into a condo, loving it, and then even getting on the board. So when people talk about this love hate relationship, and they talked about all the problem that they have with with Hoa and how much you know, they, they don’t like them, and they don’t want to pay fees. But as we talked about in our first episode, on this topic, is that it really does more than paid for itself. And it helps create that lock and leave lifestyle where you don’t have to worry about all this stuff. And also, if you do have an issue with a neighbor, you know, you don’t have to involve the police you, you have rules, a set of rules and regulations within your community that can be, you know, enforced. And so that’s really another incredible thing about living in a community with the homeowners association. And it’s I love to watch people transformation. To that to getting to that point. But one of the things I want to ask you is so your Community Association manager, what does that mean? And how does it differ from the board? What can people expect from you? What are your limitations? And what do you love most about what you do?

Lisa  51:44

So as a Community Association manager, I am responsible for being the liaison between the board and the homeowners and the board and vendors or contractors. I’m really the go between and the communicator that compiled all the information. I am educated on the law. I although I’m not a lawyer, you know, I have to know what the laws are. So that I can advise the board on how you know what decisions they should be making I provide any information to them about any emergencies that are in the building so that they know maybe what actions they need to take. I helped prepare all of the items for their board meetings. So that they don’t have to, you know, because it is a volunteer position. So even though they’re the ones that are ultimately responsible, all of the board members have that responsibility through the CCNRs it dictates You know what, what they have to do. So if the CCNR say that they’re responsible for sending out the budget, ultimately, I know that, you know, john smith isn’t isn’t going to be sitting in his unit, writing out the budget, and then copying it for all of the owners and sticking it in the mail. So they help handle that process. And then I’m the one that actually makes sure that it all gets carried out. And what was your other question?

Uri Vaknin  53:07

What do you love most about being a Community Association manager,

Lisa  53:12

it’s always something different every day brings a new challenge. I’ve learned something new every day, because there’s lots of things going on, especially in the area that I work in. So just being in this area, being in Vegas, you know, there’s always something interesting going on. And I get to help people, you know, hopefully I get to help people fix problems, you know, if they are having a problem with their neighbor, a lot of times we can help get that resolved. You know, I’m here, I’m here to help. People love where they live.

Uri Vaknin  53:45

I love that, you know, and Lisa, I have to tell you that the hundreds of Hoa managers, Community Association managers, whatever you want to call them, whatever market, you are simply one of the best. You run a great Hoa, you are so committed to what you what you do. You’ve taught me a lot. I think you’ve taught all of us a lot. And I really want to thank you for coming on, you know, our podcast to really let our listeners know what it’s what a condo Hoa is really about and to really demystify, you know these notions and negative ideas of a condo Hoa. And for that, thank you very much.

Lisa  54:30

Thank you. It’s always been a pleasure working with you. You truly know your stuff. And I still the same I have learned so much that I don’t know from you.

Uri Vaknin  54:40

Well, we all learn from each other. We’ve all been a great team, and it’s been awesome. And to our listeners. Thank you for listening to another episode of Condo Artist: The Other Side of Real Estate: Demystifying the Condo HOA Part Two with Lisa, our Community Association manager, thank you very much till next week. Bye bye.