Checklist To Evaluate A Property Manager

Being a landlord has various forms of work that feel like drudgery if you do it all alone.

Whether you're a private landlord or on an HOA board, finding a valuable property manager that can ensure day-to-day operations, reduce costs in your budget, deal with legal compliance, market the property and effectively maintain the property; is not an easy feat.

Check The Techniques Of A Property Manager

Amidst the requirements for overseeing a property, it is just as important to evaluate a property manager's financial reporting skills, salesmanship, property maintenance tactics, and analysis or track record of tenants that they have approved to live within your rental units.

Learn how to accurately determine the right property manager with these tips:

• Don't Cast a Wide Net for Potential Hires
• Expect a Balance of Salesmanship and Marketing Experience
• Understand Local HOA & Legal Compliance
• They Know How to Handle Maintenance Issues
• Quality Tenant Screening Tactics
• They Have Reasonable Service Fees

Don't Cast A Wide Net For Potential Property Managers

You should always do your research and look for recommendations of who have a great track record for handling such demanding responsibilities in an expedient manner.

The National Association for Residential Property Managers can help with this, too. But you do not want to scout numerous property managers like a professional sports leagues's draft with multiple rounds. Keep your goals simple for profitability, and keep your pool of property manager candidates narrowed.

Salesmanship and Marketing Experience

Some people are better than others when it comes to the art of persuasion, or have charismatic personalities. You need a property manager that knows the rental units and the local real estate market in order for them to sell well to tenants in a competitive real estate market. 

Have they shown properties before? Are they knowledgeable of what it take to advertise rental units? What communication methods with tenants regarding condo fees have they used into the past disseminate that important information to the residents? How well do they know the local real estate market in that side of town where your property is located?

These are all important questions to have as part of your criteria for hiring your next property manager. Make sure they have an excellent customer service mentality when dealing with tenant's problems that may arise. This will also be conducive to overall morale and culture amongst occupants within the property, and add market value to your investment in the long term. You can't afford to have the residents feel as if they are victims to a slumlord in any capacity.

Understanding Legal Compliance

There are many intricacies when it comes to dealing with real estate law. Certain states have different by-laws when it comes to property ownership. Also, they must know fire-safety regulations for example how you use mulch on the property grounds. 

If you are on the board of a condo or homeowner association, you should see if they know how your HOA voting process works and how they have carried out new rulings or policies from the HOA board. If they do not have this type of experience, they you could be bound for a legal disaster, and being in court can be costly against your investment plan for the property.

How Well Do They Know How To Handle Maintenance Issues

There is always something that comes up at random when it comes to property repairs. Property managers need to be as expedient as possible for random breakdowns of radiators during the winter, assessing flood risks to keep the resident's items and well being safe, hot water heaters not working for the rental units shower, etc.

Property managers usually have a budget for cash to carry out repairs. It is crucial to pinpoint how the property manager will use this budget and keep the regular maintenance costs under control, or evaluating damage control issues for move-in/move-out day at the end of rental leases,  

Tenant Screening Tactics

As the Boston real estate market gets more expensive and the demand for rental units continues on the uptick, the tenant screening process is becoming more essential than ever.

In order to be profitable, you need to have a property manager who can take the time to have a keen sense of who should be occupying the vacancies, and who will not give you problems when it comes time for monthly rent collections. 

Credit reports are great to use for this evaluation, but also finding out what methods and turnkey resources that the property manager uses for researching the tenant's work and landlord history for good referrals is necessary as well. 

Evaluate The Property Manager Service Fees and Accounting

Most property managers charge between 6% to 12% of the monthly rent for their services. This ties back to the first point of doing your research on property managers: know the range of percentages that property managers in your community will charge.

For example, if you have under 50 units in your HOA or as a private landlord, then you may not be able to attract a top tier property manager because you simply won't have the budget to pay them.

Perhaps in this case, you may want to hire a property manager that is not as expensive for their services. Or if you do have that many units and are looking for a property manager that caters to the lifestyle that you want to present for your HOA, then you must learn which can account for the condo fees and liability insurance requirements to help protect you from potential lawsuits. Plus, see what they know about budgeting for advertising costs for the vacancies.

As a property owner, it is mandated that you report your taxes to the Internal Revenue Service.

Therefore, ask if they have experience assisting in these filings of the required forms with property owners and landlords. The goal is reaching a profit, so you must have a person that is, if not, more financially literate than to make this happen smoothly as possible

Evaluating a Property Manager - Final Thoughts

Have you had any experience hiring the wrong property manager? What do you think your mistakes where in dealing with the wrong hiring? If you have great experience hiring a property manager, what did you use for an ample criteria to make the right decision?

The Moral vs. Legal Dilemma of Mass. HOAs Banning Its Homeowners from Medical Marijuana Usage

'Doobie'-ous Voters of Massachusetts

In this blog we will recap recent legislation for medical marijuana in Massachusetts, and discuss how this impacts HOA guidelines for marijuana smoking in units as well as the moral versus legal dilemma:

Should HOAs give leniency to unit owners who hold registered marijuana prescription cards and are protected by the new possession laws, despite living among other unit owners who do not want to live among reefer-toking neighbors? 

Statewide Decriminalization in 2008

The legalization of  marijuana has been a hot topic since the election of President Obama in 2008. His support for the legalization has caused major changes to the public's perception of the drug, and was part of the reason Massachusetts voters were asked to vote on the decriminalization of pot possession in 2008.

Medical Marijuana Approved in 2012

Four years later on November 6, 2012, the state's voters elected the Commonwealth to become the 18th state to allow medical marijuana treatment for patients prescribed from physicians. A total of twenty states have legislated  provisions for medicinal usage of pot,  including the offense levels enforced by police (i.e. $100-fines issued to offenders instead of arrests for possession levels of under an ounce, growth in one's own home due to financial hardship).

First Medical Marijuana Dispensaries Open in MA

Just last month in late January 2014, twenty locations were approved by the state legislature for licenses to medical marijuana dispensaries in Western Massachusetts, the Greater Boston area, the North and South shore, and Cape Cod regions.

Despite the overwhelming positive response  surrounding Boston area license-hosting suburban cities, from lawmakers, and even  former Boston-based police veterans  alike, many voters still oppose this rally on the progression of pot usage.  Aside from legality, the directional tilt of the moral compass comes into question.

HOAs and Medical Marijuana Usage

So what does this means for the HOAs and condo owners patients who dwell in condo buildings in these regions of Massachusetts? 

Are HOAs able to override the constitutional rights of owners that may disturb neighbors, possibly with children, who reluctantly catch a whiff from a  burned "spliff" near their respective home? 

In a state such as Colorado, where medical marijuana  became legalized, HOAs only have the right to waive constitutional rights of the owners unless the marijuana usage of a condo resident within the association becomes a nuisance.  This is explained in a recent article of Colorado-based periodical The Cannabist, which details the complications of an HOA having the right to give a condo owners the boot from their building if they offend other residents. Legal analyst Jerry Orten states in the article that there must be a two-thirds vote from the HOA board members to ban the cultivation or usage of pot in the condo building. Orten continues:

" People can agree to things which waive their constitutional rights. That's the essence of covenants. An association can have a covenant precluding the use of marijuana."

As explained in our previous blog post about HOA voting, the association must meet the quorum standards to have the vote be official. Also, another obstacle for those who support the ban of pot in HOAs is the contradiction of state law that support medical marijuana usage, which protects these types of patients to live however they need to survive in the vicinity of their own homes.

Final Thoughts

Not only does this have a question of morality versus legality, but also question the future value of your property -  if potential home-buyers know about the allowance of pot usage within your HOA. It could either help bring in home-buyers, or turn them away with that knowledge of the HOA's laws on marijuana usage on their building's grounds.

Are you in favor of supporting a ban on pot for your HOA? Do you think it can add to your property's future value? Or does freedom outweigh home value to you? Would you vote in support  for one's privacy and medical marijuana usage in one's own home?

Tell us you thoughts!

Proxy Votes & Quorums for HOAs Explained

A Guide to the HOA Voting Process and Proxy Voting

The condo association voting process tends to be complicated for condo owners, board members, and property managers alike. This can cause apathy of the required parties for establishing quorum, and can stifle decisions for carrying out business necessities for the condo association.

In this article we will answer the following questions about the HOA Voting Process:

• What is the condo association voting process?
• What is a quorum?
• What are proxy votes, and why do they exist to establish quorum?
• What does the Massachusetts law state regarding proxy voting for HOAs?

Who is This Guide For?

This guide is designed to educate unit owners, HOA board members, and property managers about the HOA voting process, as well as outline best practices for establishing and managing a voting process for their HOA's bylaws. In the first half of this blog, we will explain the condo association voting process, and then we will go on to explain the challenges of reaching quorum, state laws on proxy voting, and our recommendations for your HOA that may face challenges for meeting a quorum.

What Is The Condo Association Voting Process?

All condominiums are required to be members of an association with an election process comprised of the condo unit owners, property managers, and board members. According to the New England Condominium article Getting Out The Vote,

As a guideline, these rules should address the qualifications of candidates; nominating procedures; campaign procedures; qualifications for voting; the voting time period; the authenticity, validity and effect of proxies; and the methods of selecting election inspectors to handle the ballots. 

What Is A Quorum?

A quorum is the minimum number of association members necessary to legally conduct the business of your HOA. Most, but not all, groups define a quorum as a simple majority of the members. However, the specific defintion for your HOA should be defined in your HOA's by-laws. Without a quorum, a vote cannot be taken, and the status-quo can't be changed.

What Are Proxy Votes, and Why They Exist To Establish Quorum?

The proxy vote is when a voter or unit owner designates another person to cast their vote, using a signed letter or form. “The proxy could be given to a fellow unit-owner or to a clerk for the board,” he states. The voter may indicate his or her choice of candidate or issue with a “directed” proxy – or leave the choice up to the person designated as proxy.

What does the Massachusetts law state regarding proxy voting for HOAs?

Low attendance at voting meetings is one of the main challenges that leads to harder chances of establishing quorum, which needs to be met according to the MA state by-laws for the HOAs to conduct business. Massachusetts state attorney Frank Flynn of the Boston law firm of Downing & Flynn stated in Getting Out The Vote that the election process is not something that is legislated by the state of Massachusetts. Instead, “elections are set forth in the condo docs (rules and regulations)” and that “serving on a condo board is voluntary…” causing the challenge of attendance.

Proxy Voting: For Better or For Worse?

Proxy voting can alleviate voter apathy and can be a valid solution to getting enough voters to show up at the annual meeting since most governing docs require a quorum of over 50 percent of beneficial interest be present at the meeting. If enough proxy votes are collected, the proxies may equal enough for a quorum and allow the annual meeting to proceed.

The disadvantage of proxy voting is that it is not a valid form of voting in all US states. For example, Illinois is a state that legislates proxy voting (or "secret-ballots") is a violation. The board and property management company must collect most of the proxies from the residents, and the board members vote for themselves. This system seems to prevent others from serving on the board.

Our Recommendations on Proxy Voting

Buildings should consider amending their by-laws' requirement for size of quorum, depending on the number of units in the association. If the building has 50 units or less, the typical 50.0001 - 51% should work sufficiently. If it gets higher than that rate, it becomes difficult to reach quorum at most annual HOA meetings.

For properties over 50 units, HOAs should consider decreasing the threshold for quorum. For example, if a property has 55 units, amending the Master Deed to drop the quorum to 37% can results in an increase of action items being improved.

Using Proxy ballots allows for voting on agenda items. HOAs should mail out Proxy Ballots instead of the usual proxy form for voting. These ballots are drafted to assign your proxy to vote on behalf of you for pre-approved agenda items. However, motions from the floor (followed by Second, Discussion, and Vote) could be possibly voted by Proxy Ballot if the ballot was drafted "to include, but not limited to..." This is all assuming that you have reached quorum.

For absentee ballot/mail voting, condo docs need to be referenced very specifically for how and where quorum needs to be established. If it states "at a meeting" in person, mail in/absentee cannot be used. This is when the proxy ballot can come into play. If the condo docs are not specific, and quorum is not met at a meeting, the HOA could explore the idea of following it up with a mail-in vote.

Electronic voting is not illegal in Massachusetts, but the Trust has to again be referenced specifically. New condominiums or associations looking for under-quorum reprieve may want to amend their Trust to allow for them. There is not much judicial precedence for challenging electronic voting known. Being that is a new form of voting, HOAs should tread carefully on this.

In conclusion, HOAs should always retain an attorney to clarify what is required by your property governing documents.

Your Thoughts on Proxy Voting

Do you believe that altering the threshold in your HOA's by-laws can allow for proxy voting could be advantageous for your HOA? How hard would it be for voting on amending your HOA by-laws for establishing quorum for your property?

Give us your feedback! We would love to discuss more about Proxy Votes & Quorums for HOAs with you in the comments.

Dealing With Delinqent Owners

Hard Times

It is something that we see all to often in this economy, owners who fall behind on their condominium dues. In any association, if even ONE owner becomes delinquent, the condo can face an operational shortfall that forces trustees and managers to face tough situations. This is an unfortunate reality for many condo owners in Boston and around the country. You may not realize it, but when your neighbors stop paying, it is you who picks up the slack financially!

Early Warning

The best way to deal with a delinquent owner is with constant communication and a plan. Your accounting department and managers need to be reviewing payments monthly and ensuring everyone has paid. Make sure you have a policy in place that late fees are charged to anyone more than 15 days late on a payment. After that point, send reminder/warning letters and document all communication. Owners need to understand that dues are not optional and not paying can greatly decrease the value of the whole association.

Protection

If warnings and late fines do not bring in payments, you need to retain legal council. At our firm, if payment has not been submitted with 60 days, and every effort has been made, we turn the unit over to collections. This 60 day mark is extremely important in ensuring the association can recoup on these funds, thanks to the "Condo Super Lien Bill". Under this law, condominium associations can enforce a lien against condo owners who fail to pay their condo fees. The lien for these unpaid condo fees, as well as attorney’s fees and the cost of collection, have priority over the first mortgage. In order to achieve priority; however, the statute requires that the owner and first mortgagee (i.e. the bank/lender) be provided with a notice once the fees are 60 days delinquent. If you fail to provide this notice, you run the risk of losing the ability to recoup those
funds!

No Exceptions!

While it is unfortunate that this topic is so relevant today, it still needs to be discussed. Without the proper plan set up, managers and trustees are in danger of harming the association. Remember, there are no exceptions! If someone falls behind you have to stick to the plan. At the end of the day, a condominium is a business and it needs proper cash-flow to run. Your neighbors may be your friends and you may sympathize with their situation, but the proper steps need to be taken to protect the condominium.
If you have any questions about this, please do not hesitate to contact us. We would be happy to answer any additional questions you may have. Premier Property Solutions, LLC is Boston's premier property management firm.