Common Water Heater Problems and Signs You Might Need a New Unit

Other than a fire, nothing causes more damage to the inside of a property than leaking water. Like any appliance, water heaters break down over a period of time.  No one enjoys taking a cold shower, so ideally you’d like to be able replace your water heater before it completely stops working.  If you wait too long it may lead to bigger problems as well, such as large leaks and water damage to your home. So how do you know when it’s time for a replacement? Here are a few signs:


Age

The older a water heater gets, the more likely it’s about to break down. Electric water heaters generally last 8-10 years, while gas water heaters may only be good for 6-8 years. If your water heater is any older than this, it may be time to check for some of the symptoms below.
Rust and corrosion
Check your tank for any rust or corrosion, particularly the area around the temperature and pressure relief valve and the inlet and outlet connections. Also check your water to see if it’s turning a rusty color, which could mean there’s rust inside the tank. Unfortunately, rust and corrosion can’t be fixed. Once it starts it’s only a matter of time before the tank is leaking and needs to be replaced.
Unable to drain water through the drain valve
Over time, sediment builds up inside a water heater. Flushing your water heater once a year will help solve this and extend the life of your water heater. However, if this task isn't performed for an extended period of time then the sediment build-up will eventually reach a point where it can no longer be resolved. At this point a water heater replacement will be necessary.
Your hot water tank is leaking
A leak from your hot water tank is usually caused by an internal problem and is rarely fixable. If you spot a leak anywhere on your water heater it’s quite likely your water heater needs to be replaced.
Your water is lukewarm or cold
If your water isn't as hot as it used to be, or isn't hot at all, then there is likely something wrong with your water heater.
Check for any of the symptoms above. If you find any of them then it is likely your water heater is beyond repair and will need to be replaced.

March Volunteer Leadership Series

Bids, Contracts and Maintenance

Presented by Kent Knapp, Director of Ghertner Maintenance & Remodeling 

L to R: Kent Knapp, Bridgemill at Providence Board member




Kent spoke to a full room of Board members and Community Association Managers at the March 4th Lunch & Learn held at Ghertner & Company’s learning center.  Discussion included the importance of a maintenance plan for routine, preventative, emergency and deferred maintenance.  Recommendations for creating a bid schedule to obtain proposals for services based on detailed specifications; and what to consider when choosing a bid prior to signing a contract for services or planned projects.

If you are a Board member who is interested in learning more about our management services, please contact Kathleen Sutherland at kathleen.sutherland@ghertner.com or 615-277-0314.


L to R: Kathleen Sutherland, Saundersville Station Board member


L to R: Paul Matthys, Community Association Manager, Hermitage Meadows Board member

Tennessee 615 Area Code Overlay


The Tennessee Regulatory Authority approved an overlay for the 615 area code to accommodate the need for more telephone numbers. The new 629 area code will serve customers in the same geographic region as the current 615 area code.  An overlay does not require customers to change their existing area code.

When the overlay area code is implemented:
·        Beginning February 28, 2015, customers with 615 or the new 629 area code must dial the area code + the seven-digit number when making local calls.
·        Long distance calls remain the same. Callers need to dial 1 + area code + seven-digit telephone number whenever placing a long distance call from the 615 or 629 area code.



Completing calls:
·        To complete calls from a land line phone, the new dialing procedure requires callers to dial ten-digits (area code + telephone number) for every local call.  This means that all calls in the 615 area code that are currently dialed with seven-digits need to be dialed using the area code + telephone number.
·        To complete calls from a cellular or mobile phone, callers may dial the area code + telephone number or 1 + area code and telephone number whenever placing a call to a phone number with the 615 or 629 area code.
In addition to the new dialing procedure, automatic dialing equipment or other types of equipment that are programmed with a seven digit telephone number, need to be reprogrammed to use the new dialing procedure. Some examples are life safety systems, fax machines, Internet dial-up numbers, alarm and security systems, gates, speed dialers, mobile phone contact lists, call forwarding settings, and voice mail services.
Your telephone number, including current area code, will not change.

·        The price of a call, coverage area, and other rates and services will not change due to the overlay.
·        What is a local call now will remain a local call regardless of the number of digits dialed.
·        You can still dial just three digits to reach 911, as well as 211, 311, 411, 511, 611, 711, and 811.
Questions?  If you have any questions regarding information provided, contact more information is available through the Tennessee Regulatory Authority (TRA) at www.tn.gov/tra/dockets/1100018.htm

Ice Damming

Middle Tennessee residences  have been experiencing a phenomenon called "ice damming" which is commonplace in the north, but unusual in the south.  Ice damming is difficult to rectify in the immediacy and will typically resolve itself when the freeze/thaw cycle subsides.
Dams can tear off gutters, loosen shingles, and cause water to back up and pour into residences. This is will lead to peeling paint, warped floors, stained and sagging ceilings, wet insulation, etc. 
Here is how an ice dam is formed:

1. Heat collects in the attic and warms the roof, except at the eaves.
2. Snow melts on the warm roof and then freezes on the cold eaves.
3. Ice accumulates along the eaves, forming a dam. Melt-water from the warm roof backs up behind it, flows under the shingles, and into the house.



Ice dams will often stop leaking to the interior at night as temperatures drop, and begin leaking again as the sun comes up and warms the roof and attic.    
As difficult as it is to not take action, chipping at ice dams will damage shingles, flat roofs, siding, gutters, etc.  Additionally, it is unsafe to be walking icy or snow covered roofs and in many cases isn't possible. 




There are long term solutions to ice damming that should be taken into consideration:
  • Seal air leaks in the attic to stop warm air leakage (the source of the problem).
  • After sealing leaks, add additional insulation in the attic.
  • Provide adequate attic ventilation so that the underside of the roof and outside air are at the same temperature. Check to make sure attic insulation is not blocking roof ventilation.
  • Clean leaves and other debris from gutters before the first snow. This will help prevent ice build-up in gutters.

February Volunteer Leadership Series

Fair Housing for Homeowner Associations

Presented by Angelita Fisher of King & Ballow


Angelita Fisher led February’s lunch and learn workshop to an audience of Board members and Community Association Managers at Ghertner & Company’s learning center. Though some may think that the Fair Housing Act does not apply to Homeowner Associations, it does!  Fair Housing applies to entities and associations that provide services and facilities in connection with housing.  Your CC&R’s and Fair Housing Laws may conflict, and if they do, Fair Housing Laws trump your CC&R’s.  So next time you have a request for reasonable accommodation or modification be sure to do your research and seek legal counsel. A wrong decision could be very costly.


If you are a Board member who is interested in learning more about our management services, please contact Kathleen Sutherland at kathleen.sutherland@ghertner.com or 615-277-0314.




Severe Weather Alert



As winter weather is again approaching with sub-freezing temperatures predicted for the next several days, we wanted to advise you of some precautions to take to prevent pipes from bursting and other potential hazards.

Ghertner & Company’s Homeowner Service Center is available to help you should you need assistance during office hours of Monday-Friday from 8:00 am until 4:30 pm, and can be reached at 615-277-0358. Our 24 hour emergency number is 615-255-4736.

If you live in a condominium or townhome community, know who your neighbors are that live next door, and  above or below you.  Share your contact information with them and ask for their contact information in case of an emergency due to a busted water line, etc.  Also, check your unit’s insurance policy, so you know what is covered, and the amount of any deductibles.  Your association’s policy also has a deductible, and you may be responsible for anything below that amount.

If your Association has parking areas, roads, or common walking areas salted, be aware that when the temperature reaches a certain point salting does not work.  Please take precautions if you are walking around the community. 

Below are several helpful suggestions to help you prepare for dangerously cold weather:

Keep your pipes from freezing
Take precautions now to ensure your home is ready for the extreme cold temperatures.   When the mercury dips well below freezing, pipes can freeze under your home.
Ø  Make sure all your foundation vents are closed, so cold air is not getting in.
Ø  Make sure your crawl space door is closed and sealed properly. The main thing is keeping the wind out from under your house.
Ø  In order to keep your water pipes from freezing, allow a steady drip of water from an interior sink to drip while the outside temperature is sub-freezing approaching zero degrees.
Ø  Unhook garden hoses from spigots and cover exterior faucets with insulating material to prevent freezing
Ø  Know where the main water shut-off is located in your home in the event of a broken pipe so the water can be shut off to minimize damage.
Ø  If your outside lawn & landscape irrigation system has not been winterized, know where the shut off valve is for that system in case a broken irrigation pipe occurs.

Other precautions and considerations
Ø  Avoid body exposure to prevent frostbite and hypothermia
Ø  Use electric heaters carefully so as to avoid any combustible materials within 3-4 foot radius; use only electric heaters with an automatic shut-off
Ø  Indoor gas, propane, kerosene space heaters can be deadly if not completed vented and monitored continuously; heaters not used and tested for some time should not be used until safety is confirmed; Carbon monoxide poisoning from improperly or unvented space heaters is extremely dangerous.   If any feeling of confusion, dizziness, or nausea occurs while using a vented heater, shut it off and seek immediate fresh air.

Protect animals from life-threatening cold
Keep pets inside.  If animals can't be inside, provide a warm, comfortable place.  Face shelter away from wind and provide a flap or door to help keep the animal's body heat inside.

Government Affairs - Lien Priority 



The Federal Housing Finance Agency (FHFA) released a statement on December 22, 2014 expressing concern about state statutes that allow community associations to obtain lien priority over first mortgages for unpaid association assessments. By asking a federal court to intervene, FHFA is trying to bail out mortgage servicers that have failed to fulfill basic contractual obligations to Fannie Mae and Freddie Mac.


"Make no mistake, FHFA is bailing out mortgage servicers that lacked the competency to meet basic contractual requirements and follow established rules of civil procedure," said Thomas M. Skiba, CAE, chief executive officer of Community Associations Institute (CAI). "By suing community associations, FHFA is trying to protect Fannie and Freddie at the expense of association homeowners. That's unfair, unconscionable and unacceptable."

For years, CAI has joined with federal regulators (as well as Fannie Mae) to call on mortgage servicers to secure and maintain vacant and abandoned properties and meet their financial obligations to community associations and their homeowners. These calls and regulatory directives have been largely ignored with impunity by mortgage servicers.


"In one case, Fannie Mae’s servicers failed to respond to legal service of process and, despite mandatory notification pursuant to Nevada law, failed to appear at a foreclosure auction to protect Fannie Mae's financial interests," Skiba continued. "It says a lot about FHFA priorities that the agency now is suing to recoup Fannie Mae's losses from the pockets of community association homeowners, rather than suing servicers for breach of contract. Someone must stand up for homeowners and that’s what CAI will continue to do."


FHFA is nothing if not strategic, electing to release its statement on the heels of a lawsuit filed by the agency in federal court in Nevada. FHFA is seeking a determination that an HOA's foreclosure sale is invalid and contrary to federal law because it would extinguish Fannie Mae's property rights. However, the right of foreclosure FHFA is seeking to invalidate nationwide is permitted by law in Nevada, 21 other states and the District of Columbia.


FHFA asserts that it is compelled by law to file suit to protect Fannie Mae's and Freddie Mac's rights and to prevent taxpayers from incurring losses. Skiba said the FHFA statement "blatantly ignores" Fannie Mae and Freddie Mac rights under the respective seller/servicing guides that allow these mammoth enterprises to recover losses resulting from the mismanagement of mortgage servicers. Despite a range of available remedies, FHFA has opted to sue to invalidate state priority lien statutes rather than enforcing its rights under contract.


"It's incredulous that a Federal agency would sacrifice the interests of 65 million taxpayers who live in community associations to protect the very banks all American taxpayers spent billions of dollars to bail out during the economy-shattering housing crisis," Skiba said. "And it’s shocking for FHFA to attack state laws that have been in place for more than 100 years of precedent and practice. Fact is, by paying their association assessments and protecting property values, these homeowners protect the value of lenders' assets in associations. Yet, FHFA is enabling the bad behavior of mortgage servicers who don't spend a dime to maintain and protect their own property investments."


CAI will continue to monitor FHFA's hostile actions against the right of community associations to secure priority liens on properties within their boundaries.”


Get more information on the priority lien issue, including a detailed CAI statement and a map of states with priority lien statutes See the Nevada Supreme Court decision.

With more than 33,000 members dedicated to building better communities, CAI works in partnership with 60 chapters to provide information, education and resources to community associations and the professionals who support them. CAI’s mission is to inspire professionalism, effective leadership and responsible citizenship—ideals reflected in communities that are preferred places to call home. Visit www.caionline.org or call (888) 224-4321.  
Community Associations Institute (CAI) | 6402 Arlington Blvd., Ste 500, Falls Church, VA 22042 | www.caionline.org | 888.224.4321

December Volunteer Leadership Series

Realistic Reserves for Today's Economy

Presented by Miller + Dodson Associates


L to R: Peter Miller, Kathleen Sutherland, Larry Ellis
Peter Miller, RS, and  Larry Ellis, spoke to a packed room of Board Members and Community Association Managers at the December 11th Lunch & Learn at Ghertner & Company's learning center. Discussion included challenges in today's economic climate, as well as funding and understanding the reserve study recommendations and strategic funding solutions. The best tool to predict a community association's capital projects is a reserve study. It's a reliable guide to assist the Board of Directors plan for future replacements.  A reserve study can help avoid special assessments by forecasting the cost and timing of replacing big-ticket items such as roofs and sidewalks, so the money is available when needed. 

Peter also recommends performing annual preventive maintenance by inspecting common elements and building components at least once a year. 




L to R: Villas at Concord Place Board member,
Scott Ghertner, Sullivan Farms Board member


  

Safe Haven Family Shelter - Hike for the Homeless

Big Goal. Big Team Effort. Huge Hike Success.




The 10th Annual Hike for the Homeless on November 8, 2014 was a huge success! Our very own Janice Tantaris and the Ghertner Guardians received an award for the Team with the most members/donors who gave $25 or more.  Way to go Janice and the Ghertner Guardians!

  The Ghertner Guardian Team

Front row: Steve Ghertner, Glenda White, Barb Smith
Second row: Scott Hebrank, Parry Ghertner, Mary Margaret, Janice Tantaris, Angie Brown, Mark Smith


Team award for the most members/donors who gave $25 or more





September Volunteer Leadership Series

Budget Process and Communication


Kathy Sutherland, Theodora Winkler, CAM Financial Manager
and Retreat at Tollgate Board member
Kathy Sutherland led September’s lunch and learn workshop to a packed room on September 3rd.  The topic was the Budget Process and Communication, and was held in the training center at Ghertner & Company.

A few topics from the presentation include:

The Association Manager, Treasurer and Budget Committee’s role in the budget process;  It takes team work!

Funds needed for daily operation of the community and to maintain reserve funds at sufficient levels.

 Reserve funds provide for the repair and replacement of the community’s assets.

Funds needed for additions or enhancements to the property; What members of the community want and are willing to pay for.

Preventative and routine maintenance; The long term value of a plan for maintenance, replacement and refurbishment of common area items.

Realistic fees; A fee increase is an investment in the continual upgrading of the community.

Choosing bids for services; The lowest bid is not always the best bid. Choose the bid with the best value.

Armed with this knowledge, expenses for the coming year can be projected and compared to the association’s potential revenue.  If expenses are greater than revenue, the committee will look for ways to lower expenses without compromising service.  If that doesn't  balance the budget, the committee may have to make a tough decision; whether to recommend a fee increase or a one-time special assessment.

These workshops are one of the benefits of management by Ghertner & Company.  If you are a Board member who is interested in learning more about our management services, please contact Kathy at kathleen.sutherland@ghertner.com or 615-277-0314.


Photo's from the workshop

Damon Morris, Community Association Manager,
 Ann Claud, On Site Manager
at LaurelBrooke and LaurelBrooke Board member 



Heritage Trace Board members
and Linda W. Mason, Community Association Manager
Innsbrooke Crossing Board member, Reggie Tullis
and Bob Welborn, Community Association Managers

Retreat at Tollgate Board member
and Theresa Savich, Administrative Assistant






Jaye Kloss, Community Association Manager
and Enclave at Carronbridge Board members
Wessex Towers Board member
and Innsbrooke Crossing Board member



FHA Extends Temporary Approval Provisions for Condominium Approved Process



The Federal Housing Administration (FHA) released the long-awaited extension of its condominium project approval guidelines on August 29. The two-year extension is contained in Mortgagee Letter 2014-17 and is set to expire on August 31, 2016. To read ML 2014-17, please click here.

As expected, the extension was issued to allow time for completion of the condominium rule-making process and there are no changes made to the policy that was released in Mortgagee Letter 2012-18. Community Associations Institute (CAI) views FHA's extension as favorable as it allows more time to develop approval guidelines that are in the best interests of all stakeholders. To read ML 2012-18, please click here.

CAI looks forward to continuing its work with FHA on the condominium project approval guidelines as well as the development of the Single Family Housing Policy Handbook.

To view CAI's current action item in opposition to H.R. 4969 - the Amateur Radio Parity Act of 2014, click here and help to protect your association's rules and standards.


CAI Government Affairs represents the interests of the 65 million people living and working in America's community associations on legislative and regulatory issues at the local, state, and federal level of government.

Community Associations Institute (CAI) | 6402 Arlington Blvd., Ste 500, Falls Church, VA 22042 | www.caionline.org | 888.224.4321



July Volunteer Leadership Series 

Delinquencies at Your Association










Attorney John Curtis spoke to a packed crowd at the July 9th Volunteer Leadership series lunch and learn at Ghertner & Company.  Here are just a few highlights from the presentation:

Jon mentioned that he uses private process servers in most instances in lieu of the sheriff to serve people with suits since they are more assertive in finding people who he is trying to serve. Private process servers have more interest in locating and serving the defendant to grow their business and keep business, rather than the Sheriff.

Some delinquent payers are “professional non –payers” against whom Mr. Curtis ultimately serves a subpoena to come to court so he can find out where their assets are to garnish assets. Many are held in contempt when they don’t show up to court and the Court will ultimately send then the Sheriff to arrest the person if they fail to show at Court.

One particular national bank averages over two years on a foreclosure.  Mr. Curtis said that associations could consider legal action against the mortgage company for “negligence to foreclose and maintain the property”. This is a possible option in the case where pipes burst in empty units because the bank failed to take possession in a timely manner.  This will be a difficult road, but one option. This scenario was quite common in the winter months of this year when temperatures dropped for many days. 

Collecting from owners who are in bankruptcy is more expensive now than in the past due to the extensive claim filing requirements, especially to increase the assessments. These costs will be recouped from the owner in the chapter 13 plan provided the plan is completed and there is no foreclosure, but the costs will be paid up front first by the association. There has been some “sticker shock” from associations on these new costs.  Please make sure to contact the property manager to notify the trustee at least 25 days before the increase is to take affect to make sure the paperwork can be filed within the bankruptcy Court rules filing requirements.  Please make sure to notify the legal department for any and all changes in assessments, insurance charges, or fines to get them added to the plan with the Court, otherwise there will be challenges to overcome for payment in full of the balance upon discharge.




Ghertner & Company is pleased to announce that it has been selected as one of the Top 50 Workplaces in Middle Tennessee in a survey sponsored by the Tennessean and TN Media.


Left to right: Steve A. Ghertner, Frank F. Ghertner, Scott F. Ghertner, Kathleen Sutherland

We are incredibly honored to be recognized as one of Middle Tennessee’s Top Workplaces in 2014. In 2013, Ghertner & Company received this same honor.  We feel fortunate knowing this ranking is a direct result of the feedback of our associates. It is a privilege to have motivated, talented associates who truly care about our company, our clients and each other. We believe it is our continued focus on creating an environment where people feel valued for their individual and team contributions while being motivated to work hard, learn and have fun that allows us to retain smart, energetic associates that deliver superior service to our clients.

The Top Workplaces are determined solely on surveys about the workplace completed by company associates. The survey was conducted by Workplace Dynamics, a leading research firm on organizational health and employee engagement. The survey measures qualities such as company leadership, compensation and training, workplace flexibility, and diversity. The Tennessean hosted an awards reception at the Nashville City Club on June 19, 2014 to present the winners with their award and celebrate this honor.

June Volunteer Leadership Series


Providence Board member and  Kathleen Sutherland

Kathy Sutherland led June’s lunch and learn workshop to an audience of Board members and managers regarding community association communication in the training center at Ghertner & Company on Wednesday, June 4th 2014. The meeting was part of Ghertner & Company’s Volunteer Leadership Series and is the sixth lunch and learn of the year. Some of the concepts reviewed were: A Board “code of conduct” for signature by all incoming Board members, social media and its implications for associations, manager and board communication flow, and communication requirements of the Tennessee Condominium Act.  The next lunch and learn will be held in July. These workshops are one of the benefits of management by Ghertner & Company.  If you are a Board member who is interested in learning more about our management services, please contact Kathleen at kathleen.sutherland@ghertner.com or 615-277-0314
Deborah Wallace, Community Association Manager
and Provincetown Board member 




Work session after Lunch & Learn with Board
members from Camden Woods
Theresa Savich, Administrative Assistant and
Brandi Dryden, Wessex Towers

Joel P. Surber
Attorney
Parker Lawrence, Cantrell & Smith
In today’s cyber world, e-mails are a common method for communications.  While e-mails increase our efficiency and accessibility, they can cause problems when disputes arise and litigation is necessary. Discretion is paramount when discussing important matters via e-mail, as most communications are admissible in litigation, unless they fall within limited privileges.  

Generally speaking, when a lawsuit is pending, e-mail communications involving employees and agents
of Ghertner & Company and board members of Homeowners Associations are admissible and can be discovered (turned over) pursuant to Rule 26.02(1) of the Tennessee Rules of Civil Procedure 26.02:

“Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition and location of any books, documents, or other tangible things and electronically stored information, i.e. information that is stored in an electronic medium and is retrievable in perceivable form, and the identity and location of persons having knowledge of any discoverable matter. . .”

The only communications that are not discoverable are those that are privileged.  “Privileged communications,” usually fall within either “attorney-client communications” or “work-product” communications:

ATTORNEY-CLIENT COMMUNICATIONS
This privilege is designed to protect communications between the attorney and client, and covers the communications in both directions. A privileged attorney-client communication requires a communication (written or oral), made between privileged persons, in confidence, for the purpose of seeking, obtaining or providing legal assistance to the client. This privilege only protects the contents of the communication, and not the factual circumstances surrounding the communication. Privileged persons include: the attorney, the client, and agents of either the client or attorney.  Relaying information originally provided by attorneys between non-attorneys is acceptable as a privileged communication, but it is important to emphasize the confidential nature of the communication.  Independent contractors can also be included in a privileged communication as long as that outside party is specifically authorized to coordinate legal issues and the transmission is necessary.  Communications to third parties are generally not regarded as privileged, unless that third party’s presence was somehow necessary for the rendering of legal advice. Thus, e-mails between Board Members solely for the purpose of discussing an issue will likely be discoverable should litigation become necessary.

WORK-PRODUCT 
Work-Product Privilege is not as strong as attorney-client, but it is broader in scope.  There are 3 elements required for Work Product: documents and tangible things, prepared in anticipation of litigation or for trial, and prepared by or for a party or that party’s representative.  This privilege extends to materials prepared “by representatives of a party,” and is therefore not limited to materials prepared by an attorney. There must be a tangible risk of litigation rather than broad general legal exposure.  In order to preserve the privileged nature of email communications that are intended to be privileged based on the work product doctrine, it is important to make clear that the document is being prepared in anticipation of litigation and that the documents are intended to be confidential in nature.

TIPS
Great care must be taken to ensure that e-mails are drafted with the idea that they may ultimately be seen by other, unintended recipients. The following are some helpful hints
for the use of e-mail communications:

  • To be safe, limit the frequency of e-mail communications. If you need to “back & forth” an issue, consider meeting in person. 
  •  Use discretion at all times when discussing important matters via email.  Discretion includes what is said, and to whom it is said. 
  • Avoid “Reply All” to ensure that communications and documents intended to be privileged remain privileged.
  • Make clear that all attorney-client communications are confidential, and are related to the purpose of legal advice, even when such communications are being relayed and discussed internally.
  • For work-product documents being prepared with an eye toward litigation, make clear that these documents or communications are being prepared in anticipation of litigation.

Roger D. Perry
Certified Public Accountant






FINANCIAL REPORTING ISSUES
Many times I am asked should our association have an annual audit and my response is, “Barring any requirement by a state condominium act, what do your by-laws say?” 

Usually the by-laws address the financial reporting requirements of the association to its members and may require annual financial statements to be audited, reviewed or compiled by an independent accountant. Levels of these financial reporting services are:

AUDIT SERVICES - Provides the highest level of financial statement assurance. Audits are engagements where a CPA provides an opinion about the fairness of a financial statement that has been prepared according to generally accepted accounting principles (GAAP). The general structure and document requirements of an audit are governed by the American Institute of Certified Public Accountants (AICPA) and the Auditing Standards Board and are subject to strict peer review standards.

REVIEW SERVICES - Provides only limited assurance about the financial statements. Although a review is also governed by the AICPA and subject to peer review standards, it is substantially less in scope than an audit. It consists principally of inquiries of entity personnel and analytical procedures applied to the financial data. The limited assurance is in the form of negative assurance whereby the CPA will report that he is unaware of any material modifications needed in order for the financial statements to be in conformity with GAAP.

COMPILATION SERVICES - Provides no assurance about the financial statements. A compilation is an engagement where the CPA presents, in the form of financial statements, information that is supplied by the entity and performs few procedures outside file documentation. The accountant’s report provides no assurance and clearly states that the financials are the entity’s presentation.

BASIS OF ACCOUNTING - Another question that arises with associations is what basis of accounting should be used. The two methods of accounting that are usually used by associations are the cash basis or the accrual basis.

CASH BASIS - Revenue is recognized when received (when fees are deposited into the bank) and expenses are recorded when they are paid in cash. The most straightforward basis of accounting to practice and to understand.

ACCRUAL BASIS - Revenue is recognized when it is realized/earned/due without regard to when payment is received and expenses are recognized when incurred, without regard as to when payment is made. This method provides a better matching of revenues to expenses but requires specialized accrual based accounting procedures (integrated accounts receivable and accounts 
payable details).

Most associations use the cash basis of accounting for their monthly or quarterly interim financial statements. The majority of the homeowners and board of directors better understand this method.

If the association has an annual audit, review or compiled financial statement, general accepted accounting principles (GAAP) require the accrual basis of accounting.

TAX ISSUES - Many associations and board of directors think that their association is tax exempt for federal income tax purposes. This is incorrect. Only certain types of membership income are exempt.

Associations are taxed under Internal Revenue Code Section 528 or 277. There are opportunities for associations under either code section for tax planning but this should be done with the advice of a competent tax professional. I would recommend that any association that has a sale of common property or collects revenue from a source other than fees or assessments from its members consult with a competent tax advisor regarding the taxability of such revenues.


Steve Ghertner,
Co-President

An important criterion in selecting a management company is responsiveness. Board members will sometimes ask how many properties a property manager handles assuming the number of properties managed is a good indication, or “thing counted,” of a manager’s ability to respond.  But, the real measure, or “thing that counts,” is the proportion of a property manager’s time available for using their knowledge and experience to respond to board member and property needs. A property manager only has a fixed amount of time each day. Our goal is to maximize the amount of time our managers get to use their knowledge and experience to respond to board member and property needs.

An older management paradigm, which is still employed by many companies, had the property manager handling all property related tasks, even many tasks that we would classify today as accounting and administrative tasks. We work to find ways to lessen the administrative burden on our property managers, so they can spend more of their time on value added work for their Boards. The managers provide value by having time to use their knowledge and experience to solve problems.

For example, we use databases, which are frequently updated by our managers with information based on their property knowledge, to allow routine homeowner, real estate agent and appraiser phone calls to be handled by our homeowner services staff.

Not only are our property managers relieved of answering all of these routine phone calls, but also
the callers receive a much quicker response than if our managers tried to answer all of these calls. We monitor the response time on all calls to our homeowner services center and average about
15 seconds per call.

Likewise, our managers don’t fill out every closing form.  They enter the information into a database and administrative support staff ensure those documents are handled in a timely fashion to facilitate real estate closings. Many other tasks such as new owner packets, late notices, pool key requests, and meeting mail-outs are executed more efficiently using support staff and information technology. 

Many management companies still burden their property managers with many of these tasks, and thus make it very hard for their property managers to have time to do what they do best, solving problems.
Wanting to know how responsive your property manager is going to be is an important question for any board member to ask.  What “counts” most is how well the management organization supports the manager to allow them to best utilize their time responding to their board of directors.

The key questions to ask of your management company are what support staff, systems, and technologies are in place to make sure the management company is responsive.  Also, what metrics and benchmarks are used each day by the management company to ensure that they know they are providing responsive service.  




Melissa Peters
Relationship Manager
BB&T





INVESTING AND BORROWING FOR COMMUNITY ASSOCIATIONS


DON’T DEPLETE YOUR ASSOCIATION’S FINANCIAL RESOURCES
Associations are sometimes faced with unexpected repairs that are necessary but were not planned for during the budgeting process. Loans to the association provide individual unit owners a comfortable monthly payment and allow associations to complete projects immediately, without depleting association reserves. Here are some important standard terms, loan features and benefits with association loans.

TYPES OF LOANS
• Line of Credit
• Term Loan
• Insurance Premium Financing 

REASONS FOR A LOAN
• Concrete Restoration
• Major Improvements
• AC Repayment
• Elevator Renovations/Repair
• Window and Door Replacement

TERMS
•For special assessment financing, the term of the loan usually is matched to the term of the collection of the special assessment.
• Payments are monthly or quarterly, and generally do not exceed a five-year period.
• During construction and large repair projects, interest-only payments may be permitted  until the project is completed, followed by regular installment payments to reduce the  principal.
• A line of credit or a draw loan also may be used whereby the client pays interest only on the    funds drawn  out.
• Simple interest installment loans also are made to finance hazard and flood insurance  premiums.

INTEREST RATES
Interest rates vary depending on several factors including:
• Dollar amount of the loan
• Repayment term
• Financial status of the association
• Amount of deposits at the bank

COLLATERAL
• The bank should require an assignment of the accounts receivable of the community association.
• Typical receivables consist of special assessments and monthly maintenance fees.
• The bank also may lend money based solely on the association’s operating budget.

UNDERWRITING THE LOAN
Many factors are reviewed before approving an association’s loan request:
• Financial condition of the association
• Operating budget
• Balance sheet and income statement
• Reserve accounts
• Delinquency rate
• Community documents
• Board minutes regarding the loan process are reviewed to ensure all legal conditions are  met
• Number of rentals
• Unit value, age of the complex, and management stability

Not all banks cater to community associations. It is important to find a bank that specializes in the needs of community associations and has experience meeting their financial goals. Banks vary on loan terms such as interest rates, repayment terms and closing costs. Working with an experienced bank loan officer will ease the loan process and benefit your association.

Ghertner & Company does not endorse any vendor, but is simply attempting to disseminate as much information as possible about the many issues facing homeowner associations.






That was the average toll taken by fires caused by clothes dryers between 2008 and 2010, according to the U.S. Fire Administration (USFA). 


Many homeowners consider their clothes dryer a necessity. However, improper installation or maintenance of this appliance can pose a serious fire risk to families. The leading factor contributing to dryer fires is failure to clean lint from traps, vents and areas surrounding the dryer. 

Clothes Dryer Do’s

  • Have your clothes dryer installed by qualified personnel.
  • Clean the lint filter before and after each cycle.
  • Clean the back of the dryer where lint can build up. 
  • Inspect the venting system behind the dryer to ensure it is not damaged, crushed, or restricted.
  • Outside wall dampers should have a covering that will keep out rain, snow, and dirt. 
  • Make sure the outdoor vent covering opens when the dryer is operating.
  • The interior of the dryer and venting system should be serviced and cleaned periodically by qualified service personnel, especially if it is taking longer than normal for clothes to dry. 
  • Replace coiled-wire foil or plastic venting with rigid, non-ribbed metal duct.
  • Have gas-powered dryers inspected by a professional annually to ensure that the gas line and connection are intact and free of leaks. 
  • Check periodically to make sure nests of small animals and insects are not blocking the outside vent.
  • Make sure the correct electrical plug and outlet are used and that the dryer is connected properly.
  • Read manufacturers’ instructions and warnings in use and care manuals that accompany new dryers.
  • Keep the area around the clothes dryer free of items that can burn. 
  • If you will be away from home for an extended time, unplug or disconnect the dryer.


Clothes Dryer Don’ts


  • Do not operate a clothes dryer without a lint filter or with a lint filter that is loose, damaged, or clogged.
  • Do not dry anything containing foam, rubber, or plastic (i.e., bathroom rugs).
  • Do not dry any item for which manufacturers’ instructions state “dry away from heat.”
  • Do not dry glass fiber materials (unless manufacturer’s instructions allow).
  • Do not dry materials that have come into contact with anything flammable (e.g., alcohol, cooking oils, gasoline, etc.). These should be dried outdoors or in a well-ventilated room, away from heat.
  • Do not leave a clothes dryer running if you leave home or when you go to bed.

 Signs of a Blocked Dryer Vent

  • Lengthy drying times.
  • Clothes are hotter than normal at the end of the dry cycle.
  • Dryer deactivation due to high temperatures
  • Increased heat and humidity in the area of the dryer.





Kathleen Sutherland
Director of Training and Technical Services
Q.  What is a Proxy? 
      Is it the same thing as a ballot?

A.  A Proxy form is used when an owner will not attend a meeting.  It helps establish a quorum, and may be a way for the owner to cast a vote.  The term “Proxy” is also used to designate the person who will vote on your behalf or at your direction.

The ballot is the form used to cast a vote, which may be for an open Board position, or an issue that owners must vote on.  

If you plan to attend a meeting, do not complete or sign a Proxy form.  If someone contacts you and asks you to sign a Proxy form, tell them that you plan to attend the meeting, and will cast your vote then.  

Cast your own vote when you can and use a Proxy form only when you cannot.

Q.  How many different types of proxies are there?

A.  We use three types of proxy forms. All three forms of Proxies are used to help establish a quorum.

Read the Proxy form to determine what it is for, as described below.  Never let anyone tell you a Proxy is for one purpose when it says it’s for another. 

General Proxy
This authorizes someone to vote on your behalf, so that person makes the voting decision - not you. Do not give anyone a General Proxy to cast your vote unless you trust that person to make a decision that you will be happy with. A General Proxy gives someone the right to cast your vote however he/she wants. This is the most commonly used Proxy form.

Directed Proxy
This authorizes someone to vote on your behalf but, unlike the General Proxy, it tells that person how you want him/her to vote: for a particular candidate, or in favor of or against a particular issue.

Attendance Proxy
This does not authorize anyone to vote for you.  The Attendance Proxy (also referred to as a Quorum Proxy) simply counts you as “present by Proxy” in order to help obtain a Quorum.  Most By-laws state that a certain number of owners must be present in person or by Proxy before any official business can be conducted at the meeting, such as an election or a vote on an amendment. That minimum number of owners is the Quorum.  

By filling out and signing an Attendance Proxy, the only thing that you are doing is to help establish a Quorum so business can proceed.  

No one votes with an Attendance Proxy. 

Q.  Are there any exceptions to using a proxy?

A.  Proxies can be used to establish a quorum unless prohibited by the governing documents.