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NAR: New Condo Rules Will Open More Doors for Buyers

August 22, 2019
Photo Courtesy: NAR

The association says changes to FHA financing qualifications will bring more entry-level homes to the market, helping to meet buyer demand.

REALTOR® Magazine Staff

The National Association of REALTORS®, after reviewing the Department of Housing and Urban Development’s new condominium financing rules, says the guidance affords property owners greater flexibility in the qualification process for loans insured by the Federal Housing Administration. Lenders will be able to issue FHA loans for single condo units, and buildings with a greater number of investor-owned units or greater percentage of commercial space can qualify for FHA financing, among other changes HUD released Wednesday. NAR expects the new rules, which will go into effect Oct. 15, to revive a condo market that has been stifled since the Great Recession.

NAR says the new condo rules, which will help more would-be buyers access affordable housing, satisfy many of the changes the association has backed for more than a decade. Specifically, the new rules will:

  • Extend FHA certifications on condo developments from two years to three years, with an additional six-month grace period to meet requirements. This will alleviate some of the cost and time burdens on condominium associations that intend to maintain FHA approval. Condo associations also may continue submitting updated recertification packages, rather than the full certification package each time. The National Association of REALTORS® expects the change to prompt more condominium properties to apply for FHA eligibility, making more affordable housing more accessible.
  • Allow for single-unit mortgage approvals—often known as spot approvals—that will enable FHA insurance of individual condo units, even if the entire property does not have FHA approval. The condo building in which the FHA buyer wants to purchase must meet certain requirements: The property must have at least five units, a limited concentration of FHA-insured units, at least 50% owner-occupancy, and a maximum of 35% commercial space.
  • Secure additional flexibility in the ratio of investors to owner-occupants allowed for FHA financing in a condo building. While the current owner-occupancy requirement is 50%, HUD may approve an owner-occupancy level as low as 35% for older properties with less than 10% of units in arrears. Individual investors can purchase no more than 10% of units in a property with more than 20 units and no more than one unit in properties with less than 20 units.

FHA approvals for condos prior to these changes have been heavily restricted. For example, the National Association of REALTORS® pointed to data earlier this year showing that in Florida’s Miami-Dade County, there were 5,683 condo projects—but only seven had FHA approval. NAR sent out an all-member email about the new condo rules Wednesday morning.

“It goes without saying that condominiums are often the most affordable option for first-time home buyers, small families, and those in urban areas,” NAR President John Smaby said in a statement. “This ruling, which culminates years of collaboration between HUD and NAR, will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people.”

The association’s most recent existing-home sales report, released in July, showed that sales of condos and co-ops dropped 6.5% year over year. Further, with more than 8.7 million condo units nationwide, only 17,792 FHA condo loans were originated in the past year. Down payments for single-family homes also have grown significantly more expensive in recent years in the absence of widely accessible FHA condo financing, NAR argues.

FHA restricted its condo approval process in 2009, which limited the number of properties that could receive FHA loans. In 2016, it moved to lift several of those restrictions, but the proposed rules were never finalized.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

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A Seller’s Guide to Navigation the Home Inspection

August 15, 2019

Getting beyond the home inspection is sort of like advancing to the next level in a video game.

When you get past this step, you get to advance to a fresh, exciting place — your new home, to be exact.

In Every Inspection, There Are Stakes for Buyers and Sellers

Once the buyer has made, and you’ve accepted, the offer, your home will get the once-over from the buyer’s home inspector. The inspection is usually a contingency of the offer, meaning the buyer can back out based on serious problems discovered. The lender also expects an inspection to make sure it’s making a good investment. Makes sense, right? 

During the home inspection, an inspector will examine the property for flaws. Based on the inspector’s report the buyer will then give you a list of repair requests.

Your agent will work with you to negotiate those requests. Don’t want to be responsible for a repair? (Maybe it’s best if the buyer has the fix made by their own contractor anyway.) Your agent may be able to negotiate a price credit with the buyer instead. 

By the way, inspections aren’t necessarily a big, scary deal. Your agent will help advise you about repairs you need to make before the inspection. In fact, she may have made those recommendations to you even before you put the home on the market. And if you’ve been maintaining your home all along (and you have, right?), your punch list may be minimal.

In addition, back when you put the home on the market, you were required to disclose to buyers the home’s “material defects” — anything you know about the home that can either have a significant impact on the market value of the property or impair the safety of the house for occupants. Material defects tend to be big underlying problems, like foundation cracks, roof leaks, basement flooding, or termite infestation.

What a Home Inspection Covers Depends on the Home

Every home is different, so which items are checked during your property’s inspection may vary. But home inspectors typically look at the following areas during a basic inspection: 

  • Plumbing systems
  • Electrical systems
  • Kitchen appliances
  • Heating, ventilating, and air conditioning (HVAC) equipment
  • Doors and windows
  • Attic insulation
  • Foundation and basement
  • Exterior (e.g., siding, paint, outdoor light fixtures) 
  • Grounds

Depending on the sales contract, the purchase may also be contingent on a roof inspection, radon inspection, or termite inspection.

What a home inspection won’t cover is the unseen. Your inspector isn’t going to rip open walls or mountaineer on the roof. (Though that would be kind of exciting to watch.)

So What Do You Need to Fix?

A home inspection report is by no means a to-do list of things that you must address. Many home repairs, including cosmetic issues and normal wear and tear, are negotiable. 

There are, however, three occasionally overlapping types of repairs that sellers are typically required to deal with after a home inspection:

1. Structural defects. This is any physical damage to the load-bearing elements of a home; these issues include a crack in the foundation, roof framing damage, and decaying floor boards.
2. Safety issues. Homes for sale have to meet certain safety standards. Depending on where you live, safety issues that you, the seller, may have to address could include mold problems, wildlife infestation, or exposed electrical wiring.
3. Building code violations. Building code violations — such as the absence of smoke detectors, use of non-flame retardant roofing material, and use of lead paint after 1978 — must be addressed by the seller.

Again, addressing these might take the form of a credit on the pirce, which in the case of structural issues could be sizeable.

Use This Checklist to Prepare for a Home Inspection

So, are you ready for the inspection? If you take these steps (with your agent’s assistance) you will be: 

  • Assemble your paperwork. Transparency is key. Ideally, you’ll have summaries or invoices of renovations, maintenance, and repairs you’ve done on your home that you can provide to the home buyer. Create a file that collects this documentation and share it with the buyer.
  • Make sure your home is squeaky clean. Your home should be pristine when the inspector arrives — a good first impression will set a positive tone. Take time to declutter and deep clean the whole house. A deep clean (stuff like cleaning the range hood and upholstery and sanitizing garbage cans), averages between $200 and $400, according to Angie’s List, depending on the size and condition of your home. 
  • Remove any obstacles that may block the inspector’s access.Take measures to ensure the inspector has complete access to all facets of the property, including electrical panels, attic space, and fireplaces. This may require temporarily moving clothing and other items that impede access.
  • Leave the utilities on. For the home inspector to test items such as the stove, dishwasher, furnace, and air conditioning system, the utilities must be connected regardless of whether the house is vacant; otherwise, the inspector may need to reschedule, which can potentially push back closing.
  • Fix minor problems ahead of time. Many cosmetic issues — say, a broken light fixture or a scratch on the wall — are minor and easy to fix, but they can make buyers more concerned about how well you’ve maintained other areas of the home. It’s best to take care of small problems yourself before the buyer’s inspection.

It’s a Good Idea to Do Your Own Inspection Before the Inspection

Some sellers choose to hire their own home inspector to check the property before their house is even listed. This is called a “pre-listing inspection,” and it has several advantages: 

  • It can give you time to fix deal breakers. Granted, a pre-inspection costs money — a basic inspection is about $315, with condos and homes under 1,000 sq ft. costing as little as $200 and homes over 2,000 sq ft. running $400 or more, according to HomeAdvisor.com. That said, it can enable you to address major issues that could cause a buyer to pull out of their offer. Big problems may include mold, water damage, or foundation cracks. 
  • It can mean fewer surprises — and help you market your home. Knowing what needs to be fixed in your home in advance will enable you to be upfront with buyers about any big pre-existing issues, which can give buyers peace of mind. You can also make it known to prospective buyers that consideration for those items has already been factored into the sales price.
  • It can speed up the negotiation process. Having a pre-listing inspection can help reduce, or even eliminate the time-consuming process of having back-and-forth negotiations.

If you discover any material defects to the property in a pre-listing inspection, you are legally required to disclose them to buyers — even if you fix them. Also there’s no guarantee that the buyer’s own inspection won’t reveal things yours didn’t find. The choice to do a pre-listing inspection is yours, but it never hurts to get a head start on repairs.

Be Aware of These Tried-and-True Tactics for Negotiating Repairs

When it comes to repairs, your agent will haggle with the buyer’s agent for you — though it’s ultimately your decision as to how you want to respond to the buyer’s home repair requests.

Here are four time-tested negotiating techniques that your agent may deploy to protect your best interests — without reducing the sales price:

1. Agree to make reasonable repairs. Unless your house is flawless — and the reality is that no one’s is — be prepared to receive repair requests from the buyer. You don’t have to offer to fix everything that buyer asks of you, but you should take responsibility for major issues.
2. Offer a closing cost credit. Don’t want to deal with the hassle of making or ordering home repairs yourself? Ask your agent to offer the buyer a credit at closing for the estimated costs. This can also help you avoid complaints from the buyer over the quality of the workmanship, since you won’t be the one overseeing the repairs.
3. Barter. One way to smooth things over with a buyer and keep the deal moving forward is to offer something of value that’s unrelated to the requested repairs. For example, if you know the buyer loves the new couch or bedroom set you bought, you could offer to leave it behind in exchange for making fewer repairs.
4. Leverage the market. You may have more negotiating power depending on where you live. In a hot seller’s market, for instance, you might be in the position to offer the buyer fewer repairs, especially if you have another buyer eager to make an offer.

Home inspection may sound like a burdensome process, especially when you’re so close to your goal. But when you cross it off your list, you’re readier than ever to jump to the next level — and into your life’s newest phase.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

Should I Buy A Condo? The Pros and Cons

August 8, 2019

If you’re a potential buyer in the real estate market, you may wonder, “Should I buy a condo?” Condominiums are generally less costly to purchase than houses or townhouses, and they can offer conveniences you might not otherwise be able to afford. In fact, some buyers who are priced out of single-family homes in high-priced markets may qualify only for mortgage loans on condos or co-ops.

Condominiums can be a good investment, especially if they allow you as a buyer to enter the real estate market. Qualifying for financing is much the same as getting a mortgage for a single-family home. If you are purchasing condos as investment properties, you should be able to find a lender as well.

Yet there are caveats to condominium ownership. Here are five things to think about before you take the plunge.

You don’t own the land

A condo building is a building or complex consisting of multiple apartments that are individually owned. The entire building is owned by an individual or a property management company, but condo unit owners do not hold the title to the land on which the structure sits. This means the value of the property you own will consist solely of your condo.

Don’t confuse a condominium with a co-op. With a condo, you own a specific part of the building structure, and the use of common areas. With a co-op, or housing cooperative, you own a share of the real estate. As a real estate shareholder, you have the right to live in a certain unit.

On the pro side, living in a condo means you have use of the real estate, but you won’t be spending your weekends mowing the lawn.

On the con side, you can’t change the landscaping and you have to share the common areas with other owners.

Increased amenities, decreased maintenance

Condo communities may offer amenities and common areas (e.g., pools, a garage, or tennis courts) that you may not otherwise be able to afford if purchasing a townhouse or standalone house.

Additionally, condos can relieve you of the need to manage the building maintenance and any amenities. Some interior issues such as plumbing and electricity may be managed by the complex’s community association. You still own your unit, however, so you can decorate and personalize more than you are allowed to as a renter.

If you’re used to fixing things yourself, however, you may not always want to wait for the association to do the job, or get pre-approval before you call a repairman. Also, the association may make a special assessment for large projects, which you may not always agree with.

Built-in social network

Socially, condos can be great owner-occupied properties for singles, couples, and families. Your proximity to your neighbors and access to shared areas mean there will be greater opportunities for you to meet new people.

On the other hand, you’re likely to have less privacy when you’re sharing walls and building access. Neighbors might be able to hear your conversations or see when you come and go.

Before buying, check to see if the other condo owners are friendly and seem likely to be people with whom you would get along. Make sure the building is constructed to minimize noise. If you’ve always lived in a single-family residence, consider renting a condo or apartment before you buy.

Homeowners associations can be bureaucratic

This is obviously a case-by-case situation, but some condo HOAs can be difficult to deal with or have high monthly association fees. Some HOAs can be politicized and hold you accountable for any perceived infringement of rules. Most associations will impose building maintenance fees, whereas in a single-family home you pay for expensive renovations or maintenance projects at a time when you can afford them.

Of course, more single-family homeowners also live with HOAs now, so HOAs are becoming harder to avoid. Ask around about what it’s like to live with an HOA before you join one.

Always take the time to be familiar with the association’s fees before you buy. You could also look at the minutes of the community association’s meetings to see if there are outstanding maintenance issues that are likely to be expensive.

If you are considering purchasing an investment property, be certain that the condo association will allow you to rent out the condo unit on a short-term or long-term basis, before you buy.

Be wary if there are many condos for sale in the building

Unless a condo community is a brand-new construction looking to welcome its first group of condo owners, you might want to think twice about purchasing in a community with many properties for sale. This could mean that there is a high level of dissatisfaction with the building and living conditions.

If more vacancies appear and things spiral downward, the association may fall behind on upkeep, and lose its reserve fund. More buyers avoid the condo complex. Lenders may even refuse to make loans for new purchases, or they may require a larger down payment. Even if all goes well now, you may have a difficult time when you want to sell or refinance.

If you do find your dream home in a community that seems slightly abandoned, try to chat with a resident or two when you tour the condo to see if there are any red flags.

Ultimately, keep these questions in mind: Do you like the condo’s size? Is it in the right neighborhood? Is the building properly maintained and are the amenities to your liking? Can you comfortably afford the mortgage, including homeowners association fees? These considerations will point you in the right direction of a condominium that has everything you want in a home.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

Motivated Millennials

August 1, 2019

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

Why Working With A Reputable REALTOR® Is So Important

July 24, 2019

With the buzz about how to sell or buy for less or by owner (FSBO), “discount” brokerages coming and going, and brokerages devouring other brokerages, I thought it worth a few words on the value of good representation.

First a primer on the real estate sales profession:

Sales Agent – licensed by the state to represent buyers and sellers in the purchase of real estate. They must complete required coursework and pass a licensing exam. The agent must hang their license under a broker to legally practice their profession.

Broker – completed additional coursework and passed a rigorous exam to be able to legally take on a larger scope of fiduciary duties that may include the management of a real estate brokerage with sales agents and staff under them. Attorneys may skip the Sales Agent exam and sit directly for the Brokers’ exam.

Broker Associate – licensed broker that hangs their license with a brokerage vs. running their own brokerage – that is what I am.

REALTOR®- a member of the National Association of Realtors (NAR). The term “REALTOR®” is a registered collective membership mark that identifies a real estate professional who is a member of NAR and abides by its strict code of ethics. 

Here are what I think are the top 3 reasons why having professional, reputable, ethical representation in real estate is smart. 

1. Less Risk Exposure Buying and selling real estate in California is one of the most litigious activities you can engage in PLUS there is a lot of money at stake. Whether you are buying or selling, having a licensed professional guide you through the process, and the contractual obligations involved, will lessen the likelihood of a transaction canceling or ending up in dispute resolution. There is a reason some states use attorneys to complete real estate transactions!

2. Professional Negotiation – The #1 reason people don’t hire a licensed professional to help them buy or sell is that they think they will save money on commission. As highlighted above, working solo can actually make things more costly in the form of losing a good Buyer, Seller or property, thousands of dollars in deposits, inspections or fees and/or ending up in dispute resolution/court. It has been statistically proven that folks that sell or buy themselves or with “discount” brokers leave money on the table in terms of negotiating sale price, deposits, repairs, credits and additional terms that could contribute substantial value such as rent backs and time periods to carry out specific elements of the contract.

3. Full Service – Whether buying or selling, you want somebody that has your back from A to Z through the duration of the process and beyond! A REALTOR has a fiduciary duty to their clients- in simple terms: a REALTOR is bound by law to act in a client’s best interest. If for some reason they do not, a client has recourse. From securing vendors, designing strategies to purchase or sell, navigating through contracts, escrow, lending, etc., a REALTOR’s job is to protect their clients and guide them through what can be a complicated and risky process. And, once the transaction closes, you want somebody that is there for the long term to assist with any concerns or questions that may come up after the ink is dry…

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

8 Eye-Opening Things Inspectors Can’t Tell You

July 18, 2019

A home inspection may feel like a final exam, but it’s not quite so clear cut. Your inspector’s report won’t include a clear-cut A+ if a house is a keeper or an F if it’s a money pit.

What is included in a home inspection report is a set of neutral facts intended to help you decide on a home’s final grade.

Oh sure, a seasoned inspector will know if a home is a safe bet or full of red flags. But they’re actually bound by a set of rules that limit what they can tell you.

Here’s what they can’t say:

#1 Whether They Would Buy This House

Here’s the big one: Many buyers think an inspector will give them a thumbs up or thumbs down, but they can’t. Giving real estate advice violates the International Association of Certified Home Inspectors’ code of ethics.

Clues to look for: Count up your issues. “The average inspection turns up around 20,” says Larry Fowler, a home inspector in Knoxville, Tenn., who has done around 10,000 home inspections in his 22 years in the business. “If there are more than 30 items, you may have a bad house,” Fowler adds. “If there are fewer than 10 items on the list, you may have a bad inspector.”

The bottom line is that every house and buyer are unique and what inspection results one person is fine with, another may not be. Confer with your agent once you have the report.

#2 If It Has Termites, Rats, or Mold

Yikes! You might assume this trio of homewreckers would be part of every house inspection checklist, but your inspector isn’t licensed to look for them.

Clues to look for: Inspectors can note that those sagging floors are evidence of termites, or that shredded insulation is evidence of rats, or the black stuff on the walls is evidence of fungal growth. To turn evidence into proof, ask a specialist for a follow-up inspection.

#3 If the Pool or Septic System Are in Good, Working Order

Home inspectors aren’t certified to inspect everything that could appear in any home. So for example, if there’s a pool, some may turn on the pool pump and heater to make sure they work, but they won’t look for cracks or plumbing leaks. You’ll need to find a pool inspector. In other cases, you may need a septic systems or wells expert, an asbestos or radon specialist, etc.

Clues to look for: Any special feature is your cue to find a specialist. “We’re general practitioners,” Fowler says.

And here’s a bonus tip: Consider a home’s advanced age a “special feature,” as they’re likely candidates for lead paint, asbestos, and other old-home hazards.

#4 That They’re Making The House Look Worse Than It Is

Some inspectors make note of every tiny thing in a house, even inconsequential ones. Like chipped paint. Scratched windows. Surface mold in a shower. These folks are sometimes known as deal killers. “Some inspectors like to show they know more than somebody else,” Fowler says. “It’s annoying.”

Clues to look for: If your inspector’s report is pages long and full of items that won’t hurt the value of the home, it’s probably not a big deal. Sit down with your agent, and go through the report to determine which (if any) issues could affect your offer.

#5 If That Outlet Behind the Couch Actually Works

An inspector can only check what they can see without moving anything. This means the foundation could be cracked behind that wood paneling in the basement. Or the electrical outlet behind the sofa might not work.

Clues to look for: The inspector should note if they’re unable to inspect something critical. Consult with your agent about what to do, such as asking the seller to take down the paneling or offering to pay to have it removed. Alternately, offer a lower price.

#6 Whether They’ve Inspected the Roof Closely

Some inspectors will climb up on the roof to look closely at shingles and gutters — but they’re not required to. If it’s raining or icy, or the roof is steep or more than two stories high, they can stay on the ground and report what they can see from there.

Clues to look for: They should note whether they walked the roof, but if it’s not clear, ask. If they haven’t, keep this in mind when evaluating their roof inspection report. They should still note any missing or damaged gutters or downspouts and the general condition of the roof based on what they can see from the ground.

#7 What You Should Freak Out About (or Not)

It’s an inspector’s job to find things wrong with the house. Big things, little things, all the things. It’s not their job to categorize them as NBD or OMG. A checkmark next to a crumbling foundation will look the same as a checkmark next to chipped paint.

A few things you may find on an inspector’s report that aren’t a big deal:

  • Condensation in a basement or crawl space
  • Early signs of wood rot on trim
  • Cracks in bricks from the house settling
  • Faux stone siding that’s been improperly installed
  • Radon levels below 4 pCi/L

These items, however, could trip your freak-out response (if you’re not prepared to address them):

  • Standing water in a basement or crawl space
  • HVAC not working
  • Outdated wiring, especially knob-and-tube wiring or aluminum wiring
  • Wood rot
  • Old plumbing pipes
  • Radon levels above 4 pCi/L

#8 Who They’d Recommend to Fix It (and How Much It Will Cost)

Your inspector may seem like the perfect source of insider info on repairing issues they see all the time, but the opposite is actually true.

You don’t want your inspector to make financial decisions based on their report. Think about it: If an inspector’s buddy Steve gets a plumbing gig every time a certain issue turns up on a report, it gives that inspector some pretty big (and not cool) motivations to find that issue.

Even giving you a price range for the repair is off-limits. It’s not their area of expertise, it creates a conflict of interest (they could be endorsing Steve’s great deal, after all), and, perhaps most importantly, it’s against the ethics rules.

Clues to look for: This is good home ownership practice. Try to price out every item on your home inspector’s report, big and small. Do some research, and call three contractors or check out three retailers for the service or part needed to resolve each issue. You’ve got this, future homeowner!

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

HOA Homefront: Transparency – Great for windows (HOA boards too)

July 11, 2019
Stock photo for HOA columns (iStock)

Tips may help to build and preserve the trust of the membership in its association governance.

By KELLY G. RICHARDSON, San Diego Union Tribune

Nothing should be more important to volunteer boards than the trust of their neighbors. However, trust is not automatic and can be easily destroyed. Making good decisions for the association’s best interests is not enough. Decisions must be made in a manner which is above reproach and displays integrity and openness.

This “baker’s dozen” tips may help to build and preserve the trust of the membership in its association governance.

INITIAL ATTITUDE

1. Begin the board term with an attitude of service, not control. Directors with the right frame of mind are less likely to take offense when someone questions board decisions.

BOARD MEETINGS

2. Other than the very few permissible closed session items, board discussion should be in open session. While it is easier for boards to work in closed sessions or “working meetings”, this violates the law and destroys the legitimacy of the open board meetings. Members will not trust a board which acts in secret on matters which should be in open session.

3. Board actions taken due to emergencies or other circumstances outside of a board meeting should be disclosed in the next board meeting, and the reasons noted why the matter could not wait for the next meeting. A ratification motion can then further disclose the action in the minutes.

4. Introduce each agenda item before discussing it. Attending members do not have the board packet, and a brief introduction of each item helps attendees to follow (not join) the discussion.

5. Abstaining on a vote that uniquely affects one’s building and not the entire community, or otherwise concerns a director individually, is not enough – step away from the board and join the audience.

COMMUNICATION

6. Work with the chair or manager (or whoever sets the agendas) to make sure the board agendas are truly informative, and not designed to be so broad thato they obscure from the members the real topics to be discussed.

7. Work to increase communication with the membership. Newsletters, web sites, email blasts, and bulletin boards are common vehicles to increase communication. Don’t leave it to the nextdoor.com gossip chain.

8. When a major issue is in play, such as a major reconstruction contract, consider occasional informational “town hall” meetings, in which nothing is decided and the purpose is to report to members and answer questions.

ASSOCIATION FUNDS

9. Very few questions about the association’s money are out of bounds. Except for rare instances when confidentiality is important (such as pending negotiations or member arrearage questions), questions regarding association money should be answered without hesitation.

10. Any disbursement of funds should be confirmed by two directors minimum, unless it is large enough to require board approval under Civil 5502.

11. Refuse compensation of any kind for board service, and only seek reimbursement of authorized and documented out of pocket expenses.

VENDORS

12. Avoid doing business with association members or relatives, unless it is first disclosed to all members.

13. Keep vendor relationships clean. Obtain three bids for all significant contracts. If a bidder asks for an unfair advantage or offers any incentive to a director, drop them from consideration – vendors who will cheat to get the account will also cheat the association.

A policy of openness builds healthy communities and arises from a confident board.

Kelly G. Richardson is a Fellow of the College of Community Association Lawyers and Principal with Richardson Ober PC, a California law firm known for community association advice. Send questions to Kelly@Richardsonober.com. Past columns – Kelly@Richardsonober.com.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

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