Journal_12_06

June 2012

A Journal for California Community Association Leaders

echo-ca.org

40th Annual ECHO Seminar June 22–23, 2012 A Must Attend Event for HOA Directors

ALSO INSIDE THIS ISSUE:

• The Perils of Hidden Damage • Know Your Financial Position • “Green” Paint Technology

Change Service Requested ECHO 1602 The Alameda STE 101 San Jose, CA 95126

PRSRT STD U.S. Postage PAID Sundance Press 85719

Are you fulfilling your fiduciary duties as a board member?

Most board members of community associations understand that they owe a “fiduciary duty” to their homeowner members. But did you know that failing to properly follow this standard can result in serious liability to the association and to the board members themselves?

Learn how this duty affects your association—and you as a board member—by reading “What does it Mean for a Board Member to be a Fiduciary?” at rocklawcal.com/boardmember

Our Legal Advice is Rock Solid Ram, Olson, Cereghino & Kopczynski LLP 555 Montgomery Street, Suite 820 San Francisco, California 94111 Phone: 415-433-4949 Fax: 415-433-7311 www.rocklawcal.com

Attorneys at Law

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Contents 6

The Perils of Hidden Damage, Part 2 Next to damage from a natural disaster, a big, unexpected construction project is probably one of the most disruptive events in an association’s life. This can be avoided in some cases with early inspections of all building components. In older buildings, there may be no cure, but creativity and a willingness to accept reality may yield a better solution.

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Know Your Community’s Financial Position While it is always important to know where your community stands financially, it is especially important to understand the community’s financial condition in today’s economy. Read several recommendations on how to maintain a financially healthy association.

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“Green” Paint Technology So you’re thinking about painting your home and wondering if using a new environmentally friendly “green” paint will give your home that fresh and new look while still providing you with a long lasting investment. This article reviews the important elements of painting to assist in your decision.

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Develop Towing Partnerships The reason people park where they don’t belong is because they can, and they can get away with it! Being firm but fair, with consistent towing polices, is a system that earns respect from intended users of the parking areas who just want an easy place to park, close to their destination.

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Reviewing Bank Statements In California, the board is required by law to review reconciled bank statements for both the operating and reserve bank accounts at least quarterly. Bank statements allow you to compare what your banker is telling you about your money with what the money managers are telling you in the financial statements.

Departments 5

34 Directory Updates 35 Events Calendar 36 ECHO Bookstore

The ECHO membership list is never released to any outside individual or organization.

Executive Council of Homeowners, Inc. 1602 The Alameda, Suite 101 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org Office Hours: Monday–Friday 9:00 a.m. to 5:00 p.m.

Board of Directors and Officers President David Hughes Vice President Karl Lofthouse Treasurer Diane Rossi Secretary Jennifer Allivato Directors Paul Atkins John Garvic Robert Rosenberg Brian Seifert Steven Weil

Jerry L. Bowles David Levy Kurtis Shenefiel Wanden Treanor

Executive Director Brian Kidney Director of Marketing & Membership Jennifer Allivato Director of Communications Tyler Coffin Legislative Consultant Government Strategies, Inc. Design and Production George O’Hanlon

41 ECHO Marketplace

ECHO Mission Statement

41 Advertiser Index

The mission of ECHO is to advance the concept, interests and needs of homeowner associations through education and related services to board members, homeowner members, government officials and the professionals in the industry.

On the Cover June 2012 | ECHO Journal

Copyright 2012 Executive Council of Homeowners, Inc. All rights reserved.

Reproduction, except by written permission of ECHO, is prohibited.

40 ECHO Volunteers

ECHO Annual Seminar—page 42 4

Acceptance of advertising does not constitute any endorsement or recommendation, expressed or implied, of the advertiser or any goods or services offered. We reserve the right to reject any advertising copy.

News From ECHO

31 Legislation at a Glimpse

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The ECHO Journal is published monthly by the Executive Council of Homeowners. The views of authors expressed in the articles herein do not necessarily reflect the views of ECHO. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent person should be sought.

News from ECHO I am delighted to begin sharing with you news and updates from ECHO. Now in my second month as ECHO’s Executive Director, I am eager to hear from you about how we can make your membership more valuable. So, please feel free to email me at bkidney@echo-ca.org, and let me know what’s on your mind.

Currently, ECHO members enjoy access to a wide array of experts from every corner of the Community Interest Development ecosystem, through our Educational Seminars, the ECHO Journal and www.echo-ca.org We offer education in all aspects of homeowner association governance, management and maintenance. In addition, we advocate on your behalf in Sacramento, to promote public policies that make your jobs as volunteers in your homeowner associations easier, with rules that are clearer.

I want to highlight the educational sessions we are offering at the 40th Annual ECHO Seminar, on June 23 at the Santa Clara Convention Center.

A MUST for all new Board Members is our completely revised and updated HOA University, where you will hear about: Legal Issues:

Your role and responsibilities as a Board Member

Governance:

Required meetings, rules of conduct, and working with volunteers

Financial Issues:

Accounting, reserve studies

Insurance:

What’s required, risks and coverage

Maintenance:

Regular, preventative, deferred and emergency

Topics at the Annual Seminar will be: Legal: 2012 Legislative Update, Accessibility and Other ADA Issues, Enforcement, Recall!

Management: Charging Electric Vehicles, Newsletters, Email, Ask the Attorneys Facilities: Hidden Damage, Understanding Construction Experts, Practical HOA Maintenance We have over 125 Professionals with booths on the Convention floor, eager to discuss how they can help your association prosper. To encourage your active interest in speaking with these vendors, we will offer raffle prizes to those who participate in our passport program.

Please join us at the 40th Annual ECHO Seminar in Santa Clara, June 23. Register online at www.echo-ca.org/annual-seminar, or by mailing in the form on the inside back cover of this magazine. For more information call ECHO at (408) 297-3246.

In the coming months, you will see some changes to our web site, how we interact with you, and how you can better get the information you need when you want it! So, stay tuned!

Best,

Brian Kidney Executive Director ECHO Journal | June 2012

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June 2012 | ECHO Journal

By Tyler Berding, J.D., PhD.

Part 2: The Perils of Hidden Damage in a Community Association

What If the Cost of Repair Exceeds all Expectations?

UNEXPECTED COSTS That can happen and when it does it creates a dilemma for the board of directors. The problem that was the original reason for a major repair may not be the end of the story, depending upon how much was known about the extent of that

damage before the job began. It’s one thing to discover some dry rot in one isolated area during a routine repair, but quite another if that dry rot is part of systemic deterioration of the building.

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If your major repair project is begun with an insufficient understanding of the extent of hidden damage, your entire funding scheme may be overwhelmed and owner equity could go with it. It is critical in an older building, therefore, to determine the scope of work and the cost of repair as accurately as possible before the project begins.

But what happens when all else fails and the damage exceeds all reasonable expectations and funding?

Consider a Different Option Let’s say that you have done your due diligence, you hired an architect to investigate and prepare a scope of repair for the replacement of the siding on your building; you had the building inspected using some random intrusive testing and while you detected some hidden damage, it wasn’t extensive where you saw it; your contractor expressed confidence that he could repair the building for the costs projected in his bid. You start the project. Six months into the project the contractor reports bad news. The damage to the framing under the siding is much more extensive than the tests had revealed. His contract says that extra work is to be done on a “time and materials” basis—essentially priced over and above the base price of his contract. The costs begin to rise appreciably.

Soon the cost of the job is almost twice as high as the original estimates. You’ve tapped your line of credit and all of your available reserves and the owners will likely not approve the special assessment that will be necessary to pay for all of this new work. Now it is probably too late for many options.

Many older buildings with hidden damage will turn out to be extraordinarily expensive to repair. Knowing that before the project begins may give the owners second thoughts about the utility of starting the repair. Once a construction project is well along a substantial portion of the available funding will be irrevocably committed, leaving the board of directors with few options but to complete it.

At that point the ability to change direction, and with it, financial control may be lost.

Why is financial control important? Because once substantial funding is already paid or committed it will be too late to go back and reconsider whether doing the work was a good idea in the first place—it becomes too big to fail. Consider that scenario against this one—in some instances; repairing the damage may not make economic sense.

Take a condominium building with 50 units. The average unit’s market value before 8

June 2012 | ECHO Journal

the need for repairs was discovered is $200,000.00 partly because of the depressed economy but also because the building appears run down and in need of repairs and paint. But the average owner equity, given the decrease in real estate values generally, is only about 10% of that with mortgage loans representing the rest. Total owner equity in that building would then be $20,000 per unit x 50 units, or only $1,000,000. Now, if the cost to repair that building is only $200,000 because the hidden decay is very limited, a repair makes sense. The building will get fixed, painted, look great, and property values will rise. But what if the hidden damage is so extensive that the projected cost of repair is $2,000,000? And further, what if the association has only $100,000 in reserves?

Does it make good economic sense to do those repairs? To raise $2,000,000, the association would have to either borrow it or assess its members, or both. That’s a very tough decision for the board to make.

We have seen examples where the cost of repair rose significantly well after the project was underway and the funding was already maxed out. If a $2,000,000 repair for the building in this example stretched the association’s resources to the absolute limit, what would happen if the cost ended up being double that because previously undetected damage turned out to be extensive? It may mean that the project can’t be completed, but it may also mean that it should never have begun. A $4,000,000 repair to a building in which the owners collectively have only $1,000,000 in equity makes no economic sense—at least not to the owners. To them, that building is a total loss—a concept that I know few boards have ever considered.

Who Really Owns the Project?

That doesn’t mean that the building has no value. Don’t forget our example; the units had a market value of $200,000 x 50 units equals a total building value of $10,000,000.

Even if the $4,000,000 repair cost is deducted, the building still has residual equity of $6,000,000. But who owns that equity? It’s not the owners because their interest is second to the mortgage holders. The owners individually probably have no equity left in that building once the cost of repair is factored in. The lenders have whatever equity is left. So that leaves those owners with a very difficult decision: do they stretch their personal resources to the breaking point, including borrowing as much as they can from a bank, or assess themselves the maximum that

they can personally afford, essentially to protect the interests of their lenders? If, for the moment, you wring all of the home ownership emotion out of it, as well as the fear of the credit consequences of walking away, the answer is probably no. Consider this simple equation: Market Value - Repair Cost - Mortgages = Total Owner Equity Where total owner equity is under water, the owners should consider whether they have any remaining interest to protect. This is neither an extreme example nor a false assumption—similar examples can and will be found. Many buildings are reaching an age when decades of accumulated deterioration will become known and when that is combined with years of reserve underfunding it will produce a crisis. The loss of market value generally over the past few years has accelerated this process and has already reduced owner equity substantially. In many cases reserve funding has been raided to cover losses due to delinquent assessments.

And in our example, critical maintenance has gone undetected for many years, and as we can see, has eaten up any positive owner equity that was left.

Alternatives to Repairing the Damage If the proposed cost of repair approaches or exceeds all available reserves and owner equity, perhaps another plan should be considered. There will, of course, be individual owners who own their units outright with no lender involved. But the number of such owners will be greatly exceeded by those owners who have much less or no equity and who will not see the utility in paying large special assessments to service a bank loan and will reject that idea when presented. If the debt and the demands on owners for payment are too great, they will reject the authority to borrow additional funds or to specially assess. Or, the delinquency rate will increase until even those owners who are willing to pay will have to consider whether they will be in it alone. Potential construction lenders will be reluctant to lend if the demand on owners is not affordable.

Many state laws mandate that the association assess its members as necessary to do whatever repairs are required. That’s true in California, and in many other states. But while that is the law, it was conceived in good times and for new buildings, but it may be unrealistic in the case of catastrophic loss where the damage exceeds the combined ECHO Journal | June 2012

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ability or willingness of the owners to pay to repair it. Does the board really have a choice? Can they actually decide not to make repairs or must they do it and assess owners whatever it costs?

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The Law Recognizes Obsolescence The members are not without legal options. They could walk from their obligations and abandon their interest in the property. Many have and foreclosures have been rampant for several years. This is not necessarily just because an owner can no longer afford the mortgage payments. It may also occur because an owner no longer sees value in making those payments. Large, additional special assessments for re-construction could easily reduce perceived value. But abandonment can often carry with it stigma and impact the individual’s credit rating, so there are consequences to disorganized individual action.

When the cost to repair is too high there are other statutes that come into play to give the board and the members a choice of whether to repair the damage or not and provides an avenue for organized group action.

Oh the Things We See!

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June 2012 | ECHO Journal

But abandonment may not be the only option. When the cost to repair is too high, and repair is unrealistic compared to the value of the project, there are other statutes that come into play to give the board and the members a choice of whether to repair the damage or not and provides an avenue for organized group action. California Civil Code Section 1359, for example, anticipates building obsolescence and provides criteria for unwinding an association where the damage likely exceeds the owner’s ability or willingness to pay to repair it. The statute lists the following very specific circumstances when “partition,” or the combined sale of the

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entire parcel to a third party, may be appropriate: (1) More than three years before the filing of the action, the condominium project was damaged or destroyed, so that a material part was rendered unfit for its prior use, and the condominium project has not been rebuilt or repaired substantially to its state prior to the damage or destruction.

(2) Three-fourths or more of the project is destroyed or substantially damaged and owners of separate interests holding in the aggregate more than a 50-percent interest in the common areas oppose repair or restoration of the project.

(3) The project has been in existence more than 50 years, is obsolete and uneconomic, and owners of separate interests holding in the aggregate more than a 50-percent interest in the common area oppose repair or restoration of the project.

(4) The conditions for such a sale, set forth in the declaration, have been met.

It is not difficult to envision one or more of these provisions applying to an older building that has been severely damaged by years of hidden deterioration or where criti-

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cal maintenance has long been deferred because of lack of funds. The owners have the authority to decide that something other than spending a huge sum on repairs may be appropriate.

Think Outside of the Box In older buildings, where damage has progressed undetected for many years, it may be too late for either preventive measures or to accumulate adequate reserves. In those cases some hard, creative choices have to be made.

Here’s the dilemma: do the owners protect the lenders’ equity at all costs, or do they look for another avenue? Negotiation with lenders may be an option. Another may be to try to sell the entire project as a single parcel—maximizing unused density and attracting new developer money that may actually make the property worth more than the collective value of the units in their present state. Another may be to investigate the association’s insurance coverage to see whether its hazard insurance might cover long-term decay. Neither of those latter options would be easy, nor are they proven, but in a situation where all other options are foreclosed, a little thinking outside of the box, along with

an appropriate application of the law, might actually produce a reasonable result that will preserve some owner equity.

Next to damage from a natural disaster, a big, unexpected construction project is probably one of the most disruptive events in an association’s life. Some associations never recover. This can be avoided in some cases with early inspections of all building components, whether visible and accessible or not, so that failure can be anticipated in enough time to adequately reserve for the costs of repair. Like cancer, early detection offers the best chance for a cure. In other, older buildings, however, there may be no cure, only difficult choices. In those instances creativity and a willingness to accept reality may yield a better solution.

Tyler Berding is a founding partner of Berding|Weil, LLP, a real estate law firm located in Walnut Creek, California. For more information, please see the firm website at www.berdingweil.com.

ECHO Journal | June 2012

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By Hilary Lape, CMCA, AMS, PCAM

Know Your Community’s Financial Position hile it is always important to know where your community stands financially, it is especially important to understand the community’s financial condition in today’s economy. There are several recommendations and standards in place for analyzing a community’s financial health, and a few are listed below:

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June 2012 | ECHO Journal

Recommendation A: Two to Three Months of Expenses in Your Operating Account(s) (Liquid Funds) at All Times For example, if your community has a total monthly expense budget averaging $20,000, we would recommend that you have between $40,000 and $60,000 in operating funds. By doing this, the association helps to ensure that it

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can cover monthly expenses plus some unbudgeted expense that may arise, even factoring in assessments that are delinquent and not received. Boards should keep this in mind when considering additional investments. Only funds in excess of two to three months of operating expenses should be considered for investments.

Recommendation B: Investments Fully Support the Reserve Funds Industry standard (and in some cases state law) encourages communities to segregate operating funds from reserve funds and recommends that a community’s investment funds correspond to the penny to the reserve fund balance. It is important that the reserve funds be reconciled regularly with the operating account. When a reserve project is completed, the invoice will likely be paid from the operating (checking) account. The investments and reserve funds will not reflect the reserve expense, but the operating account will now be short that amount, which could affect the association’s ability to pay its operating expenses. The association should consider having a reserve money market account that it can use to make the reconciliation (in this case, the reserve money market account would reimburse the operating account for the amount paid for the reserve project).

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Not only is it important to match the reserve balance with cash, it is also important to review the reserve balance.

Recommendation C: Reserves Funded in Accordance with the Reserve Study Not only is it important to match the full reserve balance with cash, it is also important to review the reserve balance as it compares to the amount recommended by the association’s reserve study. Special attention should be paid to this during budget preparation time. Rather than simply plugging in the recommended annual contribution number, an analysis should be done to determine what the projected year-end reserve balance is and whether an adjustment to next year’s reserve

contribution is warranted. For example, if the reserve study recommends a reserve fund balance at the end of fiscal year 2011 of $400,000, and it is determined that the actual balance at the end of FY 2011 is projected to be $300,000, a multi-year plan needs to be established to increase the reserve contribution to make up the reserve deficit. In some states, an annual review of the reserve study is required and this analysis would be completed during that review. Similarly, if the reserves are funded higher than the reserve study recommends, the reserve contribution could be decreased.

COM PA S S

Guiding your HOA in the right direction

Recommendation D: 10–20 Percent of the Total Annual Assessment Amount Should Be Included in Prior Year Equity (This is a Recommendation that Auditors Make So that the Association Has a “Cushion” in the Event of a Major Unanticipated Event.)

Prior Year Equity, which auditors frequently refer to as Unappropriated Members Equity or, simply, Members Equity, is the cumulative operating deficit or surplus from the association’s inception. While in the development period, and as long as the declarant is funding the operating deficit, the Prior Year Equity balance is usually $0.

Once the declarant is no longer funding the deficit and the association is self-sustaining, the association should work to achieve the 10–20 percent Prior Year Equity level. For example, if your community has budgeted $300,000 for the total annual assessment income, auditors recommend that the amount recorded in prior year equity be between $30,000 and $60,000. Any amount lower than $30,000 would be noted by auditors as not being sufficient and any amount more than $60,000 would be noted as being excessive. Auditors feel that this gives the association additional funds to cover a major unanticipated event that would lead to a substantial operating deficit, such as having to replace interior pipes because of pinhole leaks, or replacing significant landscaping because of an unusually wet or cold winter.

So, what happens if you are not adequately funded in Prior Year Equity? In future years’ budgets, the association should consider budgeting for an Operating Contingency (funds not earmarked for any specific expense) or should consider creating a line item specifically to Fund Prior Year Equity in order to bring the balance into the 10–20 percent range.

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Find the Answers to your Questions on Condo Ownership

An excellent guide to understanding the rights and responsibilities of condo ownership and homeowner associations operation. The question-and-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners.

Order today from ECHO! Call 408-297-3246 Fax 408-297-3517 Email: info@echo-ca.org

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Recommendation E: Delinquency Rate Should Be Between Three to Five Percent of the Total Annual Assessment Income Using the example above with a community that has budgeted $300,000 for the total annual assessment income, the total accounts receivable (delinquent amount) should not exceed $9,000–$15,000 for the association to be financially healthy. It is important that associations do everything possible to pursue collection of delinquent accounts, in accordance with applicable federal and state law and the association’s governing documents and established collection policy. It is also important that the association, in accordance with the collections attorney, periodically review delinquent accounts and make the decision to write off accounts that are not collectible or where further collection effort is not cost-effective. Many boards hesitate to write off uncollectible accounts, but, often, it is the best decision for the board to make.

Recommendation F: Establishment of the Allowance for Doubtful Accounts The Allowance for Doubtful Accounts line item is what is referred to as a “contra-asset” and appears in the asset section of the balance sheet as a negative number (to counter the accounts receivable asset). The purpose of the Allowance for Doubtful Accounts is to reflect more accurately the association’s financial position. Without the Allowance, the association’s balance sheet would show the entire delinquent amount as a collectible asset. The Allowance for Doubtful Accounts posts as a negative number to “decrease” the accounts receivable number to reflect more accurately the association’s assets. Prior to each fiscal year-end, associations should review their delinquencies and, if an Allowance for Doubtful Accounts has not previously been established, create the line item. There are many different ways to calculate the Allowance for Doubtful Accounts (usually by percentage or specifically identified delinquent owners), so talk with your managing agent and association auditor to determine the right number for your association. If your association has an Allowance for Doubtful Accounts line item, the number should be adjusted each year to reflect any changes in the delinquent amount.

Hilary Lape is the HOA Division Director at Community Management Corporation in Fairfax, VA. This article has been previously published in Association Times, the monthly newsletter for Associa management companies.

ECHO Journal | June 2012

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By Daniel E. Villalobos

“Green” Paint Technology Eco-Friendly Products on the Rise electing paint for your home, and particularly for an entire HOA, is an investment. The right choice can provide your home with a feeling of satisfaction and pride. So you’re thinking about painting your home and wondering if using a new environmentally-friendly “green”

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paint will give your home that fresh and new look while still providing you with a long lasting investment.

“Green” Paint Evolution As has been the case in many other industries, during the last twenty years construction stakehold-

ers demanded less-polluting, environmentally-friendly construction practices and products. This interest prompted a challenge to paint manufacturers and their raw material suppliers to create environmentallyfriendly paint products and materials ECHO Journal | June 2012

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This well-known compact guide for the operation of common interest developments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequently-asked questions about associations, along with succinct answers.

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June 2012 | ECHO Journal

that comply with new standards without sacrificing quality and performance.

In 1993, the GS-11 Paint Standard was published by the nonprofit organization Green Seal. This was designed to reduce health and environment impacts due to volatile organic compounds (VOCs). VOCs are carbon compounds that can have shortand long-term adverse health effects. This standard was later updated in 2008 with more stringent requirements. As a result, paint manufacturers are producing an array of new eco-friendly paint products and “green� paint technology has become more widespread and is growing in availability.

One of these products is a result of polymer research that has lead to a new and improved latex paint that eliminates the need for toxic solvents. For example, a new line of emulsion polymers have driven manufacturers to develop “low VOC� and low odor paints. What is an emulsion polymer you ask?

Think of soap washing away dirt and what’s leftover is something clean. With emulsion, a surfactant or soap is added to a molecule that when combined with water and other molecules, get rid of any unused stuff and the result is “latex.� (Even though latex paint is

titled thus, it actually contains no latex, so it won’t affect people with latex allergies.) Air quality is maintained and does not suffer during the painting application process with this new latex paint. Another innovation is the infusion of water-repellent characteristics.

This feature allows the coating to repel water and dirt, leaving the building surface clean and free from soiling and the effects of the weather. It helps the surface to remain dry and maintain color over longer periods of time. In addition, the introduction of biocidal products is allowing paint to be manufactured more safely. A less-harmful production of paint is very important to manufacturers as they move to provide solutions that meet these green standards and ensure the buildings viability and sustainability. These innovations are also leading the way for ingredients designed for all types of coating applications as well as shortening application and drying times.

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rier or solvent keeps the paint in liquid form and evaporates once the paint is exposed to air.

Some high-quality latex paint can be as durable as an solventbased paint. Latex paints clean up easily with water, so you don’t need harsh solvents.

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June 2012 | ECHO Journal

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Latex paints have an acrylic or vinyl acetate binder. Because they use water as the carrier rather than hydrocarbon solvents, latex paints have lower VOC levels than solvent-based paints. While they don’t cover stains as well as solvent-based paints, low- and no-VOC latex paints perform well for most

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home applications. Some high-quality latex paint can be as durable as an solvent-based paint. Latex paint cleans up easily with water, so you don’t need harsh solvents to work with it. It can also be “recycled” by combining leftovers; oil paints cannot be recycled in this way.

The problem is they are also harmful to the environment, because they emit more VOCs and contain other harmful chemicals. The EPA has found that high doses of VOCs cannot only be harmful to our environment but also to people.

100% acrylic paint is more water resistant than vinyl acetate paint and is good for kitchen, bath, and exterior surfaces. Vinyl acetate paint is good for most indoor applications and is less expensive. Look for solids content of over 30% to hide stains, cover in fewer coats, and cover more surface area per gallon. You should be able to find this information on the paint’s label or technical data sheet (TDS).

Eco-friendly paints are ideal for indoor areas.

Solvent-based paints have binders typically based on alkyd resins that require aggressive solvents as carriers. These paints have been widely used and accepted for many years.

They are very durable, easy to scrub, water resistant and provide a high gloss finish. This makes them highly suitable for many applications like kitchens, bathrooms, hallways and exterior surfaces. They also are easy to use.

Many of the new eco-friendly paints contain less than 50g/L VOCs and some are Zero (0)g/L VOC, unlike their counterpart solvent-based paints that can contain more than 250g/L VOCs. With little or no odor, these eco-friendly paints make it ideal for indoor areas like homes, offices, hospitals and other areas where odor can be a concern. The State of California has been very aggressive in moving away from solvent-based paints to water-based products. Various organizations and agencies along with the State of California are working together to help pave the way to this conversion. The California

Environmental Protection Agency, Green Seal and South Coast Air Quality Management District are good resources for a better and more detailed understanding of the rules and regulations governing these changes.

So what to do? Green paint technology is moving fast and helping to change the paint industry. Green paint products are now populating the market, ready to be used and available by most every paint manufacturer.

These products are proving to be better than previous versions and continue to improve.

If you’re still in doubt, consult your paint contractor for advice, as they can be a great source of help. Paint manufacturers also have literature available through their websites and retail outlets for a better and more informed decision. A good coat of paint should last you years, so your choice is significant for your home, your health and the environment.

Daniel E. Villalobos is manager of Property Management Services at Kelly Moore Paints Company.

ECHO Journal | June 2012

23

By Burt Dean

Develop Towing Partnerships Towing for All the Right Reasons 24

June 2012 | ECHO Journal

o one can deny there are good ways to use towing: Someone who is using the parking lot to make drug deals does not like to see the tow trucks; eyesores like stripped and dumped stolen cars can be removed quickly and do not consume valuable parking spaces. Parking problems deteriorate the value and usability of property by creating a

N

nuisance and unnecessarily consuming parking spaces. Whether your property is in a rough neighborhood or in a top of the market area, towing can be an improvement.

In fact, when properties use private property towing to remove vehicles from fire lanes, handicap stalls, abandoned vehicles, and if management utilized parking permits to

control the number of vehicles parked on the property, towing becomes a service that accommodates the intended users. And, if neighboring properties used towing services, one can fantasize that drug dealers or car thieves would move to other neighborhoods to philander.

Towing is not a bad thing. There are numerous examples where ECHO Journal | June 2012

25

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2012 Condominium Bluebook Everything about Homeowner Associations $17.00 Member Price $25.00 Non-Member Price This well-known compact guide for the operation of common interest developments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequently-asked questions about associations along with succinct answers.

Order today from ECHO! Call 408-297-3246, fax at 408-297-3517 or order online at store.echo-ca.org

26

June 2012 | ECHO Journal

towing has participated with improved public safety and property values. In the mid 1990’s, on McKee road in San Jose, a several hundred unit complex typically had three security guards on duty, and one guard was armed.

Property management ordered nightly towing from fire lanes and assigned parking stalls for several years. Today that property rarely has a vehicle towed; it was eventually remodeled and sold to new owners, and today it is a beautiful home for hundreds of residents. In a commercial strip-center near the old San Jose flea market, security guards regularly logged license plate numbers for vehicles parked over one hour and had them towed. There was never a problem because the public knew they were abusing parking privileges.

The reason people park where they don’t belong is because they can, and they can get away with it! When property management feels sorry for them or fears retaliation, they are making it easy for people to abuse the parking rules. Being firm but fair, with consistent towing polices, is a system that earns respect from intended users of the parking areas who just want an easy place to park, close to their destination. The persons who get off work late at night or do evening shopping would love to depend on having their assigned parking stall empty when they get

home. In fact, it is the obligation of the property manager to honor their obligation to provide the contracted parking availability.

Finding a Qualified Tow Company Finding a qualified tow company is no different from finding any other contracted service provider. The tow company needs to have liability insurance and be willing to include the complex as an “additionally named insured” on its policy. A tow company should be required to carry workers compensation coverage for employees, which can be verified by requesting a copy of their DMV Motor Carriers Permit issued by the DMV for proof of insurance in order to register their commercial tow trucks. Local municipal codes require business licenses and/or permits that can be verified by requesting a copy. Each tow driver should have special private property towing training and he or she should provide a copy of their current CTTA certification (Certified Tow Truck Driver).

Some cities require special licensing for private property towing, which can be verified by calling the Tow Liaison of the local police department. In order to insure proper “care and custody” of vehicles, an association manager should do two things: 1) contact the local city for background complaints against the tow company; and 2) inspect the tow yard to insure the vehicles towed are properly

secured in the impound yard with acceptable facilities for vehicle owners to claim their vehicle. The manager needs to assess the potential quality of services and determine if the tow company is treating its clients as intended. They may wish to consider the advantages/disadvantages of whether the tow company pays the tow driver by commission vs. hourly wages; this may impact the tow driver’s attitude towards servicing the property manager’s objectives vs. towing simply for income.

The fees charged for private property towing are regulated by the State of California, with local regulatory jurisdiction. If there are questions or concerns about the towing regulations or fees, anyone can request a copy of the “Towing Fees and Access Notice,” which law requires to be made available to the public with up to a $500 fine for failure to meet the intent of this disclosure provision. If there are concerns or problems with a tow or a tow company, the towing receipt is required to have the phone number of the local police jurisdiction on the tag for asking questions or filing a complaint.

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Burt Dean is the owner of Rebello’s Towing Service. Previously he owned a management company. He has been an ECHO member for many years.

ECHO Journal | June 2012

27

28

June 2012 | ECHO Journal

By Steven T. O’Brien

Reviewing Bank Statements The Key to Watching Your Association’s Money No great period of time passes without news of a fresh scandal involving an association whose cash assets have been mishandled by someone in a position of authority.

Like automobile accidents, these statistics remind us that theft and fraud can happen at any time to any association. What is most distressing is that these situations could usually have been prevented had the association’s directors followed a few simple rules about watching their association’s money.

ECHO Journal | June 2012

29

Bank Statements One of the simplest means of watching the money is to review reconciled bank statements for each of the association’s bank accounts. In California, the board is required by law to review reconciled bank statements for both the operating and reserve bank accounts at least quarterly. Prudence dictates that this should be done monthly.

Why is a bank statement so important? An association’s assets are managed by only a few individuals—typically the manager, the treasurer, or a combination of these two. An accounting of this management is given monthly in the association’s financial statements: payments received, checks written, etc. However, the association’s cash assets are stored in a bank. The bank account statement represents a separate and independent declaration of the association’s funds. Put another way, bank statements allow you to compare what your banker is telling you about your money with what the money managers are telling you in the financial statements. Bank statements allow you to verify bank balances, check payees and amounts, and deposits. Even in long-term certificates of deposit, a statement will verify that the cash is indeed, where it’s supposed to be.

While this does not seem to be a strong deterrent, consider that fraud is often accomplished by altering the payee on a signed check. Likewise, in the absence of a bank statement, sums of money can be “borrowed” from long-term savings and “repaid” later without the loss even being noticed. Merely the knowledge that account balances and cash transactions are being responsibly reviewed every 30 days significantly inhibits fraudulent activity.

At a time when watching the association’s money is foremost among the board’s fiduciary responsibilities, banks are reducing statement services to cut their operating costs. Ironically, it is for an association’s largest accounts (especially long-term certificates of deposit accounts) that monthly statements are often not provided. If a board receives statements only upon the maturity of large replacement reserve CDs, as much as a year can pass without verification of those account balances. This is both unlawful and unwise. And, if you’re a director, it should be unacceptable.

Some banks, recognizing the special needs of homeowner associations, have developed Continued on page 33 30

June 2012 | ECHO Journal

Legislation at a Glimpse As of May 15, 2012 Bill No.

Author

Subject

Status

Position

Summary

AB 805

Torres

Davis-Stirling Revision Part 1

Passed Senate Housing.

To Judiciary.

Support

This is the first of two bills from the California Law Revision Commission that restate and clarify the Davis-Stirling Act.

AB 806

Torres

Davis-Stirling Revision Part 2

Passed Senate Housing.

To Judiciary.

Support

This is the second of two bills from the California Law Revision Commission that restate and clarify the Davis-Stirling Act.

AB 1547

Eng

Extend “Blight” Fines

In Assembly Finance.

Support

This bill would remove the sunset provision in a law that allows local municipalities to fine owners of foreclosed units for failing to maintain their properties.

AB 1557

Skinner

Extend “Blight” Fines

In Assembly Finance.

Support

This bill would extend the sunset provision to 2018 for a law that allows local municipalities to fine owners of foreclosed units for failing to maintain their properties.

AB 1720

Torres

Gated Communities

Amended 3/22.

To Consent Calendar.

Support

This bill would require that gated communities grant access to licensed private detectives for the purpose of service of process, provided they produce required documentation.

AB 1726

Allen

Pool Maintenance

In Assembly Oppose Health.

Unless Hearing 4/24. Amended

This bill would require that all public pools (including CID pools) use a “qualified pool operator” as defined by law. The operator must take state-mandated courses.

AB 1838

Calderon

Association Records

Amended 3/22. In Assembly Judiciary.

Existing law prohibits associations from charging fees for providing certain documents to prospective purchasers. This bill would extend those prohibitions to an authorized representative of an association, and would also authorize a penalty for violating the law. The bill also requires that the financial disclosure form be written in at least 10point type.

AB 1963

Huber

Tax on Services In Assembly Watch Taxation.

Hearing 5/14.

This bill would make dramatic changes to California’s tax code. One portion of the bill extends taxes to services.

AB 2273

Wieckowski

Purchaser Information

In Assembly Watch Housing.

Hearing 4/25.

This bill would require that an owner who is selling his or her unit provide information about the purchasing owner to the association.

SB 561

Corbett

Third Party Collections

In Assembly Judiciary.

Hearing cancelled.

Oppose

Would require any third party acting to collect payments or assessments on behalf of an association to comply with the same requirements imposed on the association. Makes statement of legislative intent.

SB 880

Corbett

Electric Vehicle Charging Stations

Signed by the Governor.

Neutral

This bill cleans up problematic sections of last year’s electric vehicle charging station law. The revisions give more oversight and control to the association.

SB 1244

Harman

Foreclosure Procedures

In Senate Judiciary.

Support

This bill eases the notice requirements for units sold in a foreclosure sale. If a unit owner is not able to be served, the bill would, among other requirements, allow the association to post notice in a reasonable location.

Oppose Unless Amended

ECHO Journal | June 2012

31

Reviewing Bank Statements Continued from page 30

special programs tailored to those needs.

These banks typically provide monthly statements for virtually all types of accounts.

However, many banks do not. When deciding on where to deposit the association’s cash assets, boards must take into consideration more than just the interest rate. Monthly bank statements represent a form of insurance for association’s assets and must be considered together with the interest those assets might earn.

Reviewing Bank Statements: What to Watch For Bank statements should not be sent directly to nor reconciled by the same person who 32

June 2012 | ECHO Journal

writes the checks. Statements and, especially, canceled checks ideally should be reviewed first by someone other than the check handlers.

Reconciling the bank statement means accounting for all the activity reported by both the bank and the financial statements.

Checks that are reported in the financial statements may not have cleared the bank by the end of the statement period and may still be outstanding. Likewise, deposits may have been recorded in the financial reports that do not show on the bank statement. These are called “deposits in transit” and should be accounted for carefully. The reconciliation explains the differences between the bank statement and the financial reports.

Adjustments stemming from those differences should bring the reconciled bank state-

ments into “balance” with the financial statements.

Reconciliation adjustments and their explanations may not be clear or easy to understand but, as a director, it is your job to understand them. Ask questions until you are satisfied that all differences have been reconciled. Don’t worry about appearing uninformed or hurting the manager’s or bookkeeper’s feelings. A great deal of effort goes into keeping a good set of books, and those responsible are usually pleased to have directors take an interest in their work. And remember, reviewing bank reconciliations may not be the most glamorous job a director has but it is one of the most important.

All directors should be involved, not just the treasurer!

Electronic Windows for Watching the Money Most banks have used rapidly changing technology to provide homeowner associations with additional tools to help them watch the money. Among these are phone and computer-based inquiry systems by which a director may check account balances 24 hours a day, seven days a week. While these services are most commonly available for demand-deposit accounts, the ability to verify all the association’s bank account balances on demand is a valuable service. Consider this when selecting a bank in which to deposit your association’s funds.

Other Measures for Safeguarding the Association’s Money In addition to reviewing reconciled bank statements, a number of other simple rules can help you watch your association’s money.

Among these are: 1) Require two signatures on all checks, not solely on replacement reserve account checks.

2) Periodically check the signature cards for the association’s accounts to ensure that they are current and correct. By altering or resubmitting modified signature cards, an unauthorized person can easily gain access to your association’s money.

3) Verify that the association’s checkbooks are in a secure place and subject to restricted access. Checkbooks readily available to a large office staff invite abuse, especially if canceled checks for those same accounts are lying about to provide sample signatures.

4) Mail checks to the recipients immediately upon signing rather than sending them back to an office for further processing.

Remember that, once signed, the payee’s name can be altered.

The majority of agents who assist associations in handling their money are trustworthy. But by attending to the steps outlined above and incorporating them into the duties of your association’s future directors, you gain the additional assurance that your cash assets will be safeguarded. Like seat belts they provide the extra margin of safety that can prevent your association from become another dismal statistic.

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If you want to learn how to manage, operate and participate effectively in your association, you will want to read this book.

Order the book today from ECHO Call 408-297-3246, fax 408-297-3517 or email: info@echo-ca.org

Steve O’Brien is a principal in a community association financial and bookkeeping service. He was a member of the ECHO board of directors and the North Bay Resource Panel.

ECHO Journal | June 2012

33

Directory UPDATES Updates for listings in the ECHO Directory of Businesses and Professionals, now available online at www.echo-ca.org.

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June 2012 | ECHO Journal

To learn more, visit our membership page at www.echo-ca.org

ECHO Events Calendar

Jot these down!

Wednesday, June 6 Maintenance Resource Panel 12:00 Noon ECHO Office, 1602 The Alameda, Suite 101, San Jose

Thursday, July 5 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse 400 Yosemite Rd, San Rafael

Friday, June 8 East Bay Resource Panel 12:00 Noon Massimo Restaurant 1603 Locust St., Walnut Creek

Monday, July 9 Accountants Resource Panel 6:00 p.m.

Francesco’s Restaurant Oakland

Wednesday, June 13 South Bay Resource Panel 12:00 Noon Buca Di Beppo 1875 S. Bascom Ave., Campbell

Tuesday, July 10 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz

Wednesday, June 20 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. Rohnert Park, CA Friday and Saturday June 22, 23 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

Wednesday, July 18 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. Rohnert Park, CA Wednesday, August 1 Maintenance Resource Panel 12:00 Noon ECHO Office, 1602 The Alameda, Suite 101, San Jose

Wednesday, August 8 South Bay Resource Panel 12:00 Noon Buca Di Beppo 1875 S. Bascom Ave., Campbell

O H C l E a 2 1 u 20 Ann inar 23 m 22, e S e n u J

Wednesday, August 15 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. Rohnert Park, CA Thursday, September 6 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse Monday, September 10 Accountants Resource Panel 6:00 p.m.

Francesco’s Restaurant Oakland

Tuesday, September 11 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz Wednesday, September 19 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. Rohnert Park, CA Saturday, September 22 Central Coast Seminar Hilton Santa Cruz, Scotts Valley

Regularly Scheduled ECHO Resource Panel Meetings Resource Panel Maintenance North Bay East Bay Accountants Central Coast South Bay Wine Country Legal

Meeting First Wednesday, Even Months First Thursday, Odd Months Second Friday, Even Months Second Monday, Odd Months Second Tuesday, Odd Months Second Wednesday, Even Months Third Wednesday, Monthly Quarterly

Location ECHO Office, San Jose Contempo Marin Clubhouse, San Rafael Massimo Restaurant, Walnut Creek Francesco’s Restaurant, Oakland Pasatiempo Inn, Santa Cruz Buca Di Beppo, Campbell Eugene Burger Management Co., Rohnert Park Varies ECHO Journal | June 2012

35

Netwion Edi

Beyond Privatopia $20.00 Non-Member Price: $25.00 The rise of residential private governance may be the most extensive and dramatic privatization of public life in U.S. history. In Beyond Privatopia, attorney and political science scholar Evan McKenzie explores emerging trends in private governments and competing schools of thought on how to operate them, from state oversight to laissez-faire libertarianism.

Condominium Bluebook 2012 Edition $17.00 Non-Member Price: $25.00

Condos, Townhomes and Homeowner Associations Member Price: $29.00 Non-Member Price: $45.00

Community Association Statute Book—2012 Edition Member Price: $15.00 Non-Member Price: $25.00

To make these a sustainable investment, new buyers, owners and board members need to understand “best practices basics” of how this form of housing works and have more realistic expectations of this form of “carefree, maintenance free” living.

Contains the 2011 version of the Davis-Stirling Common Interest Development Act, the Civil Code sections that apply to common interest developments and selected provisions from other codes important to associations.

Robert’s Rules of Order $7.50 Non-Member Price: $12.50

The Board’s Dilemma $10.00 Non-Member Price: $15.00

A step-by-step guide to the rules for meetings of your association, the current and official manual adopted by most organizations to govern their meetings. This guide will provide many meeting procedures not covered by the association bylaws or other governing documents.

In this essay, attorney Tyler Berding confronts the growing financial problems for community associations. Mr. Berding addresses board members who are struggling to balance their duty to protect both individual owners and the corporation, and gives answers to associations trying to avoid a funding crisis.

2012 Community Association Treasurer’s Handbook Member Price: $29.00 Non-Member Price: $35.00

This well-known compact guide for operation of common interest develop ments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequently-asked questions about associations, along with succinct answers.

Netwion Edi

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Homeowners Associations— How-to Guide for Leadership Member Price: $15.00 Non-Member Price: $25.00 This well-known guide and reference is written for officers and directors of homeowner associations who want to learn how to manage and operate the affairs of their associations effectively.

FOR Board Members Reserve Fund Specialists Property Managers Unit-Owners, Accountants Lawyers, Builders

NEW

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The Handbook is an in-depth guide to all aspects of association finances, including accounting methods, financial statements, reserves, audits, taxes, investments and much more.

Not for the accounting novice, this is a tool for the treasurer or professional looking for specific information about association finances.

RESERVE FUND

ESSENTIALS THIRD EDITION FIFTH PRINTING JONATHAN H.

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Two experts discuss reserve fund planning and control in a refreshingly readable and exceptionally levelheaded style.

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Reserve Fund Essentials Member Price: $18.00 Non-Member Price: $25.00 Questions & Answers About Community Associations Member Price: $18.00 Non-Member Price: $25.00 For 12 years, Jan Hickenbottom answered homeowners’ questions in her Los Angeles Times column on community associations. Now collected in one volume, readers can find answers to almost any question about CIDs.

This book is an easy to read, musthave guide for anyone who wants a clear, thorough explanation of reserve studies and their indispensable role in effective HOA planning. The author gives tips to help board members mold their reserve study into a useful financial tool.

The Condo Owner’s Answer Book $15.00 Non-Member Price: $20.00 An excellent guide to understanding the rights and responsibilities of condo ownership and operation of homeowner associations. The question-and-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners.

2011 ECHO Annual Seminar Program Book $15.00 Non-Member Price: $25.00 This 300+ page reference book contains the presentation outlines, text and handouts from the sessions at the 2011 ECHO Annual Seminar held on June 18, 2011. It also contains vital information for association directors, such as assessment collection policies, internal dispute policies, and much more.

Dispute Resolution in Homeowner Associations Member Price: $20.00 Non-Member Price: $25.00 This publication has been completely revised to reflect new requirements resulting from passage of SB 137.

Publications to answer your questions about common interest developments Now Order Online at www.echo-ca.org

Bookstore Order Form Board Member’s Guide for Contractor Interviews $20.00 Non-Member Price: $25.00

Executive Council of Homeowners 1602 The Alameda, Suite 101, San Jose, CA 95126 Phone: 408-297-3246 Fax: 408-297-3517 TITLE

QUANTITY

This report is a guide for directors and managers to use for interviews with prospective service contractors.

Questions to find out capabilities and willingness of contractors to provide the services being sought are included for most of the contractor skills that associations use.

SUBTOTAL CALIFORNIA SALES TAX (Add 8.25%) TOTAL AMOUNT

Yes! Place my order for the items above.

Board Member’s Guide for Management Interviews Member Price: $20.00 Non-Member Price: $25.00 This guide for use by boards for conducting complete and effective interviews with prospective managers takes the guesswork out of the interview process. Over 80 questions covering every management duty and includes answer sheets matched to the questions.

q Check q Visa q MasterCard Credit Card Number Exp. Date

Signature

Name (please print) Association (or company) Address City Daytime Telephone

State

Zip

AMOUNT

Nominating Committee Seeks Candidates for ECHO Board of Directors HE NOMINATING COMMITTEE for the ECHO Board of Directors is seeking expressions of interest from persons who are interested in being on the ECHO Board of Directors. Four positions on the board will be up for election at the ECHO annual meeting that will be held in October. These positions are for three-year terms. Current directors whose terms expire in 2012 are Paul Atkins, Jerry Bowles, David Hughes, and Steven Weil.

Board members are expected to attend all of approximately six three-hour board meetings held each year, generally at the ECHO office in San Jose. Each board member also

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June 2012 | ECHO Journal

serves on one or more committees that hold regular meetings throughout the year. These two activities involve a commitment of four to six hours per month plus travel time. In addition board members are expected to attend the Annual Seminar, Annual Meeting and a two-day board retreat each November. Board members receive no reimbursement for these activities. Nominees will also be expected to have been recent active participants in ECHO activities and to have thorough familiarity with the organization and the CID industry.

Persons interested in being considered for nomination should obtain and complete a nomination and qualifications form, available by request from the ECHO office. Every potential candidate, including incumbents, must submit a full form. All completed forms must be submitted to the ECHO office no later than July 19, 2012, to be considered by the nominating committee. Those requesting nomination may be requested to interview with the nominating committee. The committee will meet in late July to prepare recommendations for board consideration.

New election rules: $500 In today’s economic crisis, there may be some items that associations can cut to reduce costs. ECHO membership is not one. Let’s face it, educated board members are better fiduciaries, which helps them to avoid costly law suits and possibly personal liability.

ECHO is the premier resource in California for board member education. ECHO offers new articles each month with practical and easy to understand advice about current California requirements, and what may be on the horizon. ECHO staff is available by phone or E-mail to answer members’ questions about association problems or to recommend competent professional services when necessary.

And with discounted member rates at more than a dozen educational events throughout the year, ECHO is simply the best educational resource for California homeowners.

Avoid Litigation Each year, as a member benefit, ECHO sends every board member a copy of the updated Community Association Statute book. Every issue of the ECHO Journal and every seminar examine one or more aspects of compliance with association law, because one of the major causes of expensive litigation is ignorance of the law.

Mailing ballots: $200 Make Better Financial Choices Many associations struggle to understand reserve funding requirements and strategies, the benefits and disadvantages of using special assessments, proper collections practices, and even how to determine what components the association is required to maintain.

At a time when wise financial planning is essential, ECHO members have access to a wealth of articles about reserve funding, budgeting, insurance, collections, and much more.

Fight Costly Regulation Every year, Sacramento legislators introduce more legislation that confuses the job of California board members and increases the costs of compliance. ECHO is committed to fighting unnecessary regulation in California and promoting the interests and welfare of common interest developments.

Hire Competent Professionals ECHO offers a variety of articles and publications to help members evaluate their service providers, including questions to ask prospective management firms and contractors. All ECHO Journal articles are available to members at no cost, and publications are sold to members at a discount.

Avoiding a lawsuit: Priceless.

Spend a Little, Get a Lot The cost of ECHO membership is minimal. In a worsening economy, associations are looking to cut big expenses from their budgets. Yet, ECHO membership is as little as 25¢ per unit each month. For that small cost, here’s what every board member receives as part of being a member of ECHO: • A subscription to the ECHO Journal • An annual copy of the current Community Association Statute book • Unlimited access to ECHO’s library of past articles • Telephone consultations with ECHO staff about their problems • Reduced fees for ECHO events • Discounted prices on publications • And much more…

In These Tough Economic Times, ECHO Membership is a Necessity As the only California organization devoted exclusively to board member and homeowner education, ECHO is a one-of-a-kind resource that your association can’t afford to lose.

ECHO Honor Roll

About

ECHO Honors Volunteers 2011 Volunteer of the Year

Accountant Panel Richard Schneider, CPA 707-576-7070 Central Coast Panel John Allanson 831-685-0101 East Bay Panel Beth Grimm, Esq., 925-746-7177 Mandi Newton, 415-225-9898 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Brian Seifert, 831-708-2916 North Bay Panel Diane Kay, CCAM, 415-846-7579 Stephany Charles, CCAM 415-458-3537 San Francisco Panel Jeff Saarman, 415-749-2700 South Bay Panel Toni Rodriguez, 408-848-8118 George Engurasoff, 408-295-7767 Wine Country Panel Maria Birch, CCAM, 707-584-5123

Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry Bowles Joelyn Carr-Fingerle, CPA Chet Fitzell, CCAM John Garvic, Esq., Chair Geri Kennedy, CCAM Wanden Treanor, Esq.

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June 2012 | ECHO Journal

What is ECHO? Serving Homeowners to Build Strong Community Associations

Beth Grimm ECHO Resource Panels

ECHO

Regional Seminar Speakers Marin: David F. Feingold, Esq. Wanden P. Treanor, Esq. Glenn H. Youngling, Esq. Central Coast: John Allanson Sharon Glenn Pratt, Esq. Wanden P. Treanor, Esq. Glenn H. Youngling, Esq. Wine Country: Kirk Denebeim David Hughes Roger Doncaster Mark Dunia Bill Mann Barbara Zimmerman, Esq. Bill Gillis, Esq. South Bay: Sandra Bonato, Esq. Stephanie Hayes, Esq. Rick Coats & Sandra Long Alan Crandall Larry Russell, Esq.

Annual Seminar Speakers June 18, 2011 ECHO Annual Seminar Julie Adamen John Allanson Jeffrey Barnett, Esq. Tyler Berding, Esq. Jacquie Berry Sandra Bonato, Esq. Jeffrey Cereghino, Esq. Timothy Cline Paul P. Cordova, PE Alan Crandall Bradley Epstein, Esq. Lisa Esposito, CCAM

John Garvic, Esq. Beverlee Gordon Sandra Gottlieb, Esq. Patrick Holman Linnea Juarez, PCAM, CCAM David Kuivanen, AIA Kerry Mazzoni Evan McKenzie, Esq. Steven Saarman Brian Smith Deon Stein, Esq. Wanden Treanor, Esq. Steven Weil, Esq.

The Executive Council of Homeowners (ECHO) is a nonprofit membership corporation dedicated to assisting California homeowners associations.

ECHO provides help to homeowners associations on many fronts: finances, legal issues, insurance, maintenance and management. Members receive help through conferences, trade shows, seminars, a monthly full-color magazine and discounted publications.

Who Should Join ECHO? If your association manages condominiums or a planned development, it can become a member of ECHO and receive all of the benefits designated for homeowner associations.

Benefits of ECHO Membership

Recent ECHO Journal Contributing Authors February 2012 Jeffrey A. Barnett, Esq. Robert Booty Carl Brown, RCI, RRO Tom Fier, Esq. Steven S. Weil, Esq. March 2012 Julie Adamen David L. Hughes John R. Schneider Kevin Scroggins David C. Swedelson, Esq. Steven S. Weil, Esq. April 2012 Kenneth Carlisle Colletta Ellsworth-Wicker, CMCA, AMS, PCAM Graham Oliver Debra A. Warren, CMCA, PCAM May 2012 Tyler P. Berding, J.D., Ph.D. Robert Booty Larry Mesplé Mary Anne Sayler John Schneider

• Subscription to monthly magazine for every board member • Yearly copy of the Association Statute Book for every board member • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento

ECHO Membership Dues HOA Size 2 to 25 units 26 to 50 units 51 to 100 units 101 to 150 units 151 to 200 units 201 or more units Business/Professional

Rate $120 $165 $240 $315 $390 $495 $425

ECHO Journal Subscription Rates Members Non-members/Homeowners Businesses & Professionals

$50 $75 $125

How Do You Join ECHO? Over 1,800 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for membership, call ECHO at 408-2973246 or visit the ECHO web site (www.echo-ca.org) to obtain an application form and for more information.

ECHO Marketplace

Advertiser Index

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Find answers to almost any question about CIDs

Ace Property Management . . . . . . . .20 American Management Services . . . .9 Angius & Terry . . . . . . . . . . . . . . . . .3 A.S.A.P. Collection Services . . . . . . .10 Association Reserves . . . . . . . . . . .27 Berding | Weil . . . . . . . . . . . . . . . . .44 BTC Bob Tedrick Construction . . . . .27 Collins Management . . . . . . . . . . . . .8 Common Interest Management . . . .22 Community Management Services . .33 Compass Management . . . . . . . . . .15 Cool Pool Service . . . . . . . . . . . . . . .8 Cornerstone Community Mgmnt. . . .30 Ekim Painting . . . . . . . . . . . . . . . . . .8 Eugene Burger Management Co. . . .16 First Bank Association Bank Srvcs . .15 First Guardian Communities . . . . . .14 Flores Painting . . . . . . . . . . . . . . . .34 Focus Business Bank . . . . . . . . . . .30 Helsing Group, The . . . . . . . . . . . . .20 M & C Association Services . . . . . . .34 Massingham and Associates . . . . . .23 MCM Services . . . . . . . . . . . . . . . .33 Mutual of Omaha Bank . . . . . . . . . .21 PML Management Corp. . . . . . . . . .17 Pollard Unlimited . . . . . . . . . . . . . .22 R. E. Broocker Co. . . . . . . . . . . . . .17 Rebello’s Towing Service . . . . . . . . .21 REMI Company . . . . . . . . . . . . . . . .27 Saarman Construction . . . . . . . . . .10 Special Building Inspections . . . . . .14 Statcomm . . . . . . . . . . . . . . . . . . .22 Varsity Painting . . . . . . . . . . . . . . . .11

Questions & Answers About Community Associations Member Price: $18.00 Non-Member Price: $25.00 For 12 years, Jan Hickenbottom answered homeowners’ questions in her Los Angeles Times column on community associations. Now collected in one volume, readers can find answers to almost any question about CIDs. Order today from ECHO! Call 408-297-3246, fax at 408-297-3517 or email: info@echo-ca.org ECHO Journal | June 2012

41

SWINGING WITH THE GATSBYS Seminar Sponsors

40th Annual ECHO Seminar The 40th Annual ECHO Seminar is Swinging with the Gatsbys this year. Ask your associates in other common interest developments to join you for a day of education and fun at this important event. They need to hear updates about every important CID responsibility and issue, to see new products and to share in the large number of prizes and favors distributed by 125 trade show exhibitors.

Saturday, June 23, 2012 8:00 a.m.–4:30 p.m.

Santa Clara Convention Center Santa Clara, California Join the Friday Night Reception Join us for hors d'oeuvres, light refreshments and socializing at the Annual Seminar Reception on Friday, June 22, 5:00–6:30 p.m. The cost is $40 to attend.

Special Hotel Rates Don’t miss out on the special room rate of $95 at the Hyatt Regency adjacent to the Santa Clara Convention Center. Call the Hyatt Regency at (800) 2331234 and mention the Executive Council of Homeowners. The special rate is available until June 1, 2012.

Register Online Now is the time for homeowner association board members and professionals to make advance reservations for this event.

Register today by calling ECHO at (408) 297-3246 or online at www.echo-ca.org/annualseminar/.

Educational Sessions SESSION TRACKS

HOA UNIVERSITY Great America J

LEGAL Great America K

Administration Helen Loorya, CCAM

They Are At It Again in Sacramento: 2012 Legislative Update John Garvic, Esq. Kerry Mazzoni

Charging Electric Vehicles in HOAs Larry Russell, Esq.

Hidden Damage and Its Threat to Older HOAs Tyler Berding, Esq. David Kuivanen

Saturday Morning 10:50 to 12:00

Legal Considerations Kevin Frederick, Esq.

Accessibility and Other Disability Issues Jeffrey Barnett, Esq. Dawn Anderson, AIA

Nuisances Sandra Gottlieb, Esq.

Who Does What?

Understanding Construction Experts John Schneider

Saturday Afternoon 1:30 to 2:40

Finances David Levy, CPA

Clean Up Your Act: Handling Old CC&R and Rules Violations Sandra Bonato, Esq. Andrea O’Toole, Esq.

Back to the Future: Facing the Email Ban Head-On Steve Weil, Esq. Ian Brown

Practical HOA Maintenance Part I: Presentations Dick Tippett Brian Seifert

Saturday Afternoon 3:20 to 4:30

Insurance Dean Shibler

Director Recall!

Beth Grimm, Esq.

Ask The Attorneys Ann Rankin, Esq. Tom Fier, Esq.

Practical HOA Maintenance Part II: Demonstrations Dick Tippett Brian Seifert

Saturday Morning 9:00 to 10:30

MANAGEMENT & FINANCIAL Ballroom G

FACILITIES MANAGEMENT Ballroom H

Registration Form Yes! Please reserve my space at the 2012 ECHO Annual Seminar.

Name _____________________________________________________________ Association/Organization ____________________________________________ Address ___________________________________________________________ City ___________________________________ State _____ Zip____________ Daytime Phone _____________________________________________________ Email _____________________________________________________________ Names of Additional Attendees: 1. ________________________________________________________________ 2. ________________________________________________________________ Visa/MasterCard No. _______________________________________________ Expiration Date_____________________________________________________ Cardholder’s Signature ______________________________________________

Please reserve tickets for the following: Attendees Amount Seminar (members) $75 ____ $________ Seminar (non-members) $125 ____ $________ Buffet Lunch $40 ____ $________ Tickets are non-refundable.

Friday Reception $40 ____ $________ Order will not be processed without full payment.

TOTAL $________

Reserve Now

Register early—prices increase on June 1st.

Return with payment to: ECHO 1602 The Alameda, Suite 101 San Jose, CA 95126 Tel: 408-297-3246 Fax: 408-297-3517

What problems does your association face from hidden damage?

Every community association will face a major reconstruction project several times in the life of the development. This may occur because of anticipated problems, such as re-roofing or re-painting, but it can also occur because of completely unanticipated, and unreservedfor, problems, such as dry rot, soil subsidence, or leaks in windows and siding.

The Perils of Hidden Damage

For Community Associations

By Tyler P. Berding, J.D., Ph.D. and Steven S. Weil, Esq.

There are two different outcomes to any attempt to repair hidden damage. The first is a predictable project that succeeds in repairing the damage within the association’s financial means. The second part is so unexpected and expensive to repair that it overwhelms the association’s resources.

Next to damage from a natural disaster, a big, unexpected construction project is probably one of the most disruptive events in an association’s life. Some associations never recover.

So what are your association’s options? Learn what your association can do when facing hidden damage in the booklet, The Perils of Hidden Damage. This 12-page booklet is free simply by calling 800-838-2090.

Visit us at the Annual ECHO Trade Show on June 23 at booth 318/419 and get a free copy of this booklet.

Berding|Weil, LLP 2175 N California Blvd, Suite 500 Walnut Creek, CA 94596 www.berding-weil.com www.condoissues.com 800-838-2090

Hear the following presentations in the Seminar Hall: 9:00 Tyler Berding: “Hidden Damage and It’s Threat to Older HOA’s” 1:30 Steve Weil: “Back to the Future: Facing the Email Ban Head-On” 1:30 Sandra Bonato & Andrea O’Toole: “Clean up Your Act: Handling Old CC&R Rules & Violations”