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A Blow to Condominiums

Condominiums are suffering from poor collections, in part because the law is on the side of the delinquent. One board member, when told of this decision, said, “It’s official—deadbeats have rights.”

Inconsistent sick leave, restricted towing and other County legislation

by Chris Majerle

Prince George’s County and Montgomery County either have passed or are considering adoption of legislation that would expand mandatory sick pay to full- and part-time workers. Full-time workers may get up to 7 days, part-time would be prorated based on hours relative to a full-time position. Unfortunately, the laws are not statewide and are not the same. This poses a tremendous problem for management firms, landscapers and many other contractors who have employees who work in multiple counties, often on the same day. It would make sense for such laws to be statewide so companies could operate under the same rules throughout the state.

Why is this important to you? It will cause all of your contractors and service providers to pay more and to invest in payroll software that will calculate these various benefits. All of these costs will find their way to your invoices. Tell your county and state legislators that employment laws should be statewide for the benefit of businesses and their consumers.

County Legislative Update

Prince Georges search bills

CB-28-2015 (pending) creates a Condominium and Property Owners Association Bill of Rights. The rights specified in the bill are either already required by law or so vague that they are seemingly meaningless.

CB-34-2015 (pending) would control the distribution of e-cigarettes to minors as well as restrict their use in eating and drinking establishments, public housing and senior housing.

CB-49-2015, CB-50-2015, CB-58-2015 (pending) enhance the Common Ownerships Communities Program operations to enable increased collection of data, including reserves held by associations, and to conduct mediation in certain disputes between owners and associations.

Montgomery County search bills

17-15 (passed effective 11/30/15) relative to towing vehicles from private property, including community associations. The bill requires increased language on signage to include ALL parking restrictions and one sign for every 45 spaces. The bill also prohibits the use of “spotters” to look for towing opportunities except between 2:00am and 9:00am. Outside those hours, written authorization of the owner or manager is required before towing. It also creates a 15-minute waiting period before towing except from fire lanes, handicapped spaces or where a vehicle obstructs traffic.

19-15 (pending) is a Landlord-Tenant bill that would create a standard lease that would be required for use in Montgomery County. It also would allow tenants a two-day right of rescission (thereby ending immediate move-ins), allow tenants to convert a one-year lease to a two-year lease within 30 days of inception, require landlords to offer two-year lease extensions, and would require a County inspection of all rental units in buildings with two or more units.

21-15 (passed effective 11/6/15) creates property tax relief for renters. Qualified renters may receive a property tax credit after submitting an application.

31-15 (pending) would require home sellers to test for radon gas and to disclose the presence of the gas to purchasers along with estimated cost of remediation.

Note:  The City of Rockville has decided to rejoin the Montgomery County Commission on Common Ownerships communities, this time, in perpetuity.

Howard County search bills

Nothing pending.

Before you strike that match…!

October. Crisp, cool nights are a prelude to cozy winter evenings by the fire. However, unless you have a gas fireplace, there is more to know than you might think about using a fireplace.

The first and foremost concern is keeping the chimney clean. As wood burns, it can deposit creosote, a flammable tar, on the walls of the flue pipe. If it gets hot enough, these deposits will burn and a chimney fire is not unlike popping the window out of a jet plane. They’ll suck things out of the room and right up the chimney. Then, they are likely to catch the house on fire as they heat to very high temperatures.

Pine, like your Christmas Tree, puts off excessive amounts of creosote—never burn pine. Your best firewood is oak or cherry, aged for 6 months to a year. These very dry hardwoods minimize creosote formation.

Even when you burn the right wood and keep the fires at optimal temps, you will get deposits on your chimney liner or flue. Generally, for between $100 and $200, you can hire a company that will sweep the chimney clean, contain the soot so it doesn’t spread all over your home, and inspect the chimney flue, cap and damper for cracks and malfunctions. (Repairs would cost extra, of course.) Typically, it is recommended that you clean the chimney after 1-2 cords of wood. A cord is 4 feet high, 4 feet wide and 8 feet long. If you use your fireplace for a couple hours, 2-3 times a week during the winter, you will probably burn close to a cord. So, plan to clean the chimney every 2-3 years.

The Chimney Safety Institute of America has an excellent Homeowner-Resources section on its website. The site includes information on how to hire the right chimney sweep, how to get a fire going without smoking-up your room, and more information on cleaning your dryer vents and caring for your gas fireplace and your oil-fired furnace.

A Vivid Reminder to Clean the Gutters

By Chris Majerle

Autumn is upon us once again. With all the cool, crisp nights, the leaves start to change to an array of reds, yellows, browns and oranges. It’s gorgeous—for a few weeks; then those leaves are on the ground and in our gutters.

Some people like to compost leaves to create a fertilizer. This organic material turns to a black sludge as it decomposes. That’s great on your tomatoes, but not so much on your lawn or in your gutters. Think about it; we would never mulch where we want grass to grow. Mulch is placed to help keep grass from growing by creating an acidic soil and keeping sunlight from the grass plants. To preserve our lawns, leaves should be removed before they start to decompose. Some people like to use a mulching mower to grind-up those leaves and create a natural fertilizer. They still decompose and change the ph of the soil, so why would they purposely do this? But I digress; this post is about cleaning your gutters.

In the gutters, there is the added nuisance of standing water. If the gutters don’t tilt perfectly toward the downspout, water sits and the leaves sit in the water and they quickly become a gooey, smelly and disgusting mess. It’s probably not enough to clean gutters once each fall. Two or three times might help keep them from decaying to buy Viagra online

A leaf blower works great if the leaves are fresh and relatively dry. You can walk along the edge of a roof and quickly blow out leaves. This makes the process so easy that doing it a few times before winter is no big deal.

Clogged gutters are a real danger to your property. Aside from the fact that they may cause a waterfall right over your front door, they prevent water from draining. The accumulated water freezes in winter, and more water is added to the ice dam when the heat from your home melts the snow over your living space and the water re-freezes as it reaches the gutters. Eventually, the gutters can get so heavy that they simply fall off. Worse yet, they can block the flow of melted snow and cause it to back up under your shingles. As it freezes, it will actually lift the shingles and allow more water and ice under the shingles. When this melts, it will find its way to your ceiling.

Most leases require tenants to clean their gutters, and also make them liable for damage resulting from failure to do so. In HOAs, it is typically a homeowner responsibility. Condos often have common roofs and gutters, so it becomes the association’s responsibility. Gutter cleaning is a do-it-yourself job for some, but others prefer to hire someone else to do the dirty work. No license is required to clean gutters, but be sure the contractor provides an insurance certificate for liability and worker’s compensation. Remember, when a contractor works for you, you are effectively an employer and therefore responsible. When a contractor is properly insured, that responsibility shifts to the insurance carrier. Also, be sure you clearly define the job. The cleaning should include clearing downspouts and cleaning up all removed debris from the grounds, including shrubbery and garden spaces.

Bed Bugs: Point, Counterpoint, Ouch!

By Chris Majerle

As families return home in droves from summer vacation, they could be bringing freeloaders back with them: bed bugs. Unfortunately, once they’ve moved in and made themselves at home, it’s tough—and costly—to get rid of them. So whose job is it? Let’s start with a link to an article and an exchange between CAI member managers and one attorney, written in 2011 and 2012 for Common Ground, entitled “Bugging Out.”

In this article, what becomes abundantly clear is that it is not clear who is responsible for exterminating bed bugs in multi-family housing, particularly condominiums and HOA’s. From my perspective, the association should not get involved until the problem spreads from one unit to the next. Of course, one of the managers quoted in the article raised the issue that we have a duty to see that the problem does not spread. I disagree. With that argument, the association should fix your leaky sink because we have a duty to see that the water doesn’t spread to another unit. However, we respond only after the water spreads.

Water is one thing. We can see where it originates by following the wet trail up; yes, water only flows downhill (or sideways), but never up. Bed bugs can spread through walls, holes for wiring or plumbing, HVAC ductwork or under doors. The source is not so easily identifiable.

Where rental units are involved, the responsibility to exterminate varies from one jurisdiction to another. In Montgomery County, landlords are responsible in multi-family housing; the tenant in single-family. Often, the law permits the responsibility to be determined by the lease and many leases make the tenant responsible. Tenants should be aware that the mere fact that they live in a multi-family structure does not make the landlord liable. If the multi-family structure is a condominium, and that condominium board chooses to make the landlord responsible, the lease may shift that responsibility.

For condominium boards, it’s easy to assume responsibility when you’re spending other peoples’ money. Being proactive and responding to a lone report of bed bugs is just that—assuming responsibility for one owner with the money belonging to all. Frankly, we’ve experience many reports of bed bugs, but only a few actually were bed bugs. Sometimes the resident reports “bed bugs” because they’re in the bed, but they actually may have lice. If we respond and find that to be the case, we must now pay the exterminator (because we called) and try to recover the cost from the homeowner. (Good luck.)

From my perspective, it’s a homeowner/tenant issue until it extends to more than one unit. Then, we would require a licensed exterminator to document that we actually have a bed bug infestation. At that point, the association would take control and treat all adjacent units: beside, above, below and across the hall.

It’s admirable to want to help, but the board and management have a duty to see that common funds are spent on common problems and, until bed bugs affect more than one unit, it’s not a common problem—it’s a homeowner/tenant responsibility. We should not take action until we get that report from an exterminator and from another adjacent unit. Yes, in the end, it may be more costly to rid the building of the problem after it spreads, but it has been our experience that we would spend that much or more responding to false alarms.

As always, it is better to prepare with a policy before the need arises. Writing policy can take time, something we don’t have when a bed bug infestation occurs. Also, developing policy after the fact places names in the mix, whereas creating policy beforehand is impersonal and tends to be perceived to be more fair.

How do you budget for snow?

By Chris Majerle

Snow and other variables pose the most difficult of budget challenges. To some degree, the answer is, “Guess!” But, there is a better answer:  budget for the average. In the Washington-Baltimore area, we get about 17″ annually in 4 events. Of course, most of us recall 2010 when some of us got over 70″. We have had  years of abnormally-high snowfall totals and we have had others with almost none.

Skip this next paragraph unless you’re a weather nerd…

El Niños are measured in terms of Pacific temperature deviation from norm. NOAA has been tracking this only since about 1950, so the data is minimal and that could make the findings less reliable. NOAA says El Niño “tilts the odds,” rather than emphatically stating that it has an absolute effect. A strong El Niño brings lots of moisture to California, the South and the Mid-Atlantic, but if it’s too strong, it also brings warmer temps. A moderate El Niño is where we panic… lots of moisture, but not a lot of warm air.  A normal Pacific temperature variation would be 0 degrees.  2 degrees is considered a very strong El Niño. One of the strongest was January 1998 at a variation of 2.1, which resulted in DC getting 0.1″ of snow–our lightest snowfall since El Niño records have been kept. Our recent 2010 “snowmaggeddon” brought DC 56.1″ of snow with a moderate El Niño of 1.3. An exception was 1982-1983 when we had our second strongest El Niño and a 21″ storm that ranks in the top 10 for our region. Current forecasts for the coming winter are that this El Niño will approach or exceed 2.0. Unlike the usual strong El Niño, NOAA has us at a slightly greater chance of being cooler than normal, but right on the edge. (What else would you expect for DC?)

And, of course, if you trust in the Farmer’s Almanac, look out for a snowy winter!

What to do about it…

If you get in the practice of budgeting for the average AND you do not divert surplus snow removal funds to other areas, over time you will accumulate the funds to handle another snowmageddon. MMI recommends establishing a contingency (or operating) reserve fund for this purpose. In years of low snow expenditures, set-aside the excess in this operating reserve. Then, in years of extreme snow totals, draw on this fund to supplement your snow budget. Following this process will take the worry out of winter weather budgeting and the impact of severe winters.

But, what about the near term while you save? Although you can’t trust the weather forecast for the upcoming weekend, meteorologists keep trying to give us long-range forecasts. The current forecast, for an extremely strong El Niño, should give you a year of savings to start your operating reserve. We need to keep a close eye on the 2015/2016 El Niño and how it will impact our area. However, since you are likely budgeting now, you will not have the benefit of updated forecasting; you will have to go with what you have and that is this: long-range weather forecasting is totally unreliable, so you are best served by budgeting for an average winter.

Montgomery County on the Attack Against Landlords

Montgomery County Councilmember Elrich, together with co-sponsor Navarro, have introduced legislation that would make being a landlord in Montgomery County comparable to the District of Columbia.

For starters, bill 19-15 would require you to use a lease prepared by the County Commission on Landlord-Tenant Affairs, but we have to pass the bill to find-out what’s in it; the lease would be developed after passage and would be printed in a variety of languages. Are you comfortable signing a lease you can’t read?

Tenants would be granted a 2-day right of rescission after signing a lease, so you had better not let them move in immediately. Additionally, they will have the right to convert the lease to a two-year lease within 30 days after signing. While a two-year lease offer is currently required, this bill would extend the requirement to lease renewals.

Open your checkbook! Under this proposed law, the Commission would be able to empower the tenant to correct deficiencies, including making repairs, and to abate the rent for the costs incurred by the tenant.

The bill also provides for annual inspection of residential rental properties, a measure sure to raise license fees to rates comparable to other inspecting jurisdictions of $250 or more.

Finally, they are proposing the introduction of rent control. Guidelines would be published based on the CPI-U. Any increase that exceeds the recommended level by 100% or more would be subject to review. FYI: The CPI-U for the past 12 months was 0.2%. An increase of 0.4% would trigger an investigation.

The way this bill has been proposed fails to recognize several key issues:

  1. If your property is in a condominium or HOA and the assessments go up or you are levied a special assessment, you would still be held to the increase guidelines;
  2. If your property is in a condominium or HOA and the maintenance issue is in the common areas, does this law potentially grant your tenant the right to make repairs and to charge you?
  3. If your unit is in a cooperative building, co-op corporations own 100% of the real estate and you own stock. You are not generally permitted to make repairs. Does this law allow your tenants to do so and at your expense?
  4. Nowhere does it say that the tenant must use a licensed contractor, electrician or plumber. Nowhere does it say they must submit for architectural change approval to your association. Nowhere does it require the tenant to secure permits;
  5. Tenants would be allowed to deduct “reasonable” repair costs. When you come up against your tenant in court over what is reasonable, who do you think will prevail? And, under the law as written, it could be the tenant’s brother, boyfriend or mother who did the work and you are paying them. You would become their cash cow.

These Councilmembers are not done, yet. Rumor has it that they intend to propose life tenancies whereby a landlord can NEVER terminate a month-to-month tenancy without cause.

Montgomery County bill 19-15 is a bad idea. Other cities are seeing rents come down along with property values, so there is evidence that the free market works.  Montgomery County is imposing this horrendous set of laws on landlords with 85,000 when the problems are likely due to a few who do not fulfill their duties as landlords. Let the County Council know that you oppose the bill and do so in the next few days as the hearing is fast approaching.  Read Bill 19-15

Fire Sprinklers Save Lives, But It’s Hell When They Freeze!

By Chris Majerle

According to a National Fire Protection Association report, the risk of loss of life due to fire is reduced by 82% with a wet sprinkler system. In addition,
property damage is reduced by 68%. (Source: NFPA US Report Experience with Sprinklers.) The report further states that, in fires large enough to activate them, sprinklers function properly, on average, 87% of the time, wet systems being more reliable than dry. Saving lives definitely takes precedence over property damage, no question, so sprinkler systems are critical.

However, the report failed to recognize the damage caused by sprinkler system failures or freezes. As a manager, I would speculate that the property damage caused by sprinklers is far greater than the property damage reduction in fires because we see leaks maybe 20 to 50 times more than we see activation due to fire. For the sprinkler novice, I will try to explain more about sprinkler systems below. If you don’t need the primer, skip to the last three paragraphs.

There are two types of sprinkler systems: wet and dry. Both are fed water from the main water supply to the building. In a wet system, the entire piping system, right down to the sprinkler heads, is charged with water at all times. In a dry system, there is a device that stops the water and prevents it from flowing into portions of the system until a sprinkler head is activated.

The physiology of the system is that, when a fire occurs, the heat melts a block or breaks a glass tube at the sprinkler head allowing a spring-loaded valve to open. This releases the water to put out the fire. There is no shut-off valve. When the fire is out, the entire system must be shut down and the sprinkler head replaced before water pressure can be restored.

Dry systems are generally used where the pipes and heads are subjected to freezing temperatures such as attics, balcony ceilings or outside storage and utility closets. In a dry system, there is either a back-flow prevention device or a pressurized system where the air pressure closes a device (similar to a toilet flapper) to hold back the water. As long as the air pressure on the dry side is maintained, water flow is held back. But, if a fire breaks out or damage occurs to a sprinkler head, the pressure drops, the device opens and water flows. It takes only a few seconds for the water to reach the head. Once the fire is out, we must again shut-down the system, replace the head AND we must remove water and restore air pressure before that water can be turned back on.

All too often, buildings are built with wet systems where they should have dry. We frequently see sprinkler pipes in attics above the insulation so they do not receive any heat from the unit below. We see them in outside utility closets and even on balconies. These pipes freeze when temperatures drop below about 25 degrees. As we all know, in the mid-Atlantic, we often see temps below 20 for an extended time. There ought to be a law! (and you rarely catch me saying that): Wet systems should be outlawed for such uses in this area.

If you have a building with a wet system, separate from the domestic water, in an area exposed to cold temperatures, there is a solution. The water can be replaced with potable antifreeze. A glycol/water combination with a 20-below-zero mixture is suitable for this purpose. The process entails having a plumber remove ALL sprinkler heads in the affected areas and pumping the mixture into the pipes. The plumber will open another pipe in a warm area and look for the mixture to seep out, indicating that all water has been replaced. Then, the pipes are re-sealed, install the heads re-installed, and you have a protected system. In a fire, the glycol mix will come out of the heads first, followed by water. It is safe, if properly mixed. Otherwise, it could be flammable!

The cost of replacing the water with glycol varies depending on the length of pipes that must be filled and the number of sprinkler heads that must be removed to replace the water. It may not be necessary to fill the entire system as long as there is a way to ensure that all exposed pipes are protected. But, compare the cost of maybe $200 to $300 per unit to the cost of your $5,000 insurance deductibles, not to mention the personal property damage, potential for mold, resident inconveniences (putting it mildly) and the hit these claims take to your insurance ratings, and this may pay for itself in a year or two. The antifreeze replacement is a one-time expense, at least until a fire or sprinkler head damage causes a release. But that may be many years, or never. Talk to a plumber or sprinkler maintenance company if you want to consider such a measure.

Association Reserves Dwindling

Kiplinger Magazine, in an April 2014 article entitled Homeowners Associations are Short on Cash by Sandra Block, issue cites a report issued by consulting firm, Association Reserves, estimating that 70% of association-governed communities’ reserves are underfunded; an increase from 60% just ten years ago. What does this mean to common ownership community homeowners? It means an increased likelihood of large special assessments or the inability to make repairs to major components like roofs, parking lots and heating/air conditioning systems. While Block warns potential buyers of the importance of inspecting the association’s reserve study and financial reports, many of our readers find themselves already to be owners in those underfunded communities.

Knowing that your future buyer may be getting educated in how to avoid buying in an underfunded community should be a wake-up call to take action now. The common refrains are “We can’t afford to pay higher dues” and “Why should we pay more when others are not paying at all?” Ask yourself if you can live with a leaky roof or no heat. Ask yourself if it will be easy to sell when the community is obviously falling apart. Ask if property values will hold when the place looks shabby. The real question is “Can you continue delaying reserve funding while the property keeps getting older?”

As to carrying those who do not pay, it certainly is infuriating. But, we do that throughout American society. In theory, the rich pay higher taxes than the middle class, who pay something so the poor can pay nothing. We give to charities so others can have food, shelter and clothing. What makes this different is that our charitable recipients are owners who enjoy the benefits of buying Provigil online

We could go on for hours about what to do about this; make foreclosures easier, improve our priority lien for associations. The fact is that, in Maryland, our legislature is taking far more action to protect those who do not pay than those who do. In fact, when I suggested to Del Sam Arora (D) that it was time someone started looking out for those who pay, he told me to my face, “They’re not my concern.” So, until the economic news improves and the powers at be expect people to pay their own way, those of us who pay will carry those who do not if we want to live in safe, well-maintained homes and want to protect and enhance property values. We will fund our reserves so repairs can be made when needed. And, yes, it will be painful.

Chris Majerle, PCAM
Majerle Management, Inc., AAMC

Board Member Term Reset

From time-to-time, board member term expirations get lost or mis-understood and elections are conducted incorrectly.  Let’s look at a typical, odd number board (5) with staggered three-year terms.

The governing documents generally have some sort of provision for the first board to be elected with the members receiving the two highest vote counts getting 3-year terms, the next two 2-years and the 5th receiving a 1-year term.  From that point, forward, all newly elected or re-elected members receive a 3-year term.

Then it gets confusing.  A board member moves or resigns.  Sometimes that spot is filled; sometimes not. Then, an election is held.  But whose term is up?  How many “vacancies” are we filling.

The correct method of managing this is to track, not the people, but the positions.  If positions 1 and 2 are up for re-election in 2015, there are two positions up for election in 2015.  Whether they are filled at the time or not, those two positions are up for re-election.  If, at the same time, position 3 is vacant, that position is available to be filled by appointment (either by the board or by the president, depending upon the language in the documents).  Position 3 is NOT up for re-election by the members.

Assume only one person runs in 2015 and is elected to position 1, position 2 is now vacant, along with position 3.  A person appointed, later, to fill position 1 is up for re-election in 2018, no matter when appointed and a person appointed to fill position 3 is up in 2019, no matter when appointed.

Let’s say that position 3 is up for re-election in 2016 along with position 4.  But, a person was appointed to fill the vacant position 3 in early 2016.  That person, because he/she is holding position 3, is up for re-election in 2016.  The appointment was for the remainder of the position’s term; not for 3-years.

So, now you understand that each position is placed in the members’ hands every three years whether vacant or not and appointments to mid-term vacant positions are for the remainder of the position’s term, but that’s not how you have been doing it.  One way to correct this is to have the current board agree that ALL members will be up for re-election at the next election and they agree, beforehand, regardless of whether they or others are elected (the members should be notified in the annual meeting notice) they will hold a drawing immediately after the election to determine term lengths.  For a 5-member board, place 5 pieces of paper in a bowl numbered: 1, 2, 2, 3 and 3.  Each member draws a slip and that is the number of years they have on their newly elected position.  From then, on, all elections are for 3-year terms.  You have reset the election cycle and can now begin managing re-elections for proper staggered term expirations.