If your Board has done its job well, the annual budget has been thoroughly researched, has properly anticipated the common area expenses, and is providing for reasonable reserves. In today's economy, the Board has most likely tried to keep the budget as lean as possible while still including a little extra in the event that unanticipated expenses come up, as they always do! For example, who would've thought that most snow removal line items for the 2007/2008 season would have doubled or even tripled over recent years?!

All Associations count on the funds generated by the monthly assessments from every unit-and special assessments, if applicable-to pay for the services required to properly maintain the Association. If one or more units don't pay on time then, depending upon how lean the budget was to begin with, lost income could be detrimental to the Association. Collection problems often create a shortfall that could result in unpaid bills, late fees, service interruption and/or special assessments to the remaining owners. And, for a prospective buyer, a high delinquency rate may create concerns of mismanagement resulting in their "business decision" to purchase in what may appear to be a more financially sound property.

Understanding the collections process, the rights of an Association against delinquent owners, the role of the Board/Management, and how to work the most efficiently with the Association's attorney are crucial in helping to protect the Association from lost income.

Robert P. Nesbit, principal of the Law Offices of Kovitz Shifrin Nesbit, has provided us with the below article to help explain the process. You may also click on the above graphic to learn more about his credentials.

Understanding the Collections Process is only one aspect of how to protect your Association from potential lost income. It all starts with efficient Rules & Regulations and Unit Sales protocols. Creating proactive procedures-and consistently enforcing them-is one way to ensure that your Association is a step ahead of unknown financial problems that your unit owners may be facing.

As a Board member, it may be very difficult NOT to be compassionate if you hear that a neighbor lost his/her job, is getting divorced, is on a fixed income, or is facing other financial hardships. That said, the Board has a fiduciary duty to protect the Association and all unit owners. If you are late in paying your mortgage, does the bank call you with a friendly reminder?! The Board must remember that it is managing a corporation and business decisions must be made for the betterment of the Association and not based on emotion.

Concise Rules & Regulations, properly adopted, can help in this manner including the clarification of late fees, collections policies, and procedures for selling a unit. For example, depending on the language of the Declaration, many Associations include language in their Rules that assessments are due on the 1st of the month, a $25 late fee is automatically assessed after the 15th, and it is turned over to the Association's attorney after 60 or 90 days of non-payment.

But, having Rules & Regs in place are useless if not enforced consistently. If a unit owner is not paying their assessments, they may not be paying their mortgage and the Board/Management must protect the Association. Following the Collection of Delinquent Assessments information as noted above will help to avoid lost assessments; however, with the rise of bankruptcy and foreclosures, even if an Association does everything by the book, lost income can still occur.

Understanding the new foreclosure laws and the legal process an Association must follow to recoup unpaid assessments will help a Board diminish its potential losses.

Allan Goldberg, partner at Arnstein & Lehr, has provided the below article to help navigate the Association's options in the delinquent owner's foreclosure. You may also click on the above graphic to learn more about his credentials.

You may or may not know that, of the 90 hours of coursework to obtain a real estate license, only about 45 minutes is devoted to condominium, townhome or community association information despite the fact that this is one of the most rapidly growing sectors of the real estate market. In our quest to help Realtors® work the most efficiently with associations and help them to educate their clients on how to select the best investment to meet their needs, we are pleased to again provide Part 2 in our condominium series for CAR's Member Profitability Programs in the Fall:

Selling Condos & Townhomes... Save Time & Facilitate The Sale! Topics will include: Illinois Condominium Property Act (ICPA) overview; 22.1 resale disclosures; the new ICPA foreclosure laws; how to work efficiently with associations-whether self or professionally managed; association vs. homeowner insurance; and, how to recognize a problem property and better investment.

The schedule is currently being confirmed for the Fall. The Events & Seminars page of our website will be updated once finalized and the dates and locations will be included in our next newsletter. You can also check the CAR website by clicking on the link above.

Included in this newsletter are just a few examples of how to run your Association like the corporation that it is to help decrease liability and increase efficiency. Regardless of the size of your property or if you are self or professionally managed, if your Association doesn't understand or follow proper condo protocols, then perhaps you'd benefit from our services! We've serviced over 70 associations ranging in size from 3 to 700 units and have trained management company staff. Below are just a few ways we can be of help to your Association....

Project & Loan Management Do you have projects that haven't been implemented yet but need to be? Is your volunteer Board or property manager too busy to research and implement the required pending Projects? We can act as an extension to Management or the Board to assist with your projects from Criteria and RFP development to Vendor Pre-Qualification & Selection to Loan or Special Assessment Guidance and thru Project Completion.

Board Training & Developer Turnovers Are you a new Association starting up after a Developer Turnover? Or an existing Association that may not be working as efficiently as it could? Is your Budget realistic to meet the specific needs of your property, including setting aside "reasonable" reserves? Do you have Rules & Regulations in place to assist the Board in ensuring that all owners are treated equally and the community lives harmoniously? Do you have an Annual Calendar that includes all important administrative, financial and operational deadlines to ensure important items are not forgotten? We can customize a training package to meet the specific needs of your Association, whether self or professionally managed.

Refresher Courses are now being offered to our past training clients. This is an excellent way to review past action items lists, bring new board members up-to-speed with how to efficiently and accurately manage your Association, and to ensure everyone is on the same page and to avoid board member burnout.

"Do-It-Yourself" and "Management Coaching" Retainers are designed to provide on-going assistance to our self-managed Boards to encourage annual compliance with the Illinois Condominium Property Act, increasing efficiency and decreasing Board liability. Various service levels are offered on a monthly, quarterly or annual basis.

Management Searches Are you a start-up Association after the Developer Turnover looking to find new management? Or, perhaps your current management company may not be fulfilling the expectations of the owners, and the Board has exhausted its options trying to rectify the issues? We can assist by guiding the Board on the proper due diligence needed to help them make the most informed decision. Services include: Needs Analysis, RFP Development, Pre-Qualification, Interviewing, Contract Negotiations and Transitions.

What makes AAI different? We provide customized training designed for your specific association's needs, prompt responsiveness, and practical information to help empower the Board. Can you afford our services? Can you afford not to have them? Your home is most likely one of your biggest assets. We can help you save time, money and frustration while protecting and increasing the value of your property in today's very competitive market!