Condo Media - January 2023 - 40

Best Practices Advice
Best Practices 101
Tips for Association Boards
[By Gary M. Daddario, Esq., CCAL]
This month's focus is on best practices for association boards which offers a wide spectrum of matters
on which advice may be provided. I have found the following best practices over time serve associations very well.
1
KNOW YOUR
ASSOCIATION
DOCUMENTS
The very creation of your association
occurred, in part, as a result of the
drafting of your governing documents.
Those documents are intended to provide
for the governance of your association
on an ongoing basis. True, not all condominium
documents were created equally.
Upon careful review, some suffer internal
inconsistencies and others mysteriously
fail to address certain aspects of the property.
Also, from time-to-time, age and the
modernization of society require upgrades/
amendments to the governing documents.
Still, none of these issues would be discovered
without a review and working knowledge
of your documents. More importantly,
the proper administration of the everyday
business of the association must be accomplished
in compliance with your governing
documents (as well as existing law).
A working knowledge of the governing
documents is necessary to perform your
duties as a board member or a unit owner.
40 CONDOMEDIA January 2023
2
BE INSURED FOR WHAT HAS OCCURRED
When your association suffers a casualty loss, the ability to smoothly
and fully recover depends in large part on your insurance coverage.
I have seen the spectrum from happily rebuilding following a loss to being
millions of dollars short. There is no substitute for having the right coverage.
Having the right coverage is not necessarily one in the same with buying the
cheapest policy. I recommend having a meaningful meeting with a reputable
agent to discuss the coverage your property really needs, as well as the buyouts
of certain exclusions or riders for certain coverage that can really make a
difference when a tragic event occurs.
3
DON'T BE RESERVED ABOUT RESERVES
Building components do not last forever. Ironically, those that serve
us the longest (e.g., furnace, roof) are often the forgotten ones because
they have such lengthy life spans. The problem, of course, is that when they
need replacing, it must be done without delay. And the expense is significant.
It is really a pay now or pay later scenario. By building and maintaining adequate
reserves over time, an association can alleviate the financial pinch that comes
from needing significant projects and lacking the funding. The alternatives are
so-called " special " assessments or loans. Both are typically objectionable to
unit owners and even potential lenders and purchasers. Federally-backed
mortgages, now estimated to be up to 40% of the mortgage market, require
that reserves receive deposits equivalent to 10% of an association's overall
budget. Properly budgeting and setting aside reserve funds is easier than
facing situations in which reserve funds are needed but not available.

Condo Media - January 2023

Table of Contents for the Digital Edition of Condo Media - January 2023