TEN TIPS FOR FINDING THE BEST DENVER PROPERTY MANAGEMENT COMPANY FOR YOUR HOA.
HOA management companies in Denver range from the mega, big-box companies to the Mom and Pop companies run by families. Regardless of the size of your association, you should understand the key differences in management companies and how to choose the best management for your HOA or condo association.
Here are ten things you should look for in an Denver HOA Management Company:
1. Find a Locally Owned Company. Working with a locally owned and operated management company means that all management decisions originate in Denver and not 800 miles away. Locally owned management companies are focused on the Denver market and their key vendor and banking relationships are right here in Colorado. Best of all, if you ever have a question or concern, you can personally visit and meet with the company and its highest executive officers and inspect any and all management records.
2. Make Sure Your Management Company Banks with a Colorado Bank. Banking locally means fewer errors in banking transactions and more efficient depositing of HOA checks without delays caused by interstate bank transactions or delayed mail processing times. It also means that if you ever have any concerns or a need to withdraw or move funds, you can do without any delay. If your property management company works with an out-of-state bank, you will have a longer turnaround and less access to records and money when you need it.
3. Find a Company That Delivers Financial Statements at the Beginning of Every Month. If you entrusting your company’s affairs to a management company, you have the right to receive timely and accurate financial statements every month. If your management company is not giving you full and complete financials by the 10th of every month, something is wrong. Either they are too big and inefficient, understaffed or lack the organization they should have to effectively manage your community. And make sure the financial statements include a Balance Sheet, Income and Expense Statement, Cash Receipts Journal, General Ledger and Check Register as well as copies of the actual bank statements. If the management company can’t provide you with all of these basic financial documents (and many cannot), there is something wrong and you need to find another company.
4. Insist on Complete Transparency. There is nothing magical about what management companies do and nothing should be secret from the Board. The Board should be able to request records and get them without a runaround. And the Board should be able to review every property inspection the company performs. Too many companies claim they do property inspections when in reality they whistle through the neighborhood on the way to Starbucks.
5. Make Sure You Get to Choose All Vendors. Management companies often have “sweetheart deals” with vendors that enhance their bottom line and cost the HOA more money. So when it comes to selecting vendors and soliciting bids, make sure you are able to direct what companies you want to receive bids from and that you make the decision of who to hire. If any management company tells you that they select all of the vendors, pack up your bags and run!
6. Be Realistic. Management companies deal on a very low profit margin. Think about what services you want and what you are willing to pay for. If you want weekly property inspections, you are going to pay a lot more than a neighborhood that wants monthly property inspections. But are weekly inspections necessary or reasonable? Most Covenants require that associations provide homeowners a minimum of 14 days to correct a violation. Weekly inspections would be an unnecessary waste of resources and would only increase the management costs.
7. Look at the Company’s Insurance Before Doing Business With Them. Is your HOA property management company insured to cover your association in the event of a loss? Do they have liability insurance in case they hit the front entrance sign on the way into the neighborhood? Do they have an umbrella insurance policy just in case? Do they also have fidelity coverage in case one of their employees steals from the association coffers? Do they have workers compensation coverage in case one of their employees is hurt on the job? If not, you probably need to find another management company.
8. Beware of the Big Boys. Bigger management companies often have longer response times and more “red tape” to deal with. If a Denver property management company has to refer your question to someone else in the company or can’t get a bill paid within five days of receiving it, you are going to be frustrated dealing with the company and the delay in response time is ultimately going to cost you time and money. Also, lack of service and delayed responses put your Denver HOA, High Rise or Condo association in situations of extreme liability. If problems concerning the health and well being of the public, let’s say a tripping hazard or leaking roof in a community center, aren’t addressed immediately the cost and liability associated with the problems rise exponentially.
9. Meet the Company Representatives. You will never get a true sense of what a management company does and how companies differ from one another until you meet with representatives. If all you are doing is collecting bids and comparing prices, you are missing the boat. If the management company representatives aren’t “liable,” when you meet them, they sure aren’t going to get any better when they talk to homeowners. And make sure they are willing to return all phones, not just calls from Board members, from all homeowners within 24 hours. Many companies will give “A+” service to Board members and “D-” service to the homeowners.
10. Visit the Company Offices Before You Decide. Worried about who you are doing business with? There is no better way to get a sense of how your management company operates than by a personal on site visit. Is the office clean, neat, professional and organized? It should be if that is how they conduct business. If the office is a disorganized mess with boxes piled everywhere and papers scattered in a heap, you may want to choose another management company.
Choosing the right management company for your HOA or condo association can seem like an overwhelming task, but it doesn’t have to be. As board members, take your time and don’t make a knee jerk reaction. You know that you have a company that isn’t getting the job done if you are considering changing, but consider what is best your community. The HOA management or Condo Management you choose should offer the right amount of services for your community for the right price. Most importantly they should have some ideas for helping improve and maintaining your property values, because ultimately, that we are paid for.
If you feel your community is ready to make a change, take a few seconds to inform us about your community so we can sit down and explain how we can make your HOA a better place to call home.
“Collecting Dues In Tough Economic Times ” Event Hosted by Accord Property Management
Guests of this event were able to learn factors that contribute to successfully collecting, even in difficult economic times.
First, the Association needs to have a clear and firm collection policy. A community association is a business. Even though it is likely a non-profit organization, it has bills to pay. If the association’s members don’t know a specific date by which payment is due, it is unlikely that payment will be received in time for the association to pay those bills. To encourage timely payment, non-payment by the required date must be attached to very real, disclosed consequences. Normally, this means late fees. While it would be nice to think that association members pay their dues on time because they value what their association does for them, and they want to make sure the association’s contractors and bills get paid on time, the reality is that more people pay on or just before the “deadline” for avoiding late fees. If that deadline doesn’t exist, or if there is no consequence to paying after the scheduled payment date, experience says that the payments won’t be received. Similarly, the consequences should not be easily reversed, or they represent no consequence at all.
The results of non-payment need to be meaningful. If you don’t pay a credit card bill on time, your interest rate might climb significantly. You will also pay a late fee, and your credit score might drop. These consequences make people prioritize paying credit card bills on time. Fears of foreclosure and repossession help owners prioritize mortgage and auto loan payments. Without a meaningful consequence flowing from the non-payment or untimely payment, association dues will always fall to the bottom of the payment priority list. What is meaningful in terms of dollar amount and percentage rate will vary from community to community, and frequently deed restrictions and condominium declarations establish amounts and rates in advance. Where a Board can really make a difference, is making sure it acts on delinquencies by filing liens or lawsuits to protect the Association’s right to collect, and affirmatively work to turn receivables into cash.
A recurring debate exists regarding whether an association is better served by filing liens or filing lawsuits when members become delinquent in their obligations. That discussion is better saved for a later article, but suffice it to say that, once a Board adopts one policy or the other (or a blend, as I would recommend!), that policy should be followed with few exceptions. To avoid harshness that should not be necessary in running a community association, Boards should be flexible in allowing members to enter into payment plans, especially in associations that collect dues on an annual basis. Communities that collect dues monthly may have a more difficult time structuring payment plans, but if the member is willing to make a bona fide proposal in good faith that results in dues being paid in a reasonable period of time, everyone benefits from a workout that avoids expensive and time consuming legal processes.
Association assessments, like taxes, should be paid by everyone. No one’s dues should be artificially high, just to cover for the people who don’t pay. The ability of a community association to keep dues at a fair amount, and to actually collect from the highest percentage of owners possible, will be enhanced even in a bad economy, by (i) having and implementing a serious collection plan, (ii) having meaningful consequences that flow from non-payment, and (iii) by taking appropriate legal actions that force payment or protect the association’s ultimate right to collect from people who don’t make payment or reasonable payment arrangements.
Thank you to all Guests how was able to attend this learning seminar. Please email us at RSVP@ACCORDHOA.COM if you would like to be notified about upcoming events. Thank you.
Things You Must Know about HOA Insurance Policy
A homeowners’ association or HOA elects board of directors for proper management of the community. Board Members and Property Management Company are responsible for enforcing policies of the association related to property maintenance, administrative functions, repair problems and other key issues. They also make the annual budgets for insurance coverage of the association.
Things You Must Know about HOA Insurance Policy make sure your association has the following policies to adequately protect you and the association:
•Commercial auto (hired and non-owned)
•Fidelity (crime or employee dishonesty)
•Workers’ compensation (optional)
If you are a Board Member looking for a suitable HOA/Condo insurance policy, PELITON can help. They specialize in insurance for Homeowners’ & Condo Associations. They can help you select the correct policies that are “Targeted for your association.” They will make sure you get the right types of policies with proper coverage. They are passionate about their work and help community managers and board members make informed decisions.
HOA ASSOCIATION FEES
What are Homeowners Association (HOA) Condo Fees?
Homeowners Association (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs. HOA fees are typically paid monthly and run on average from $100-$700 per month – these are indeed estimates, and can vary depending on many factors (especially if there are higher-end amenities being provided via the HOA fees such as a concierge, pool, fitness center, or valet). Fees are normally set by the HOA's board of directors and adjusted annually – oftentimes, an HOA board of directors is simply all the homeowners in a complex or building, if it is small, or if there are a large number of owners, the board of directors is typically elected by all homeowners. Any excess HOA fees that exist after paying for pertinent services as described above are stored in an account and called reserve funds.
What are Condominium Special Assessments?
Occasionally, Homeowners Associations need to levy what are called special assessments. Special assessments are a one-time expense that the building (or more appropriately, the homeowners) needs to pay for, such as significant maintenance or repairs (i.e. a new roof for the building, façade brick repainting, etc.). Low monthly HOA fees, or inadequate reserve funds, have the potential to lead homeowners into a situation where a special assessment is necessary to cover large expenses.
Factor HOA Fees and Special Assessments into your Condo Purchase
When purchasing a condominium, HOA fees, as well as the status of special assessments, need to be factored into the purchase price and ongoing cost of living. Make it a point to review existing financial information for the building, including reserve fund levels, and special assessment information, when buying a condo.
Are HOA fees tax deductible?
The Internal Revenue Code does not provide for a deduction of homeowners association fees. Since these fees are charged by a private company or association, rather than a state or local government, these fees are not deductible.
What is deductible if I own my condo?
Although your HOA fees aren't deductible, your condominium can provide you with other valuable tax deductions. You may deduct any real estate taxes that you pay on your condominium. Additionally, any interest you pay on your mortgage and mortgage interest premiums are deductible on your personal income taxes.
What if I use my condo as rental property?
If you own a condominium and you use it for rental property, you may then deduct your HOA fees because it would be an ordinary and necessary expense of running your business. You may also deduct other rental expenses, such as insurance, repairs, taxes, utilities and legal fees. If your condominium has a special assessment, you may not deduct those expenses; however, you may be able to take a depreciation deduction.
Independent Contractors: Frequently Asked Questions
Working with an independent contractor generally relieves employers of certain obligations, such as requirements relating to employment taxes, minimum wage, overtime, benefits, and workers' compensation insurance. As such, some employers may improperly use the classification to avoid expenses that result from hiring regular employees. In recent years, federal government enforcement agencies have been focused on recouping those dollars.
Given heightened enforcement, employers need to be acutely aware of the narrowly defined criteria for independent contractor status. However, determining whether a worker is an employee or independent contractor can be complex and is a common point of confusion among employers. The following are some of the most frequently asked questions related to independent contractor classifications:
Q: What are independent contractors?
A: In general, independent contractors are self-employed individuals in an independent trade, business, or profession who offer their services to the general public under a contract or agreement. However, whether workers are independent contractors or employees under federal or state law depends on the facts in each case. In general, the determination is based on the degree of control the business has over a worker. The more control the business has over the individual, the more likely that individual will be perceived as an employee and not an independent contractor.
Q: What are the penalties for misclassifying employees as independent contractors?
A: Federal and state enforcement agencies have made worker misclassification a top priority, and the consequences for misclassification can be significant. In addition to owing back pay, overtime, and benefits to a misclassified worker, the employer may be ordered to pay back taxes, interest, and fines. In some states, employers that intentionally misclassify a worker may also face criminal charges or stop-work orders.
Q: How do I determine if a worker is an employee or an independent contractor?
A: A worker is presumed to be an employee unless he or she meets specific criteria; the specific test used depends on the purpose. For example, the Internal Revenue Service (IRS) uses a Common Law Test to determine whether a worker is an employee for federal tax purposes. There are also other tests, including those used by the Department of Labor, the Equal Employment Opportunity Commission, and several states. While each test is slightly different, there are some common elements. Each looks at: (1) whether or not the business has the right to control the worker; (2) whether the worker's services are an integral part of the business; (3) the permanency of the relationship; and (4) the worker's investment in facilities, equipment, and tools. You should carefully review each test and consult legal counsel before classifying any individual as an independent contractor.
Q: What is the IRS Common Law Test?
A: The IRS Common Law Test is the most commonly used test for determining independent contractor status. It has three parts that examine factors related to behavioral control, financial control, and the type of relationship between the business and the worker (covered below).
Q: What factors are considered when looking at behavioral control?
A: The first part of the IRS test examines whether there is a right to direct or control how the worker does the work, including the type of instruction given (e.g., when and where to do the work, what equipment to use, what order or sequence to follow, etc.); the degree of instruction (detailed instructions indicate the worker is an employee); evaluation systems (measuring how the work is performed rather than the end result is an indication of a employee/employer relationship); and training (which indicates the employer wants the job done in a particular way and is strong evidence of an employer/employee relationship).
Q: What factors are considered when looking at financial control?
A: The second part of the IRS test looks at factors that show whether the company has a right to direct or control the financial and business aspects of the worker's job, such as how the business pays the worker and the extent to which the worker has unreimbursed business expenses. When compared with employees, independent contractors are: more likely to have unreimbursed business expenses; make significant investments in tools and facilities; make their services available to other businesses; realize a profit or loss; and are more likely to be paid a flat fee or on a “time and materials” basis.
Q: What factors are considered when looking at the nature of the relationship between worker and employer?
A: The third part of the IRS test looks at facts that show how the worker and business perceive their relationship, such as whether there is a written contract describing the relationship, the extent to which the worker is available to perform services for other businesses, the permanency of the relationship, the extent to which services performed by the worker are a key aspect of the business, and whether or not the worker is entitled to employee-type benefits.
Q: Is there a set number of IRS factors that must be met to classify a worker as an independent contractor?
A: No. Under the IRS test, there is no set number of factors that must be met, and no one factor stands alone in making the determination. An employer must weigh all factors and take into account other applicable tests when determining whether an individual is an employee or an independent contractor.
Q: I gave workers a 1099. Does it mean they are automatically independent contractors?
A: No. A common misconception is that a worker's classification is determined by whether a Form 1099 or Form W-2 is provided to them at the end of the year. The reality is the classification determination must always be made on the basis of whether the worker meets the specific criteria for an independent contractor established by the applicable federal or state law.
Q: Can I lay off employees and bring them back as independent contractors?
A: As mentioned above, if the requirements of federal and state tests for independent contractors are not met, the worker is an employee, regardless of how you characterize the relationship. Simply reinstating an employee and calling him or her an independent contractor is not going to change his or her status as an employee. Unless the nature of the relationship changes so that it satisfies the tests, the worker would still be your employee.
Q: Can a worker waive his or her right to be considered an employee and opt to be a contractor?
A: No, a worker cannot waive his or her employee status through a contract or otherwise. Again, the specific criteria of the independent contractor tests must be satisfied to classify a worker as an independent contractor. Otherwise, the worker is an employee, no matter what a contract or waivers says.
Q: How long can an independent contractor work for me?
A: While there is no specific limit, a continuing relationship between the business and worker is considered an indication of an employer/employee relationship. Since the relationship can change over time, if and when contracts are renewed or extended, review whether the worker still qualifies as an independent contractor.
Q: What are my options if I have applied the tests and I am still unsure whether a worker is an employee or independent contractor?
A: When in doubt, seek legal counsel or err on the side of caution and classify the worker as an employee. You may also request an official determination from the IRS using Form SS-8. Keep in mind, however, that it ordinarily takes at least six months to get an IRS determination.
Q: What are the paperwork requirements for independent contractors?
A: If you've made the determination that the person you're paying is a bona fide independent contractor, you should have the contractor complete IRS Form W-9. This form can be used to request the correct name and Taxpayer Identification Number of the worker. The Form W-9 should be kept in your files for four years for future reference in case of any questions from the worker or the IRS. Additionally if you paid a bona fide independent contractor $600 or more for services provided during the year, you need to complete IRS Form 1099. A copy of the Form 1099 must be provided to the independent contractor and IRS.
Federal and state laws establish the criteria for classifying workers as independent contractors. Employers should carefully review and apply appropriate tests before classifying any individual as an independent contractor. Independent contractor relationships should also be reviewed periodically to determine if reclassification is necessary.
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