Law & Logic of Homeowner Association Capital Reserves

In October 1999, Oregon was one of the first states that enacted a significant improvement to its Condominium and Planned Community regarding capital reserve planning, a process by which homeowner associations plan and fund future repairs and replacements. For many associations, the process became mandatory although there was an "escape clause" for pre-October 99 Oregon communities.

But there's more to reserve planning than The Law. Where statute stops, the Board's "fiduciary" duty kicks in. A "fiduciary" is one who is given the trust or confidence of another. The Board is entrusted with care of the biggest single asset that most people own, their homes. These people have the right to expect the homeowner association to be run like the business that it is...a corporation often responsible for millions of dollars in assets.

The reserve study concept was developed during the 1980s as a result of the many aging homeowner associations that found themselves in dire straits due to failure to plan for reserve expenses. The homeowners expected the Board to plan for such events and all too many had no plan other than "dealing with it" when the time came. Well, those "times" came all too soon and inevitability lived up to its reputation. Thus, the obvious need for long range planning came about.

Reserve studies analyze and predict the cost and timing of future repairs of association maintained components like roofing, pools, paving, landscaping, painting, fences, decks and other items that have a useful life of between 3 and 30 years.

The typical condominium association has between 15 and 30 items that fall under the "reserve" definition. When the repair costs of these 15-30 items are added up, it usually amounts to hundreds of thousands, even millions of dollars. This is not chump change. It takes careful planning to accumulate the funds plus know how and when to spend it. That's what reserve planning is all about.

Reserve plans require all owners to pay a monthly share of future repairs and replacements. These payments pay for assets that are being used up. If an owner sells, the next owner picks up the monthly share. All owners pay a fair share and no more special assessments! This is as it should be. If you've been thinking there's a better way to manage association assets, there is: It's called a Reserve Study. Whether by law or logic, it's time your homeowner association started doing business like a business.

Neda Dabestani-Ryba is a licensed Realtor in Maryland. She is a member of the President's Circle of Top Real Estate Professionals. She can be reached at (800) 536-3806 or visit her website for more information: http://neda.dabestani.pcragent.com/

Prudential Carruthers REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

More than 40 states signed onto a proposed $25-billion deal with major mortgage servicers over faulty foreclosure practices. New York, Nevada and Delaware joined California in holding out for better terms.

More than 40 states signed onto a proposed $25-billion settlement with major mortgage servicers over faulty foreclosure procedures, but California, New York and other key states were still not among them.

California has until Monday to share in a multi-state deal with banks to obtain mortgage relief and reforms. Atty. Gen. Kamala Harris, who walked away from talks last year, says the door remains open.

With a Monday deadline at hand, California officials have resumed direct talks with the Obama administration about joining a multibillion-dollar, multi-state mortgage settlement with the nation's largest banks, a source said Sunday.

The talk show host pays $12 million for the 4,088-square-foot house with four bedrooms and four bathrooms. The ocean-view home sits on 1.26 bluff-top acres with beach access.

In one of the more talked-about transactions in town, actors Brad Pitt and Angelina Jolie have sold their Malibu beach house to daytime host and comedian Ellen De Generes for $12 million.

The four-bedroom, five-bathroom house built in 1920 for industrialist James Wigmore lists for $2,875,000.

A decorative cast stone entrance opens to this restored Spanish Colonial Revival-style house in Pasadena's South Orange Grove area. Built in 1920 for industrialist James Wigmore, the house retains such original details as coffered wood ceilings and arched doorways.

They don't believe they can sell their property for what it's worth, so they're spending money on making their homes more comfortable.

Do you fit any of these descriptions?

A biennial research report by the National Assn. of Realtors indicates that a handful of real estate agents and brokers and their clients either don't know the law or don't care to follow it.

When it comes to lawsuits, real estate agents and brokers tangle mostly among themselves.

The president aims to help about 3.5 million people with good credit who are unable to refinance at historically low rates because their homes are worth less than their mortgages.

 

The White House hopes to help millions of homeowners lower their monthly mortgage bill with a $5 billion to $10 billion plan to set up a streamlined refinancing program for people who are current on their payments.

The Standard & Poor's/Case-Shiller index of 20 large U.S. cities fell 1.3% in November from October as foreclosures continue to drag down the housing market.

Three straight months of home-price declines in the biggest U.S. cities showed that foreclosures remain a significant drag on a housing market that is entering its fifth year of deterioration.

L.A. Clipper Chris Paul may be quick down the court, but he moves pretty fast when it comes to buying multimillion-dollar real estate too.