Archive for May, 2010

Condo Poop Patrol–How do you Control Messy Pets in Condos, Co-Ops and HOAs?

Monday, May 24th, 2010

So let’s admit to begin with that it’s very hard to be taken seriously when you’re talking about poop–but it’s a serious issue for millions of people around the country who live in Shared Ownership Communities and like to live a dog-doody free lifestyle.  This is not going to be a blog about banning pets from condos.  I’m a dog owner, I love pets, and while I respect the right of those who wish to live petless to do so, I don’t expect it to be the norm.  But what I don’t like is going down to my community’s dog-walking area and finding it layered in other dog’s excrement.  Many who live in pet-friendly condos have the same problem; and in HOAs, the problem expands to people’s front lawns.  And lest you assume that this issue is trivial, note that a lot of neighbor battles, even violent ones, can be traced back to disagreements over picking up poop.

First of all, for the small percentage of people who fail to understand why dog poop is an issue, or think that it’s too trivial to deal with, dog poop is not nice stuff.  It attracts scavengers, it can contain worms, it smells bad and it’s a terrible mess to get out of your shoes, your children or, worse, your dog’s fur (how many of us have seen our dogs rolling happily in the grass, only to find that they decided to coat themselves with another dog’s poop?  It’s gross, but it happens all the time).

To start, nearly every condominium, co-op or HOA that allows pets will have some kind of clause in their documents that requires owners to clean up after them.  If by some chance your community doesn’t have a rule that says that owners must pick up after their dogs, consider your nuisance rule as a possible tool to deal with owners who cannot be bothered to bend.  However, it would be far more effective and clear for your board or membership to simply pass a new rule that requires pet owners to pick up after their animals.  Honestly, I can’t think of a single responsible pet owner who would disagree with such a rule (though, as you’ll see below, such people clearly exist).

However, having a rule in place is only a tiny fraction of the enforcement conundrum, as a large portion of people will simply ignore the rule.  I’m frankly not sure why this is–I would assume that everyone prefers walking their dog in an area without crap on the ground, but apparently that’s not a universal opinion.  Some people are physically unable to pick up after their pets, so choose not to; some people honestly believe that it’s not their responsibility; some are house workers who simply don’t care enough about the community to comply; some are just lazy and don’t like to bend over.  Whatever the reason, it’s a disgusting problem that exists in every single pet-friendly SOC in one way or another, so managing the problem is a paramount, universal issue that’s going to come down to enforcement.  Here, then, are some tools that you can use to combat the poop problem.  First you have to catch the violator, then you need to decide on an appropriate punishment.

1) Registration/Tags:  The first problem you need to deal with is determining which dog owners are the common violators, and that requires knowing which dogs are allowed to be on your property, and which ones are not.  It’s a minor inconvenience to ask owners to register their pets with the association office.  Ask for a photo of the pet, and place it on a page with the pets breed, color, and contact information for the owners.  You may also want to consider requiring owners to put a visible neighborhood tag on the dog’s collar (and we’ll get to why in a moment).  Now, some people will certainly resist the requirement to register their pets.  Some are probably violating association rules regarding number or type of pets (because every single community has SOMEONE violating those rules), some don’t feel it’s anyone’s business what types of pets they have, and some are simply to “busy” to take the time to register their pets.  But be persistent.  Registration of pets is one of the first lines of defense against disrespectful owners (and yes, owners who refuse to pick up after their dogs are disrespectful–disrespectful to other owners and to their neighborhood.  There’s just no two ways about it.)

2)  Enforcement:  This is where the real trick comes into play–how do you catch people not doing something?  Before anything, start with the obvious options.  Place a “reminder” flyer in a prominent place, asking residents to pick up after their pets.  Send out an email or letter if appropriate, as well.  Explain in the flyer or letter the negatives of dog poo (and yes, some people do need to be informed that there are negatives).  See if making owners more aware of the problem can help improve compliance.  Fair warning though–it rarely does.

After that, if you have security in your property (especially if it’s a condo) they should be instructed that people who they witness not picking up after their pets should be stopped, asked to pick up, and if they refuse, their name and unit number should be recorded (or, if they’re trespassers, they police should be called).  Many security guards will ignore an issue like this, thinking it’s outside of their purview.  But condo and HOA security guards are not simply there for “security”, they also need to be able to identify basic rules violations as well.  So if your community is having a repeated problem, make sure that management is specifically directing security to keep an eye out for violators.  This, by the way, is where dog tags become useful.  It enables a security guard, at a glance, to make sure the dog is authorized to be on the property, and if needed to check the unit number for future enforcement.  Second, you may want to add cameras to the typical dog-walking areas.  These cameras don’t need to be monitored 24/7, but they should have some recording capacity (a few days at least) so that if an acute problem begins to develop they can be reviewed for compliance.  You will often find that the same few people are constantly breaking the rule, over and over, and may not stop until there are consequences.  If you don’t have cameras or security, consider getting together all the responsible dog owners and asking everyone to keep an eye out for poop pick-up violators.  A “neighborhood watch” type of arrangement may be your only defense against the mess.

And for the really technologically advanced, here’s a new tool in the aresenal.  It was recently reported that a condo in Massachusetts is considering DNA testing dog poop to figure out whose dog left the mess.  Apparently, we are seeing the genesis of a new TV hit–CSI: Dalmatian.  You can read more about this story here:  http://news.discovery.com/animals/pet-dna-calls-out-poop-scoop-offenders.html

3)  Punishment:  It seems silly to be talking about punishing people who won’t pick up after their pets–you’d assume that all people would be willing to comply with this simple, neighborly step of pet ownership.  Unfortunately, in the real world that’s often not the case.  Even after reminding people to pick up after their dogs, even after catching them in the act, a number of people will simply not pick up poop, thinking that the job is beneath them or that it’s not their responsibility.  So your association may have to resort to punishing them to get the point across.  There are three main threats that can be used against owners:

Embarrassment:  For some reason, condos and HOAs have no problem using embarrassment as a tool against non-paying owners (publishing a list of delinquents for everyone to view), but embarrassing people about violating other rules is often viewed as unreasonable.  That said, if you want to try it, you can consider a simple policy of posting flyers in the mailroom, stating something like “please remind Mrs. Jones to pick up after her dog, Champs.”  While I’ve never tried this in my own community, my gut feeling is that it’s far more effective to call people out on a simple, easily correctable issue, like picking up dog poop, than convincing them to pay their maintenance.

Fines:  The main enforcement tool available to SOCs is fining owners for rules violations.  A typical fine is $100 per occurrence.  But what are you going to do when they don’t pay the fine?  Are you going to put a lien on their property for a dog poop fine, or even foreclose on the unit?  Most states will not let an association foreclose for non-payment of a fine, so this often becomes a toothless threat, as the fined owner knows there are no consequences for non-payment.  Still, some owners will be willing to pay fines, and the threat of fines do have at least some deterrent effect.  And even if the fine is never applied, the simple act of bringing an owner in front of the grievance committee may be enough to convince them to pick up after their animal.

Doggie Exile:  This is certainly the most extreme remedy, but for repeat offenders you may have no choice.  Most pet-friendly documents have a provision that allows the association to expel the dog from the community if it becomes a constant nuisance (usually due to violent behavior or constant noise and barking).  Still, a board could easily argue that a pet who is never picked up after is a nuisance, and may not live in the neighborhood.  Now, pretty much any pet owner will respond to a threat to remove their dog, so this enforcement tactic is perhaps the most ultimately convincing.  Still, it should only be used in the most severe of recidivist cases, against those people for whom threat of embarrassment or fines have no effect.

Dog poop may be a silly topic, but it is a serious problem for a lot of communities, especially neighborhoods with a large cultural mix (not all nationalities or cultures are used to picking up after their animals).  Unfortunately, the only real way to deal with the problem is the way you deal with any other rules violation–make sure a clear rule is in place, enforce the rule, and punish accordingly.  Hopefully your association can convince the majority of your neighbors to keep dog walking areas neat and clean, because it’s never fun to deal with dog poop–especially from someone else’s dog.

New FHA Condominium Guidelines–What You Need to Know

Tuesday, May 11th, 2010

In February of this year, the FHA passed a new set of lending guidelines that significantly changes how condominium units are approved for FHA-backed loans. It’s important for condo owners and board members to understand these new guidelines and how they impact your community. I’m going to provide a bunch of background information, so if you’re perhaps a real estate agent who is well versed in FHA procedure, you can skip ahead a bit.

The Federal Housing Administration is a government agency created during the Depression (now part of Housing and Urban Development) that provides mortgage insurance on loans. It’s a common misconception, but the FHA does not actually loan money or create loans. Instead, it insures private lenders that their loans will not fail. In exchange, FHA approved loans often have consumer friendly terms (though, not as “friendly as the Adjustable Rate Mortgages that were popular before the housing crash). FHA loans are extremely popular–as many as 25% of the loans in the United States are FHA-approved loans.

Until February of 2010, a lender could get spot approval of a loan on a single condominium unit if the building was not on FHA’s list of certified properties. However, as of February 1, 2010, the FHA has removed the spot approval process entirely. Now, the only way to get an FHA loan for a condominium purchase is if the entire project/building has been pre-approved by the FHA, either because the bank or the condominium has submitted the necessary paperwork.

First of all, this raises an important issue for board members. If you want to encourage sales in your building (and any smart board member should want to encourage a robust resale market), you have to make sure that your association is preparing the required forms for FHA approval. If your condominium is not FHA approved, you are potentially removing 25% of the market for units.

The tremendous problem, however, is the FHA guidelines themselves. It is certain that a huge number of condominium projects, perhaps even a majority, will not satisfy the very stringent new requirements for becoming an FHA approved property. And, unlike in the past, there will be no way for a buyer to get approval for a single unit. Here are some of the new guidelines, and why they are problematic:

1) Maintain a reserve equal to 10% of the annual budget: Even completely healthy condominium properties often fail to maintain a reserve of this size, and in many states condominium owners may chose to waive collection of reserves entirely. A truly distressed property, one that needs the government’s help, will never be able to budget for basic services (like water and garbage) and still maintain appropriate reserves. Reserves are kept for emergencies—many communities have actually used their reserves to weather the current crisis.

2) Make sure that no more than 15% of owners are more than 30 days late on condominium fees: Again, this is a guideline that seems ignorant of reality—in the current economic environment, even healthy properties can have delinquency rates over 15%, and the vast majority of distressed condominiums will never reach this threshold. There are struggling-but-functional condominiums in the country today where over half of the units do not pay maintenance, but the solution to this problem is to get the abandoned units into the hands of new buyers—not to preclude the entire property from one of the country’s most popular loan programs. This single guideline realistically exempts every single property that the government desperately needs to assist.

3) Assure that no more than 10% of the unit are held by a single investor: Not only is this guideline misguided, but it conflicts with the current trend in state law, where states are actually making it easier for investors to buy large numbers of unsold units. Abandoned or empty, ownerless properties contribute nothing to a condominium, and force the other owners to foot the bill. When investor-owners purchase large blocks of units in distressed condominiums, they have legal responsibilities to pay maintenance on those units and contribute to the upkeep of the property. That’s a good outcome for distressed communities—the FHA guideline, which would block this practice, is perplexing.

4) Have no more than 25% of the space used for commercial activity: Many extremely successful condominiums, especially in large cities like New York, are designed with large percentages of commercial space–the rents paid can reduce dramatically the maintenance load on owners. The commercial owners attract buyers to the condominium, particularly those who appreciate the convenience of having in-building amenities like restaurants, shopping and entertainment. Again, this guideline appears to ignore marketplace realities and blocks help for distressed properties that could otherwise be quite successful.

There are FHA guidelines that are quite reasonable–such as allowing access to financial records or requiring fidelity insurance. And the FHA has clearly passed these rules because it believes it is protecting the government from insuring bad mortgages, or at least mortgages in properties that it believes will fail. But the government, through the FHA, is using a butterfly bandage to close a gaping wound. The condo market has already crashed and failed–the government needs to provide tools that will allow investors, buyers and agents to sell the backlog of empty units and replenish the coffers of shared ownership communities. It should not be passing regulations that will make it even more difficult for buyers to clear real estate stock. And these new FHA guidelines will make it so difficult for some condominiums to move their empty or unsold units that the communities will be destined to fail. Like the earlier Freddie Mac/Fannie Mae guidelines, the new FHA guidelines are misguided, don’t respect the realities of the current marketplace and in the long run will hurt buyers, instead of encouraging them.

UPDATE: I sent a letter to HUD asking them how a condo may file for pre-approval. Unless I’m misreading their response, it appears that any approval must be done through an FHA approved lender, which certainly makes the process far more arduous:

“Please read Mortgagee Letters 2009-46a and 2009-46b that all apply to change is the approval method of condominiums. You can access the Mortgagee Letters at the following URL:

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/

Under the new rules that took effect December 7, 2009, there are two approval methods; HRAP (HUD Review and Approval Process) and DELRAP (Direct Endorsement Lender Review and Approval Process).

Condominiums approval under HRAP/DELRAP must be submitted by an FHA approved lender, thus cannot be done by an individual, HOA, etc. So if you are not a lender, you will need to enlist the help of an FHA approved lender to get your condominium FHA approved. If you are a unconditional DE approved lender with FHA, then you should use the DELRAP approval unless the condominium meets conditions specified in the Mortgagee Letters. If you are not a unconditional DE approved lender (i.e. a broker, builder, part of the HOA of the development, etc.), then you must go through the HRAP process. For information on how to submit condominiums for approval via the HRAP process, please contact the Home Ownership Center (HOC) in your region for information due to this e-mail address is geared for the technical support of the FHA Connection website. To reach the HOC, please call 1-800-CALL-FHA (1-800-225-5342) or e-mail info@fhaoutreach.com.

As for the DELRAP process, we are able to provide instructions for that process since that is done on the FHA Connection website. If you meet the requirements stated in the Mortgagee Letters, the first thing that you need to confirm is that you have the “Condominium Approval Maintenance” authorization set to “Update” on your FHA Connection user ID. If you are not sure, the application coordinator in your company can check if it is set and set it if it is not.

Once that authorization is set, do a query in the Condominiums function where you get the error saying “No Record Match Your Selection Criteria”. When you get that error and you have the authorization mentioned set, you will also see a “Establish Condominium Project” button. You would click that button and complete the form that comes up to submit the condominium for approval. You would complete that form and you will find a field on that where you point to where the PDF file is located on your computer for recorded documents and another field where you point to where the PDF file is located on your computer for unrecorded documents.”

I’ll keep researching this and report back when I know more.