Archive for June, 2010

Can You Ever Be Too Safe? Tips on Security Systems for Condos and HOAs

Friday, June 25th, 2010

At the outset, let me state that I am not a security expert.  I have, however, spent the past year working with my board of directors to design and implement a quarter-of-a-million dollar security system in our beachfront condominium.  So I thought it might be helpful to share our experiences, and to explain some of the decisions we’ve made and why we made them.

As we discuss in our book, New Neighborhoods, shared ownership communities (SOCs–condos, co-ops and HOAs) are microcosms of society–they have good people and bad people, considerate people and inconsiderate people, all living within a small geographic area–in a condominium, right on top of one another.  This can lead to a lot of uncomfortable conflicts, and, in some cases, even violence.  It’s imperative, therefore, that SOCs have at least SOME plan for protecting their residents and properly securing the property.  This is the first layer of risk management, and perhaps the most important–risk avoidance.

Of course, not every risk can be avoided, and not every crime can be prevented.  Take, for instance, domestic violence.  Can you imagine sitting in your living room and hearing shots and screaming coming from a nearby unit?  It may not be particularly common, but it happens, and it happened about a year ago at my own property.  After a four-hour lockdown of the 240 unit building, infiltration by a swat team and dozens of police officers, and after scouring hours of video camera footage, it was determined that a renter had shot and killed his wife and her adult son, and fled the property.  A terrible tragedy, but one that also illustrated a number of issues with our security system and procedures that the residents felt needed to be rectified.

The first obvious problem was with the system itself.  Like a lot of new properties that were finished at the end of the housing boom, our developer seems to have skimped on a few items towards the end of construction, and the security system was one of them.  As president at the time, I found myself as the main liaison between management and the police as they searched the building for the suspect.  Our security system, as described by one policeman, was a “big-box” special–13 cameras, a 48 hour DVR and an almost totally unintelligible interface for reviewing footage that required the user to squat under a counter pressing physical buttons with no labels.  I sat at that DVR searching for footage of the shooter for over two hours before finally finding a clip of him riding the elevator down to his car, wiping blood off of his face with his shirt.  Of course, at this point he was long, long gone.  The problem is that it was hard to determine whether he had left the property, or might be hiding in a staircase or the garage, which forced SWAT to continue to clear the building long after the incident.  Big fail for Mr. Security System.

In addition to the confusing user interface, the cameras, and their location, were both woefully inadequate.  Once we saw the suspect leave the elevator at the garage level, we had absolutely no idea where he went.  There were no cameras in the garage, and the single camera on the garage door was aimed in such a way that it was impossible to see who was inside cars that left the property.

The third issue that arose was with our building procedures.  When the shots first occurred, nearby residents immediately called the front desk.  An UNARMED security guard was then sent upstairs to investigate.  In retrospect, this decision was extremely dangerous for the guard, and in fact it appears that he arrived at the unit just after the suspect had fled.  If he had encountered the suspect in the elevator, it’s quite possible that there would have been another fatality.

At our next board meeting, it was widely agreed that it was worth a significant investment on the part of owners to improve building security.  This decision was hammered home only a couple of months later, when two extremely expensive cars were stolen from our garage within a 2 day period.  While it seemed to have been a planned and targeted event by professional thieves, that was the last straw for owners.  Time to take action.

Our first decision as a board, and in my opinion one of our best, was to agree that none of us knew enough about security to make such a significant decision without the advice of a professional.  One thing we did not want to do, however, was to simply bring in a security camera manufacturer and let them advise us on an appropriate system for our property, as we felt they would be unavoidably biased towards a particular solution.  Instead, the board decided to hire a security consultant, at a significant cost (5 figures) to prepare a detailed security analysis of our property, and to recommend not only electronics, but also rules and procedures that we needed to implement.  It was to be a comprehensive report, and we prepared a very detailed Specification of Work (SOW) for the consultant to follow.  After vetting the candidates we chose a consultant with experience in hotels, country clubs, and even prisons, one who was universally respected as an expert.

While the cost of hiring a consultant was significant, I feel the decision was absolutely mandatory.  The consultant’s report identified dozens and dozens of small flaws within our procedures that could be rectified at little or no cost and would greatly contribute to our risk management.  For example, he pointed out that the flowers on a table in front of the welcome desk were too thick, and significantly blocked the view of visitors entered the building.  So we simply instructed our florist to stick to tall, skinny arrangements.  He also noted that the white parking bumpers in the garage blended into the concrete and were easy to trip over–we painted them all bright yellow.  Again, these are small things, and some of them were obvious, and yet to have a report detailing all of them, and how to remediate them, was invaluable.

In addition to identifying hazards, the report corrected many of our basic security procedures (i.e., don’t send an unarmed guard to investigate a shooting), and a separate technical report made very detailed recommendations about cameras and the type of system we needed on the property.  In short, his report was comprehensive, and invaluable to our board.  Well worth the cost of hiring an expert.

So our next step, in addition to simply implementing changes to procedure and working on small projects (fixing doors and locks, correcting line of sight issues, etc), was to determine how exactly to solicit bids for a security system that we knew could easily cost six-figures.  We chose to use a strict, closed and blind bidding procedure, implemented by one of our board members who happens to be an expert in bidding and contracts from his line of work.  Eight companies were invited to bid based on their reputation, and four chose to bid on the project.  They were all presented with a very detailed SOW that contained not only camera locations but storage requirements and even suggestions on technology.

It took several months for this part of the process to move forward, and eventually all four bidders were brought in for a traditional “dog and pony” show where they were invited to demonstrate their technology and proposal for the board.  This included live demonstrations of their operating systems (user interfaces) as well as the cameras they would be using.  As with all of our board meetings, residents were invited to not only attend but to walk with us, room to room, as we visited the presentations.  After 2 hours of live demos the board convened again and decided that two of the bidders were clearly superior to the others, with preferable technology (a modern, IP based camera system with a host of “megapixel” high resolution cameras) and easy-to-use user interfaces.  We voted to request best-and-final proposals from both companies.  Througout this entire procedure, no company was allowed to know what the others were bidding, or even the systems they were proposing.  For these final bids we made sure that they were based on an apples-to-apples, exact technical specification so that all variables could be removed from the bidding process.  Next week, we will be making our final choice.  It will be over a year since the incident that sparked our review, but I honestly believe that our detailed and deliberate approach to solving our problem will dramatically improve security in our building, and was clearly the way to proceed.

So, as SOC owners or board members, what can you learn from our process, and even our mistakes?  Let me point out a few of what I believe were the most important lessons we learned:

First, whether you are in a building with four residents or four hundred, make sure that you have clear, written security procedures for your staff to follow, and that those procedures cover all conceivable events.  Have written procedures for disasters, crimes, accidents, fire, flood, etc.  No one should ever have to wonder what they need to do in an emergency.  It should all be on paper, in detail, ideally in a security manual.

Next, don’t be afraid to hire an expert to help your community to make difficult decisions, especially those that involve technology or a particular expertise.  In our case, the security consultant added only a small percentage to the total cost of the project, but his report and advice made it dramatically easier to improve our security and to select an appropriate camera system.  I strongly believe that any system we would have solicited from a security installer, absent the expert’s advice, would have been functionally inferior.

Third, consider strict bidding procedures for large projects, whether security or otherwise.  Large corporations use detailed bidding procedures for a reason–it ensures that the corporations are getting the best value for their money, and the best product.  The same procedures can be used to excellent effect in the smaller arena of an SOC.

Fourth, post-event analysis is an important function of a security system for residential communities.  Now, this is a point that I know some would argue, but I feel that the most important value of a camera system is not preventing crimes–it’s allowing police, insurance companies and others to properly analyze crimes and accidents after they occur.  Management of a condominium or HOA carries with it a lot of liability, and associations can be responsible for bad acts that occur on their property, even if committed by third parties, depending on their procedures.  The association should not only try to protect owners, but also needs to protect itself in the event of a dispute over the cause of an incident.  Liability for personal injury, and especially a wrongful death, can total millions of dollars.  In addition, SOCs need to protect against petty crimes, like vandalism, trespassing, and even improper use of common areas, and a good security system makes it much easier to enforce the rules of the community.  Of course, your first responsibility as a board member is to try to protect residents and their property.  But it’s unreasonable to assume that ANY security system is going to prevent crimes and accidents.  Post-event analysis is therefore an important function of a security system.

Last, don’t underestimate the importance of user interfaces.  Many SOCs have an unavoidably-revolving door of employees that might work for the property in different areas, especially security.  For a camera system to be effective, it needs to be easy to use–ideally idiot-proof.  Any new employee should, with a minimum of training, be able to access camera views and review archived footage.  If the system in your community is so complex that only one or two employees or residents know how to use it, and if even the police can’t figure out how to work it, then you have a significant problem.

I hope you find my experiences helpful, and good luck protecting your own community!  I’m confident that my own community will be far safer for residents because of the diligent, deliberate way that we pursued this very important capital upgrade.

Condo and HOA Commandos–How to Avoid Being One

Tuesday, June 15th, 2010

This blog topic is addressed mainly to board members around the country, but it will be interesting to everyone who lives in a Shared Ownership Community (SOC–condo, co-op or HOA).  In reading a number of other condo blogs, I’ve noticed in the comments section that one negative term gets thrown around pretty consistently–Condo Commando.  The question today is, what is a condo commando, and how can you avoid becoming one?

Perhaps since the invention of condominiums (well, maybe a day afterwards), people have been using the term “Condo Commando” to describe the exploits of a certain group of condo owners or board members.  The problem is that the term has never really been well defined.  For example, the anti-condo/hoa crowd uses the term to describe pretty much every condo board member who would deign to enforce a rule or regulation.  In their parlance, every single board member in the country is a “condo commando,” and they’re all worthy of scorn.  To others, condo commandos are those board members who attempt to use the condominium association for personal gain, using threats and false complaints to abuse particular owners.  And to some, condo commandos are the busybodies, whether on the board or not, who take note of every slip and infraction in the community to serve as grist for the rumor mill.

Whatever your definition of condo commando, however, it’s clear that it’s not intended as a compliment.  In the Toronto Star, one writer defined commandos as:

def. n. An egocentric person on a condominium’s board of directors who rules by intimidation, putting his/her interests ahead of others, abusive to the property manager and any board member who gets in the way. Dominates meetings, won’t let others speak. Can be prone to angry outbursts

Now, ignoring for the moment those people who use the term to refer to anyone who tries to enforce a rule or regulation in a condo or HOA (because, frankly, every board member has a legal responsibility to do so), the term condo commando as it’s most frequently used seems to have a few common characteristics.  A commando:

  • overuses legal options to deal with disputes
  • is power hungry
  • fails to follow proper corporate procedure
  • enforces rules arbitrarily
  • accepts kickbacks

Pretty clearly these are all things to avoid, but let’s talk a bit about each one individually and see how we can avoid falling into the commando trap.

Overuses Legal Options to Deal With Disputes–This is a common complaint among ordinary residents who feel that their association is constantly harassing them with threats of legal action.  And certainly, there are plenty of board members around the country who feel that “sue first, sue later” is always the best policy.  But if you’re a board member, remember that lawsuits are really, really expensive.  Before resorting to a lawsuit or legal action on any issue, try to exhaust every other avenue.  Start by having your manager talk with the violating owner–sometimes that alone will solve the problem.  Next, look to your fining procedure or your grievance committee for possible non-legal enforcement methods.  Then, consider whether mediation or arbitration is a legitimate option.  Only after an owner has consistently ignored all attempts to modify their behavior should the board resort to legal resolution.

That having been said, it’s important for owners to remember that they DO have responsibilities, including paying maintenance and following the rules and covenants of the community, and that sometimes the only remedy available to SOCs is to bring the owner to court to compel them to act in a particular manner.  Certainly, given the current financial climate liens and foreclosure actions may be the only collections remedy that is available to boards (if you’re interested in collections specifically, check out my past blogs on the issue).  Just because a board has authorized a lawsuit doesn’t make them “condo commandos”.

Power Hungry–In our book, New Neighborhoods, we talk a bit about what we call the “high school election model.”  Condo elections tend to bring out some unpleasant characteristics in otherwise perfectly reasonable people who are campaigning for an elected position for the first time since high school.  Some of these people are inevitably those who feel that they deserve to be in a leadership position.  And for a few, especially those who felt cheated out of a leadership position earlier in life, they take to board membership with an unhealthy zeal.  To paraphrase one web commenter, the best board members are often those who don’t want to be on the board.  For those who don’t respect the democratic system that is inherent in any SOC, leadership can easily be confused with control.  The power hungry commando will often be a micromanager, taking it upon him or herself to have the final say on any issue that arises in the community.  She may view herself as a Solomonesque arbiter of disputes between neighbors.  He will probably burn through managers at a rapid clip.  This type of commando can be especially dangerous if the rest of the board is particularly wishy-washy and refuses to stand up to the “bully.”

For anyone serving on a board, it’s imperative to remember that board service is a civic duty–one that requires personal sacrifice and some humility.  It’s not an opportunity to live out regal fantasies or dictatorial dreams.  The board of a condo, co-op or HOA is an elected, representative body that has certain responsibilities to the association.  Think John Adams, rather than Fidel Castro.  Please, please don’t serve on a board because you think you deserve to be a leader, or that you’re the only person who could possibly be in charge.  Serve because you think you can do a good job for your community.

Fails to Follow Proper Corporate Procedure–by this we’re talking about all of the corporate niceties that make any business run smoothly: hiring the right people (and letting them do their jobs without micromanaging them), engaging in formal bidding for large projects, proper budgeting, record keeping and finance, and transparency to the shareholders (the owners).  Condos and HOAs are, at their most basic level, non-profit businesses, and they must be run like businesses.  Keeping a condominium association afloat is not the same as doing your personal finances.  Especially in the largest associations (where budgets can often be in the millions of dollars) you need qualified and properly trained employees to run the association.  Large construction projects should be bid to multiple contractors, and depending on the scope traditional blind bidding procedures should at least be considered.

Enforces Rules Arbitrarily–nearly all SOCs have a set of rules and covenants that must be followed in the community, and that inevitably brings up an issue of enforcement.  Unfortunately, it seems to be very, very hard for ordinary people to be completely neutral when it comes to rules enforcement–and yet, complete neutrality is what is both morally appropriate and expected under the law.  The principle of selective enforcement states (loosely) that an owner who is breaking the rules can defend himself against enforcement of the violation if he can prove that the rule has not been enforced consistently.  So it’s not ok for the president of an association to ignore his best friend’s kitty if the condominium has a no-pet rule, but then try to enforce that rule against other residents.  Board members should also never use threats of enforcement to attempt to manipulate owners.  In my opinion, the best policy is to simply instruct management to enforce every rule in the community equally, across the board, against every owner (even other board members).  Though there are some who will still accuse a totally neutral board member of being a “commando” for enforcing rules in the first place, you simply can’t please all of the people all of the time, and consistent, across-the-board enforcement of rules is perfectly reasonable in an SOC setting.

Accepts Kickbacks–OK, so this one really should be a no brainer, but just for the sake of saying so, accepting money from a contractor for granting them a contract is at best totally unethical, and in many states can be a crime.  You should be receiving NO compensation for your service to your community, either from the association itself or from third parties.  On the other hand, any board member can expect to be accused of stealing or accepting kickbacks at least once in their term of service–it’s inevitable that someone in your community will think that you are stealing simply because you are in a position to do so (a lot of people seem to have a pretty dire world view).  So in short, don’t steal, but don’t get upset when someone inevitably accuses you of doing so.

So there you have it–five of the most common reasons that board members sink into the “condo commando” pitfall and some thoughts on how to avoid them.  And don’t listen to the haters–condos and HOAs provide a great lifestyle for millions of Americans, and there are hundreds of thousands of hard-working, reasonable and fair board members out there as well.  Don’t let a few bad seeds spoil the entire SOC apple.

Crist Vetoes Architect Shield/Banning Deadbeat Owners From your Condo or HOA: Good Idea?

Thursday, June 3rd, 2010

First, an update on a previous blog.  A few weeks ago I wrote about a terrible bill that had passed the Florida legislature, one that would have shielded architects, engineers and others from negligence lawsuits.  Happily, Governor Crist has listened to his constituents, and not the lobbyists, and he vetoed the bill.  Good for you Charlie!  To his credit, Crist has shown no fear when using his veto on bad legislation, and this was a good decision.  No professional group deserves complete immunity from lawsuits for unreasonably careless acts.  Congrats to those who successfully fought this law.

I wanted to dedicate the majority of today’s blog to another new change in Florida law, but one that has already been implemented in other states (and has applied to Florida’s HOAs for years).  It’s a new tool in the arsenal of dealing with owners who don’t pay their association maintenance–deadbeats.  If you recall from previous blogs, the main tool that shared ownership communities (SOCs–condos, co-ops and hoas) have against deadbeat owners is filing a lien on their property, and eventually foreclosing on that lien.  However, that is a fairly drastic step to take, and it can be costly–thousands of dollars in legal fees, depending on the complexity of the case.

The obvious question for owners is, if these deadbeats are not contributing to the common elements (such as the pool, tennis courts, and other recreational facilities), why should they be allowed to use those facilities?  Why can’t we ban them?  And this new law in Florida allows exactly that.  The text of the new law reads as follows:

718.303(3)–If a unit owner is delinquent for more than 90 days in paying a monetary obligation due to the association the declaration or bylaws so provide, the association may suspend the right of a unit owner or a unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the monetary obligation is paid. This subsection does not apply to limited common elements intended to be used only by that unit, common elements that must be used to access the unit, utility services provided to the unit, parking spaces, or elevators.

OK, so there’s some interesting stuff hidden in there.  Just by the language itself, if a unit owner is behind on his or her maintenance for over 90 days, the association can block that owner or the occupant/renter of the unit from using the facilities of the condominium.  However, this restriction doesn’t apply to certain categories, such as utilities, parking spaces, elevators, etc.

The first obvious question for Floridians is, what about cable TV?  When this law was originally being discussed, one of the main abilities association boards were clamoring for was the power to shut off a deadbeat owner’s television.  In many associations, the cable television bill is a bulk contract paid by all owners as a common expense–so if your neighbor isn’t paying his bills, you’re paying for his television.  There’s a strong psychological issue with many people when it comes to television–the idea of deadbeats lounging on your dime is simply anethmatic.  So really, the most common request from board members and owners was for the legislature to specifically allow boards to cut off non-paying owners’ televisions.

Unfortunately, the law doesn’t seem to do that.  The language of the statute exempts “utilities,” and depending on who you ask, cable television does seem like a utility.  The law probably wasn’t intended that way, and even some of the architects of the law have said they have no idea if cable TV is included in the restrictions.  This is going to be one of those wait and see situations, where an aggressive association is going to test the issue in court, and allow a judge to clarify the statute (and fight over that clarification for a decade).

Also, it’s unclear from the law whether common services may be restricted, like valet or towel services.  The law does say that the association may suspend the use of common facilities and association property.  Valet parking spaces are always some form of common element or association property, as would be towels.  But it does also say that you can’t limit parking spaces–does that only apply to owner-assigned spaces, or valet as well?  Hard to tell, but I would argue that, until we hear otherwise, associations can restrict these services as well.

Note also that you explicitly cannot ban owners from using access points, like gates and elevators.  So you probably can’t turn off a deadbeat owner’s gate key or elevator fob, as much as you may want to do so.

In any event, now that we’ve established that you can ban deadbeats from the common elements, the real question becomes should you ban deadbeats–and if you do, how?

The entire concept of a law like this ultimately comes down to psychology and human nature.  On the one hand, paying owners get a psychological boost from the idea that there are no free rides.  It’s the old Little Red Hen analogy–you can’t eat the cake if you don’t help make the cake.  Among paying owners, you can bet there will be a clamor to ban deadbeat owners from using common facilities.  Still, we have to remember that the clamor does partly base itself on a feel-good philosophy–does it have actual utility?  We need to dig a bit deeper to find out.

As for the deadbeats themselves, and whether such a ban will influence there desire to contribute to the association, that’s probably going to depend on the particular deadbeat.  Some non-paying owners are absentee investors who may or may not have renters in their units.  They will only care about a ban of the common elements if it affects their renters, and that of course requires that the association be aggressive against renters of deadbeat units.  Other deadbeat owners may simply be so down on their luck that they are completely unable to pay  their maintenance (and usually their mortgages as well), and banning these owners from the common elements will again simply provide a psychological boost to paying owners–it’s unlikely to encourage them to pay money they don’t have.  The most likely owners to be affected by a deadbeat ban would be those who have the money to pay, and do live in the community, but simply choose not to pay for reasons of arrogance or a lack of commitment to the concept of shared ownership.  These owners may be impacted by an inability to use the common elements, and may be convinced to start contributing if such a ban is enacted.

Question 1–What does a ban accomplish?

So the first question for any community or board considering enacting a common element ban would be:  What does it accomplish?  If the ban doesn’t force a single non-paying owner to pay their maintenance, but it makes the paying owners feel better about their contribution, is that a sufficient reason to enact a ban?  It may very well be–there’s clearly a legitimate purpose in encouraging paying owners to continue to pay.  Or, you may decide that, without a likely affect on the deadbeats themselves, a ban simply creates a ton more work for the association with no real benefit.  And this gets to the second principle question every community and board needs to consider before enacitng a deadbeat ban:

Question 2–How do you enforce the ban?

Consider this for a moment–your condominium decides to ban deadbeats from all of the common elements, including the pool, the tennis court, the gym, and even from using valet.  How do you make sure the owner isn’t cheating?  This may not be too much of a problem in a condo with ten units, where every owner is easily identifiable–but what about condos with hundreds of owners?  Do you hand out photographs to the staff, relying on them to enforce the ban on recognition?  Do you hang police house style wanted posters around the common elements, stating that the owner pictured isn’t allowed to use the facilities?  And would such action violate the various federal privacy laws that protect debtors?  And what about if an owner or staff member does catch a deadbeat using the pool–how do you kick them out?  Does the owner enforce the ban themselves, or do you call security?  And what if the owner refuses to leave–call the police?  I really can’t answer such questions, because they’re discussions for every individual community to have–I’m simply trying to demonstrate that enacting a ban is not as simple as declaring that deadbeats can’t use the common elements.  Boards need to consider enforcement of these rules as well, if they are to have any impact.

Now, for some non-paying owners, the simple threat of expulsion (and a desire to avoid conflict) will be enough to keep them from using the facilities until their account is up to date.  And maybe that, combined with the feel-good nature of a ban for paying owners, is enough to enact such a ban in your community.  But as a board member of my own condominium, I have concerns about effecting policies that have no real “end game,” that may not be practically enforceable.  So before we enact such a ban in my community I’m going to insist that the board discuss our enforcement options and plan, and really know why we want a ban before we begin to enforce one.

To sum up, I don’t want it to be misconstrued that I am against deadbeat bans–I think, used properly, they can be a very effective tool for associations to encourage payment of maintenance.  I am simply illustrating that bans are more complex than people may realize, and it’s incumbent upon any responsible board of directors to consider all aspects of a ban before making it a part of their community’s way of life.

Til next time, thanks for reading, and I hope you find this discussion useful!