In our work with self-managing condominium associations, we've noticed that clients often have vendors providing services with no clear written agreement in place detailing expectations and compensation.

Haus Financial Services recommends that all vendors, no matter how "small" the service may seem, be provided with a written contract. A written contract is vital for the following reasons:

  • It documents the expectations of the vendor and allows the board to accurately review the work that is being done. If you aren't sure what is covered by the fees, how can you know that you are getting what you are paying for?
  • It creates a history of the regular maintenance required by the building for reference by future board members. This makes it easier for a new board to review regular maintenance needs and ensure they are being met.  
  • It eliminates questions about fee increases. If a vendor is suddenly charging a different amount from what is expected, the board can refer to the existing contract to determine if the increase is valid and if a new contract should be created to document a new fee agreement.

A vendor agreement or service contract does not need to be overly complicated to be useful. The key items to include are:

  • Begin and end date of the agreement
  • Detail of services to be performed
  • Amount of compensation
  • Frequency of compensation
  • Any items not included that can be expected to be invoiced separately

The board should draft a written agreement and have it signed by both parties, then retain it with the association's records.

Your condominium association may have turned over from the developer years ago, but there's a chance that you still have a financial connection to that developer. 

Many developers took the opportunity to continue to profit from their new construction or converted condominium project by retaining commercial space within the building and renting it out. But even if the space remains vacant, the developer has a financial obligation to the association, and many condo boards aren't aware that they are owed.

There are two different ways the commercial portion may have been handled. The first would be for an ownership percentage to be allocated to the units, in which case the units are a part of the association and subject to the same financial obligations as residential owners. Assessments are charged to the retail owner based on the ownership percentage assigned.

The second option is for the developer to omit the commercial portion from the association and create a separate legal agreement between the residential units and the commercial units that dictates what expenses are chargeable to the commercial owner and to what extent. This is generally known as an "Easement Agreement" and must be recorded with the county recorder along with the association's Declaration. An Easement Agreement creates a bit more accounting work for the board and can easily be overlooked by board members who have not had prior experience in addressing commercial units.

If your association has commercial units and has confusion or difficulty in charging the developer and/or collecting those funds, Haus Financial Services can help.  Contact us and start putting more money in your bank account!

The City of Chicago Shared Cost Sidewalk Program opens for applications at 12:00am on Tuesday (January 8). Applicants can apply by calling 311 or creating a request online.

The SCSP allows property owners to split the cost of needed sidewalk work with the city. Senior citizens and persons with disabilities are eligible to receive an additional discount. The application period closes quickly, so be sure to enter your request as early as possible on Tuesday morning.

Here at Haus Financial Services, LLC we keep a close eye on our clients' water bills. Your water bill can be one of your largest common expenses, and unfortunately the DOW isn't always accurate. One client received a bill for $11,704.22 that was clearly inaccurate. The DOW eventually issued a credit of $11,327.18 but needless to say, the bill caused quite a bit of stress in the meantime.

Broken meters and billing errors can result in outrageously large bills. For this reason, we also recommend that clients do not put their water bill on autopay. You should receive your bi-monthly bill via mail or email and review it for the following before making payment:

  1. Unreasonable charges. Bills that are inflated beyond what is usual for your building mean something isn't right. This could mean a broken water meter or a potential leak. The sooner you can address the issue, the sooner it can be resolved. Leaks can create huge water bills, and you must pay for all of the water you use even if it is unintentional.
  2. Estimated readings. An estimated reading means the DOW hasn't taken a reading of your actual water usage, and they may be overestimating. This could also be the result of a broken meter. Call the DOW and ask for a current Actual reading and an updated bill to ensure that you aren't overpaying and that your meter is working properly.

Water is not inexpensive and rates continue to rise annually. Keep an eye on bills and avoid overpaying for what you use.

 

Imagine this scenario:

Your small condo association has been cited by the City of Chicago for various code violations. The City has given the association eight months to resolve the violations or face fines. The total cost of the repairs? $53,000.

The association has not raised assessments for several years due to push back from unit owners. As a result, the association has had to dip into its savings to cover increasing operating expenses. The association's savings have dwindled below $5,000.

A Special Assessment of about $6,625 per owner is necessary to remedy the violations and avoid fines. 

Considering that nearly 1 in 4 Americans have no emergency savings, how likely is it that your association will be able to collect the needed funds from all owners in time?

If your association is not regularly increasing assessments and including a reasonable contribution toward reserves each year, when an emergency hits your owners may not be able to pony up. This could then lead to increased repair costs and/or the need for collection action against non-paying owners, which costs everyone even more.

It's a lot easier to ask owners to pay a little bit more each month to allocate to savings than to ask for a $6,625 lump sum payment. Keep this in mind when planning your 2019 budget. 

 

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