Reserve Funding

In the past several weeks as I have been speaking on the new HUD/FHA guidelines, many persons have asked me whether HUD/FHA will require the "straight line," "cash flow" or some other methodology for determining percentage of reserve funding.  The short answer is, "we do not know."

What we do know is that in order to obtain FHA certification for a condominium project, reserve funding must be at 60% for established projects, and 100% for new projects.  Also, a reserve study must have been conducted within the past 12 months.  [To review our previous postings on the new proposed HUD/FHA guidelines, type in FHA in the search window]

In attempting to answer the question on funding methodology, I first spoke with the HUD regional office in Santa Ana, California.  The regional manager stated he did not know how the new guidelines would be interpreted regarding this issue.  I then spoke with Reserve Study consultant Jim Talaga from Association Reserves, Inc., who referred me to an article his partner recently wrote on the subject.

To read an informative article on the difference between "straight line" and "cash flow" reserve funding analysis written by Robert Nordland from Association Reserves, click here.

We'll find out in time whether HUD/FHA will mandate a particular type of reserve funding.  In the interim, as the experts at Association Reserves suggest, the use of a particular funding method does not dictate a particular result.  What's most important is funding results.  Thus “cash flow" or straight line?” is the wrong question to ask. It is much more informative to ask if the association is pursuing a conservative ““Fully Funded” objective, an aggressive “Baseline Funded” objective, or a “Threshold Funding” level somewhere in-between.  Whatever methodology is used, HUD/FHA will insist on either a 60% or 100% funded number to qualify for FHA certification.

Towing Vehicles on HOA Property in Washington

Homeowner associations often inquire as to their authority to tow vehicles within their communities. The following outline describes general Washington law regarding homeowners associations’ legal authority and required procedures for towing vehicles. Please note that this posting contains general information and is not legal advice for a specific towing event, which would be unique to the circumstances surrounding that event.

First, the board needs to determine if the streets within its community are public or private roads. This information should be contained within the Association’s Declaration and Plat. 

A.  Vehicles on Public Property

·        Only a law enforcement officer or public official having jurisdiction over the property upon which the vehicle is located has authority to order the impoundment of a vehicle located on public property. RCW 64.55.113. A vehicle constituting a traffic hazard can be removed immediately, while one that is not a hazard can be removed only after it has been properly tagged for twenty-four (24) hours. Additionally, a vehicle located in a publicly owned or controlled parking facility, which is properly posted with no parking signs, can be removed immediately. 

·        To have a vehicle removed from a public right-of-way, a homeowners association’s options are limited to notifying a public official of the location of the vehicle it wants removed. The public official may then arrange for and authorize the vehicle’s removal after twenty-four (24) hours. The association may not authorize the removal of a vehicle from public property.

B.  Vehicles on Private Property

·        A vehicle located on private property may be removed through private impoundment by the owner of the property or the owner’s agent. Such a vehicle may be removed immediately if the property is properly posted with parking restrictions, or if the property qualifies as residential property. Residential property is defined as property with no more that four living units. A vehicle found on unposted, nonresidential private property can be removed only after it has been parked for twenty-four (24) hours. 

·        Signage prohibiting parking on nonresidential property must meet several requirements. A sign must be posted near each entrance and on the premises in a clearly conspicuous and visible location. The signs must state the times at which an unauthorized vehicle may be impounded and must also list the name, telephone number, and address of the towing company where the vehicle may be redeemed.

·        A person requesting a private impoundment must provide a signed authorization for the impound to a registered tow truck operator. A separate authorization must be signed for each impoundment; blanket authorizations allowing a towing company to remove all unauthorized vehicles are not allowed. The authorization must include the following statement: “A person authorizing this impound, if the impound is found in violation of Chapter 46.55 RCW, may be held liable for the costs incurred by the vehicle owner.” Additionally, a private property owner may not authorize the immobilization of a vehicle on its property though devices such as “car boots.”

·        As an alternative to having a vehicle removed as an unauthorized vehicle in a private impound, a person who owns, possesses, or controls private property may dispose of a vehicle abandoned on the property as an “abandoned junk vehicle.” The advantage of this process is that once a vehicle has been properly designated as an abandoned junk vehicle, the property owner is immune from liability regarding disposal of the vehicle and may receive proceeds from the sale of the vehicle. Additionally, the junk vehicle’s registered owner is liable to the property owner for costs incurred in disposing of the vehicle.

·        There are several requirements that must be met before a vehicle may be removed as an abandoned junk vehicle. A public official must inspect the vehicle and verify that the value of the vehicle is equivalent to the value of the vehicle’s parts. The official then provides the property owner with the name and address of the vehicle’s registered and legal owner. The property owner must mail a notice to the vehicle’s owner. Fifteen (15) days after sending notice, the property owner may dispose of the vehicle or sign an affidavit of sale to be used as a title document.

C.  Summary

This is not an exhaustive list of Washington law regarding towing vehicles and each association should review the local ordinances controlling for their jurisdiction. In general, state law requires that a homeowner association contact a public official, most likely local law enforcement, to have a vehicle removed from public property. An association may remove vehicles located on private property under its control immediately if the property is posted or if it qualifies as residential property. On unposted nonresidential property the vehicle may be towed after it has been parked for twenty-four (24) hours.