Trouble is Brewing! Associations and their FHA Approval

Townhome and condo subdivisions all over the Schaumburg area hire management companies to help them sort out the variety of problems with managing a substantial subdivision. Foreclosures are also a recent addition with lack of payment by owners and by the banks themselves once they own the homes.

I can't remember when it was ever a tougher financial burden than it is now. Homeowners that join the board to volunteer their services on behalf of others, now have to know finances, budgets, legal proceedings, and construction. Many associations do have a legal team on board to help them make these decisions and stay within the law. Many are smaller and feel that the need is just too costly for legal advice during general monthly meetings.

All of these scenarios are correct and within the law for IL subdivisions. But my concern is, when does it become negligence when the management company or attorney DOES NOT advise the board correctly or worse yet not at all? 'Not knowing' can also cause great financial harm.

Case in point with management companies not telling the homeowner board members that their FHA approval and certification has expired last year. It seems that management companies are not aware that FHA approval is no longer for 10 year intervals as in times past. New guidelines are in place with stricter banking regulations affecting mortgages. All FHA approved subdivisions must re-apply and re-certify themselves with added financial paperwork so buyers can benefit by using FHA loans.

Where is that line with negligence?

Isn't it negligent for the management companies NOT TO suggest and bring up that renewal is eminent? This has recently happened in a few subdivisions here in the Schaumburg area. The management companies thought that 'it was no big deal' and didn't offer any suggestions. If it wasn't within their 'scope of knowledge' then who helps the board directors with this decision? If there is an expiration date on the FHA certificate and no one brings up the motion to renew the certification and the date passes, who's fault is it or where does the responsibility lie?

I see it clearly as the management company's role and this vital certification should be handled like any other important business renewal regarding insurance and repairs. I am suggesting that board members (and homeowners) are going to quickly get a whiff of this negligence and management companies across the country better watch out for the backlash.

I smell a law suit on the horizon.

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