Finance & Legal minutes: 2010-10-03

Minutes:

Special F&L meeting

Present: Carl, Amy, and guest Adi

10-3-10





1) Dave Butler’s Unit Update



Carl has sent information about Dave Butler’s association fee status to
Sheila Rice at Century 21 Brookside on Packard Rd. Attorney’s Title
(Colleen) has also asked for information and Carl will follow up with them.



2) History of Proposed Master Deed Changes



We asked Adi to bring us up to date on the history of proposed changes to
the Master Deed, as all of us on F&L are new to the committee since the time
these were discussed and agreed upon.



This WIKI page records three different sets of changes that were consensed
upon by the community back in 2005:



http://www.gocoho.org/~gocoho/wiki/index.php/MasterDeedChanges2005



The three categories of changes are:



1) New Member Requirements

2) Refining General Common Element (GCE)/Limited Common Element (LCE)
definitions, and

3) Sale of a Garage



F&L needs to understand the second item (GCE/LCE definitions) in particular
right now because we are in the process of updating our Reserve Study and
the changes we consensed upon in 2005 have bearing on what Paul Conahan
needs to include in the Study.



Adi explained that the language in our Master Deed is ambiguous in defining
exactly which components of our structures owners or the Association are
responsible for. It is important to clarify what the Association is
responsible for so we can be sure these expenses are covered either in the
Reserve Study or the Operating Budget, and also that we are protecting
ourselves from liability. It is also important so that our Buildings
Committee knows what it is supposed to oversee.



One of the concerns back in 2005 was that there are instances when the
Association would be liable if a household failed to maintain an addition to
our structures. Decks are a good example. The decision was made in 2005
that the Association would collect funds from households with decks and
other additions to be held in the Reserve Fund, thereby enabling the
Association to maintain and eventually replace decks and other additions,
thus protecting the Association from liability, and also making life easier
for households by creating a savings mechanism and relieving them of
individual responsibility for maintenance and replacement. This is just one
example.



Back in 2005, F&L developed a table with proposed changes to the Master Deed
that provides great detail to clarify the LCE/GCE distinction – who
maintains, replaces, etc. various specific structures. At a series of
community meetings, this was discussed and modified, and finally consensed
upon. This table is available at:



http://www.gocoho.org/documents/proposed_lce_gce_v5.pdf



The components in yellow are CHANGES to what is written in the original
Master Deed. The components in white are NEW items that are not included in
the Master Deed language at all.



F&L has been wondering about whether decks should be included in the Reserve
Study, since Paul Conahan told us that typically condo associations do not
include owner-initiated additions, but rather require individual households
to maintain them. This discussion of our history shows that the community
has given this a great deal of thought and decided to include decks for a
number of reasons as described above. So unless F&L wants to revisit the
2005 agreement, we should probably leave things as they are.



Note: The consensed-upon table includes “sunrooms,” so George’s sunroom
should be added to the Reserve Study. [Note: We later determined that the
lifespan of George's sunroom is longer than our lifespan criterion for
Reserve Fund items, so it will not be included this time around.]



3) Amending the Master Deed



As noted, the above table and two other categories of changes were consensed
upon by the community in 2005 and are recorded in our Book of Agreements. The
next step would be to legally change the Master Deed to reflect these
changes.



As a point of fact, it turns out that one does not ever CHANGE the language
of a Master Deed. Instead, one AMENDS a Master Deed, adding on new language
with an indication of which section it replaces.



Some on F&L at that time felt strongly that this should be done. Others
felt that the fact that these changes are recorded in our Book of Agreements
might be sufficient.



An attorney who was consulted in 2005 said that it was necessary to change
the Master Deed and that the GCE/LCE table could not be added as an
amendment, but rather it should be written as prose, and that only an
attorney could do this. This could be very costly, and some on F&L were not
trusting of this advice, nor willing to spend the money.



So, since then, nothing has been done, and we have been living with the
consensed agreement as recorded in our Book of Agreements.



Now that we have David Keast on retainer, we could ask him these questions:

1) Should the Master Deed be amended to reflect these changes or is the
BOA sufficient?

2) Can the GCE/LCE amendment be in table form, or does it need to be in
narrative/prose? Can we write it and have an attorney edit our prose?

3) If we don’t record these changes in the MD, what scenarios might arise
that would cause us problems? Where is our risk? Outside parties might not
accept the BOA as binding the way that we do.

It also occurred to us to see what we can learn from the County Register of
Deeds.



SUBSEQUENT TO THIS MEETING, Aaron and Amy talked briefly with Dale about
this same subject. Dale stated that the GCE/LCE table of changes cannot be
included in the current Reserve Study because it is not part of the Master
Deed. He does not think it is sufficient to have this in the BOA only. We
should not have contradictions between our documents. He does not believe
that our lenders (mortgagees/banks) will recognize the BOA as legally
binding, and believes that we will need to have our lenders approve in
writing any changes to the Master Deed. This is not trivial. Dale is very
concerned about the Master Deed’s ambiguities, and worries that the
Association is liable for a number of things that we might not be actively
aware of.


Dale wondered whether our attorney would recommend including mention of the
BOA in the Master Deed.



It is clear that we need the advice of an attorney on this. Adi suggested
several questions for the attorney in a subsequent e-mail (inserted below).
And once we have obtained an attorney's advice, we should bring the
community up to date on these matters.



Aaron proposed that we get the several informed people at GO together to
talk about this and get very clear about what we need to ask David Keast so
we don’t waste money asking him the wrong questions.



Adi's suggested questions for the attorney:


1. is the current MD wording on what the reserve fund should contain
reasonable and legal?

2. What proposed language would make the MD less ambiguous about new
LCEs and the possible association's wish to collect reserve money for
their maintenance and replacement?

3. Could/Should we just collect money for "remediation" instead of
"replacement" in the reserve for LCEs?

4. Since the list of LCEs is likely to grow, short of specifying every
class of element in the MD, can we do it instead in the BOA?

5. Can we maintain that list as a table instead of as prose? We are
likely to *ADD* to this list over time and so maintaining it easily
is paramount, and we don't want to have to pay a lawyer each time.

6. When mortgagees review our MD are they also obligated to review our
Bylaws and BOA and abide by them all? Owners are.

7. As a HOA we have decided that it makes sense for us to be
collectively responsible for some LCEs beyond what the typical HOA is
as a convenience (for volume discounts as well). Is this contestable
as illegal?
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