Finance & Legal minutes: 2016-10-12

Agenda:

2017 Finance & Legal Operating Budget request
Arrears
Attorney's advice on responsibility for water spigots and smoke
detectors
Responsibility for damages: Household vs. GOCA
Bookkeeping Updates
Truck Usage Policy
Insurance

Minutes:

Present: Debbi, Becky H., Becky G., Keith, Amy



1. 2017 Finance & Legal Operating Budget request

a. Agreed to raise cap for insurance deductible savings account to $5000
from $2400 because of new insurance policy. Amy will communicate to Mary
and Dale that we would like to request a new line item in the 2017 budget
of $1000 to be added each year to the savings account until it reaches its
new cap. If there's enough $ leftover from the 2015 budget to cap the
account, we may not need to spend the $1000. We won't know how much is
left from 2015 until the audit is completed.

With the new insurance policy, we have a deductible of $5000 per instance.
We felt it was better not to save for two possible instances unless we know
we need it. Leaving $10,000 sitting in a savings account indefinitely seems
excessively cautious. We can revisit later if it becomes apparent we need
to do so.



b. The new insurance policy will cover liability for guests in the CH
Guest Room even if we charge for use, unlike State Farm's policy. We have
stopped charging for Guest Room use pending resolution of the insurance
coverage question. CH Com could decide to start charging again and put this
income in the 2017 budget. Becky H. will let CH Com know.



However, we noted that there are costs to charging for the Guest Room.
Becky G. pointed out that it takes a lot of time to do the bookkeeping for
just a few hundred dollars of income, which, notably, is taxable. It's not
just a matter of Becky sending the information to Susan at our CPA's office
to add to statements. It's also the hassle when people don't notice that
their monthly charge is higher due to GR fees, and don't pay enough to
cover it, resulting in late fees, back and forth communications, and the
possibility of bad feelings around the issue.



2. Arrears

a. As noted in the minutes of the previous meeting, the household
seriously in arrears has paid in full and provided extra funds to cover
October's association payment.

b. Becky G. will communicate with the household about removing their
lien. The attorney's fees for this work will be charged to the household,
and the household needs to understand that we will place a new lien if they
exceed $1000 in arrears again, and, once again, the attorney's fees for
placing a new lien will be charged to them.

c. We took a moment to celebrate that there are no households with
significant arrears who do not have a payment plan that they are upholding.
There are no households with arrears above or very close to $1000, and soon
we won't have any outstanding liens. Hurrah!



3. Attorney's advice on responsibility for water spigots and smoke
detectors



Note: We asked our attorney Rick Delonis for advice on the following
points prior to the damaging leak at the Grovers' unit (#511). We will be
asking the attorney a separate set of questions about that incident.



Pasted in below are the questions and responses from the attorney, followed
by F&L's discussion:



*GREAT OAK QUESTION TO ATTORNEY*:

A few scenarios have come up recently, both of which pertain to where Great
Oak's responsibility to a unit ends and the home owner's begins. And what
to do in cases of negligence. I'll give you 2 specific areas we want your
legal opinion on, but also we are looking for an overall, high level
opinion that would cover similar situations. Scenario #1 - Smoke Detectors
and Batteries A few years ago, we as a community agreed that the smoke
detectors themselves were community responsibility. We added this to the
Book of Agreements, and to our official Reserve Study. At the same time,
it was pointed out that buying the batteries in bulk would be a huge
savings, and we did that when we replaced the old detectors the first
time. However, some people interpreted this to mean that Great Oak, the
association, is responsible for actually going into everyone's unit to
change the batteries every year. Other people believe that batteries
are, and should be, the owner's responsibility. Requiring the community to
take on the work of going into each unit every year for batteries seems
excessive. There is also concern that if we say the association is
responsible for the batteries, but then don't replace them regularly enough
that this might open us up for legal action. Or open us up for being
legally responsible for similar items. From a legal perspective, what
is your take on this issue?



*ATTORNEY COMMENTS:*

It is unclear from the Master Deed whether the Association or the
individual owners have the responsibility for maintaining the smoke
detectors. Nevertheless, since the community has agreed that the
Association has the responsibility and that decision has been memorialized
in the Book of Agreements, then that threshold question is presumably
resolved. In a broad view, maintaining the smoke detectors may indeed
entail making sure that the batteries are replaced at appropriate intervals
in order to keep the smoke detectors working properly. "Maintain" is
defined by Merriam-Webster as: "to keep in an existing state (as of
repair, efficiency, or validity), preserve from failure or
decline". Changing the battery would be necessary to "preserve" a smoke
detector from "failure", and to "keep [it] in an existing state of
efficiency". If indeed the language adopted by the owners was that the
Association is to "maintain" the smoke detectors, then that likely means
that the Association would be held responsible for changing the batteries.
It could be clarified that the Association will repair or replace a smoke
detector, but that the individual owners must "maintain" them, including
changing the batteries.



*GREAT OAK QUESTION TO ATTORNEY*:

Scenario #2 - Outside Spigots Each building at Great Oak contains between
3-4 units. Most of the buildings have fewer outside spigots than units,
resulting in owners needing to share spigots. Even though they are
"frost free" spigots, we have discovered in recent years that if they are
not actually turned off inside the building and drained, the pipes can
freeze and burst. Our Buildings committee has been doing a good job of
sending out instructions (and offers of help) every fall to have people do
this. But it is not certain that everyone is. Our question here - Is the
association responsible in this case for going into each unit and turning
off and draining the spigots every year? If so, what happens if a unit
does not coordinate a time to let us in in a timely manner? (the
association does not have a master key) If this is not an association
responsibility, and an owner does not drain their spigot and it causes a
pipe to burst, can the association charge them with the repair, even it it
causes damage in a connecting unit? The relevant section of our bylaws
appears to be this: Bylaws Article 4, # 4-b: The association shall
maintain and repair the general common elements, inside and outside the
units, and limited common elements to the extent stated in the master deed
and shall charge the costs to all the co-owners as a common expense unless
the repair is necessitated by the negligence, misuse, or neglect of a
co-owner, in which case the expense shall be charged to the co-owner. The
association and its agents shall have access to each unit during reasonable
working hours, on notice to the occupant, for the purpose of maintaining,
repairing, or replacing any of the common elements in the unit or
accessible from it. The association and its agents shall also have access
to each unit at all times without notice for emergency repairs necessary to
prevent damage to other units or the common elements.



*ATTORNEY COMMENTS:*

Article IV (1) (d) of the Master Deed states that the following is a common
element: "the plumbing and gas-line networks throughout the common areas
of the project, including those within common walls, floors, and ceilings
up to the point of connection with plumbing fixtures". Article IV (3) (c)
of the Master Deed imposes the responsibility for maintenance and repair on
the Association for all general and limited common elements except for some
specifically enumerated ones. Plumbing and plumbing fixtures are not
enumerated as the responsibility of the owners. Hence, they would be the
responsibility of the Association. I recommend that the Association go in
and check the spigots. The Association can announce that it is going to be
done and perhaps give two days/times to choose from. If an owner does not
coordinate access, then the owner could be warned that the Association will
seek a court order and that the costs incurred will be assessed back to
them. Overall, if the Association has the responsibility to maintain,
repair or replace an item (as delineated by the Master Deed), then the
Association will be held legally responsible for any damage due to the
failure to properly maintain, repair or replace the general or limited
common element at issue. *Unless *the damage was the result of the actions
of an owner. If that is the case, the owner will be responsible for the
costs of the repair. In certain situations, insurance policies may be
available and claims can be made. Hope this helps. Please let me know if
there are any questions, or if something needs to be clarified.



*F&L Discussion*:

Spigots: Rick's recommendation is that GOCA needs to make sure that the
spigots are turned off and the water supply is turned off inside the
building, and drained. We will ask that the Buildings Committee devises
and implements a concrete plan to ensure that water is shut off to all
outside spigots and that all pipes are adequately drained. They can notify
the community of a timeline by which this needs to be done, and offer help
to those who are unable to do the task. Buildings doesn't necessarily need
to go inside if people do the task themselves, just to check and document
which ones have been checked. It's easy enough to verify whether the water
has been turned off and drained by checking the outside spigot.



Buildings could figure out a date by which everything is off. Probably
needs to be separate from the work days as they may be earlier than people
want to turn off their spigots for the winter.



Smoke detectors: Rick says that GOCA is responsible for batteries unless
our agreement says otherwise. The new draft policy put forward by
Buildings says that GOCA will supply batteries but it's the owner's
responsibility to replace them, though Buildings is willing to help.



Keith will cut and paste the minutes and make sure Buildings sees and
discusses this information. Building will figure out the process and
communicate it to the community.



4. Responsibility for damages: Household vs. GOCA



a) Responsibility for subfloor in unit #511



The Grovers (#511) recently suffered extensive damage to their built-out
basement when a toilet valve failed and water flooded down into the
basement.



There has been a lot of email since then about who is responsible for
repairs "outside the paint" (and carpet). In this case, the question of
who pays for replacing the subfloor is at issue: the household or Great
Oak?



The Reserve fund is not at play because this situation is a case of repair,
not a scheduled replacement.



However, we've discovered in past meeting minutes that the community
intended years ago to figure out a way to charge households with built-out
basements an extra fee to cover possible future costs, but this was never
implemented. This suggests that the community anticipated that there might
be some costs associated with build-outs. It was pointed out that when a
unit changes hands, it would be difficult for future owners to know exactly
what was added by previous owners, and to understand clearly that they have
special responsibility for repairing damages to those components. Would
households need to get special insurance for those components? This seems
complicated and not in keeping with the typical structure of condominium
responsibilities.



During their emergency, the Grovers purchased the materials for the
subfloor and Becky did the installation work herself, with the intention of
saving Great Oak the cost of labor because she believed that Great Oak
would be responsible for the subfloor costs.



Other issues that have been raised by neighbors on email:



"If it's GOCA's responsibility to pay for the subfloor, shouldn't the
Grovers have obtained 3 bids? The background section in GO's 2002 agreement
<http://www.gocoho.org/boa/?id=agreement&num=82> about getting 3 bids for
expenditures over $500 says: "There will be some times when it is not
appropriate to ask for more than one bid - for instance, in an
emergency" In addition, it was pointed out that the materials cost for
any installer would be approximately the same; what would vary would be the
labor. And in this case, Becky did the work herself at no cost to GO, so
there was no chance that any outside bid would have been cheaper.



--How do we define responsibility for maintenance? Were the Grovers
negligent because their toilet valve failed, or was it an accident? The
F&L committee imagined numerous similar scenarios, and would like our
attorney to address this.



--Couldn't we just let the insurance companies duke it out? What is the
role of insurance in paying for the subfloor? The cost of materials was
under $1000, below GOCA's $5,000 insurance deductible, so we don't think
insurance would have come into play. However, we would like to get
professional opinions to help us sort all this out.



Debbi will review the email thread and minutes, and compose and send
questions to our attorney to try to get clarification. If needed, we'll
then ask our insurance company for input as well.



b) Minutes



In the minutes of our last meeting, an individual's name and email comment
was mentioned but other individuals' email comments were not. While Amy
had offered to amend the minutes, the committee felt that the minutes
reflected the actual conversation, and that any clarification should be
included in the minutes of the meeting at which it was discussed. GO',...-s
practice is to avoid naming names unless it's necessary for clarity and we
will try to stick to that. The committee supported the current practice
that only those present (or quoted) will review draft minutes to prevent
the spread of incorrect information by widely circulating drafts.



5. Bookkeeping Updates



a. Audit: Becky has been answering questions from the auditors. Now
some questions need to be answered by our CPA, Len. For 2015, Len did the
taxes one way, we caught an error, and he re-did them. It sounds like he
may have missed making a needed change when he re-did them.



The auditors have observed that the management of our CH office leases has room for improvement. This will probably appear in the auditors'
report. We need to check to see where we are for leases for 2016.



b. Any other updates

Becky alerted the community by email that monthly reports will be late. Quarterly transfers need to happen sometime this month.
Becky got the new asphalt savings account set up for Grounds
(she had to go to the bank to do this).



6. Master Deed: no news



7. Truck Usage Policy



a. We need to send the key code pad back and request a replacement as
the device we got did not work. Tech support did not respond.



b. Discuss "fault" or "no-fault" scenarios we'd be comfortable with
given the $5000 deductible for insurance.



We need to indicate in our Truck Usage Policy what happens when a driver
has an accident while driving for personal business. Who pays? We will
return to the topic at our next meeting.



8. Insurance

a. 2016 insurance documentation has been received from all three CH
office renters.

b. Family Farms insurance certificate next steps: we need to make sure
their organization and members have liability coverage when they're on
site. The example of Kito's camp insurance would be useful to show them
what we need.

c. We're down to just two households that did not provide the mortagee
contact information we will need when we do the MD changes. We will
instruct our attorney to research the missing info and to charge us for
that research, and we will pass on the cost to the households. The
households were asked for this information numerous times, and warned that
they would incur costs for not responding.

d. The new insurance policy documents have been scanned. Debbi will
upload the files to the important docs section of the WIKI.

e. According to our attorney, the tree house is an attractive nuisance.
We need to ask our insurance co about liability coverage.

f. Next steps on units being charged property taxes on garages they
don't own. Debbi intends to work on this.

g. CH Special Assessment Liens (Amy) after Truck

h. Deck refunds



7. Next Meeting: Weds 10/26 @ 7 pm in the CH Sitting Room


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F&L Agenda Cooler List (Amy updated the Priority Tasks section 12/29/15;
the rest needs updating!)