tag:blogger.com,1999:blog-87713820209217411592024-03-13T00:02:36.417-07:00Condominium Financial Management, Inc.Unknownnoreply@blogger.comBlogger11125tag:blogger.com,1999:blog-8771382020921741159.post-69262664097453883612019-09-09T12:26:00.001-07:002019-09-09T12:27:45.395-07:00<br />
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<span style="color: white; font-family: "century gothic" , sans-serif; font-size: 36.0pt;">The
CFM Distinction<o:p></o:p></span></div>
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<span style="color: white; font-family: "century gothic" , sans-serif; font-size: 14.0pt;">Summer
2019<o:p></o:p></span></div>
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<span style="font-family: inherit;"><span style="color: black; font-size: 14.0pt;">Welcome to the summer edition of our
company newsletter, </span><span style="font-size: 14pt;">The CFM Distinction. There is a lot
of information to share in this space so please read when you have a few
minutes to digest it all!</span></span></div>
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<span style="color: black; font-family: inherit; font-size: 14.0pt;">Over the last few
years, I have become involved with the Legislative Support Committee (LSC)
which is a part of the California Legislative Action Committee (CLAC), a
committee of CAI (Community Associations Institute). CLAC exists to
advocate on behalf of our clients with education for legislators surrounding
issues related to Association living. You can read more <a href="http://r20.rs6.net/tn.jsp?f=001qqlGzjQKRa3SL8POkqHTGmy4wvMTQRmx4sTpG1rFLenon2pjKit6yha1BgKb-OUltWkh6mL2oWDHbVNFIrMc_HRkUfxGRP3oIf83UvZbRJcN7s_j6aJUlveuoslLsPsHUxqfAsnKu-gmFjMjtMWBYsiOGyia7EwBbqeslYL64hM4CrzOOmdUrA==&c=la7TbdjDVPvAOFGrppQrN5DNkOOt5RmKYuODEp1PGG89t68nRGCuIg==&ch=Fx124HymY1ox89thRlQtL1s8peM_6URhv4ovuPVl18ly553eBDEHOA==" target="_blank">here </a>about CLAC. <o:p></o:p></span></div>
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<span style="color: black; font-family: inherit; font-size: 14.0pt;">I intend to use this
platform to inform our clients when efforts are needed to support or oppose a
bill that will directly affect the way we all serve our communities. One
such bill is SB 323 (Wieckowski), the Board Member Qualifications; Elections
bill. This one is scary and we need all hands on deck to oppose, and
fast, as it will be voted on very shortly. This bill would prohibit an
Association from establishing requirements for a member to serve on the Board
of Directors. This means if you have a member previously convicted of a
financial felony (forgery, embezzlement, etc), they could serve on your Board
of Directors. I've attached the potential financial impacts of this bill
should it pass <a href="http://r20.rs6.net/tn.jsp?f=001qqlGzjQKRa3SL8POkqHTGmy4wvMTQRmx4sTpG1rFLenon2pjKit6yha1BgKb-OUlB3lqfq5KUG_oxg2M9GRnWvIfrAW8mj7iaXektk3I0iPHR4OBcIf-BCxEJ5WJ7j7jtVq1Bhl0xH5BqKPHShv2u9j_2lRsP2uRTLEyRCgpjJlV8mss3p4q-Lvxy8LYAi8dKY1YyvMhcUKKKN5XXjlyMKZrZXYTryflYriP70zErGzdMfgyFoTAvogZBEF4egnQ&c=la7TbdjDVPvAOFGrppQrN5DNkOOt5RmKYuODEp1PGG89t68nRGCuIg==&ch=Fx124HymY1ox89thRlQtL1s8peM_6URhv4ovuPVl18ly553eBDEHOA==" target="_blank">here</a>. This bill was introduced last year as SB 1265
and was vetoed by the governor. Let's get this defeated again! <o:p></o:p></span></div>
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<span style="font-family: inherit;"><a href="http://r20.rs6.net/tn.jsp?f=001qqlGzjQKRa3SL8POkqHTGmy4wvMTQRmx4sTpG1rFLenon2pjKit6yha1BgKb-OUlf9nzzml1pO5-Cv5agWIXJjgNdcfttFrEF6em-bNjyhAuRynLqq1c-uA5EA5wLwpPY5ASuifRaQ8RdtSBRa-0XZ8jRUcWBWvuqZiBq_jVQYjT2yMzdU3xeB7Cfaqvff7Z-kKO_Ag_W34Kf0uzvgevF0ZtKvW2S8MgVL-LKeg9kzk=&c=la7TbdjDVPvAOFGrppQrN5DNkOOt5RmKYuODEp1PGG89t68nRGCuIg==&ch=Fx124HymY1ox89thRlQtL1s8peM_6URhv4ovuPVl18ly553eBDEHOA==" target="_blank"><span style="text-decoration: none; text-underline: none;"><img alt="Help Us Defeat SB 323" border="0" height="189" id="_x0000_i1025" src="https://web-extract.constantcontact.com/v1/thumbnail?url=https://i.ytimg.com/vi/_9NgCISl5-s/hqdefault.jpg" style="height: 1.966in; width: 2.625in;" width="252" /></span></a><o:p></o:p></span></div>
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<span style="color: black; font-family: inherit;">Help Us Defeat SB 323<o:p></o:p></span></div>
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<span style="color: black; font-family: inherit; font-size: 14.0pt;">We need to target
Assembly Member's as they are the next to vote. Find your Assembly
Member's contact information <a href="http://r20.rs6.net/tn.jsp?f=001qqlGzjQKRa3SL8POkqHTGmy4wvMTQRmx4sTpG1rFLenon2pjKit6yha1BgKb-OUlDDTusrujABJzGV_yUQO_H4WwG3tJ1CkmO2qdHdh0nmyr_8tSM5UZqUgP2RQLlyxGJU8UsAm0leV9SwuMPu0OSnp_ejOVfR73JGNIWd2WTK0e1gVLceAU3TLPZ4RvQziQ0a73wJff4lA=&c=la7TbdjDVPvAOFGrppQrN5DNkOOt5RmKYuODEp1PGG89t68nRGCuIg==&ch=Fx124HymY1ox89thRlQtL1s8peM_6URhv4ovuPVl18ly553eBDEHOA==" target="_blank">here</a> and call or email today. It only takes a few
minutes and will contribute to a giant impact we can all have together. I
have personally visited three local legislative offices to spread the word
about SB 323. We all need to do our part to defeat this bill. Thank
you! <o:p></o:p></span></div>
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<span style="color: black; font-family: inherit; font-size: 14.0pt;">Keeping you up to
date with information such as this is a reminder why you have chosen CFM as
your financial management team. CFM is the only accredited financial management
firm in California. We appreciate the opportunity to serve your Association!<o:p></o:p></span></div>
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<span style="color: black; font-family: inherit; font-size: 14.0pt;">With Gratitude,<o:p></o:p></span></div>
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<span style="color: black; font-family: inherit; font-size: 14.0pt;">Stacie & Linnea<o:p></o:p></span></div>
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<span style="font-family: inherit; font-size: 18pt;">Consider donating to CLAC!<o:p></o:p></span></div>
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<span style="font-family: inherit;"><span style="font-size: 14pt;">During your budget process,
please consider adding a line item to support the education and advocacy
efforts of CLAC. A Buck-A-Door (or more) is a great way to support the
voice and impact we have in Sacramento. <br />
<a href="http://r20.rs6.net/tn.jsp?f=001qqlGzjQKRa3SL8POkqHTGmy4wvMTQRmx4sTpG1rFLenon2pjKit6yha1BgKb-OUlFANSVjQdQL9z-Rwipik9TyrfblWxKwmunu6fh_E-CJrn6vlO1KL77KwjULT4-Mexa6TZLMh2SNoNKIi4NFkZiMXIygJmqRO3UYMSiUl4kSbRtWa4uMfwHUSyZRPUpgFcCnypvPIZMM4=&c=la7TbdjDVPvAOFGrppQrN5DNkOOt5RmKYuODEp1PGG89t68nRGCuIg==&ch=Fx124HymY1ox89thRlQtL1s8peM_6URhv4ovuPVl18ly553eBDEHOA==" target="_blank">Here</a> is more information as well as a video indicating why
your support is necessary and impactful. Just say yes and we will do the rest
to get your Association involved! We also support CLAC financially, and
spend many volunteer hours serving on the committees and attending e</span><span style="font-size: 14pt;">vent</span><span style="font-size: 14pt;">s in
order to strengthen our industry and support the interests of our
clients. </span></span></div>
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<span style="font-size: 18pt;"><span style="color: #741b47; font-family: inherit;">Read
what our clients are saying about us...<o:p></o:p></span></span></div>
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appreciates the professional, knowledgeable and reliable experts we work with
on a regular basis!!! We are grateful for reliable, immediate access to our
financial reports, vendor accounts, payables/receivables accounts, escrow
activity, legal member report generations, and so on! The board members... rely
on your efficient financial reports, reconciliations, extensive member record
management and ready access to relevant reports as requested!"<br />
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<span style="font-size: 14pt;"><span style="color: #741b47; font-family: inherit;">Cathy Dougherty, Office
Manager & Executive Assistant, <br />
Oakmont Village Association</span></span></div>
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<span style="font-size: 14pt;"><span style="color: #073763; font-family: inherit;">_________________________________________________</span></span></div>
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<span style="font-size: 14pt;"><span style="color: #073763; font-family: inherit;">Innovia-</span></span><br />
<span style="font-size: 14pt;"><span style="color: #073763; font-family: inherit;">Our management
company has joined a national community management cooperative to add increased
value to our associations and residents. The goal of our network is to
create powerful resources and innovative technologies that improve our
communities. Through our investment in the co-op, we are able to pass along
savings opportunities to our clients with the programs offered. One great
opportunity is Community Base, a customized app designed specifically for each
community association serving as one platform for assessment payment, push
notifications from management and the board, contact us tool, and anything else
that would benefit your community specifically. CFM is covering the cost
of this great benefit and all you need to do is let us know you are
interested! We can show you a demo of the app and once approved, can
provide a URL code on homeowner assessment statements for download, it is that easy!
Please check out our brochure for more detailed information <a href="http://r20.rs6.net/tn.jsp?f=001qqlGzjQKRa3SL8POkqHTGmy4wvMTQRmx4sTpG1rFLenon2pjKit6yha1BgKb-OUlPj2GfjM04dTgUq5QEy0J9xmRMsr3PA8gmt7ivtKF9787OasGQu9he3xk-M3rm-NBRNH2nd02tlZJ7AVUeEM49POm57da4b6RKHwzGJfuJAaDXLTNg73PVfDErqX2N9ADbsRsSDvBLHyl-GqcRJKKpK14RJhJ4bAG5WmFAsyUFHfsC6pYhD_s0LyMYm_RxrCE&c=la7TbdjDVPvAOFGrppQrN5DNkOOt5RmKYuODEp1PGG89t68nRGCuIg==&ch=Fx124HymY1ox89thRlQtL1s8peM_6URhv4ovuPVl18ly553eBDEHOA==" target="_blank">here.</a> Also, please visit our website for further
information at: <o:p></o:p></span></span></div>
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<span style="font-size: 14pt;"><span style="color: #073763; font-family: inherit;"><a href="http://r20.rs6.net/tn.jsp?f=001qqlGzjQKRa3SL8POkqHTGmy4wvMTQRmx4sTpG1rFLenon2pjKit6yha1BgKb-OUlOeRUn1QdNdmB4zRYPlBv-ACR4aVF2IukWLY6A-xtE1YvaPpSUFad-AyQANjJcXZUySl8U3Yiyr429wyrjJneIKv9XqBBlV0DdMJ1Td12WqbD4FDuOHkJBAdsHRf2R3Hb&c=la7TbdjDVPvAOFGrppQrN5DNkOOt5RmKYuODEp1PGG89t68nRGCuIg==&ch=Fx124HymY1ox89thRlQtL1s8peM_6URhv4ovuPVl18ly553eBDEHOA==" target="_blank">https://condofinancial.com/innovia2/</a><o:p></o:p></span></span></div>
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<br />Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com0tag:blogger.com,1999:blog-8771382020921741159.post-25194004141208713982015-08-24T15:35:00.002-07:002015-08-24T15:35:30.732-07:00Inspection of Records in a Homeowners Association<span style="font-family: Arial, Helvetica, sans-serif;">By Tom Fier: Attorney at Law</span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"><a href="http://www.tomfier.com/">www.tomfier.com </a></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 14.0pt;">INSPECTION OF RECORDS IN A <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 14.0pt;">HOMEOWNERS ASSOCIATION<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> The
matter of inspection of records comes up in almost every homeowners
association. Some of the most frequent
questions are: "What records are subject to inspection? What are the limits on these inspection rights? Who pays for the costs involved? What are the inspection rights of
directors?"<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> These questions, as
well as other questions dealing with
inspection rights within an association, are addressed in this
article. Civil Code sections 5200-5240
deal with this subject.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> What records are subject to inspection?<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> a. Financial
documents (a summary of the association's <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> reserves, the
annual budget report, financial statement <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> reviews, and
audits);<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> b. Interim financial
statements;<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> c. Executed
contracts, not privileged;<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> d. Written board
approval of vendor or contractor proposals <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> or invoices;<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> e. State and federal
tax returns;<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> f. Reserve account
balances and records of payments made <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> from reserve
accounts;<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> g. Agendas and
minutes of meetings of the members, the board <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> and committees
appointed by the board, excluding minutes <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; margin-right: -.5in; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> and
other information from executive sessions of the board;<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> h. Membership lists,
including name, property address, and <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; margin-right: -.5in; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> mailing
address (but no records/information concerning<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> those members who have opted out);<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> i. Check registers;<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> j. The governing
documents;<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> k. Reserve studies;
and<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> l. Enhanced
association records which means invoices, <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> receipt and
cancelled checks for payments made by the <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> association,
purchase orders approved by the association, <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> credit card
statements for credit cards of the <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> association,
statements for services rendered and <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> reimbursement requests
submitted to the association <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> (Civil Code §
5200).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Can information be withheld or redacted?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Yes, if it is likely
to lead to identity theft; to fraud in connection with the association;
documents that are privileged or confidential (subject to attorney-client
privilege, litigation, or confidential settlement agreements); a release that is
likely to compromise the privacy of a member; information that contains disciplinary actions, collection
activities or payment plans of members, or any personal identification
information (i.e. social security number, tax identification number, driver's
license number, credit card number, bank account number or bank routing number);
minutes and other information from an executive session, personal records, and interior
architectural plans, including security features.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> If information is
withheld or redacted, the association must provide a written explanation (Civil
Code § 5200).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Who may inspect?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> A member or member's
designated representative may inspect [Civil Code § 5205(a)], as well as a
director.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Where may a member inspect/copy the
records?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Inspection or
copying of records may be done in the association's business office within the
association or at a place agreed to by the requesting member and the
association [Civil Code § 5205(c) and (d)].
If a written request is made, the association may deliver copies to the
member [Civil Code <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;">§ 5205(e)].<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Can
the association charge?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Yes. The association may bill the requesting
member for the actual cost of copying and mailing. The association shall inform the member of
the amount and this shall be paid prior to copying and sending [Civil Code §
5205(f)]. Additionally, the association
may bill a requesting member up to $10.00 per hour not to exceed $200.00 per
written request, for the time involved in redacting an enhanced record. These costs shall be prepaid. [Civil Code §
5205(g)].<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Can the records be produced
electronically?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Yes, the requesting
member can request that he/she receive records by electronic transmission or
machine-readable storage media so long as the records can be transmitted in
redacted format that does not allow the records to be altered. The association can charge for this cost.
[Civil Code § 5205(h)].<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> What are the required time frames that the
association must keep records?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> a. Records for the
current fiscal year, plus two previous<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> years.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> b. Minutes of
members and board meetings need to be kept <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> permanently.
[Civil Code § 5210(a)].<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Under what time frame must the association
produce records?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> a. Association
records prepared during the current fiscal<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> year: 10 days following receipt of the request
[Civil<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Code § 5210(b)(1)]. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> b. Association
records prepared during the previous 2 years: <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> 30 days [Civil
Code § 5210(b)(2)].<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; margin-right: -27.0pt; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> c.
Minutes: within 30 days of the meeting (Civil Code § 4950).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> d. Membership list:
5 days (Civil Code § 8330).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Can members request e-mail
addresses of other members? <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Yes. The court in <i>Worldmark,</i> <i>The Club v.
Wyndham Resort Dev. Corp.</i> (2010) 187 Cal.App.4th 1017 noted that
"address" was broad enough to include e-mail addresses.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Does a member need a reason to request inspection?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Yes, records and
minutes may only be inspected for a purpose reasonably related to the member's
interest as a member. [Civil Code § 5230
a)]. Corporations Code § 8338(a) states
that a membership list may not be used to solicit money; for any purpose that
the requesting member does not reasonably and in good faith believe will
benefit the association; for a commercial purpose or for sale to any person.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> What are a director's rights of
inspection? <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> A director has an
"absolute" right, at any reasonable time, to inspect and copy all
books, records, and documents of the association (Corporation Code §
8334). This absolute right is
constrained by a director's fiduciary duty to act in the best of interests of
the association [Corporations Code § 7231(a)], to restrain directors from
exercising these rights for personal gain, or to further interests contrary to
the interests of the association.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Can a lender inspect the books and records
of the association?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%; mso-bidi-font-size: 10.0pt;"> Most governing
documents protect a lender's right to inspect the association's books and
records as a way to protect their security interest.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 85%; mso-pagination: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div align="center" class="MsoNormal" style="line-height: 85%; mso-pagination: none; text-align: center;">
<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">FREQUENTLY
REQUESTED DOCUMENTS<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="line-height: 85%; mso-pagination: none; text-align: center;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-size: 12.0pt; line-height: 85%;"> </span><u><span style="font-size: 12.0pt; line-height: 85%;">Member</span></u><span style="font-size: 12.0pt; line-height: 85%;"> </span></span></div>
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<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;"> <u>Document</u> <u><o:p></o:p></u></span></div>
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<u><span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Yes<o:p></o:p></span></u></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><u><span style="font-size: 12.0pt; line-height: 85%;">No</span></u><span style="font-size: 12.0pt; line-height: 85%;"><o:p></o:p></span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Audits<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Bank Statements<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Ballots<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Checks (cancelled)<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">E-mail Addresses of Members<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Financial Statements<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Invoices/Bills<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Litigation Documents<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Membership List (but not for <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">a commercial purpose)<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">Minutes<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif; font-size: 12.0pt; line-height: 85%;">x<o:p></o:p></span></div>
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Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com0tag:blogger.com,1999:blog-8771382020921741159.post-52796241840451395652012-08-21T10:57:00.000-07:002012-08-21T10:57:22.700-07:00<img alt="The CFM Distinction, Summer 2012" height="95" src="http://www.condofinancial.com/images/12NewsletterSummer.jpg" width="400" /><br />
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<span><span style="color: #20124d;"><strong>The CFM Distinction, Summer 2012 Newsletter</strong></span></span><br />
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Welcome to the summer edition of our company newsletter. It has been a long time since our last publication, but much has happened during that time. On the personal front, Stacie has added to her family with a beautiful baby boy named Conor. He is already 9 months old and her 3 year old twins round out the very busy household! As for business, we have a very exciting announcement! THE BOARD PORTAL IS READY AT LAST!!! What does this mean for our clients? Our boards will now be able to approve invoices online automating our check writing and disbursal process. Additional features include the ability to view invoices online, both current and historical, as well as Association financial reports. We will be getting everyone setup as soon as possible. Would you like to be one of the first to try it? Please email AndreaR@condofinancial.com and she will setup a time to get this process started for you. We hope you are as excited as we are for these technological advances we are now able to offer our clients. Until next time, we wish you a great summer and a Happy 4th of July!<br /><br /> Sincerely,<br /> Linnea & Stacie<br /><br />
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Are You in Compliance?</h2>
<img alt="" class="newsletterImage" src="http://www.condofinancial.com/images/news_12Summer_gavel.jpeg" /> As most of you are aware, a new law went into effect Jan 1 of this year changing the way boards may, or more importantly may not, conduct business. There were several facets to this new law but the biggest change contained in Civil Code 1363.05 states that boards of directors 'shall not conduct a meeting via a series of electronic transmissions, including, but not limited to, electronic mail'. A meeting is defined as any discussion by a majority of the board on any item of business within the authority of the board. There is an exemption to this law for emergency meetings. The Code defines an emergency meeting where 'there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the board'. What does all this mean? Very simply, you may not use email as a communication vehicle to discuss business between meetings among board members.<br /> What is the purpose? To increase transparency in the business of the HOA.<br /> What can happen? A challenging member can file a lawsuit and a board may be found in violation of the Open Meeting Act. Fine is $500 per violation + challenging member's attorney's fees and court costs. What should you do? Be very careful when using email and work with counsel to determine what could constitute an emergency to justify the use.<br /><br /><h2>
Stump the Experts<br />$$$</h2>
<br /> If you have a question regarding the financial management of your association, please send an e-mail to: <a href="mailto:stacied@condofinancial.com">stacied@condofinancial.com</a>. If your question is chosen, we will publish the information in our next newsletter.<br /></div>
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<img alt="" class="stacie_linneaNLimg" src="http://www.condofinancial.com/images/linnea_stacie.jpg" /><div class="nlSpr02">
See what our clients are saying about us...<br /><br /> '...amazing and helpful individuals...'<br /><br /> I wanted to let you know that you have some amazing and helpful individuals... I am in Singapore... I appreciate the patience and understanding that was paid to me until I was able to get things reorganized... office was helpful and follow up was tremendous.<br /><br /> Denise Shirkey<br /> HOA Property Owner<br /><br /><a href="http://www.condofinancial.com/client_testimonials.aspx">To read more client testimonials, click here</a><br /></div>
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<img alt="" src="http://www.condofinancial.com/images/news_12franklinaward.jpeg" style="width: 148px;" /> The Franklin Award is a company reward of a $100 bill given to one employee per quarter in recognition of an outstanding achievement or extraordinary task completion. They can be nominated by their fellow employees, by a homeowner, board member, or colleague. The Franklin Award winner for 1st quarter 2012 is Theresa Hall, accounts payable specialist, in recognition of her outstanding service to the company. Theresa was nominated both internally and externally by clients who recognized her great work and took the time to share with us!</div>
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Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com1tag:blogger.com,1999:blog-8771382020921741159.post-50850016329882783932012-07-26T10:31:00.000-07:002012-07-26T10:31:33.683-07:00Budgeting/Net Income-Facts and Procedures<div class="separator" style="clear: both; text-align: center;">
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<span style="font-family: Arial, Helvetica, sans-serif;">By: Linnea Juarez PCAM, CCAM</span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Each year the Board of Directors must take on the task of preparing and adopting an operating budget for the Association. This process involves an analysis of the reserve funding needs and requirements, operating income and expense over the current fiscal year and the association’s needs and owner’s expectations.
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<span style="font-family: Arial, Helvetica, sans-serif;">The result is the determination of the adequacy of the current assessment level as compared to the reserve funding requirements and operating expense projections. If the total of these two fund requirements is greater than the expected revenue sources, the board must contemplate options to cover this shortfall.
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<span style="font-family: Arial, Helvetica, sans-serif;">One obvious option is to raise the revenue levels usually through assessment increases. This is often necessary and desirable based on ongoing increases to operating costs. Another consideration must be the results of operations over the current operating year and prior year’s net operating results.
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<span style="font-family: Arial, Helvetica, sans-serif;">If the association has a positive operating fund balance, current net income which will result in a net increase to the operating fund balance and excess operating cash, then the board can and should consider using that net income to cover the increased operating and reserve requirements for the upcoming fiscal year.
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<span style="font-family: Arial, Helvetica, sans-serif;">An important consideration is that the net income to be applied to the budget must be backed by available operating cash. If the net income is mainly backed by accounts receivable and other non-cash assets, the net income is not a viable answer to the need for operating cash to cover increased operating expenses and reserve funding.
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<span style="font-family: Arial, Helvetica, sans-serif;">If the board determines that net income does exist and is backed by an accumulation of operating cash then a deficit budget should be adopted and published. This means that the revenue shown on the budget will be less than the total reserve allocations and operating expenses. The bottom line will be a net operating loss in the budget which will be covered by the carryover of net operating income from prior years.
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<span style="font-family: Arial, Helvetica, sans-serif;">Obviously the budget must be accompanied by a letter explaining why a deficit budget is being published and how it will be funded with excess operating cash.
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<span style="font-family: Arial, Helvetica, sans-serif;">After this process occurs the board’s next task is the end of their fiscal or calendar year and the preparation of the association tax returns and year-end financial statements. This involves the engagement of a CPA to perform these services for the association and to advise the board on their options regarding the filing of tax returns either under Revenue Code 277 or 528.
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<span style="font-family: Arial, Helvetica, sans-serif;">A short tutorial on these tax options is necessary for the board to understand the ramifications of each decision and the underlying costs and potential liabilities related to these two methods of tax filing. I am dismayed that the tax filing options are usually not even discussed with the board. They are handed a tax return and asked to sign. That appears to be the extent of their involvement in the process.
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<span style="font-family: Arial, Helvetica, sans-serif;">The association can file either an 1120 tax return or an 1120H. If the board chooses to file an 1120 under IRS Revenue Code 277, they must do all of the following;
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<span style="font-family: Arial, Helvetica, sans-serif;">1) Pay Estimated taxes in a timely fashion
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<span style="font-family: Arial, Helvetica, sans-serif;">2) Pay tax liability on time
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<span style="font-family: Arial, Helvetica, sans-serif;">3) Have the owners vote annually on the 70-604 election.
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<span style="font-family: Arial, Helvetica, sans-serif;">The 70-604 election is usually voted on at the annual meeting. Now, with the new election laws, this may become problematic. We have added this to our written ballot to make the process easier. This election basically asks the owners to approve the disposition of any net income which may be the result of the year’s operations. Technically there are three accepted uses for net income under this ruling which will protect the association from tax liability related to this issue.
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<span style="font-family: Arial, Helvetica, sans-serif;">1) Transfer the net income to Reserves.
</span><br />
<span style="font-family: Arial, Helvetica, sans-serif;">2) Carry the net income over to the next operating year to avoid the necessity of increasing the owner’s assessments.
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<span style="font-family: Arial, Helvetica, sans-serif;">3) Refund the net income to the membership.
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<span style="font-family: Arial, Helvetica, sans-serif;">Any of these options are dependent on the availability of cash. If the board voted to transfer net income to the reserve fund, but did not have the cash available to actually move from operating to the reserves, would this create an unfunded reserve liability? That certainly would not achieve the results the board was hoping for.
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<span style="font-family: Arial, Helvetica, sans-serif;">The decision to use net income to cover a projected budget shortfall in the upcoming fiscal or calendar year requires the availability of cash to support the expected costs of operations. You can’t pay bills with accounts receivable.
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<span style="font-family: Arial, Helvetica, sans-serif;">Refunding net income to homeowners can create an even bigger nightmare. The association may end their fiscal or calendar year with a net income of $1500. If refunded to the membership, what does the association use to pay their January operating bills? These bills may be due and payable before the assessments for the month have been received. The association needs operating cash to continue normal business operations.
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<span style="font-family: Arial, Helvetica, sans-serif;">Rather than asking the membership to decide the best use of net income, the wording of the 70-604 should be as follows:
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<span style="font-family: Arial, Helvetica, sans-serif;">Resolved: that any excess of membership income over membership expenses (profit) as defined in Internal Revenue Code Section 277 for the year ended _____ shall be applied to the subsequent tax year member assessment as provided by IRS Revenue Ruling 70-604.
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<span style="font-family: Arial, Helvetica, sans-serif;">This allows the board to analyze the needs of the association and the best use of any excess funds. They may decide to transfer a portion of the net income to the reserve fund and maintain a portion in the operating account to offset the increases expected in operating costs.
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<span style="font-family: Arial, Helvetica, sans-serif;">All of these actions are based on the concept of filing an 1120 tax return and having the membership vote on the 70-604 election.
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<span style="font-family: Arial, Helvetica, sans-serif;">The real question is if this is the best tax option for the association?
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<span style="font-family: Arial, Helvetica, sans-serif;">Under tax code 277, filing an 1120, the association is taxed at 15%. If they file under tax code 528 using an 1120H, the tax rate is 30%. The real question is what is taxable?
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<span style="font-family: Arial, Helvetica, sans-serif;">Under tax code 277, filing an 1120, all non-assessment income is taxable. This includes interest earned on banking accounts, both operating and reserve; laundry revenue which is not offset by laundry expense; parking and other revenue not offset by specific expenses. Net income is potentially taxable unless the association has followed the steps required including the passage of the 70-604 election. Various artricles have been written regarding the taxability of net income in this circumstance and a major question is whether an association can have multi-year net operating income protected by the 70-604 election..
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<span style="font-family: Arial, Helvetica, sans-serif;">There is a school of thought which takes the position that net income must be “used up” in the next year by either application to the reserve fund or to the next year’s assessments to offset required assessment increases. The assumption is that the association could be liable for taxes if the IRS were to perform an audit and determine that net income has occurred over multiple years without proper application as required under the 70-604 election.
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<span style="font-family: Arial, Helvetica, sans-serif;">All of this uncertainty can be avoided if the association files an 1120H tax form. First the association must qualify to file under revenue code 528 and secondly they must instruct their CPA to use this option. Assuming that your association can qualify (discuss with your CPA) to file an 1120H, the next question is the tax rate imposed under this tax code. The flat rate is 30% tax on all non-assessment income excluding the $100 allowance. If we assume that in most cases non-exempt income relates to interest earned on reserves and operations, how much is taxable?
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<span style="font-family: Arial, Helvetica, sans-serif;">In today’s banking economy, the earnings are so minor that paying 30% of nothing is nothing. It is a great time to instruct your CPA to file 1120H on behalf of the association. This avoids the issue of voting on the 70-604 election and the question of tax liability on net income. It may also “clean up” prior questionable issues related to net income.
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<span style="font-family: Arial, Helvetica, sans-serif;">Many CPA’s have already switched their clients to an 1120H filing and some have always filed this way. It is important for the board to have a basic understanding of why. When interest rates rise and taxable income becomes a greater issue, the board should be ready to open a dialogue with their tax preparer.</span>Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com0tag:blogger.com,1999:blog-8771382020921741159.post-85023805673021320412011-10-26T12:01:00.000-07:002011-10-26T12:15:17.844-07:00Change in HOA email protocol<div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh34q_5-xVSd-AmsEEe5ft3GBBNLW-3fQa8zxvv2aWH3W0bpnaOjiQ38tL_Dx1rF03Myr4_Wdfm6PWECcJgUDSbH4ZLmGoh7uK1W3bbZBfE9c7WbZsGAwVZrhx3AUkYTJt_3r7L9iFvhew/s1600/noemail.gif"><img style="margin: 0px 10px 10px 0px; width: 200px; height: 175px; float: left; cursor: pointer;" id="BLOGGER_PHOTO_ID_5667880949755314610" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh34q_5-xVSd-AmsEEe5ft3GBBNLW-3fQa8zxvv2aWH3W0bpnaOjiQ38tL_Dx1rF03Myr4_Wdfm6PWECcJgUDSbH4ZLmGoh7uK1W3bbZBfE9c7WbZsGAwVZrhx3AUkYTJt_3r7L9iFvhew/s200/noemail.gif" /></a><br /><div align="center"> </div><div align="center"> </div><div align="center"><font size="1" face="arial">BETH A GRIMM,<br />P.L.C.(Attorney)3478 Buskirk Ave. #1000Pleasant Hill, Ca.<br />94523OFFICE: (925) 746-7177FAX:<br />(925) 215-8454EMAIL: </font><a href="mailto:Califcondoguru@aol.com"><font size="1" face="arial">Califcondoguru@aol.com</font></a><br /><font size="1" face="arial"> FAX: (925) 609-9135</font></div><div><font size="1" face="Arial"></font> </div><div><br /><font size="2" face="arial">People have been talking for years about the upsides and downsides of email. One of the downsides - too many directors have found it to be a great and easy way to conduct business. So let's talk about an important new law, namely a bill that was signed by the Governor about a month ago. It's controversial, for sure. It's about board meetings - and increasing transparency in HOAs.<br /><br />NOTICE OF OPEN MEETINGS is still 4 days: Senate Bill 563 which has been signed into law tightens up the notice requirements for meetings, and puts an end to email meetings. Owners upset with their boards about secret meetings have nowhere to go, really, to complain, so they go to their legislators. Owners get upset when they want to attend board meetings and cannot find out when or where they are. And it irks owners who want to know what is going on when they see board members out and about walking in the development, or hanging out at the pool or at the local pizza parlor talking about association matters and then coming into meetings with a full consent calendar (meaning decisions have already been made). Whether the problems are real or perceived, the squeaky wheel often gets the grease in Sacramento, especially when it points to bad HOA conduct. Most years it seems to be a very hot topic.<br /><br />The new law, which takes effect January 1, 2012, will amend Sections 1363, 1363.05, and 1365.2 of the Civil Code (part of the Davis Stirling Act). Notice of the time and place of open board meetings isn't new. For years there has been a legal requirement to notify members at least 4 days prior to the meeting of the date and time of the meetings, except for executive sessions or emergency meetings. This notice could be given by posting in the common area, newsletter, by specification in the Bylaws, or by letter, or any method geared to reach the members.<br /><br />NOTICE OF EXECUTIVE SESSION MEETINGS: This new law requires notice to be given at least 2 days prior to a meeting "solely" for an executive session (meaning it is not held the same time as a board meeting I suspect). At least it allows for meeting notices by email for any owners that consent. The law changes the rules for considering action items that were not on the meeting notice for a regular board meeting.<br /><br />The new law permits meetings of the board to be conducted by teleconference - not previously in the Davis Stirling Act, but the Corporations Code has allowed for telephone or video conference meetings for a few years now. Most practitioners had already figured out that if a board met this way in an open meeting, it would have to make arrangements for owners to also "attend" by telephone, or video conference thus protecting the rights of members. The new law also requires that the notice of a teleconference meeting identify at least one physical location so that members of the association may attend and requires that at least one member of the board of directors be present at that location.<br /><br />THE END OF EMAIL MEETINGS with exception (emergency meetings): The new law also prohibits the board from taking action on any item of business outside of a board meeting, and doing business by email. It was bound to happen! I imagine there were a lot of complaints about this. Good HOA lawyers have been discouraging business by email for years. It's just been too tempting, too easy, for directors to communicate that way, often leaving an incriminating "paper trail" even when they claim to not have done business. This doesn't mean the board cannot communicate via email but watch out to avoid any email that says something like: " Do you agree that we should ???" or "I talked to Bill today and he definitely is a 'yes'. What about you?"<br /><br />Email is a quick and easy way to share information and circulate downloads and items the board needs to review, but watch for that fine line between passing information and setting up a consent calendar.<br /><br />There is an exception and that is for matters that require an emergency meeting: "... the board of directors shall not conduct a meeting via a series of electronic transmissions, including, but not limited to, electronic mail, except as specified in subparagraph (B). ... (B) Electronic transmissions may be used as a method of conducting an emergency meeting if all members of the board, individually or collectively, consent in writing to that action, and if the written consent or consents are filed with the minutes of the meeting of the board. Written consent to conduct an emergency meeting may be transmitted electronically."<br /><br /> OTHER CHANGES IN THE LAW<br /><br />RECORDS INSPECTION LAW - ACCESS TO EXECUTIVE SESSION AGENDAS. There are also some changes to the records inspection law (Civil Code Section 1365.2); owners will now be entitled to inspect an agenda for an executive session. So how do you protect the privacy of the subject matter? Keep it generic - otherwise the idea of confidentiality is lost. List the "purpose" on the agenda that puts it within the category appropriate for executive session meetings. Those would be discussions about pending or threatened litigation, disciplinary action, contract negotiation, and personnel matters. Suggested sample language: "Discuss disciplinary matter with owner" or "Discuss threat of litigation (or attorney letter regarding litigation)," rather than "Discuss Kim Jones' disciplinary matter with Ms. Jones" or "Discuss litigation threatened by Oleg Stanyon." If the matter to be discussed is pending litigation, the court papers are a matter of public record so you could in that case say "Discuss Dixon v. Association litigation." And the statute does exclude inspection of "... minutes and other information from executive sessions of the board of directors as described in Section 1363.05."<br /><br />RIGHT TO ATTEND TELECONFERENCE MEETINGS: Added to 1363.05(b) - a member of the association shall be entitled to attend a teleconference meeting or the portion of a teleconference meeting that is open to members, and that meeting or portion of the meeting shall be audible to the members in a location specified in the notice of the meeting.<br /><br /> NEW DEFINITIONS: Here are some of the new definitions:<br /> <br /><br />(1) "Item of business" means any action within the authority of the board, except those actions that the board has validly delegated to any other person or persons, managing agent, officer of the association, or committee of the board comprising less than a majority of the directors.<br />•(2) "Meeting" means either of the following:<br /><br />•(A) A congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business that is within the authority of the board.<br /><br />•(B) A teleconference in which a majority of the members of the board, in different locations, are connected by electronic means, through audio or video or both. A teleconference meeting shall be conducted in a manner that protects the rights of members of the association and otherwise complies with the requirements of this title. Except for a meeting that will be held solely in executive session, the notice of the teleconference meeting shall identify at least one physical location so that members of the association may attend and at least one member of the board of directors shall be present at that location. Participation by board members in a teleconference meeting constitutes presence at that meeting as long as all board members participating in the meeting are able to hear one another and members of the association speaking on matters before the board."<br />As usual, there will be some bristling and complaining about this new law, but the associations that are professionally managed will conform - and there is no telling what the "self-managed" associations will do. It seems that many turn a blind eye to difficult legislation, and there is plenty of it.<br /><br />Later this month - maybe I will get the opportunity to cover the new small claims court limits, the veto of the turf bill, the results of the transfer fee bill and and other legislation affecting HOAs and Condos. All bills should be final by now. Also watch my blogs for interim information - they are accessible on the main page of this website. Get your friends on the list for the free E-News now! It's never too late.<br /><br />Beth A. Grimm is an attorney who serves homeowner associations and homeowners alike. She is a frequent contributor to the Echo Journal and other similar publications in the State of California and on a national level. She provides several publications written in plain English to help people who need information about California law as it relates to homeowner associations. She posts a wealth of information on her website. And she was named the Volunteer of the Year in June by the Executive Council of Homeowners.<br /><br />Check out the Main and Resource Pages at www.californiacondoguru.com.<br /><br />Check out my new book called "THE CONDO OWNER'S ANSWER BOOK" and my new blog</font> </div></div></div>Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com0tag:blogger.com,1999:blog-8771382020921741159.post-56007683717801666532011-01-13T13:14:00.000-08:002011-01-24T14:47:45.211-08:00Liability in the Bargain? The Dangers of Hiring an Unlicensed Contractor:<div align="left"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQ_gfxd3T_BFNqxq9mknOXEGZiSNUqaIzlJVkgKBNuZk_MJKl0MQIPukj51neEP8YttGmC5P9IjObcXMxdxZ0fVh46L0_DsR4xLMSL-v4KpUS42e767u-rUXwpQj0vUJ_OlKHj39R4_j8/s1600/bw-newLogo.gif"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5561796071314683586" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQ_gfxd3T_BFNqxq9mknOXEGZiSNUqaIzlJVkgKBNuZk_MJKl0MQIPukj51neEP8YttGmC5P9IjObcXMxdxZ0fVh46L0_DsR4xLMSL-v4KpUS42e767u-rUXwpQj0vUJ_OlKHj39R4_j8/s200/bw-newLogo.gif" style="cursor: hand; display: block; height: 27px; margin: 0px auto 10px; text-align: center; width: 200px;" /></a><br />
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<span style="font-family: arial;">By Timothy J. Smith Esq.<br />
</span><br />
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<span style="font-family: arial;">Homeowners and homeowners' associations often face expenses to maintain or repair their property. It makes sense to look for the most affordable contractor available to do the work. Many times, through friends or relatives, a homeowner will come across an unlicensed contractor during their search for a person to do the work. The unlicensed contractor will provide a bid that is much lower than bids from licensed contractors and promises to do the same work. It sounds so appealing to save money but still get great workmanship that many people fall into the trap and hire the unlicensed contractor. However, the cheapest contractor available might be the one that will cost the most in the long run.</span><br />
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<span style="font-family: arial;"> It is not surprising that an unlicensed contractor would be less expensive than a licensed contractor. Unlicensed contractors have advantages that enable them to provide the lowest prices. They do not have to pay licensing fees, they do not have to obtain a bond to protect their work, and more often than not they do not purchase liability or workers compensation insurance. Without these added expenses the unlicensed contractor can provide their services at a rate lower than the legitimately licensed professional.</span><br />
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It is true that having a contractor's license is not a guarantee that the work will be done well, or even properly. Since there is no guarantee that a licensed contractor will do a better job why should a homeowner or association care if the contractor has a license? The answer is simple--to protect the homeowner or association from a myriad of problems that could arise.<br />
When is a License Required?</span><br />
<span style="font-family: arial;"><br />
The Contractors State License Board, a division of the California Department of Consumer Affairs, governs the issuance and supervision of contractors' licenses. The State License Board specifies a number of classifications for licensing and sets the standards necessary to receive the license. The contractor can only legally perform the work associated with the classification of the license they hold. A contractor must hold a valid contractors license for any work that will cost more than $500 in labor and material for any work that would fall into the classifications set by the License Board.</span><br />
<span style="font-family: arial;"><br />
Basic Protection<br />
Many professions require a special license or admittance to an organization for that specific profession. Lawyers, doctors, teachers, and contractors are just a few of the professions that immediately come to mind. For those of us who have to obtain a license or join a trade association, it feels that the purpose of licensing may be to keep out competition from other states and to generate revenue for the state. But the truth is much simpler. Everyone wants at least a minimal level of certainty that their doctor is competent, or that their lawyer actually knows at least a little bit about the law. The general goal of professional licensing is to ensure that the person in the profession has a minimal level of competence in their field. Does this mean that a person with a license will be the absolute best at what they do? Of course not. It is a minimal assurance that the person working on your home has more experience than that gained by simply watching TLC and Discovery programs on home renovation and thinking that they can do that work.</span><br />
<span style="font-family: arial;"><br />
Hiring a contractor that has a license also provides an avenue of grievance if a dispute arises. California Contractors State License Board requires mandatory arbitration for disputes under $12,500 (consequently the same amount that is required for the mandatory bond). A licensed contractor must participate in the mandatory arbitration in an attempt to resolve the dispute. With disputes between $12,500 and $50,000 the licensed contractor can opt for voluntary mediation to resolve the dispute. A voluntary dispute resolution process can be a much cheaper and less time consuming venture than litigation. If a dispute arises with an unlicensed contractor your only recourse would be to file a lawsuit. And if the unlicensed contractor is particularly shady, good luck finding them or collecting any award you might obtain. </span></div><br />
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http://www.berding-weil.net/newsletter/2010/12/59/Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com2tag:blogger.com,1999:blog-8771382020921741159.post-60132225730030358552010-11-08T11:23:00.000-08:002011-01-24T14:48:09.543-08:002010-2011 ANNUAL DISCLOSURE AND NOTICE CHECKLIST FOR CALIFORNIA COMMUNITY ASSOCIATIONS<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmo2g-uMLrbLxaxvm3jad5SGY0jrGXAr2ux6IaCCBIDl2kWjvNOOIejXOtGHXhkPl_eDBsVOle4_VdhGAb5z-xiOQB9y-mY4vzS79hQYlts2xqBNXbHEkixtwH9YlAkgUE3OF3kk3UOUo/s1600/images.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5537267782085009618" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmo2g-uMLrbLxaxvm3jad5SGY0jrGXAr2ux6IaCCBIDl2kWjvNOOIejXOtGHXhkPl_eDBsVOle4_VdhGAb5z-xiOQB9y-mY4vzS79hQYlts2xqBNXbHEkixtwH9YlAkgUE3OF3kk3UOUo/s200/images.jpg" style="cursor: hand; display: block; height: 159px; margin: 0px auto 10px; text-align: center; width: 200px;" /></a><span style="color: red;"><span style="font-size: 130%;"></span></span><br />
<span style="color: red;"><span class="Apple-style-span" style="font-size: 21px;"><br />
</span> </span>Not less than thirty (30) days nor more than ninety (90) days prior to the beginning of the fiscal year:<br />
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Pro Forma Operating Budget Civil Code §1365(a)<br />
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The association must distribute its “pro forma” operating budget within the “60-day window” to retain its ability to increase assessments without seeking an approval of the membership. If this requirement is not met, the members must approve any increase to the regular assessments.<br />
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The budget shall contain the following:<br />
An estimate of revenue and expenses on an accrual basis;<br />
A summary of the reserves printed in bold type, based on the most recent reserve study<br />
a) A Reserve study with site inspection is required every three years except in very limited cases. The funding portion of this study must be updated annually.<br />
b) If the Association has experienced a construction or design defect case, the summary must also include a separate line item for:<br />
• Funds received from compensatory damage awards or settlements; and<br />
• Expenditure or disposition of funds, including amounts for direct/indirect costs of repair of defects. If the association is required to have a CPA review of its financial statements, the above information is disclosed in that review rather than in the budget.<br />
A statement as to whether the board anticipates the levy of one or more special assessments;<br />
A basic description of the procedures used to calculate the reserves.<br />
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The association may distribute a summary of the operating budget in lieu of the pro forma<br />
budget as described above. The summary budget must give members notice that:<br />
<br />
<div>The complete budget is available for review at the association’s business office or other suitable location within the development; and<br />
Copies of the complete budget will be provided upon request at no charge to a member within five (5) days of the request. These notices must be printed in at least 10-point type.<br />
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Secondary Addresses Provided by Owners Civil Code §1367.1(k)<br />
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The association shall notify owners, at the time the association issues the pro forma operating budget, of their right to submit secondary addresses to the association for purposes of collection notices. Upon receipt of a written request by an owner identifying a secondary address for purposes of collection notices, the association shall send additional copies of any notices required by Section 1367.1 of the California Civil Code to the secondary address provided.<br />
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The owner’s request shall be in writing and shall be mailed to the association in a manner that shall indicate that the association has received it. The owner may identify or change a secondary address at any time, provided that, if a secondary address is identified or changed during the collection process, the association shall only be required to send notices to the requested secondary address from the point that the association receives the request.<br />
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Suggestion: Along with this notice, also send a form for owners to fill out if they want to opt out of having their addresses given to other members upon request. If the association maintains a list of email addresses, new case law suggests that the association may be obligated to distribute email addresses and physical addresses upon request, so the form should give the owners the option to keep either or both addresses confidential.<br />
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This also brings up the question of the association’s ability to “mask” or “protect” those addresses and e-mail addresses from lists, labels or other methods of making owner’s lists available.<br />
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Assessment and Reserve Funding Disclosure Summary Civil Code<br />
§§1365(a) & (b), 1365.2<br />
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The association must distribute an Assessment and Reserve Funding Disclosure Summary.<br />
The Civil Code also requires that this disclosure include a specified statement regarding the interest rate earned on reserve funds and the assumed inflation rate applied to major component repair and replacement costs.<br />
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Because of the complexity of this disclosure, we recommend it be completed annually by your reserve specialist.<br />
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Assessment Collection Policy Civil Code § 1365(e)<br />
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Members must receive a copy of the association’s Delinquency Control Policy within the same “60-day window” unless the association’s governing documents require a narrower period of time. The failure to adopt and distribute this assessment collection policy may affect an association’s ability to collect delinquent assessments.<br />
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Insurance Coverages Civil Code §1365(f)<br />
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Within the “60-day window” described above, unless the governing documents require a narrower window, the association must distribute to the members a summary of its property, general liability, earthquake, flood and fidelity insurance policies.<br />
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The summary should disclose:<br />
-The name of the insurer and the type of insurance; and<br />
-The policy limits and deductibles, if any.<br />
If this information is included in the Declaration Page of the policy, the Dec page may be distributed in lieu of the summary.<br />
The summary or declaration page must include the statement provided in Civil Code Section 1365(f)(4). This statement must be in at least 10-point boldface type.<br />
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If there is a significant change, such as a lapse, decrease in coverage, cancellation or non-renewal to any of the insurance policies, a notice shall be provided to the members by first-class mail as soon as reasonably practicable.<br />
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During the sixty (60) days prior to the beginning of the fiscal year:<br />
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(Notice the issue of 90 vs. 60 days prior to the beginning of the fiscal year)<br />
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Notice of Assessments, Foreclosures and Payment Plans Civil Code §1365.1<br />
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The association must distribute the notice as written in Civil Code Section 1365.1.<br />
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This notice must include the following language: “An owner may, but is not obligated to, pay under protest any disputed charge or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collection cost, or monetary penalty imposed as a disciplinary measure, and by so doing, specifically reserve the right to contest the disputed charge or sum in court or otherwise.”<br />
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With the budget or budget summary, or in any general mailing during the year:<br />
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1) Notice of Right to Minutes of Board Meetings Civil Code §1363.05(e)<br />
On an annual basis, the association must notify members of their right to receive copies of the minutes from board of directors’ meetings (which does not include executive session meeting minutes). The notice should state that members have the right to receive approved minutes, an unapproved draft, or a summary of the minutes within thirty (30) days of a board meeting upon the member’s request; and how and from whom those minutes may be requested.<br />
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2) Arbitration/Mediation of CC&Rs Disputes Civil Code §1369.590<br />
Annually, the association must distribute a summary of Civil Code Section 1369.510 et seq. to its members explaining their rights to request arbitration or mediation of disputes between the member and the association related to violations of the Governing Documents.<br />
Additionally, the summary must include description of the internal dispute resolution process<br />
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3) Within 120 days after the close of each fiscal year:<br />
Review of Financial Statement Civil Code §1365(c)<br />
Any year in which the association’s gross revenue equals or exceeds $75,000 a CPA must be engaged to perform a Review of the books and records of the association unless the governing documents require a higher level of service. (Audit)<br />
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Notice of Right to Receive Annual Report Corporations Code §8321<br />
For any fiscal year in which the association’s gross revenues are at least $10,000 but less than $75,000 the association must prepare a financial statement which includes:<br />
-A year-end balance sheet and income statement, and statement of cash flow for the fiscal year;<br />
-A notice stating where records of the association members’ names and addresses are stored;<br />
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The association must attach either the accountant’s report, if an independent accountant has reviewed or audited the financial statement, or a certificate by an officer indicating that the statement was prepared without review or audit.<br />
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Assessment Increases Civil Code §1366(d)<br />
Notice of an assessment increase or special assessment must be provided by first-class mail to members not less than thirty (30) nor more than sixty (60) days before the increase or assessment is due. It only makes sense to mail the assessment notice with the budget, which would mean that the budget could not be mailed until 60 days prior to the fiscal year end, not 90 days. The alternative is to mail your budget early and send out a separate notice of assessments in the 60 day window.<br />
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Notice of Intent to Borrow from Reserves Civil Code §1365.5(c)<br />
The board may authorize the temporary transfer of money from the reserve fund to the association's operating fund to meet short-term cash-flow requirements or other expenses, if the board has provided notice of the plan to make the transfer in a notice of the board meeting.<br />
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-The reasons the transfer is needed<br />
-How the Board intends to repay the borrowing and whether a special assessment may be considered<br />
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Notice of Intent to Postpone Repayment of Borrowed Reserves Civil Code §1365.5(c)<br />
The board may determine and disclose that delay of the repayment of borrowed reserve money would be in the best interests of the association. This action does not “forgive” the borrowing only allow the board to plan a longer period of repayment.<br />
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Item for discussion:<br />
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Is the failure of the association to transfer the amount budgeted to reserves during the fiscal year a borrowing?<br />
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This question is answered differently by various law firms in California. I can only voice my own research and opinion:<br />
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Your budget was a notice to the membership of how you intended to spend the assessment paid by each owner. You disclosed the amount to be funded into the reserves based on the suggestions of your reserve specialist.<br />
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If, due to cash flow problems, you are unable to make the total deposit to the reserve fund during the year, it is no different than if you had made the transfer and then “borrowed” the money back. Failure to fund does create an interfund liability. </div>Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com0tag:blogger.com,1999:blog-8771382020921741159.post-66054027986712179742010-10-20T09:43:00.000-07:002011-01-24T14:43:27.023-08:00Newsflash: Tough Secondhand Smoke Laws for Contra Costa County Condominiums<div align="center"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizOcsARs1nCcnwqVcQWFDfmrU8hyclrBQoU8sP715IND8rBf4ABNeE7HLftnLleFFMYbY3Yu0HGjo4h60Yj5mUVw65nz73aOmBkbGkvA-gtQ1mMUK5Wcx2Yk0OxjNxjDWQHnF4NjoLfps/s1600/bw-newLogo.gif"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5530170634723775650" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizOcsARs1nCcnwqVcQWFDfmrU8hyclrBQoU8sP715IND8rBf4ABNeE7HLftnLleFFMYbY3Yu0HGjo4h60Yj5mUVw65nz73aOmBkbGkvA-gtQ1mMUK5Wcx2Yk0OxjNxjDWQHnF4NjoLfps/s200/bw-newLogo.gif" style="cursor: hand; display: block; height: 27px; margin: 0px auto 10px; text-align: center; width: 200px;" /></a> By Andrea L. O'Toole, Esq</div><div align="left"><br />
</div><div align="left">The Contra Costa County Board of Supervisors has just passed an ordinance that bans smoking in all areas of new multi-unit residences. This follows a recent trend in the Bay Area as several cities and counties are more aggressively regulating secondhand smoke in multi-unit residential buildings. See article regarding San Francisco’s recently-enacted secondhand smoke regulations at:<a alt="" class="" href="http://www.berding-weil.net/articles/legislative-alert-for-sf-condos.php" target="">www.berding-weil.net/articles/legislative-alert-for-sf-condos.php</a>.The Contra Costa ordinance further limits where persons may smoke within existing multi-unit residences.<br />
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A multi-unit residence is a building having four or more dwelling units and, as such, would include most residential condominium buildings and many mixed-use residential/commercial buildings. Three cities in Contra Costa County - Richmond in 2009, and more recently, Pinole and Pleasant Hill - have already passed similar regulation of secondhand smoke.<br />
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Existing Buildings: Existing law already prohibits smoking in all indoor common areas of multi-unit residences and provides strict guidelines for where smoking may occur in outdoor common areas. (Health & Safety Code §445-4.004) The new ordinance extends that prohibition to exclusive use common areas as well, including outdoor balconies, porches, decks, patios, and carports.<br />
New Buildings: With respect to new condominium buildings - those with building permits issued after January 1, 2011 - smoking will be prohibited in all areas of the condominium buildings. That means that the smoking prohibition will pertain not just to the shared common areas of a building, but to the inside of the condominium units as well. The same restrictions apply for exclusive use common areas as discussed above. The ordinance further requires that leases, new and renewed, include non-smoking provisions.<br />
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These new regulations apply only to those properties situated within the unincorporated areas of the County and take effect January 1, 2011.</div><div align="left"></div><div align="left"><a href="http://www.berding-weil.net/newsletter/2010/10/55/">http://www.berding-weil.net/newsletter/2010/10/55/</a> </div>Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com3tag:blogger.com,1999:blog-8771382020921741159.post-18482572207626322312010-08-27T09:00:00.000-07:002011-01-24T14:48:26.678-08:00Dealing with Difficult People<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihHucglH7fqbbtwVxnqalnfWHXTyxeZm9amfiFeryI6YuCGWKrVdM1g9kltwpLPtdgPsHlsMOZJoYhjy66UkY22PwTdwvTkh7-mU-GTnCkoxxCG7CK3QL6Ttlw6BSrufyvygQjPdzG138/s1600/1W4MCAASIMEQCAX011NXCALC6DHGCAOHRPM2CAIE40Y5CAKG7TXNCATUA1U7CAMRJ3ZZCAXSX3DFCAU4JFDUCALED3K6CAI6J0IOCAD1Z15RCA8LZX1PCAFX13X2CATK2L7BCAYOKPO9.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5510122506961638418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihHucglH7fqbbtwVxnqalnfWHXTyxeZm9amfiFeryI6YuCGWKrVdM1g9kltwpLPtdgPsHlsMOZJoYhjy66UkY22PwTdwvTkh7-mU-GTnCkoxxCG7CK3QL6Ttlw6BSrufyvygQjPdzG138/s200/1W4MCAASIMEQCAX011NXCALC6DHGCAOHRPM2CAIE40Y5CAKG7TXNCATUA1U7CAMRJ3ZZCAXSX3DFCAU4JFDUCALED3K6CAI6J0IOCAD1Z15RCA8LZX1PCAFX13X2CATK2L7BCAYOKPO9.jpg" style="cursor: hand; float: left; height: 116px; margin: 0px 10px 10px 0px; width: 115px;" /></a><br />
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<em style="font-size: 85%;">By Julie Adamen: Julie Adamen is president of Adamen Inc., a consulting and placement firm specializing in the community management industry. Julie can be reached via email at</em><a href="mailto:julie@adamen-inc.com"><span style="font-size: 85%;"><em> julie@adamen-inc.com</em></span></a><span style="font-size: 85%;"><em> or through her website </em></span><a href="http://www.adamen-inc.com/"><span style="font-size: 85%;"><em>www.adamen-inc.com</em></span></a><span style="font-size: 85%;"><em>. </em></span><br />
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Few new community managers walking in on their first day have the slightest inkling what is in store for them unless they have extensive customer-service experience. Without scaring everyone too much let me say in no uncertain terms that some of the people with whom you will deal will be very difficult. Why is that? Largely it is because of three things:<br />
<br />
<ul><li>We deal in situations that affect people’s living arrangements, making even the smallest of issues seem very, very personal to the resident. </li>
<li>People find community associations a perfect place to enact personal agendas.<br />
</li>
<li>There are no repercussions for bad behavior.<a name='more'></a><br />
</li>
</ul><br />
<strong>Dealing with Difficult People (or, how to deal with the real heat in the kitchen)</strong><br />
When dealing with a problematic person, you must remain detached from the emotion of the moment by realizing that 1)Though the complainant appears to be upset with you, usually they are not: they are frustrated with the situation, and 2) Know that your response can either exacerbate or diffuse the problem, and 3) Know that you can't control the person, you can only control your reaction.<br />
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If you remember these simple truths, you will be able to stay detached. Once this is accomplished, you'll be able to respond to the problem, and not the attitude.<br />
<strong></strong><br />
<strong>Let's get started</strong><br />
For the most part you will encounter most of your "problem children" on the telephone. There is a very basic structure of response to that person on your part that will get you through 99% of those (often heated and angry) complaints (they work with in-person complaints as well). They are:<br />
<strong>Listen, empathize, focus, and solve the problem </strong><br />
<br />
<strong>Listen and take notes.</strong> As the individual is detailing his complaint, demonstrate that you are listening by repeating portions of what you have heard: “As I understand you, Mr. Smith’s dog barked last night between the hours of 2am and 6am – is that right?” Listen and take notes only. Why? Because you will need those notes for a service order or for the file, and it keeps you from multi-tasking (see below<br />
<br />
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<strong>Empathize</strong>. Intermittently offer reassuring words such as, “I see,” and, “I understand,” to show that you grasp their unhappiness with the situation and are listening. As long as the complainant sees you are listening and empathizing, the emotion will tend to diffuse.<br />
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<strong>Focus.</strong> Once it is established you are listening, you will be able to focus the conversation from an emotion-laden complaint to a positive course of action by you, on their behalf.<br />
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<strong>Solve the problem.</strong> “I’ll be sending Mr. Smith a letter asking him to comply with our rules. If the situation continues, please contact me again and we’ll take the next step.”<br />
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<strong>A VERY BIG word to the wise!</strong> When speaking with a complaining or angry person on the phone, absolutely do NOT multi-task; i.e., don’t check emails, texts or surf the net. Listen to the person talking and give them your full attention. Not only is it is rude (yes, it is), it is obvious to the person talking to you that you are not giving them your full attention, making them more frustrated or angry. I cannot emphasize this enough: Step away from the Blackberry!<br />
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<strong>More methods for dealing with the polite-challenged </strong><br />
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<strong>Resist the urge to immediate response.</strong> As soon as someone is "in your face," it's human nature to want to respond instantly with your knowledge of the situation. Unfortunately, this will almost always come off as defensive; so, take a deep breath and let the person vent. Then, respond.<br />
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<strong></strong><br />
<strong>Guide, don't teach.</strong> "Guiding" someone indicates that person is intelligent about what they are reporting, but maybe not about the process of getting that something resolved. "Teaching" someone indicates they are ignorant. A "teacher" mindset is a sure way to get yourself crosswise with owners or Board members, as comes across as paternalistic and/or patronizing.<br />
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<strong>Apologize for the event, or their perception thereof.</strong> When dealing with an angry person, it's okay to apologize for the event. This keeps you personally out of the blame game loop, but allows you to take responsibility for handling the problem. "I'm sorry this happened to you," does not admit guilt on your part. And it makes them feel better.<br />
<br />
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<strong>Don’t expect them to apologize for anything.</strong> Get over it right now: They could have been the biggest jerk in the world, but chances are slim they will apologize to you, even if they were dead wrong, or especially if they were dead wrong. Apologizing will be way too embarrassing for your difficult person. Move along with your work day, and own this truth.<br />
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Adamen Inc © 2010 All rights reserved.Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com0tag:blogger.com,1999:blog-8771382020921741159.post-69194702480322371132010-08-18T11:13:00.000-07:002011-01-24T14:48:45.250-08:00FDIC Insurance Coverage * Permanently Increased *<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_HRDrhrgtO5I_L2WFixHuV2TyUcNancKwQUjdkoZrx_vX5W_7HRMw8qaJ7Kx7cjiPYKJwDsXNI7BbgVcZvyGY-KMYMAyC1qNFSI5dXpjPVHdxC64W3dn0M0xT-Vm9OWL477n2M358WCc/s1600/images.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5506815224556797346" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_HRDrhrgtO5I_L2WFixHuV2TyUcNancKwQUjdkoZrx_vX5W_7HRMw8qaJ7Kx7cjiPYKJwDsXNI7BbgVcZvyGY-KMYMAyC1qNFSI5dXpjPVHdxC64W3dn0M0xT-Vm9OWL477n2M358WCc/s320/images.jpg" style="cursor: hand; float: left; height: 123px; margin: 0px 10px 10px 0px; width: 114px;" /></a><br />
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<a href="http://r20.rs6.net/tn.jsp?et=1103613514557&s=0&e=001js_x6fDhYzWxfG9fJdeD2M9qfw-qureLC9PymTe2Wp0BM1j3DarINUzxHSb26gg6gPLe21Ei1w8DcGLDt7ZixBRTnK261aBFT-MgoRC8vgHMHDCt7bGupD0ID5B7Jg6D" s="0&e=" shape="rect" target="_blank" title="http://r20.rs6.net/tn.jsp?et=" track="on"></a><a href="http://r20.rs6.net/tn.jsp?et=1103613514557&s=0&e=001js_x6fDhYzWxfG9fJdeD2M9qfw-qureLC9PymTe2Wp0BM1j3DarINUzxHSb26gg6gPLe21Ei1w8DcGLDt7ZixBRTnK261aBFT-MgoRC8vgHMHDCt7bGupD0ID5B7Jg6D" s="0&e=" target="_blank" title="http://r20.rs6.net/tn.jsp?et="></a><a href="http://r20.rs6.net/tn.jsp?et=1103613514557&s=0&e=001js_x6fDhYzWxfG9fJdeD2M9qfw-qureLC9PymTe2Wp0BM1j3DarINUzxHSb26gg6gPLe21Ei1w8DcGLDt7ZixBRTnK261aBFT-MgoRC8vgHMHDCt7bGupD0ID5B7Jg6D" s="0&e=" target="_blank" title="http://r20.rs6.net/tn.jsp?et="></a></div><div>On July 21, 2010, the FDIC Insurance coverage was permanently increased to $250,000 per tax ID number, per institution. We previously reported to you the insurance had been increased to $250K from $100K in late 2008. The increase was temporary as part of the financial bailout bill signed by the President. This increase has been made permanent... fantastic news given the last standard had been in effect since 1980. </div></div>Condominium Financial Management Inc.http://www.blogger.com/profile/15976861598637890249noreply@blogger.com0tag:blogger.com,1999:blog-8771382020921741159.post-17784661454193027972010-08-05T09:53:00.000-07:002011-01-24T14:49:06.820-08:00Is the lifeblood of the association bleeding out?<div align="left"><span class="Apple-style-span" style="font-family: arial;">The association lives on assessments. Many CID’s are facing major financial difficulties due to the failure of a high percentage of members to pay their monthly obligation. Late fees are assessed, interest calculated, and notices of delinquency mailed. At some point the account is sent to a collection firm or attorney to begin the process of preparing an assessment lien.</span><br />
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All of these actions are based on the CC&R’s, Delinquency Control Policy and California Civil Code. The management team should implement the policy of the board in the timely application of each step of collection of the assessment.<br />
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Now, under Civil Code section 1367.1 (c) (2), any lien recorded on or after January 1, 2006 requires a decision by the board of directors. “The board shall approve the decision by a majority vote of the board members in an open meeting. The board shall record the vote in the minutes of the meeting.”<br />
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After the recording of the lien, what happens? Following the recording of the lien, it may be enforced by any manner permitted by law. This may include Judicial Foreclosure or Non-Judicial Foreclosure.<br />
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Many boards are reluctant to take this next step. This reluctance is due to both misinformation and prudence. There are pros and cons to foreclosure which must be considered by the board before taking this action.</span><br />
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Ultimately, the goal of the board is to have the owner pay what is owed to the association. If the notices and lien have not caused the owner to do something about their debt to the association, will the threat of foreclosure? If the owner is facing financial ruin including the inability to make their mortgage payments, they probably will not be moved by a threat of foreclosure by the board.</span><br />
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The association is always in second place to the first deed of trust. Depending on the date of the filing of the assessment lien, the association could be in third or fourth position behind a second loan or line of credit. All of this information goes into the decision process when contemplating the next step on behalf of the association.<br />
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If the first deed of trust holder has filed an NOD (Notice of Default), the company providing collection services for the association may be reluctant or unwilling to proceed with an action on behalf of the association.<br />
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This has become a major problem for associations at this time. The lenders are taking their foreclosure off the calendar, meaning that they are delaying their action, and the association is left with a non-paying unit or lot and unable to proceed themselves.<br />
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Why do the lenders fail to continue their foreclosure action? Their borrower is not paying the mortgage and you would think they want to get them out of the property and find a paying customer. If they foreclose without a buyer ready and available, the bank becomes responsible for the assessments, taxes and insurance. If the property is in a project with a high number of delinquent accounts, there may not be a market for the unit at this time.<br />
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Another issue is that the lender does not want to recognize the loss on their books. If they foreclose, they are taking back the unit/lot in lieu of their mortgage and very often must sell the property for much less than the book value of the loan.<br />
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One opinion on this issue comes from a loan broker I spoke to in Marin. He feels that the lenders were caught flat footed by the mortgage meltdown and do not have the trained personnel to deal with the volume of foreclosures. According to this source, who by the way is my step-son and mortgage broker, the lenders are buried under an avalanche of defaults. Their foreclosure department has neither the time nor training to proceed in an expeditious manner.<br />
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So why can’t the association foreclose its lien, rent out the unit, and use the rental income to cover the assessments, taxes and insurance until the bank gets off its duff and takes action? Great idea, but illegal. California Civil Code section 890 (a) (1) “Rent Skimming” means using revenue received from the rental of a unit or home at any time during the first year period after acquiring that property without first applying the revenue to the payments due on all mortgages and deeds of trust encumbering that property.<br />
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In this case, the association is left with three options:<br />
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1) Do nothing! Wait for the bank to foreclose its loan.<br />
In this case, the association may have recourse to get a money judgment against the prior owner and garnish their wages or file the judgment in any county where the owner has assets.<br />
2) Foreclose the association’s lien, wait one year, and then rent the unit or home out and use that money to pay assessments, taxes and insurance.<br />
3) Foreclose the association’s lien, contact the lender, and try to make a<br />
deal with the lender to avoid “Rent Skimming”. Get them to agree that<br />
the association will rent out the unit, maintain it, pay the insurance and<br />
taxes and apply what is remaining to the assessments, and any thing<br />
left over goes to the lender. This agreement should be immortalized in<br />
writing with the help of the association’s attorney.<br />
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Another thought is that if there is a second deed of trust or line of credit which was taken out after the association’s lien was filed, they are in jeopardy from both the first deed of trust holder and the association. If the association files an NOD, that may force the holder of the second to come forward.<br />
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If the association decides to move ahead with their foreclosure, consideration as to the type of foreclosure must be taken. The association may use judicial or non-judicial foreclosure. There are pros and cons to both methods as follows:<br />
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Non-Judicial Foreclosure<br />
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Pros<br />
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1) Cheap, quick and relatively easy.<br />
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Cons<br />
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1) If there are no bidders on the court house steps and the owner does not step forward to “save” the property from foreclosure, the association will become the owner of the property.<br />
2) The association can’t rent the property for one year from taking title unless they want to turn over the rents to the lender, or try to negotiate sharing rents with the lender.<br />
3) The association has pursued a remedy and cannot seek a money judgment against the prior owner due to the one action rule.<br />
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Judicial Foreclosure<br />
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Pros<br />
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1) A judge and court are involved in the process and give protection to the association’s action. This is very important when there is a question of title or a high equity balance in the property.<br />
2) There is a possibility of not only selling the unit or lot, but getting a judgment against the owner if the proceeds are insufficient to cover the amount owed to the association. This is especially true if the unit was owned by an investor who has other properties and assets.<br />
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Cons<br />
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1) Expensive, slow, and requires legal counsel.<br />
2) After getting a judgment from the court, you still have to either sell the unit or lot, or try to collect from the debtor.<br />
3) There is a redemption period of up to one year following the sale during which the prior owner can pay what is owed and redeem their unit/lot. This can put quite a damper on any potential purchaser of the unit or lot.<br />
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Let’s assume that the association filed their assessment lien, waited out the time and the lender foreclosed. This action by lender has now wiped out the association’s lien as it applies to the property, but has no effect on the personal debt owed by the prior owner.<br />
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The association should determine if the owner is worth pursuing in small claims or other civil courts. Are they investors who have other assets to be attached? Do they have wages to be garnished? If this was the sole residence of this owner, very likely they have just lost their one major asset and have nothing to go after. On the other hand, if they were investors and own property in other areas, the association may well want to seek a money judgment in either Small Claims Court or Municipal Court and file that judgment in any county where that individual or company owns assets.<br />
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Remember the limitation for small claims action. The association can only seek to recover two claims per calendar year of $2500 or more not to exceed $5000 each.<br />
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If the accounts receivable exceeds $5000, the board must consider the cost related to hiring an attorney and paying court costs if they want to seek a judgment in municipal court.<br />
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Remember the old adage, “He who screams loudest, gets his way”? Don’t let this be the description for your collection policy. Many boards are being harassed by delinquent owners to “take them out of collection”. The board needs to prepare a defense made up of their fiduciary duty to protect the assets of the association and their duty to treat all owners on a fair and equitable basis.<br />
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Once the account is in collection, the board should refer the owner to that agency when they have questions or demands. If the owner requests a “Meet and Confer”, the board must agree. That doesn’t mean that the assigned board member must sit through three hours of weeping, wailing and cajoling.<br />
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Set a board policy for all Meet and Confer sessions.<br />
1) They are to be held within _____ days of the receipt of the written<br />
request for the hearing.<br />
2) They are to be no more than 30 minutes.<br />
3) The owner will be allowed 15 minutes to present their issues.<br />
4) The board will take 5 minutes to question or clarify any issues necessary.<br />
5) The owner will then have 10 minutes of rebuttal or closing argument time.<br />
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After all avenues of collection have been utilized, and a decision of the board has been reached that no further action should be taken in the attempt to collect the past due amounts, a motion of the board should be made to “write off’ the bad debt. This is a bookkeeping process which removes the balance from the books and records of the association as an active balance of accounts receivable.<br />
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This action does not mean that in the future, if this party were to win the State lottery, the association can’t seek collection via their judgment if they did not foreclose their lien.<br />
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The amount written off is charged to a Bad Debt Expense or against the Allowance for Bad Debt on the balance sheet.<br />
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At each year end, the CPA for the association should analyze the accounts receivable and create an Allowance for Bad Debt which is a contra-account on the balance sheet. This account is the estimate of how much of the total accounts receivable may not be collected.<br />
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Another way that this account is created is during the budget process and accounting year end actions. During the budget process, the accounts receivable should be analyzed to create assumptions as to the probability of assessments being paid by the membership in the next fiscal or calendar year. If the association has been experiencing a 10% delinquency they should create a line item in the budget for expected delinquencies in the next year.<br />
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The net effect of this line item is that it increases the assessments to all owners to cover those who are failing to pay their fair share. This may seem unfair to all the owners who do pay on time each year, but you must remember that this is a non-profit association and the budget comes down to a zero each year. That means that if 10% of the membership fails to pay their assessments, 10% of the expenses can’t be paid.<br />
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Bad debt expense is not the same as Allowance for Bad Debt. Bad Debt Expense is related to the assessments and other charges billed in that year only. At the end of the year, if you have not written off the balances from accounts receivable, but still have a probability of not collecting those amounts, you should debit the Bad Debt Expense and credit the Allowance for Bad Debt to maintain that probability.<br />
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Work with your association manager, collection agency, and CPA to make sure all of these issues are properly recorded, and that all delinquencies are pursued with the intent to collect what is owed to the association in a timely manner. We can only hope the tide will change in the next few years so we can have a new ‘hot topic’ to discuss in the HOA industry. Until then, stay the course and adhere to your policies!<br />
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</span></div><span style="font-family: arial;"></span>Staciehttp://www.blogger.com/profile/16834817898340631090noreply@blogger.com1