Year 2008
Click History for a list of changes and updates.
__See Recent Posts for an explanation of the content. Click Continue for the listing of recent posts with brief summaries.
Don Nordeen
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Click Continue for Post Continuation plus Comments. Or Click Show All for Above plus Post Continuation and Comments.
December 31, 2008
December 30, 2008
Formal Protest — Proposed Amendment to DMCCR Concerning Venue
2008 December 30
Last Update: 2009 Apr 09. Click History for a list of changes and updates.
__The continuation of this post is my formal protest of the proposed amendment to the Declaration of Master Covenants, Conditions and Restrictions for the Michaywé Planned Unit Development concerning venue.
__Owners/members were provided no information on the validity of the proposed amendment nor were they provided the opportunity to review what analysis, if any, was done by an attorney. The board meeting minutes do not state any approval of a motion by the board of the Michaywé Owners Association to authorize such an analysis.
__When I asked board member Jay Welter for a copy of any legal analysis, he advised that such was privileged to the board. Nonsense! Owners/members paid for any analysis and the analysis potentially affects their rights.
__Since owners/members had no opportunity to discuss, debate, learn and understand the ramifications of this proposed amendment, the protest letter below will be revised to include questions directed to this concerned owner/member. See History below for additions and revisions to date.
__A related post, Are delinquent dues & assessments a personal debt?, analysis this question and concludes that delinquent dues and assessments are not a personal debt, and therefore cannot be collected in court as such.
__(added 2009 Feb 20) Collections Policy — Click Dues Collections Policy for MOA's policy posted on its website.
Don Nordeen
==========
Continue reading Formal Protest — Proposed Amendment to DMCCR Concerning Venue.
__The continuation of this post is my formal protest of the proposed amendment to the Declaration of Master Covenants, Conditions and Restrictions for the Michaywé Planned Unit Development concerning venue.
__Owners/members were provided no information on the validity of the proposed amendment nor were they provided the opportunity to review what analysis, if any, was done by an attorney. The board meeting minutes do not state any approval of a motion by the board of the Michaywé Owners Association to authorize such an analysis.
__When I asked board member Jay Welter for a copy of any legal analysis, he advised that such was privileged to the board. Nonsense! Owners/members paid for any analysis and the analysis potentially affects their rights.
__Since owners/members had no opportunity to discuss, debate, learn and understand the ramifications of this proposed amendment, the protest letter below will be revised to include questions directed to this concerned owner/member. See History below for additions and revisions to date.
__A related post, Are delinquent dues & assessments a personal debt?, analysis this question and concludes that delinquent dues and assessments are not a personal debt, and therefore cannot be collected in court as such.
__(added 2009 Feb 20) Collections Policy — Click Dues Collections Policy for MOA's policy posted on its website.
Don Nordeen
==========
Continue reading Formal Protest — Proposed Amendment to DMCCR Concerning Venue.
- Key Words:xx Attorney Issues, Governance, Governing Documents, Members' Rights, Michaywé, Amendment, Abuse
December 28, 2008
Estimate of Operating Loss for 2008
2008 December 28
Last Edit: 2009 Feb 14. Click on History for changes and updates.
__Making an ongoing estimate of the projected year-end financial results is one of the primary obligations of the board of directors. The budget is annual; so the primary checking point on financial status should be the projected results against that budget.
__One of my ongoing questions at Open Forums is asking for financial results — particularly compared to prior year results. In general, the board is not prepared to answer the question even though the board has just approved filing of the financial report for the prior month.
__The continuation of this post contains further discussion and my estimate of the operating loss for 2008 which is in the range of $200,000 loss (most optimistic) to $280,000 loss. Mr. Todd Chwatun, general manager, was unequivocal during the Dec 13 meeting that the operating loss would be the optimistic number — $200,000 loss. For 2008, the board approved a balanced budget, meaning that the performance to budget is an unfavorable $200,000 at best.
__The Line of Credit and Accounts Payable are also unfavorable to 2007. In 2007, the board used $80,000 from the reserve fund for operations. These three accounts are a short-term debt of $566,000 which is about 65% of the annual dues billing.
__But maybe members aren't interested in receiving correct and competent financial information since they voted to not have an independent audit committee that could provide trustworthy financial reports.
Don Nordeen
===========
Click Continue for Post Continuation and any Comments.
Last Edit: 2009 Feb 14. Click on History for changes and updates.
__Making an ongoing estimate of the projected year-end financial results is one of the primary obligations of the board of directors. The budget is annual; so the primary checking point on financial status should be the projected results against that budget.
__One of my ongoing questions at Open Forums is asking for financial results — particularly compared to prior year results. In general, the board is not prepared to answer the question even though the board has just approved filing of the financial report for the prior month.
__The continuation of this post contains further discussion and my estimate of the operating loss for 2008 which is in the range of $200,000 loss (most optimistic) to $280,000 loss. Mr. Todd Chwatun, general manager, was unequivocal during the Dec 13 meeting that the operating loss would be the optimistic number — $200,000 loss. For 2008, the board approved a balanced budget, meaning that the performance to budget is an unfavorable $200,000 at best.
__The Line of Credit and Accounts Payable are also unfavorable to 2007. In 2007, the board used $80,000 from the reserve fund for operations. These three accounts are a short-term debt of $566,000 which is about 65% of the annual dues billing.
__But maybe members aren't interested in receiving correct and competent financial information since they voted to not have an independent audit committee that could provide trustworthy financial reports.
Don Nordeen
===========
Click Continue for Post Continuation and any Comments.
- Key Words: MOA Financial, Working Capital, budget
December 13, 2008
Accounting for the Reserve [Preservation] Fund
2008 December 13
Posted: 2009 Mar 11.
Click History for a list of changes and updates.
__This post including graphics is available as a PDF file at Accounting Preservation Fund.pdf.
__This post is my 2008 Dec 13 email to Vice President Kirk Yodzevicis concerning an incorrect accounting of $80,000 from the preservation fund (reserve for repair, replacement and renovation) which occurred in 2007. This was posted on 2009 Mar 11 as Accounting for the Reserve [Preservation] Fund. This post is included to place the email in correct time perspective in this weblog.
Don Nordeen
==========
Posted: 2009 Mar 11.
Click History for a list of changes and updates.
__This post including graphics is available as a PDF file at Accounting Preservation Fund.pdf.
__This post is my 2008 Dec 13 email to Vice President Kirk Yodzevicis concerning an incorrect accounting of $80,000 from the preservation fund (reserve for repair, replacement and renovation) which occurred in 2007. This was posted on 2009 Mar 11 as Accounting for the Reserve [Preservation] Fund. This post is included to place the email in correct time perspective in this weblog.
Don Nordeen
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- Key Words:xxFinancial Information, 2007 General; Financial Information, 2008 General; MOA Operations, General/Total; accounting; financial statements; preservation fund; reserve fund
December 8, 2008
Vote "NO" on Proposed Amendment to Michaywé Deed Restrictions Regarding Venue
2008 December 08
Last update: 2008 Dec 12. Click History for a list of changes and updates.
___The continuation of this post is an email to MOA members recommending a "NO" vote on the proposed amendment to the Michaywé Deed Restrictions to add a venue provision.
___Are you satisfied that the board has provided full and accurate information on:
___If the answers are "NO" to these questions, do you believe that the board has provided full and accurate information about the proposed amendment?
___If the last answer is "NO", then why would you vote for the proposed amendment based on the information provided?
Don Nordeen
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Last update: 2008 Dec 12. Click History for a list of changes and updates.
___The continuation of this post is an email to MOA members recommending a "NO" vote on the proposed amendment to the Michaywé Deed Restrictions to add a venue provision.
___Are you satisfied that the board has provided full and accurate information on:
- the financial status quarter by quarter?
- the financial status year by year?
- progress toward a balanced budget?
- not achieving a balanced budget?
___If the answers are "NO" to these questions, do you believe that the board has provided full and accurate information about the proposed amendment?
___If the last answer is "NO", then why would you vote for the proposed amendment based on the information provided?
Don Nordeen
===========
- Key Words:xx • Attorney Issues, • Governing Documents - General, • MOA Governance, • MOA Members & Members' Rights, CC&Rs, Declaration of Master Covenants, Conditions and Restrictions, duty of obedience, law, members' rights, POA members' rights, restrictive covenant, vote
November 23, 2008
Venue and Michigan Case Law on Amendment of CC&Rs
2008 November 23
Initial post: 2009 Apr 07. Click History for a list of changes and updates.
__The continuation of this post is an email to MOA Board Director Jay Welter concerning the board's proposal to seek an amendment to the Declaration of Covenants, Conditions and Restrictions ("DMCCR") defining venue for all purposes to be the courts in Otsego County. The reason for considering the amendment is a companion decision of the board to pursue collection of unpaid dues and special assessments in small claims court in Otsego County.
__Two significant questions are involved: (1) the requirements for amending the DMCCR for a new provision; and (2) whether or not third parties can change a resident's right of Michigan law that the venue for lawsuits is the county of the defendant (owner) for personal debt. Consequently, the amendment would affect venue only for owners of restricted property in Michaywé who are residents of another county or state. The effect of the amendment is to transfer the inconvenience of which court from MOA to the individual non-Otsego County resident.
__The analysis indicates that unanimous approval for such an amendment would likely be required to effect a redefinition of venue for litigation against an individual owner. To respect the rights of owners/members, the board should ensure that the proposed action is unquestionably valid under the law and governing documents.
Don Nordeen
==========
Initial post: 2009 Apr 07. Click History for a list of changes and updates.
__The continuation of this post is an email to MOA Board Director Jay Welter concerning the board's proposal to seek an amendment to the Declaration of Covenants, Conditions and Restrictions ("DMCCR") defining venue for all purposes to be the courts in Otsego County. The reason for considering the amendment is a companion decision of the board to pursue collection of unpaid dues and special assessments in small claims court in Otsego County.
__Two significant questions are involved: (1) the requirements for amending the DMCCR for a new provision; and (2) whether or not third parties can change a resident's right of Michigan law that the venue for lawsuits is the county of the defendant (owner) for personal debt. Consequently, the amendment would affect venue only for owners of restricted property in Michaywé who are residents of another county or state. The effect of the amendment is to transfer the inconvenience of which court from MOA to the individual non-Otsego County resident.
__The analysis indicates that unanimous approval for such an amendment would likely be required to effect a redefinition of venue for litigation against an individual owner. To respect the rights of owners/members, the board should ensure that the proposed action is unquestionably valid under the law and governing documents.
Don Nordeen
==========
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Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain. ------------------------------------------------------------------------------------------------------
Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain. ------------------------------------------------------------------------------------------------------
- Key Words:_ Attorney Issues; Governing Documents,; Members' Rights venue; amendment; governing documents; CC and Rs; Covenants Conditions and Restrictions; restrictive covenants
September 19, 2008
Dismissal of Nordeen v MOA Lawsuit
2008 September 19
Last update: 2008 Sep 21. Click History for a list of changes and updates.
___The continuation of this post is an email to MOA Members concerning the dismissal of the Nordeen v MOA Lawsuit. Included is a discussion of the rule of law and democratic issues involved with governance of owners associations.
___The court order not only dismissed the lawsuit, but also created the possibility of significant personal liability if I proceeded with an appeal. The Opinion and Order creates a number of claims of reversible error including a major one of using an incorrect Standard of Review upon which the Opinion and Order is based. Had I won the lottery in August, I would have appealed the Court's decision in a heartbeat.
___Your comments are invited and are welcome. Thanks. I am available for discussion and to answer any questions.
Don Nordeen
==========
Last update: 2008 Sep 21. Click History for a list of changes and updates.
___The continuation of this post is an email to MOA Members concerning the dismissal of the Nordeen v MOA Lawsuit. Included is a discussion of the rule of law and democratic issues involved with governance of owners associations.
___The court order not only dismissed the lawsuit, but also created the possibility of significant personal liability if I proceeded with an appeal. The Opinion and Order creates a number of claims of reversible error including a major one of using an incorrect Standard of Review upon which the Opinion and Order is based. Had I won the lottery in August, I would have appealed the Court's decision in a heartbeat.
___Your comments are invited and are welcome. Thanks. I am available for discussion and to answer any questions.
Don Nordeen
==========
- Key Words:xx• Attorney Issues, • Governing Documents (General), • MOA Board of Directors, • MOA Governance, • MOA Members & Members' Rights, • Nordeen v Michaywé Owners Association, attorney, board of directors, breach of fiduciary duty, business judgment rule, bylaws, CC&Rs, Covenants Conditions and Restrictions, Declaration of Master Covenants, Conditions and Restrictions, dues, duties, duty of care, duty of loyalty, duty of obedience, duty to act, duty, fiduciary duties, fiduciary duty, fiduciary, governance, governing documents, governing, law, laws, lawsuit, members' rights, POA Board of Directors issues, POA governance, POA members' rights, restrictive covenant
August 29, 2008
2007 Audit Financial Statements
2008 August 29
Last update: 2008 Sep 13. Click History for a list of changes and updates.
___The audit reports for 2007 are finally available. They should have been available and summarized in the notice of the annual meeting.
___The continuation of this post is a summary of the results reported. Roughly, the results for 2007 are about $100,000 worse than for 2006, which were unfavorable as have been prior years. The cash flow for 2007 was negative (meaning unsustainable).
___If my review of the the 2007 audit report is incorrect, or if you have concerns about the findings from the review, please post a comment.
Don Nordeen
===========
Click Continue for Post Continuation plus Comments.
Last update: 2008 Sep 13. Click History for a list of changes and updates.
___The audit reports for 2007 are finally available. They should have been available and summarized in the notice of the annual meeting.
___The continuation of this post is a summary of the results reported. Roughly, the results for 2007 are about $100,000 worse than for 2006, which were unfavorable as have been prior years. The cash flow for 2007 was negative (meaning unsustainable).
___If my review of the the 2007 audit report is incorrect, or if you have concerns about the findings from the review, please post a comment.
Don Nordeen
===========
Click Continue for Post Continuation plus Comments.
- Key Words: Financial Information, 2007 General; MOA Operations, General/Total; accounting; financial statements; preservation fund; reserve fund
July 28, 2008
Which attorney should be believed?
2008 July 28
Click History for a list of changes and updates.
__Maybe a more appropriate title is "Should any attorney for MOA be believed?" Or, what actions should a board take to ensure that any opinion of an attorney is likely to be valid under the law and governing documents?
__Part of the broader question is "Who does the attorney represent?" or "Who is the client?"
__The continuation of this post discusses these questions in the context of Article IX of the bylaws for which MOA has conflicting opinions from two different attorneys on whether or not the board of directors has the authority to amend the bylaws.
Don Nordeen
===========
Click Continue for Post Continuation plus Comments.
Click History for a list of changes and updates.
__Maybe a more appropriate title is "Should any attorney for MOA be believed?" Or, what actions should a board take to ensure that any opinion of an attorney is likely to be valid under the law and governing documents?
__Part of the broader question is "Who does the attorney represent?" or "Who is the client?"
__The continuation of this post discusses these questions in the context of Article IX of the bylaws for which MOA has conflicting opinions from two different attorneys on whether or not the board of directors has the authority to amend the bylaws.
Don Nordeen
===========
Click Continue for Post Continuation plus Comments.
- Key Words:_ • Attorney Issues, • Community Association • Governing Documents (General), •Members' Rights, • Michaywé Owners Association, attorney, board of directors, engagement letter, governing documents, lawyer, organization as client, property owners association, transparency
July 27, 2008
Document From MOA Board Re Nordeen v MOA
2008 July 27
Click History for a list of changes and updates.
__A one-page undated yellow insert entitled, Re: Nordeen v MOA, was included with the 2008 May Business Review on the Nordeen v MOA lawsuit. "Signed" by the board or directors, it doesn't even have many of the counts properly described. The Complaint in the lawsuit speaks for itself. The document is available on the
__This is another example of the board not providing full and accurate information to the members. Providing full and accurate information requires an understanding of the issues.
__The continuation of this post provides my discussion of the lawsuit followed by the text from the Board's yellow paper with my comments added. Please call for a confidential discussion.
Don Nordeen
(989) 939-8240
===========
Click Continue for Post Continuation plus Comments.
Click History for a list of changes and updates.
__A one-page undated yellow insert entitled, Re: Nordeen v MOA, was included with the 2008 May Business Review on the Nordeen v MOA lawsuit. "Signed" by the board or directors, it doesn't even have many of the counts properly described. The Complaint in the lawsuit speaks for itself. The document is available on the
__This is another example of the board not providing full and accurate information to the members. Providing full and accurate information requires an understanding of the issues.
__The continuation of this post provides my discussion of the lawsuit followed by the text from the Board's yellow paper with my comments added. Please call for a confidential discussion.
Don Nordeen
(989) 939-8240
===========
Click Continue for Post Continuation plus Comments.
- Key Words:_ access; access to records; accounting; Accounting Principles; accounting standards; AICPA; AICPA Audit & Accounting Guide; AICPA Audit & Accounting Guide for Common Interest Reality Associations; Attorney Issues; breach of fiduciary duty; business judgment rule; case law; CC&Rs; CI/DR Dues; closed session; complaint; consolidated financial statement; Covenants Conditions and Restrictions; duty of care; duty of loyalty; duty of obedience; duty to act; executive session; fiduciary duty; lawsuit; Members' Motion; members' rights; Michaywé; Michaywe; Michaywé Owners Association; Michaywe Owners Association; open meetings; organization as client; planned unit development; prudent person; PUD; restrictive covenant; roles and responsibilities
July 24, 2008
Preservation of MOA's Assets
2008 July 24
Posted: 2008 Sep 05. Click History for a list of changes and updates.
___One of the major obligations of MOA through its board of directors is the preservation of MOA's assets. The quality and appearance of the assets provides an important indication of the well being of the Association. Wear and tear are inevitable. Assets in need of restoration are an obvious indicator of the financial health of the Association and poor management by the board of directors.
___The continuation of this post provides the parts of the 2005 preservation study for the items identified for RRR in the 2006-2010 time frame. It seems clear that the current board has decided not to take any action on preserving the assets, even though the board made a report in 2006 stating that the estimates were on the low side, items were omitted from the study, and the preservation fund had a major shortfall.
Don Nordeen
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Continue reading "Preservation of MOA's Assets".
Posted: 2008 Sep 05. Click History for a list of changes and updates.
___One of the major obligations of MOA through its board of directors is the preservation of MOA's assets. The quality and appearance of the assets provides an important indication of the well being of the Association. Wear and tear are inevitable. Assets in need of restoration are an obvious indicator of the financial health of the Association and poor management by the board of directors.
___The continuation of this post provides the parts of the 2005 preservation study for the items identified for RRR in the 2006-2010 time frame. It seems clear that the current board has decided not to take any action on preserving the assets, even though the board made a report in 2006 stating that the estimates were on the low side, items were omitted from the study, and the preservation fund had a major shortfall.
Don Nordeen
==========
Continue reading "Preservation of MOA's Assets".
- Key Words:_ access to records; accounting; annual meeting; arbitrary; arbitrary and capricious; Balanced Budget; Business Reviews, 2007; consolidated financial statement; depreciation; Fiduciary Duty; Financial Information, 2007 General; Financial Information, Capital Projects; Financial Information, General; preservation; preservation fund; reserve; reserve fund; Reserves for Capital Repair; transparency;
May 26, 2008
Q and A for Article IX of the MOA Bylaws
2008 May 25
Click History for a list of changes and updates.
_____Not much information has been provided concerning the advantages and disadvantages to members for Article IX of the MOA Bylaws. Article IX established two committees (Audit and Governing Documents) of the membership with election of two co-chairs serving two-year staggered terms.
_____The continuation this post provides questions and answers for the known questions. If you have another question or have a comment, please add by clicking on "Post a Comment" at the end of this post. Questions and Answers are below.
Don Nordeen
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Continue reading Q and A for Article IX of the MOA Bylaws.
Click History for a list of changes and updates.
_____Not much information has been provided concerning the advantages and disadvantages to members for Article IX of the MOA Bylaws. Article IX established two committees (Audit and Governing Documents) of the membership with election of two co-chairs serving two-year staggered terms.
_____The continuation this post provides questions and answers for the known questions. If you have another question or have a comment, please add by clicking on "Post a Comment" at the end of this post. Questions and Answers are below.
Don Nordeen
===========
Continue reading Q and A for Article IX of the MOA Bylaws.
- Key Words:_ access; access to records; accounting; Accounting Principles; accounting standards; annual meeting; bylaws; governing documents; meeting; members' meeting; Michaywe Owners Association; MOA Operations, General/Total; nonprofit corporation; nonprofit corporation act; nonprofit GAAP; planned unit development; POA; preservation fund; property owners association; reserve fund; Reserves for Capital Repair
April 5, 2008
Letter to MOA Board re Nordeen v MOA
2008 April 05
Click History for a list of changes and updates.
__The continuation of this post is a letter to the MOA Board of Directors Re Nordeen v MOA and Related Issues. The letter includes three attachments: A. Overview of why this lawsuit; B. Roles of Board and Attorney; and C. Fiduciary Duty. Posted for members' information. Comments are welcome. Please scroll down to the end of this post after the attachments.
__A PDF file of this letter with its three attachments can be downloaded at 2008 Apr 05 Letter to the Board.
__The Complaint in Nordeen v MOA is available at Complaint, MOA Governing Documents.
__Some of the links in this post are to the password-restricted website. See the Welcome page to gain access.
Don Nordeen
==========
Click Continue for Post Continuation plus Comments.
Click History for a list of changes and updates.
__The continuation of this post is a letter to the MOA Board of Directors Re Nordeen v MOA and Related Issues. The letter includes three attachments: A. Overview of why this lawsuit; B. Roles of Board and Attorney; and C. Fiduciary Duty. Posted for members' information. Comments are welcome. Please scroll down to the end of this post after the attachments.
__A PDF file of this letter with its three attachments can be downloaded at 2008 Apr 05 Letter to the Board.
__The Complaint in Nordeen v MOA is available at Complaint, MOA Governing Documents.
__Some of the links in this post are to the password-restricted website. See the Welcome page to gain access.
Don Nordeen
==========
Click Continue for Post Continuation plus Comments.
- Key Words:xxKeyWords
December 31, 2007
Recent Posts — 2007
Year 2007
Posted: 2009 Apr 03. Click History for a list of changes and updates.
__See Recent Posts Explanation for an explanation of the content. Click Continue for the listing of recent posts with brief summaries.
Don Nordeen
==========
Click Continue for Post Continuation plus Comments. Or Click Show All for Above plus Post Continuation and Comments.
Posted: 2009 Apr 03. Click History for a list of changes and updates.
__See Recent Posts Explanation for an explanation of the content. Click Continue for the listing of recent posts with brief summaries.
Don Nordeen
==========
Click Continue for Post Continuation plus Comments. Or Click Show All for Above plus Post Continuation and Comments.
June 14, 2007
Competitive Fees for all Services and Benefits
2007 June 14
Last update: 2009 Jun 27. Click History for a list of changes and updates.
__The continuation of this post is work in progress on this subject. It is posted in its incomplete form to provide the internet links to user fee schedules used by other property owners associations. Otherwise it only provides a few notes from my internet research.
Don Nordeen
==========
Continue reading Competitive Fees for all Services and Benefits.
Last update: 2009 Jun 27. Click History for a list of changes and updates.
__The continuation of this post is work in progress on this subject. It is posted in its incomplete form to provide the internet links to user fee schedules used by other property owners associations. Otherwise it only provides a few notes from my internet research.
Don Nordeen
==========
Continue reading Competitive Fees for all Services and Benefits.
- Key Words:_ Community Association, Governance, Michaywé, MOA Operations (General/Total), Recreational Facilities, User Fees; Governing Documents; amenities; fee schedule; golf; members' rights; meeting rooms; recreational facilities; tennis; storage; swimming; user fees
June 12, 2007
Board Action to Assess a Late Fee of $25 for Nonpayment of Dues
2007 June 12
Last update: 2009 Apr 02 which is the initial post. Click History for a list of changes and updates.
__ The continuation of this post is an email on the above subject. References to prior correspondence are included. The Fair Debt Collection Practices Act may apply to collection of delinquent dues and assessments.
__ Some of the internet links in the post are to a password-protected weblog. If you are a MOA member, please refer to the Welcome and Home Page for information on how to access that weblog.
Don Nordeen
==========
Last update: 2009 Apr 02 which is the initial post. Click History for a list of changes and updates.
__ The continuation of this post is an email on the above subject. References to prior correspondence are included. The Fair Debt Collection Practices Act may apply to collection of delinquent dues and assessments.
__ Some of the internet links in the post are to a password-protected weblog. If you are a MOA member, please refer to the Welcome and Home Page for information on how to access that weblog.
Don Nordeen
==========
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Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain.
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Continue reading Board Action to Assess a Late Fee of $25 for Nonpayment of Dues. Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain.
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- Key Words:__ Financial Information, General; Governing Documents, 2005-6 Amendment Initiative; Governing Documents, General; MOA Board of Directors; MOA Governance; MOA Members & Members' Rights; late fees; delinquent dues; assessment
June 7, 2007
Audit Considerations for 2006
2007 May 07
Last edit: 2010 Feb 16. Click History for a list of changes and updates.
__ The continuation of this post is an email to the board summarizing the accounting and audit concerns regarding MOA's financial accounting and reports. Fourteen subject areas are covered, which is an indication of the magnitude of the opportunities for improvement. My goal is to help make the accounting and accounting practices so well founded that even over a beer after a round of golf the members comment that they have no quarrels with the accounting. With solid credibility in the accounting, the members can better spend their efforts on helping to make the necessary improvements.
__ Please post your comments.
Don Nordeen
==========
Continue reading Audit Considerations for 2006.
Last edit: 2010 Feb 16. Click History for a list of changes and updates.
__ The continuation of this post is an email to the board summarizing the accounting and audit concerns regarding MOA's financial accounting and reports. Fourteen subject areas are covered, which is an indication of the magnitude of the opportunities for improvement. My goal is to help make the accounting and accounting practices so well founded that even over a beer after a round of golf the members comment that they have no quarrels with the accounting. With solid credibility in the accounting, the members can better spend their efforts on helping to make the necessary improvements.
__ Please post your comments.
Don Nordeen
==========
Continue reading Audit Considerations for 2006.
- Key Words:_ Financial Information, 2006 General; Financial Information, 2005 General; Financial Information, General; MOA Accounting Practices; MOA Board of Directors; MOA Operations, General/Total
May 18, 2007
A Discussion of "User Fees" or "Charges" for Michaywé
2007 May 18
Posted 2009 May 04 but indexed to the original date. Click History for a list of changes and updates.
__The continuation of this post is a summary of my proposal concerning the subject of User Fees which was submitted to the board of directors in 2007. This concept has been discussed by MOA homeowners at Open Forums in Board meetings. Many voiced support. However, no formal discussion or proposals have been made by the board to give all members, both homeowners and lot owners, the opportunity to better understand and comment on the concept.
__The fees suggested were included after studying fees charged by other Home Owners Associations and other entities like the Sportsplex. Many other owners associations use this concept. Continue on to read the particulars.
__Also, an unfinished discussion of user fees, Competitive Fees for all Services and Benefits, is available to provide the internet links to the user fee schedules used by other associations.
Kate Nordeen
==========
Click Continue for Post Continuation plus Comments.
A Discussion of "User Fees" or "Charges" for Michaywé (continued) A DISCUSSION OF "USER FEES" OR "CHARGES" FOR MICHAYWE' __This pamphlet [Sample Michaywé User Fee Schedule.pdf at [http://swagman.typepad.com/files/Mw%27UserFeeSchdl4AR.pdf]] is meant as a starter for conversation and debate on the subject of User Fees or Charges for Michaywe' amenities. The amounts listed are for illustration only and were chosen based on fees and chargers other developments use. __In researching a number of Property Owner's Associations which have amenities, I found that most of them have user fees as part of their financial picture. Basically, the dues - so much per lot or unit- pay for the convenience and maintenance of the amenities, with operational costs a combination of subsidies, public use and user fees. __Our Deed Restrictions say:
- History:_
- 2009 May 04 — Posted 2009 May 04 but indexed to the original date.
- Links:_ A Discussion of "User Fees" or "Charges" for Michaywé at [http://swagmanmwpoa.blogspot.com/2007/05/discussion-of-user-fees-or-charges-for.html]
- Key Words:_ Governing Documents, Members' Rights, Michaywé, MOA Operations (General/Total), Recreational Facilities,
A Discussion of "User Fees" or "Charges" for Michaywé (continued) A DISCUSSION OF "USER FEES" OR "CHARGES" FOR MICHAYWE' __This pamphlet [Sample Michaywé User Fee Schedule.pdf at [http://swagman.typepad.com/files/Mw%27UserFeeSchdl4AR.pdf]] is meant as a starter for conversation and debate on the subject of User Fees or Charges for Michaywe' amenities. The amounts listed are for illustration only and were chosen based on fees and chargers other developments use. __In researching a number of Property Owner's Associations which have amenities, I found that most of them have user fees as part of their financial picture. Basically, the dues - so much per lot or unit- pay for the convenience and maintenance of the amenities, with operational costs a combination of subsidies, public use and user fees. __Our Deed Restrictions say:
"As a member of the Association each Owner shall be entitled to the use and enjoyment of the Michaywe' Common Properties which are an integral part of the Restricted Property, and (each Owner) shall be obligated for related financial support for Michaywe' Common Properties."I believe this allows us to implement user fees as part of our financial support. __Just as golfers pay for using the golf course, I believe owners should pay for swimming, tennis and use of facilities. For absent owners, support for User Fees seems only fair. For lot owners with homes, well kept amenities are important in sustaining the real-estate value of their property as well as for their enjoyment and sense of community. When a person builds a home in a development with amenities, it is incumbent upon the owner to support them. __To make User Fees or Charges convenient, I am suggesting the use of the electronic access card. For other facility uses, arrangements would be made through the MOA office as is done now. Golf would be handled as it is now. There are a number of companies in Michigan who sell cards and equipment needed. Further research on these would be needed. __Please take time to look at the pamphlet and then begin a discussion to consider making User Fees or Charges part of our financial package. __Formulated and Submitted by Kate Nordeen, May 16, 2007
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April 3, 2007
Recommended Bylaws Provision re Operating Plan and Budget
2007 April 03
Last edit: 2009 Mar 23. Click History for a list of changes and updates.
__The continuation of this post is an email to the MOA board of directors recommending an amendment to the bylaws concerning the balanced budget requirements. This amendment merely makes more specific what is to be included in the balanced budget calculation, and would require a monthly projection for balance (unbalance). The M-W online dictionary definition of budget is
Recommended Bylaws Provision re Operating Plan and Budget (continued) __ _From: Don Nordeen ____Date: 2007 April 3 18:59:47 EST ____ _To: Floyd Burchard, Bill Martella, Tad Latuszek, Bob Olszewski, _________Vicky Rigney, Carolyn Study, Kirk Yodzevicis ____ _Cc: Bill Nowacki, Robert Felt, Don Nordeen, Bob Allaben, Bob&Jackie _________Kish, Jack Barry, Mike Buckley, Phil Curtiss, Bill Fish, Gary Hyatt, _________Dick Nelson, Kate Nordeen, Diane Shockey, Pam Tavernier, _________Jim PagelsO, Dick&Joyce Thams, Christine Zarichney __Subject: Recommended Bylaws Provision re Operating Plan and Budget Date: 2007 April 03 ___ _From: Don Nordeen_____ _To: Floyd Burchard, Tad Latuszek, Bill Martella, Bob Olszewski, __________Vicky Rigney, Carolyn Study, Kirk Yodzevicis _____ _cc: Bob Allaben, Jack Barry, Mike Buckley, Phil Curtiss, Bill Fish, __________Gary Hyatt, Bob Kish, Don Nordeen, Dick Nelson, __________Bill & Penny Nowacki. Kate Nordeen, Jim Pagels, Vicki Rigney, __________Diane Shockey, Pam Tavernier, Dick Thams ______cc: Christine Zarichney (for MOA file) __Subject: Recommended Bylaws Provision re Operating Plan and Budget Re: Recommended Bylaws Provision re Operating Plan and Budget __This responds to the discussion concerning Operating Plan and Budget at the Special Board Meeting on Mar 29. I had the writing assignment on this provision. At the Mar 14 bylaws cmte meeting, there were a number of decisions on content, but not full agreement on the language. My email (Appendix) on the revised language was sent to the bylaws cmte on Mar 15. A lot was done at the last moment in putting the bylaws package together, so a few glitches are not unexpected. __The discussion at the Mar 29 board meeting was a very good one. Since the members control the money by having to approve both the dues cap and any special assessment, and since the members are unlikely to ever assign any part of that to the board, a way must be found to connect the members with the operating plan and budget. The operating plan, budget, dues cap and special assessment all go together. Even though the decisions are made by the members, the board has a major role in the process. Trust is essential. ************************************************************************ __With regard to trust, consider a few aspects of how the board views the members as evidenced by the actions taken on Mar 29. The qualitative scoreboard is:
4 a : a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them b : a plan for the coordination of resources and expenditures c : the amount of money that is available for, required for, or assigned to a particular purposeThis definition includes all sources of financing and all expenditures. Unfortunately, the boards over the past six years have only considered revenues and expenses (income & expense items) only, which has underestimated the finances required, and helps to explain MOA's deteriorating financial condition. __This is also a policy issue for building trust with members. An interpretation that avoids disclosing the true budget conditions to members does not build trust with members. __(added 2009 Mar 23) A prior email to the board discusses the concept of Annual Approval of Operating Plan and Budget at [http://swagman.typepad.com/michaywe_poa/2006/10/annual_approval.html] Don Nordeen ========== Click Continue for Post Continuation plus Comments.
- History:xx
- 2009 Mar 23 — Added link to prior discussion of the concept.
- 2007 Jan 10 — Initial Post, but indexed to the date of the email, 2007 Apr 03.
- Links:xxRecommended Bylaws Provision re Operating Plan and Budget at [http://swagmanmwpoa.blogspot.com/2007/04/recommended-bylaws-provision-re.html]
- Key Words:x Financial Information, General; Governing Documents, 2005-7 Amendment Initiative; Governing Documents, General; MOA Board of Directors; MOA Governance; MOA Members & Members' Rights; MOA Operations, General/Total; planning; plan; budget; balanced budget
Recommended Bylaws Provision re Operating Plan and Budget (continued) __ _From: Don Nordeen ____Date: 2007 April 3 18:59:47 EST ____ _To: Floyd Burchard, Bill Martella, Tad Latuszek, Bob Olszewski, _________Vicky Rigney, Carolyn Study, Kirk Yodzevicis ____ _Cc: Bill Nowacki, Robert Felt, Don Nordeen, Bob Allaben, Bob&Jackie _________Kish, Jack Barry, Mike Buckley, Phil Curtiss, Bill Fish, Gary Hyatt, _________Dick Nelson, Kate Nordeen, Diane Shockey, Pam Tavernier, _________Jim PagelsO, Dick&Joyce Thams, Christine Zarichney __Subject: Recommended Bylaws Provision re Operating Plan and Budget Date: 2007 April 03 ___ _From: Don Nordeen_____ _To: Floyd Burchard, Tad Latuszek, Bill Martella, Bob Olszewski, __________Vicky Rigney, Carolyn Study, Kirk Yodzevicis _____ _cc: Bob Allaben, Jack Barry, Mike Buckley, Phil Curtiss, Bill Fish, __________Gary Hyatt, Bob Kish, Don Nordeen, Dick Nelson, __________Bill & Penny Nowacki. Kate Nordeen, Jim Pagels, Vicki Rigney, __________Diane Shockey, Pam Tavernier, Dick Thams ______cc: Christine Zarichney (for MOA file) __Subject: Recommended Bylaws Provision re Operating Plan and Budget Re: Recommended Bylaws Provision re Operating Plan and Budget __This responds to the discussion concerning Operating Plan and Budget at the Special Board Meeting on Mar 29. I had the writing assignment on this provision. At the Mar 14 bylaws cmte meeting, there were a number of decisions on content, but not full agreement on the language. My email (Appendix) on the revised language was sent to the bylaws cmte on Mar 15. A lot was done at the last moment in putting the bylaws package together, so a few glitches are not unexpected. __The discussion at the Mar 29 board meeting was a very good one. Since the members control the money by having to approve both the dues cap and any special assessment, and since the members are unlikely to ever assign any part of that to the board, a way must be found to connect the members with the operating plan and budget. The operating plan, budget, dues cap and special assessment all go together. Even though the decisions are made by the members, the board has a major role in the process. Trust is essential. ************************************************************************ __With regard to trust, consider a few aspects of how the board views the members as evidenced by the actions taken on Mar 29. The qualitative scoreboard is:
Favorable to the Board — Many Favorable to the Staff — Many Favorable to Members — Zero (so far) Unfavorable to Members — Many__And this only counts the direct actions. Many, perhaps all, of the actions that are favorable to the board and staff are unfavorable to the members. Why?
- Aren't the directors elected to represent the members?
- Why are the board and staff more important than the members?
- Did any current director state in the election biography and reasons for seeking election that they intended to vote against the members?
- Does the board have the obligation to protect the rights of the members?
Section 7.xx. Operating Plan and Budget — The board shall develop an operating plan and budget for the following fiscal year and include both with the mailing of the annual dues billing on or before 60 days prior to the beginning of the fiscal year. Members may provide comments and recommendations to the board prior to the beginning of the fiscal year. The board shall consider members’ comments and provide a final operating plan and budget to the members by first-class mail no later than 30 days into the fiscal year.__Click Return to go to the beginning of this post. Don Nordeen (989) 939-8240 =====Appendix — Bylaws Provision as Submitted to Bylaws Cmte===== #BylawsBalBdgt Date: 2007 March 15 __To: Bob Allaben, Mike Buckley, Bill Fish Gary Hyatt, Dick Nelson, _____Don Nordeen,Kate Nordeen, Jim Pagels, Pam Tavernier __cc: Christine Zarichney (for MOA file) Re: Balanced Budget Provision Article VII. Board of Directors __Balanced Budget Provision ____Current Provision — The Board shall not approve an annual budget in which the projected expenses are in excess of the projected income (revenue) unless approved by a majority vote of the members voting in person or by proxy at a Members’ Meeting. The notice of the meeting shall provide complete and balanced information on the annual budget. ____Proposed Provision as a New Section — ____Section 7.xx. Operating Plan and Budget — The board shall develop an operating plan and budget for the following fiscal year and include both with the mailing of the annual dues billing on or before 60 days prior to the beginning of the fiscal year. Members may provide comments and recommendations to the board prior to the beginning of the fiscal year. The board shall consider members’ comments and provide a final operating plan and budget to the members by first-class mail no later than 30 days into the fiscal year. ____The Board shall not approve an annual budget in which the total unrestricted operating revenues are less than the total operating expenditures. Budgets shall be based on operating trends adjusted for changes reflected in the operating plan, usual and customary business analyses and methods used to develop operating plans and budgets, and shall be conservative (may need a better word). Any budgets with projected increased revenues require a business analysis based on no increase in revenues, which shall also be provided to the members with the dues billing. ____For the purposes of this provision, total operating expenditures means the sum of total unrestricted operating expenses, principal payments on long-term notes and obligations, capital investments in new and/or expanded facilities, the net of required reserve funding minus depreciation, and required transfers to any other restricted accounts or funds. ____Monthly projections of year-end results are required with the above requirements applied. A budget or monthly year-end projection not meeting the stated requirements requires approval by a majority vote of the members voting in person or by proxy at a special members’ meeting called within 5 days for this purpose. The notice of the meeting shall provide full and accurate information on the annual operating plan and budget and applicable year-end projections. ______Rationale — The proposed provision corrects the deficiencies in the current provision by reflecting all of the operating revenues and expenses. By including the operating plan and budget with the dues billing, members can relate what they are paying to what will be provided. The dates reflect timely action by the board. The 30-day requirement reflects approval of the year-end results for inclusion in the fourth quarter business review. The second paragraph defines requirements to avoid unrealistic budgets, which requires Plan B (no revenue increase) if Plan A is based on a revenue increase. The third paragraph provides the accounting detail to ensure that expenditures do not exceed revenues. The last paragraph requires monthly evaluations by the board for which unbalanced budgets or projections require prompt approval by the members. The CPA should review the third paragraph to ensure that the accounting details are properly stated. ______Further Explanation — The operating plan and budget are logically bound together as hand in glove. The parts members may have difficulty understanding are the accounting details in the third paragraph. A qualitative understanding is provided by the first, second and fourth paragraphs. Barron's accounting dictionary defines expenditure as "Payment of cash or property, or the incurrence of a liability to obtain an asset or service." That is what is intended to be described. The CPA should also verify the default for reserve funding equal to the depreciation. Don Nordeen Tel: (989) 939-8240__Explanation — Since the operating plan and budget interact with each other, they need to go together. Mailing with the dues billing further ties the operating plan, budget and dues together. Note that the word preliminary is not used. Most of the year's revenues and expenses are known by the end of September so the estimates can be reliable. A special board meeting would be required in early January to consider the members' comments and to refine the operating plan and budget as final. It should be then published to the members with the fourth quarter business review mailed in January.__The Board shall not approve an annual budget in which the total unrestricted operating revenues are less than the total operating expenditures.__Explanation — This is the balanced budget requirement expressed in simple terms. All members should be able to understand the principle involved. The complexity is in the definitions of what is included. "Unrestricted" excludes the restricted funds (reserves, etc.) from the statement, but the transfers to the restricted funds may be part of the expenditures. "Operating" is a key word as well which excludes extraordinary items, such as a profit or cash from the sale of an asset. The next paragraph provides the definitions.Budgets shall be based on operating trends adjusted for changes reflected in the operating plan, usual and customary business analyses and methods used to develop operating plans and budgets, and shall be conservative (may need a better word). Any budgets with projected increased revenues require a business analysis based on no increase in revenues, which shall also be provided to the members with the dues billing.__Explanation — This is a definition for "be realistic". Part of being realistic is not using optimistic projections of revenue for balancing the budget. Hence the requirement in the last sentence. I hope the meaning is clear: no budgets that are only an exercise in arithmetic.__For the purposes of this provision, total operating expenditures means the sum of (a) total unrestricted operating expenses, (b) required principal payments on long-term notes and obligations, (c) capital investments in new and/or expanded facilities, (d) the net of required reserve funding minus depreciation, and (e) required transfers to any other restricted accounts or funds.__Explanation — I have inserted letters in the text above to aid the explanation. Since members may not understand these details, they are in a separate paragraph. Perhaps the bylaws should be written with a "lettered" list. Probably better, the CPA should specifically review these definitions.As a way of validating the language, the above could be applied to the results for 2002 through 2005. __Monthly projections of year-end results are required with the above requirements applied. A budget or monthly year-end projection not meeting the stated requirements requires approval by a majority vote of the members voting in person or by proxy at a special members’ meeting called within 5 days for this purpose. The notice of the meeting shall provide full and accurate information on the annual operating plan and budget and applicable year-end projections.
- (a) "Unrestricted" means not including revenues earmarked for restricted funds.
- (b) I have added the word "required" in the text. The budget has to be balanced based on the required payments. Discretionary payments such as might occur from the sale of an asset would be excluded from both the revenue and expense sides.
- (c) These are the discretionary investments (example is the $100,000 in most of the prior year budgets).
- (d) This should be better worded as "the greater of depreciation and the reserve requirement from a professionally-conducted reserve study". Since both depreciation and reserve calculations are based on useful lives of the assets and since project-by-project repair etc is more expensive than if done as part of a larger project, the professional study should yield a higher number than depreciation. The use of depreciation establishes a minimum allocation to the reserve fund which would be reflected in more meaningful financial statements.
- (e) Restricted accounts can also be established by the board or could be established by members' resolution. For example, a fund should be established by the board for the repair of the pool so that the operating expenses related to the repair and the payments from the insurance companies would not distort the operating expenses. The language has been crafted to avoid any implied resolution of the questions about the CI/DR Dues.
____Explanation — The basis for determining status should always be the projected year-end results. When conditions change that affect projected revenues and/or expenses for remaining months, those adjustments should be immediately made in projecting year-end results. The year-end results made each month should be approved by motion of the board. As part of the determination of unfavorable projected year-end results, the board should have debated alternatives for keeping the budget balanced. That is the information needed for the notice. If the result by approved motion is unbalance, the only time required to the mailing the notice is the time to prepare and reproduce the notice for mailing. It is a short time. Delays are costly. No deferring or waiting until next month.
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February 23, 2007
$25.00 Late Fee Likely Inconsistent with Master Declaration
2007 February 23
Last edit: 2007 Mar 14. Click History for a list of changes and updates.
__The continuation of this post is an updated email to the bylaws committee providing an analysis of whether or not a $25.00 late fee for delinquent dues is authorized in the Master Declaration. Answer is likely not. The matter was discussed at the 2007 Feb 21 bylaws committee meeting approved by those in attendance. Bob Allaben and I voted no. That last updated email replaced the earlier one.
__This is an example of one of the things that is very wrong at MOA, namely, adherence to the governing documents is not taken seriously. Members may not like that other members do not timely pay the annual dues. But that dislike does not provide the authorization to assess an late fee of $25 per quarter that is invalid under the governing documents.
__Some of the internet links in the post are to a password-protected weblog. If you are a MOA member, please refer to the Welcome & Home Page for information on how to access that weblog.
Don Nordeen
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$25.00 Late Fee Likely Inconsistent with Master Declaration (continued) ____From: Don Nordeen ____Date: 2007 March 14 10:45:25 EST ______To: MOA Bylaws Committee ______Cc: Christine Zarichney __Subject: $25.00 Late Fee Likely Inconsistent with Master Declaration Date: 2007 February 23 (Revised 2007 Feb 27, 2007 Mar 14) ____From: Don Nordeen ______To: Bylaws Committee: Bob Allaben, Jack Barry, Mike Buckley, Phil Curtiss, _________Bob Felt, Bill Fish, Joe Houston, Gary Hyatt, Bob Kish, Dick Nelson, _________Don Nordeen, Kate Nordeen, Bill & Penny Nowacki, Jim Pagels, _________Vicki Rigney, Diane Shockey, Pam Tavernier, Dick Thams ______cc: Non-official Michaywe weblog (access information below signature block) _________at [http://swagman.typepad.com/michaywe_poa/2007/02/2500_late_fee_l.html] ______cc: Christine Zarichney (for MOA file) __Subject: $25.00 Late Fee Likely Inconsistent with Master Declaration Re: $25.00 Late Fee Likely Inconsistent with Master Declaration __(added 2007 Feb 27) Revision with this update adds an additional provision of the Declaration of Master Covenants, Conditions and Restrictions (DMCCR) which even more clearly defines allowable late fees as limited to actual costs of the additional administrative expense. __(added 2007 Mar 14) My recollection is that, after considerable discussion, the bylaws cmte decided to reference the applicable provisions in the DMCCR and not include the $25.00 late fee proposal. As the bylaws committee has done elsewhere, it is inappropriate to redefine what is already defined in the DMCCR, which is the superior document. The recommended provision in the bylaws then becomes (added language in italics and blue):
------------------------------------------------------------------------------------------------------ Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain. ------------------------------------------------------------------------------------------------------Click Continue for Post Continuation plus Comments.
- History:_
- 2007 Mar 14 — Added recollection of prior action of the bylaws cmte, added more discussion and analysis.
- 2007 Feb 27 — Expanded the scope of the analysis to answer more questions.
- 2009 Apr 03 — Initial Post, but indexed to the date of the document which is 2007 Feb 23
- Links:_ $25.00 Late Fee Likely Inconsistent with Master Declaration at [http://swagmanmwpoa.blogspot.com/2007/02/2500-late-fee-likely-inconsistent-with.html]
- Key Words:_ Governing Documents; 2005-7 Amendment Initiative; Governing Documents, General; MOA Board of Directors; MOA Governance; MOA Members & Members' Rights; late fees; delinquent dues; assessment
$25.00 Late Fee Likely Inconsistent with Master Declaration (continued) ____From: Don Nordeen ____Date: 2007 March 14 10:45:25 EST ______To: MOA Bylaws Committee ______Cc: Christine Zarichney __Subject: $25.00 Late Fee Likely Inconsistent with Master Declaration Date: 2007 February 23 (Revised 2007 Feb 27, 2007 Mar 14) ____From: Don Nordeen ______To: Bylaws Committee: Bob Allaben, Jack Barry, Mike Buckley, Phil Curtiss, _________Bob Felt, Bill Fish, Joe Houston, Gary Hyatt, Bob Kish, Dick Nelson, _________Don Nordeen, Kate Nordeen, Bill & Penny Nowacki, Jim Pagels, _________Vicki Rigney, Diane Shockey, Pam Tavernier, Dick Thams ______cc: Non-official Michaywe weblog (access information below signature block) _________at [http://swagman.typepad.com/michaywe_poa/2007/02/2500_late_fee_l.html] ______cc: Christine Zarichney (for MOA file) __Subject: $25.00 Late Fee Likely Inconsistent with Master Declaration Re: $25.00 Late Fee Likely Inconsistent with Master Declaration __(added 2007 Feb 27) Revision with this update adds an additional provision of the Declaration of Master Covenants, Conditions and Restrictions (DMCCR) which even more clearly defines allowable late fees as limited to actual costs of the additional administrative expense. __(added 2007 Mar 14) My recollection is that, after considerable discussion, the bylaws cmte decided to reference the applicable provisions in the DMCCR and not include the $25.00 late fee proposal. As the bylaws committee has done elsewhere, it is inappropriate to redefine what is already defined in the DMCCR, which is the superior document. The recommended provision in the bylaws then becomes (added language in italics and blue):
Section 5.04 - Failure to Pay Dues or Assessments. Failure to timely pay dues and assessments may result in additional charges, as defined in Article V of the Master Deed Restrictions, including charges for interest, late fees, fines and collection costs. A certificate in writing issued by the Treasurer of the Association shall be given on demand to any member liable for said charges and assessments setting forth the status thereof. Notes and Explanation__I previously distributed this research by email to those who attended the Feb 21 bylaws committee meeting. I believe it should receive broader communication to provide the opportunity for more members to comment. The bylaws committee should exist to serve the members. MOA Members' inputs are important. Please click "Reply All" and send your comments to those on this distribution list. __Conclusion — (revised 2007 Mar 14) A provision for assessment of a $25.00 late fee is likely inconsistent with the DMCCR and should not be included as a proposed amendment to the bylaws. Rather, the bylaws should refer to Article V for required due dates and the allowable late fees. __ One of the considerations discussed by the board several times in updating the bylaws was the need to bring the bylaws into consistency with the Declaration of Master Covenants, Conditions and Restrictions (DMCCR). Unfortunately, such is not stated in any board motion. However, it seems to be part of the charter for the bylaws cmte. __ (revised 2007 Mar 14) This consideration should apply to any new provision in the bylaws as well. I have stated on several occasions that the DMCCR do not authorize a $25.00 late fee for delinquent dues — rather authorize a fee to cover costs. This is directly stated in Article V, Section 5(b) and 5(e) of the DMCCR:
- Since the due dates and all the charges are defined in the DMCCR which is the superior document, no additional charges can be defined in the bylaws.
- As the committee has decided on other issues, the requirements should not be restated in the bylaws which might create conflicting language.
- Since the various requirements are dispersed through Article V of the DMCCR, it is best to reference Article V to avoid missing a required reference.
- The board's policy to charge a late fee of $25.00 per quarter is likely inconsistent with the DMCCR. The board's obligation is to be obedient to the governing documents. Action is required by the board.
__Excerpt from (c) "The Association may also assess fines for late payment or nonpayment of Association Dues, assessments and other charges in accordance with the provisions of Article VII hereof, and/or through duly promulgated rules and regulations, establish late fees for late payment of Association Dues, assessments and other charges, to compensate the Association for the administrative expense associated with handling delinquent accounts."__The assessment of any fine must meet the requirements for fines as defined in Article VII. Separate board action would appear to be required for each fine assessed. The procedures required are clearly defined in Article VII. Any action to assess a fine that does not conform to Article VII is invalid. __The excerpt of (c) is
"The Association may ... establish late fees for late payment of Association Dues, assessments and other charges, to compensate the Association for the administrative expense associated with handling delinquent accounts."__(added 2007 Feb 27) The DMCCR repeat much of the above in Article V, Section 5(e) which states in its entirety:
"(e) Expenses of Collection. All expenses incurred in collecting unpaid assessments, including interests, fines, costs, actual attorneys' fees (not limited to statutory fees) and other costs paid by the Association for taxes, other liens and other such expenses paid to protect its lien, shall be chargeable to the Owner in default and shall be secured by the lien on his Property Unit. Such collection fees shall also include, but are not limited to, the costs for additional billings and invoices, special correspondence, preparing and recording liens and releases, collection agencies, and court costs. The Association shall prepare a schedule of costs for routine transactions for such billing of costs. Non-routine costs shall be billed at the actual cost to the Association plus the appropriate transaction and administrative costs."This is a very specific provision and as such should take precedence over a general or more general provision. It makes very specific that the Association shall prepare a schedule of costs for the allowable late fees. __Redrafting of the DMCCR is needed to define the additional charges in one section rather than two. The last two sentences of (e) are clear as to what charges are authorized. __The Michigan court of appeals cases has established clear standards for interpretation of restrictive covenants:
“Restrictive covenants are to be read as a whole to give effect to the ascertainable intent of the drafter, and strictly construed against grantors and the parties seeking to enforce the covenants. All doubts are to be resolved in favor of the free use of property. Courts should not infer restrictions that are not expressly provided for in the controlling documents."The excerpt of the remaining part described above is clear about what is allowed, namely fees for administrative expenses. __ When this issue was discussed previously in the bylaws cmte, the action was to refer to Article V, Section 5(b). That clearly makes the bylaws consistent with the DMCCR. __ The current assessment of $25.00 appears to be in violation of the DMCCR, which only allows a late fee "for the administrative expense associated with handling delinquent accounts." The requires a cost analysis to determine the costs for the fee for administrative expense. Don Nordeen (989) 939-8240
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