CAI-MN Minnesota Community Living – Nov/Dec 2016 by CAI-MN

In this Issue: Put Your Association on the Map with GIS. . . . . 8 Vision Awards Winners . . . . . . . . . . . . . . . . . . . . . 11 It's the End of the Year as We Know it . . . . . . . 15 November/December 2016

Volume 34 â&#x20AC;˘ Issue 6

Preparing for Incapacity and Death. . . . . . . . . . . 16 Evaluating Potential Vendors. . . . . . . . . . . . . 21

The Legal Issue

Guidelines for Holiday Decorating . . . . . . . . . 34 And More!

Inside: 2017 CAI-MN Law Firm Guide Online Magazine Available!

www.cai-mn.com/ magazine

Multifamily Construction Professionals

BIG PROJECTS DESERVE A STRONG TEAM. Since 2006, PCS Residential has helped property managers and members of the board scope, manage & complete their exterior construction projects. Built on industry-leading craftsmanship and customer service, we provide a positive and seamless construction experience for you and your residents.

Ben

Chad

HOW WE RATE: Construction quality

Likely to recommend

Mike

96% 93%

Clean & safe

97%

Trust

97%

Value

100%

Problem resolution source: GuildQuality.com

92%

Mike

Lisa

CALL US FIRST FOR:

nRoofing nSiding nWindows nGutters nExteriors nInspection reports nProfessional estimates nInsurance claims

Your Involvement Makes CAI-MN Work By JoAnn Borden, CMCA, AMS, PCAM, Associa Minnesota

he 2016 CAI-MN Annual Meeting and Vision Awards, held September 22, was a great way to celebrate everyone’s efforts and hard work. The Vision Awards is one of my favorite CAI-MN events. The recognition, appreciation, and socializing is a positive way to end the year and begin another year. CAI believes community associations should strive to exceed the expectations of their residents. CAI National’s mission is to inspire professionalism, effective leadership and responsible citizenship, ideals that are reflected in communities that are preferred places to call home. Our Chapter’s mission is to provide the knowledge, education, networking, and legislative leadership needed to run competent and prosperous community associations. We all play a role in achieving the mission and goals of our Chapter. As a CAI member, we need your ongoing involvement: • • • • •

December 3 8:00am-12:00pm Essentials of Community Association Leadership Course Ewald Conference Center January 10, 2017 CAI-MN Seminar (4 credits) Updates on Numerous Topics Related to HOAs Bloomington, MN January 26-27, 2017 M-204 Class Bloomington, MN April 20, 2017 CAI-MN 2017 Tradeshow (3 credits) Bloomington, MN October 19-21, 2017 M-100 Class Bloomington, MN I will certainly strive to do my part as Chapter President. As members of the elected board, it is our goal to serve as facilitators of the CAI-MN Chapter and plan for a future well beyond our tenure on the board. Sincerely, JoAnn Borden, CMCA, AMS, PCAM

CAI-MN Chapter upcoming events/education sessions to attend/get involved (visit the CAI-MN website for details, www.cai-mn.com):

November | December 2016

Partners 2016 Annual Partners

Platinum

Capital Construction Columbus Exteriors, Inc. Parsons Construction, Inc. PCS Residential Sela Roofing & Remodeling Xtreme Exteriors N.A., Inc.

Gold

Volunteers Committee Chairs

Board of Directors

Charitable Outreach Carla Gruenhagen cgruenhagen@gassen.com

President JoAnn Borden, CMCA, AMS, PCAM Phone 763.746.1196 joann.borden@associa.us

Community Association Volunteer Leaders (CAVL) Gene Sullivan gene@ncmgi.com Editorial Carin Garaghty crosengren@kellerpm.com

Advanced Irrigation, Inc. Benson, Kerrane, Storz & Nelson CertaPro Painters Community Advantage FirstService Residential Gassen Company, Inc. Hellmuth & Johnson, PLLC

Education Nigel Mendez nmendez@carlsonassoc.com

Silver

Membership Paul Lawson paul.lawson@fsresidential.com

All Ways Drains American Family Insurance – Jeffrey Mayhew Agency, Inc. Asphalt Associates, Inc. Carlson & Associates, Ltd. Gaughan Companies Mutual of Omaha/CA Banc New Concepts Management Group, Inc. Omega Management Reserve Advisors TruSeal America, LLC

Bronze

24 Restore Allied Blacktop Company Allstar Construction & Maintenance, LLC American Building Contractors, Inc. Clean Response, Inc. Gates General Contractors, Inc. Michael P. Mullen, CPA, PLLC Stinson Services, Inc.

Leadership

Golf Tournament Joel Starks jstarks@sperlongadata.com Legislative Action (LAC) Randy Christensen randy@actmanagementinc.com

Social Ben Brueshoff bbrueshoff@pcsrenew.com Trade Show Michele Ramler mramler@cedarmanagement.com Tom Engblom tengblom@cabanc.com Vision Awards Shaun Zavadsky, CMCA shaun.zavadsky@fsresidential.com

President-Elect Matthew Drewes Phone 952.835.7000 mdrewes@tn-law.com Treasurer Joe Crawford, CMCA, AMS, PCAM, Broker Phone 952.236.9006 crawford@crawfordmanage.com Secretary Michelle Stephans, RS Phone 763.226.7118 michstephans@gmail.com Directors Kris Birch Phone 651.481.9180 kris@wearebirch.com Herman J. Fasbender Phone 651.480.1739 herman.fasbender@marshmma.com Mary Felix, CMCA, AMS, PCAM, CIRMS Phone 763.231.9825 mfelix@cedarmanagement.com Chris Jones cjones@hjlawfirm.com Crystal Pingel, CMCA, AMS, PCAM Phone 952.277.2700 crystal.pingel@fsresidential.com Jim Stroebel Phone 952.921.0969 jkstrbl@gmail.com Larry Teien Phone 952.888.8093 lteien@aol.com

Published by Community Associations Institute — Minnesota Chapter, copyright 2016. All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Minnesota Community Living or CAI–Minnesota Chapter. The information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting, or other professional services by the CAI–Minnesota Chapter, or by Minnesota Community Living, or its authors. Articles, letters to the editor, and advertising may be sent to Bryan Mowry at bryanm@cai-mn.com, or at CAI–MN Chapter, 1000 Westgate Dr., Suite 252, St. Paul, MN 55114.

Minnesota Communit y Living

Calendar Upcoming Events November 8 Manager Seminar December 13 CAI-MN Social Event â&#x20AC;&#x201C; Holiday Party! January 10 Manager Seminar January 26-27, 2017 M-204 Class April 20 Trade Show

Series

Index 7

Winter Pet Safety

By CAI National

Put Your Association on the Map with GIS

Vision Awards Recap and Winners By Michelle Desnoyer, Trinity Exteriors, Inc.

It's the End of the Year as We Know it By Chuck Krumrie, Broker/Owner, Urbanwood, Inc.

Preparing for Incapacity and Death

By Scott M. Nelson, Esq., Hellmuth & Johnson, PLLC

Evaluating Potential Vendors

By Christopher R. Jones, Esq., Hellmuth & Johnson, PLLC

23 Meet a CAI-MN Member

Sara Lassila, CPA, CGMA, Certified QuickBooks ProAdvisor

30 Ask the Attorney

By JoAnn Borden, CMCA, AMS, PCAM, Associa Minnesota

14 Member Pulse

By Lynn Boergerhoff

Your Involvement Makes CAI-MN Work

By Nigel H. Mendez, Esq., Carlson & Associates, ltd.

32 2017 CAI-MN Law Firm Guide

By Mark Gittleman, President, FirstService Residential Minnesota

22 Register for events online at www.cai-mn.com For more information regarding an event, call the office at 651.203.7250 or visit www.CAI-MN.com.

An Overview of Minnesota Statutes of Limitation and Repose in Construction Defect Lawsuits

By Alex Nelson, Esq., Benson, Kerrane, Storz & Nelson, P.C.

Guidelines for Holiday Decorating

By Heidi Stinson, Stinson Services

Have Comments? Email your feedback on articles to bryanm@cai-mn.com for a chance to be featured in Minnesota Community Living!

2016 Social Events Recap

By Ben Brueshoff, PCS Residential

Index of Advertisers Advanced Innovative Management. . . . . . . . . . 20 Advanced Irrigation . . . . . . . . . . . . . . . . . . . . . . . . 11 All Ways Drains . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Allstar Construction . . . . . . . . . . . . . . . . . . . . . . . . 17 American Family Insurance â&#x20AC;&#x201C; Jeffery Mayhew Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Asphalt Associates . . . . . . . . . . . . . . . . . . . . . . . . 29 Association Property Management Company. 26 BEI Exterior Maintenance . . . . . . . . . . . . . . . . . . 25 Benson, Kerrane, Storz & Nelson, P.C. . . . . . . . . 15 Capital Construction. . . . . . . . . . . . . . . Back Cover Carlson & Associates, Ltd . . . . . . . . . . . . . . . . . . . 19 CertaPro Painters . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Columbus Exteriors, Inc.. . . . . . . . . . . . . . . . . . . . 18 Community Advantage . . . . . . . . . . . . . . . . . . . . 27 Epic Masonry Restoration . . . . . . . . . . . . . . . . . . 26

Final Coat Painting . . . . . . . . . . . . . . . . . . . . . . . . 27 FirstService Residential . . . . . . . . . . . . . . . . . . . . . 17 Gassen Companies . . . . . . . . . . . . . . . . . . . . . . . . . 19 Gaughan Companies. . . . . . . . . . . . . . . . . . . . . . . . 19 Hellmuth & Johnson, PLLC.. . . . . . . . . . . . . . . . . 26 Mutual of Omaha Bank. . . . . . . . . . . . . . . . . . . . . . 19 New Concepts Management Group, Inc. . . . . . 27 Omega Management, Inc. . . . . . . . . . . . . . . . . . . 28 Parsons Construction, Inc.. . . . . . . . . . . . . . . . . . . 6 PCS Residential . . . . . . . . . . . . . Inside Front Cover Reserve Advisors. . . . . . . . . . . . . . . . . . . . . . . . . . 27 Sara Lassila, CPA. . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Sela Roofing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Strobel & Hanson, P.A. . . . . . . . . . . . . . . . . . . . . . 28 Xtreme Exteriors . . . . . . . . . . . . . . . . . . . . . . . . . . 35 November | December 2016

FREE ANNUAL ROOF INSPECTIONS!

INPSECT, DOCUMENT, REPORT, REPAIR, MONITOR, ARCHIVED DATA & ONLINE ACCESS!

ANNUAL ROOF INSPECTIONS

Every year, we inspect, your properties to track the condition of the roofing system.

DOCUMENTATION

We document the inspection process with pictures, note any issues found, make any repair recommendations, and track the condition of the roofs from year to year.

REPORTING

We compile all of the data into a comprehensive, full color, bound report that is delivered to the Property Manager, annually.

REPAIRS

We recommend any necessary repairs and provide a detailed repair cost estimate.

MONITORING

We monitor the roofing system throughout the year and will notify you if there are any issues that would support a mid-year inspection.

ONLINE ACCESS

Data is archived and saved. You have access to all the information regarding your properties through our client portal. Print, review and schedule service, all online!

Call Justin 763-482-0488 or email: Justin@Parsons1.com

TO RECEIVE A SAMPLE REPORT AND ENROLL YOUR PROPERTIES TODAY!

WE ADD VALUE TO YOUR RELATIONSHIPS WITH YOUR PROPERTIES! 6

WWW.PARSONS1.COM

Minnesota Communit y Living

Winter Pet Safety By CAI National

e love our pets, so keeping them safe in the wintertime should be a top priority. Here are some friendly reminders detailing how you can ensure your pet stays warm, happy and out of harm’s way even on the dreariest of winter days. • Beware of sidewalk salt and de-icer. Pets’ paws are extremely sensitive, so prolonged exposure to sidewalk salt can be problematic. If you walk your dog regularly in areas where sidewalk salt is used during inclement weather, wipe the underside of paws with warm water and a clean towel when you go back inside. Doing so also eliminates risk of ingestion if your pup licks its paws often. Keep an eye on your pet’s toe pads for severe dryness, cracking or bleeding. • Bring pets indoors. Just as in summer months when temperatures reach extreme highs, pets should be brought inside during extreme wintertime lows. This applies for daytime and nighttime temperatures, so check your local weather daily and limit your pup’s outside time if the forecast is looking chilly. And remember—if you’re uncomfortable with the outside air temperature, chances are your pet is too.

• Bundle them up! When pets do go outside during the cold winter months, those with thinner fur coats may need extra warmth. Your local pet store should have an assortment of extra layers for your dog—even winter boots for pups who need extra paw protection from the cold and ice. Only add layers if your pet can truly benefit. If you’re unsure, ask your veterinarian. • Keep your pet active and out of trouble. During inclement weather when you can’t make it outside with your pup, set aside some extra time during the day to make sure they have some exercise—even 15 minutes of playtime helps. Paying attention to your pup keeps them engaged and happy, and ensures no bad behavior caused by boredom.

November | December 2016

Put Your Association on the Map with GIS By Lynn Boergerhoff

lmost everything you know about your association can be geographically referenced; linked to real-world objects, at specific locations and times. Geographic Information System (GIS) software can create and share computer maps that make information visual and easier to understand. Maps can help association boards and property managers govern, manage operations and build community.

What is GIS?

A Geographic Information System is a software application that uses symbols (called features) on computer maps that represent objects in the real world. Some examples of symbols include a point (light pole or fire hydrant), a line (buried cable or retaining wall) or a polygon (building or water body). A GIS has two powerful capabilities. First, a GIS can join two types of information: spatial data and attribute data. Spatial data are information about a feature’s shape, location and relationship to other features. With this capability, a GIS can measure distance, calculate area and change map scales to show your association in your city, the homes within your association or plants in a landscape bed. Attribute data are qualities or characteristics that distinguish one feature from another. For example, attributes of a landscape bed may be area in square feet, type of cover (rock or mulch) and type of plants. A second powerful capability of GIS digital maps is the flexibility to create and change the map’s content and appearance of features

to clarify your purpose and improve understanding. Features can have different shapes, sizes or colors to show different characteristics. Time-series maps can show how features change over time.

Creating Association Maps with GIS

Creating GIS maps requires working with a GIS application, spreadsheet-like tables and a web browser. GIS applications use familiar mouse and keyboard commands to select actions from menus and toolbars. QGIS (www.qgis.org), a free and open-source GIS, was used to create the accompanying maps. You can begin to create a GIS map by importing an aerial photograph or satellite image of your association into the GIS application. With the image as a visual reference on the computer screen, GIS drawing tools are used to create point, line and polygon features. The GIS creates maps by overlaying the desired features with special symbols and colors needed for the map’s purpose as in Figure 1. The computer maps can then be printed, inserted into documents, published to the web, shared through social media or changed again to create new maps.

GIS in Association Governance

Boards and property managers may need to consider information from many sources to make decisions. Here are three examples of using GIS in board governance. •

A GIS map can help manage rainwater run-off and erosion by combining the association’s land surface elevation and the location of city storm sewer pipes to help assess the need for the association to install additional storm water drain pipes (Map 1).

•

GIS can help association boards prepare for disasters by identifying buildings, common areas and amenities at risk (for example, which buildings are more prone to flooding); by documenting losses; and by planning for repair and replacement.

•

Association boards can use GIS maps to visualize the possible effects of creating or changing rules and regulations that affect how residents use common areas or parking spaces.

Buildings

Trees

Land Parcels

GIS in Operations Management

GIS maps can help boards and property managers explore options, monitor ongoing services and see the results of their work. Here are three examples.

Streets

•

Reality

Figure 1: Example of GIS layers 8

Minnesota Communit y Living

Map 2 shows the location of existing mailbox posts and the possible grouping of replacements into cluster mailboxes serving several homes from one location. GIS can measure walking distance from homes to find optimal groupings and mailbox placements.

•

When the boundaries of irrigation zones are drawn and linked to the appropriate water meter, the gallons of irrigation water used can be mapped by zone and time period as in Map 3.

•

Projects from the spring walk-around can be incorporated into GIS maps that clarify the scope of work in contractor bid requests.

GIS in Building Community

GIS maps can help visualize the association’s place in the world, promote a shared living experience, show association assets and board accomplishments, communicate resident concerns and advocate for association interests. Here are three examples. •

Maps can help the garden club plan the spring flower planting.

•

As residents grow older, GIS can help identify barriers for successful aging in place. Maps can help association boards evaluate resident concerns and requests for accommodation.

•

Map 4 shows how GIS can use county parcel records to help identify other associations in your area, opening the opportunity to meet and share information.

A GIS can benefit association boards and property managers by helping visualize the information needed to lead and manage.

Irrigation System

Irrigation Zone [59] Meter 1 [9] Meter 2 [12] Meter 3 [18] Meter 4 [18] Irrigation Pump/Meter Walk Path

Stormwater System City Storm Sewer City Storm Drain Association Water Drain Line Erosion Walk Path Countour Elevation Line ( Feet)

Map 1: Stormwater System

Map 3: Irrigation Zones

Mailboxes Existing Mailbox Post 2 Mailboxes 4 Mailboxes Cluster Mailbox Group Cluster Mailbox

Map 4: Other Nearby Associations

Map 2: Mailboxes November | December 2016

Minnesota Communit y Living

Vision Awards Recap By Michelle Desnoyer, Trinity Exteriors, Inc.

he annual Vision Awards was the CAI event of the year, taking place in the atrium of the breathtaking International Market Square in Minneapolis.

The passing of the torch from Outgoing CAI President Joel Starks to Incoming President JoAnn Borden commenced with a literal mike drop. The two leaders kept their speeches mercifully short (to the appreciation of members), but Starks and Borden still managed to convey the associationâ&#x20AC;&#x2122;s gratitude to its dedicated volunteers, and the value of continuing education by honoring those professionals who earned new designations in 2016. With a dinner of perfectly seared filet and a judgment-free selfserve dessert table, the night ended with the penultimate door prize drawings. Recipients were thrilled with gift cards to Best Buy, Target and Amazon, but the big winner of the night was Louise Heffernan, who won the $1,500 Delta gift card for flights or vacation packages. See, attending the annual meeting definitely pays off! See page 12 for a list of this yearâ&#x20AC;&#x2122;s award winners!

COMMERCIAL MAINTENANCE, IRRIGATION & LANDSCAPING Your landscapes will determine the first impression when customers, tenants or facility users arrive at your location. Commercial services from Advanced Irrigation will give you the neat, green, professionallooking property you want people to see. Advanced Irrigation has a wide range of commercial lawn care service and landscape design including townhomes, apartments, schools and commercial buildings. + Snow Removal

+ Maintenance

+ Irrigation

+ Fertilization

+ On-Call Service + Landscape

FOR A FREE ESTIMATE CALL

612-599-8675

www.advancedirrigationmn.com

November | December 2016

Congratulatio Above and Beyond Award Hannah Zornes Associa

Hannah has assisted with the 32 developer properties, increasing the homeowner and developer relationship while improving client relations. The success of this division within Associa could not happen without her. Developers and homeowners both are pleased with her timely responses, knowledge of the community and friendliness in her communications with them all.

Association of the Year Award Stonemill Farms Community

Stonemill Farms is more of a lifestyle rather than a homeowners association. The board of directors had a vision of creating a resort-like feel to the community, giving the homeowners the best of both worlds. They host numerous community events throughout the year ranging from the Stonemill Farms 5K for Charity to outdoor movie nights at the Community Center.

Business Partner Community Impact Award Wade Vrieze

Shwaders Lawn Care and Landscape

Wade is more than happy to work with managers to ensure satisfaction. He goes above and beyond by taking multiple meetings with an association’s board of directors. His goal is to ensure complete satisfaction with the services his company provides. If his team fails in any capacity, which we all know can happen, Wade’s response time is highly-regarded.

Community Management Professional Award Tim Broms

Gassen Company

Tim shows dedication to clients and company by providing complimentary board training services, which means educated and professional board members. This makes board members aware of their responsibilities, expectations and duties to their communities. They also learn proper board meeting etiquette and how to operate their meetings with order. 12

Minnesota Communit y Living

Excellence in Service Award Jessica Hamilton, AMS FirstService Residential

Jessie has been a huge resource to the Board of Directors and Homeowners at Bright Keys of Stone Meadow. She guided the board through a difficult transition from our previous management company, maintained a positive attitude the entire time and kept reminding the frustrated Board of Directors “Onward and Upward.”

Financial Impact Award Kristi Hoffman

Gassen Company

Kristi successfully (and peacefully) led her clients through an upwards of $3.65 million restoration project that resulted in a community loan and large special assessment to homeowners. Not only did Kristi assist her clients in securing such a large loan, but she also dedicated her time to educate homeowners and keep them informed.

Outstanding Community Building by an Association Girard Park West Association

Girard Park West is a Bloomington condominium consisting of 60 units built in 1976 by Mel Gittleman. The building and grounds are beautiful, the community is strong and vibrant, and there is a positive sense of belonging and community that is palpable and special. The community has done fantastic work to maintain the tradition of excellence based on the original vision and design of the property.

Rookie of the Year Award Chris Gosse

Sharper Management

Chris is a rookie performing at a seasoned allstar veteran level. The biggest attribute he has is that he truly, genuinely cares about his properties and the people in them. What makes him so great is the expectations he has of himself and how he takes to heart the importance of the people and functionality of the property. It is more than just a job to Chris.

ons, Winners! Outstanding CAI-MN Chapter Volunteer Nancy Polomis

Hellmuth & Johnson, PLLC

Nancy T. Polomis of Hellmuth & Johnson, PLLC, received CAI-MNâ&#x20AC;&#x2122;s Outstanding Chapter Volunteer award. Nancy has been a long time supporter of CAI-MN. She has been active on the CAI-MN Board of directors for the past 6 years and was a valuable member of the Vision Awards Committee.

2016

Thank You, Sponsors! Gala Sponsor

Regal Sponsors

Jubilee Sponsors All Ways Drains

Building Reserves, Inc.

FirstService Residential

Clean Response, Inc.

Reserve Advisors

November | December 2016

member pulse

Question

Does your association have a policy on how long holiday decorations may remain on display?

By Christopher R. Jones, Esq., Hellmuth & Johnson, PLLC

“Member Pulse” is your chance to comment on timely and relevant topics. Each issue will feature questions related to the topics or themes of the upcoming issue. Your responses will be published in the next issue. To respond to the question, or suggest a question for a future edition of “Member Pulse,” contact us at memberpulse@cai-mn.com.

Answers

“We have a strict policy that all holiday-themed decorations must be taken down by January 15.” — Laura K. “Our association includes people from a lot of different religious backgrounds, so we came up with a rule that publicly visible decorations should be taken down within one week of the holiday in question.” — Darren S.

For the next issue...

Question

What types of big projects does your association have planned for 2017? Send your responses to: memberpulse@cai-mn.com 14

Minnesota Communit y Living

It's the End of the Year as We Know it By Chuck Krumrie, Broker/Owner, Urbanwood, Inc.

he end of the year draws nigh…eggnog and blazing hearth fires. If your association is like most, your fiscal year runs January through December. So while the band is playing Auld Lang Syne, the books are closed on the year passing. If your association is governed under the Minnesota Common Interest Ownership Act (MCIOA), then it must deliver year-end financial statements to all homeowners within 180 days of the end of the fiscal year. Your Board of Directors likely has been reviewing such statements monthly. What are the directors looking at? How do the financials inform their course(s) of action? Twelve months of financial statements is part of the big picture. The board will use the data in kind of a meta-budgeting process. The budget for the year fast upon you has already been approved. But a budget must be approved every year and deliberate boards will look at years of year-end financials vis-à-vis long term income and expense strategizing. Year-end statements allow you to look forward by looking back. How do your actual figures compare to your budget? Which line items are red and which are black? Are any seriously out of whack? Twelve months of financials can be seen as a report card on the board’s

budgeting prowess, as well as a statement of the sufficiency of your dues structure. Your association is a non-profit corporation and as such, budgeted income must equal budgeted expenses. My firm works primarily with smaller associations, so it’s unfortunately common to see missed budgetary targets regarding the Contribution To Reserves (CTR). To my mind, the CTR is one of the most important line items, as it represents the association socking away money for its future. Temptation always lurks to neglect this line item in the face of greater-than-anticipated expenses or a cash crunch. A 12-month snapshot of your CTR offers a revealing picture of the strength of your dues intake. The expense of insurance is another area where actual cost can stray from budget predictions. Premium costs are typically less predictable than most any other expense item. Of late, the market has hardened, meaning that there are fewer players willing to write coverage. Those which are can command higher premiums and steeper increases. I’ve seen the tail wagging the dog when budgeting for insurance. Many expenses are pretty much the same month after month, and magical thinking just cannot apply. (You cannot cut your water consumption by a third by mandating five-minute Navy showers (continued on page 29)

November | December 2016

Preparing for Incapacity and Death By Scott M. Nelson, Esq., Hellmuth & Johnson, PLLC

reparing for incapacity or death is never a pleasant task, but is in many cases all about making sure that events will be handled according to your wishes in circumstances where you may no longer be able to direct the process. The goal is also to ease the process for your friends and loved ones, and provide clear guidance to first responders and health care providers. For those involved with community associations, an essential step is to make sure that you have emergency contact information for all owners and tenants of residential units.

Health Care Directive

Every adult should prepare a health care directive that designates an agent to handle their health care matters upon incapacity. This can later avoid the necessity of petitioning the Court to appoint a guardian. Agents can be appointed jointly (with authority to act jointly or independently), and in succession. A Minnesota health care directive can also include a “living will,” which allows expression of end-of-life matters, organ donation, and handling of the remains upon death. The directive should also be on file with the primary care clinic or physician, which the electronic filing will make available regardless of where you may be traveling.

Financial Power of Attorney

A financial power of attorney should also be executed designating an agent to handle financial affairs in case of disability. This can avoid the necessity of petitioning the court for a conservatorship in many cases. In Minnesota, the document generally is effective immediately when signed, so it is important for the client to maintain custody of the original documents.

Prepare and Update Your Will

Although each state has presumptions on how to divide up an estate when there is no direction from the decedent, it is recommended that everyone have a will. It will appoint a personal representative (executor) to handle the estate administration, direct distribution of tangible personal property, appoint a guardian for minor dependents, and provide for efficient and financially beneficial distribution of assets after death. There also can be significant income and estate tax savings in the right circumstances. A valid will in Minnesota needs to be signed before two witnesses, and ideally is also notarized.

Establish Your Domicile

This can be significant for state income tax and estate tax purposes, and has been a point of much controversy in recent years. How long you live in a particular state, where you register to vote, where you go to religious services, where you have your drivers license or insurance, where dependents attend school, and other issues can arise in determining where your domicile is for tax purposes. The Minnesota Department of Revenue looks at 26 factors. 16

Minnesota Communit y Living

Inventory Assets/Centralize Documents

This will assist your family and friends in handling the administration of your estate upon disability or death. The list should include your will, bank accounts, life and health insurance policies, real estate deeds, trust documents, stocks, bonds and other securities, birth and marriage certificates and marital agreements, military discharge records, tax records, Social Security information, employee benefit brochures, and business agreements. The list should indicate whether you have a safe-deposit box, and if there is one, you may wish to discuss with the bank how the box can be accessed after disability or death. You also may consider listing all of your professional advisors.

Ownership/Titling

Because the titling of the asset controls its disposition after death, it is important to address the ownership and beneficiary designations. For example, if you have joint ownership or beneficiary designations already established on specific assets, those will override any provisions that you put in a will or trust. If you do have a will or trust, then you need to review the ownership and beneficiary designations to make sure they are consistent with the documents. In most cases you do not want the “estate” to be the beneficiary, because this may unnecessarily generate taxes, possibly subject assets to additional claims of creditors, and require a probate proceeding to transfer title after death. The same is true if there is no joint owner or beneficiary designated.

Consider a Revocable Trust

Placing property into a revocable trust can reduce and perhaps even eliminate some of the costs, delay, and uncertainty involved in the probate process. Revocable trusts are also frequently used for tax minimization or elimination.

Arrange for Successor Management and/or Sale of Your Business If you are in business or have a professional practice, it is easier and far more profitable for you, rather than your estate’s executor, to arrange for its sale or succession. You can plan to use life insurance or business assets to possibly redeem your interest, or finance the transfer of ownership to family or key employees.

Conclusion

It is important to address these issues before it is too late to express your wishes and control the process, and it is recommended that you contact appropriate professionals to provide guidance through the process. Aside from the technical and legal issues, it is important to also address your personal and customized needs and goals, and it is highly recommended that experienced professional advisors work with the client to make sure the documents will achieve their unique wishes and needs.

TIME TO GET YOUR MIND IN THE GUTTER! CALL ALLSTAR FOR GUTTER CLEANING SOLUTIONS & SERVICES FOR SINGLE FAMILY, MULTI-UNIT AND COMMERCIAL PROPERTIES

SERVICE IS KEY! ONE CALL DOES IT ALL! YOUR EXTERIOR CONSTRUCTION, RESTORATION & MAINTENANCE EXPERTS

PHONE: 952-942-7454 EMAIL: INFO@ALLSTAR.BZ LICENSE #BC690350

November | December 2016

Minnesota Communit y Living

Making the Difference: Gaughan Companies is small enough to tailor their services to meet the needs of the Associations they manage, and large enough to make sure all areas of Associations’ needs are handled promptly and professionally. ~ Susan Sabrowsky Ashbourne Townhomes

Community Association Management Accessible. Reliable. Accountable. Hands-on Management. Whether your community is large or small, we provide comprehensive management services by evaluating your Tom Engblom CMCA, AMS, PCAM v Annual reports – Audits, Review, Compilations community’s wants, needs and goals. VP, Regional Account Executive v Tax planning and Tax Return preparation v understand Monthly Accounting We the importance of efficient v Consulting

312-209-2623

cost-effective tom.engblom@mutualofomahabank.com practices that result in the cohesive operations of the community. www.saralassila.com Our hands-on management is responsive to the requests of the Member FDIC mutualofomahabank.com Equal Housing Lender AFN45462_0213 952.474.1631 sara@saralassila.com Board of Directors and Homeowners while preserving the property and lifestyle of the community. For over four decades, Gaughan Companies has been trusted for our integrity and perspective. Our Management Teams treat your Association as if we owned it. Each member of our team will always be accessible, reliable and accountable to you, the homeowner. •

Making the Difference: • •

Gaughan Companies is small enough to tailor their services to meet the needs of the Associations they manage, and large enough to make sure all areas of Associations’ needs are handled promptly and professionally. ~ Susan Sabrowsky Ashbourne Townhomes

November | December 2016

Minnesota Communit y Living

Evaluating Potential Vendors By Mark Gittleman, President, FirstService Residential Minnesota

When your association hires a vendor, it could either be the best decision you ever make, or the worst; the stakes are high. A good vendor will execute your vision on time and on budget, whereas a not-so-good one can be the source of bad workmanship, unexpected delays, inconvenience, a whole lot of headaches, and could end up costing you more in the long run.

Schedule individual walk-throughs with each vendor prior to seeking bids so they can ask questions that may affect the scope of work. It’s a great opportunity for you to ask questions, get to know your candidates, and see what kind of rapport develops.

Navigating the vendor selection process is the necessary first step to getting things done in your community. By following these helpful steps, you can streamline and simplify the bidding process and connect with the best contractor to fit your needs—and that goes a long way toward getting the job done right.

Seek input from your management company. Its experienced team can help you decide who to choose—and who not to choose. Many management companies have longstanding relationships with trusted vendors and insights into key vendor strengths for the project at hand. Some may even have their own vendor certification process to ensure providers have the proper credentials and adhere to rigorous service standards.

First and Foremost, Focus on More than Price

Get Your Docs in a Row

We can’t say this enough. Some associations simply want to call three companies, get three proposals, and go with the lowest bidder. That sounds easy, but buyer beware. While your commitment to financial stewardship is certainly admirable, don’t award the contract just yet. You should assess each vendor based on the value it brings—its fees compared to what it offers. A cut-rate vendor may use shoddy materials or employ poorly trained workers. That can mean substandard work that will cost your association more money in the long term when it comes time to repair work that should’ve been done right the first time. Sometimes it’s worth it to pay a little more to work with a quality company that offers benefits that don’t come with a price tag. The saying “you get what you pay for” has never been more true, especially in today’s tight labor market. It’s the combination of knowledge and experience, fiscal stability, and dedication to customer service that makes a vendor great.

Standardize Your Procedure

By standardizing your procedure and focusing on what’s important, you can reduce hassles and increase your chances of getting better results. In order to effectively compare apples-to-apples, be sure each bidder submits a proposal that includes the same scope of work. Create a template for vendors to fill out in lieu of or in addition to any standardized proposal they provide. This template should include specs on all materials used, tool and equipment provisions, timeframe, total cost of the project, and how they will communicate if anything arises.

Do Your Due Diligence

You can’t put a price on reputation; you’ll know you’re looking at the right vendor if they’ve got a good track record with other communities like yours. The only truly honest way to get to know a company is to talk to some of their former clients. Build some extra time into your approval process so you can speak to a few former and current customers. They will give you the unvarnished truth.

It’s important to request certain documents and to obtain the same documents from all of the candidates so you can effectively compare and evaluate. What should you ask for? A list of the company’s qualifications, prior experience, past projects, subcontractors (if any), and applicable certifications. Make sure that the vendor meets the standards of professionalism and trustworthiness that come with being properly licensed and bondable, as well as maintaining an active registration with the state of Minnesota. These are not the only criteria you should look for, but these are some of the indicators of a quality vendor. These elements provide important protections for both you and the vendor, and they let you know you’re starting the relationship on firm footing. Don’t forget their proof of insurance, and ensure that proper types and levels of coverage are in place before starting any job. If your association hires an unlicensed or underinsured vendor, it risks substantial financial penalties if injury or property damage results from their actions. Moreover, your association could also be responsible for making good on unpaid wages or worker’s comp claims filed by the vendor’s employees.

Things to Remember

1. If it’s too good to be true, it is. An extremely low price and a willingness to end final negotiations indicate a desperate contractor who really needs money. 2. Watch the frontload. If the initial payment requested seems out of proportion with the work completed at that point, your contractor could be cash-strapped. 3. Clean-up is part of the work. Be sure you’ve specified where contractors and their sub-contractors can store their materials and tools. Mandate how the work site should be maintained to keep an orderly appearance. Ask them to provide a map or a (continued on page 34) November | December 2016

An Overview of Minnesota Statutes of Limitation and Repose in Construction Defect Lawsuits By Alex Nelson, Esq., Benson, Kerrane, Storz & Nelson, P.C.

he Statutes of Limitation and Repose dictate the time frames within which a construction defect action must be brought. A claim not filed or properly asserted within the applicable time period is considered “time barred,” or “stale,” and is subject to dismissal in its entirety. A few important things to remember about Statutes of Limitation and Repose are that:

A few more general principles to consider when calculating and evaluating Statutes of Limitation: •

The clock typically starts when you “knew or should have known” of the defect. That is, when the damage starts to manifest, even if you don’t know the cause yet, or exactly what repairs will be needed.

•

Time periods are short and often ambiguous. •

•

Always consult an attorney if you are not positive about how to calculate them. Most attorneys will do a free, initial statute of limitation analysis for you.

You may or may not get a separate 2 year limitation period for each defect, or even for each location of the defect.

•

“Working with the builder” may, or may not toll (pause) the Statutes of Limitation, and never tolls the Statute of Repose.

My law firm turns down more cases than we take, and the primary reason is missed Statutes of Limitation and Repose.

Statutes of Repose

•

Statutes of Limitation

Four main types of construction defect claims are brought in Minnesota, each with its own Statute of Limitation requirements: 1. “327A” Statutory Warranty Claims for homes or condo/ townhome units: A homeowner has only 6 months within which to give written notice of the defect to the builder once the defect has manifested itself. An action must be commenced within two years of when the defect was known, or should have been known. 2. “515B” Express and Implied Warranty Claims under the Minnesota Common Interest Ownership Act: a. On homes or condo/townhome units, the statute runs (regardless of anyone’s knowledge of the claim) 6 years from the earlier of: (i) Transfer of title to the first purchaser; or (ii) The time the purchaser takes possession of the unit. b. On common elements in a condo/townhome community: The statute runs (regardless of anyone’s knowledge of the claim) 6 years from the later of: (i) Completion of the common element; (ii) The first unit sale; or (iii) Termination of Declarant control. These time periods can be shortened by the Declarant to as little as 2 years, so complete review of the CC&Rs, purchase contracts, etc., is needed. 3. General Negligence or Breach of Contract Claims: a. Negligence: 2 years after the manifestation of the defect. b. Breach of Contract: 2 years after the builder fails to fulfill the warranty. 4. Fraud or Misrepresentation: 6 years after discovery of the facts constituting the misrepresentation. 22

Minnesota Communit y Living

Statutes of Repose apply to bar a claim whether you know about the defect(s) or not. The Statute of Repose is considered an “absolute” time bar. Again, each type of legal claim comes with its own calculation: 1. Breach of Contract or Negligence claims: 10 years from “substantial completion” — when the improvement could be occupied or used for its intended purpose. This period can be extended up to an additional 2 years, for a total of 12 years, when the defect manifests in year 9 or 10. 2. “327A” Warranty claims: The various statutory warranties start running upon unit purchase or occupancy, and expire on a staggered schedule. The warranty time periods are: 1 year — general workmanship and materials. 2 years — electric, plumbing, HVAC, etc. 10 years — “major construction defects” If these 1, 2, and 10 year time periods expire without a defect manifesting, “327A” claims will be forever time-barred. 3. “515B” Express and Implied Warranty Claims under the Minnesota Common Interest Ownership Act: a. On homes or condo/townhome units, the statute runs (regardless of anyone’s knowledge of the claim) 6 years from the earlier of: (i) Transfer of title to the first purchaser; or (ii) The time the purchaser takes possession of the unit. b. On common elements in a condo/townhome community: The statute runs (regardless of anyone’s knowledge of the claim) 6 years from the later of: (i) Completion of the common element; (ii) The first unit sale; or (continued on page 34)

red u t a fe ber m e m

Meet a CAI-MN Member

Interested in being a featured member? Contact Bryan Mowry at bryanm@cai-mn.com.

Sara Lassila, CPA, CGMA, Certified QuickBooks ProAdvisor How long have you been involved in the CAI organization? I have been involved in the Minnesota CAI Chapter since 1988, except for a sabbatical from 1992 to 1999, when I worked in private industry. What do you do in the industry? I apply all my association and business experience to providing high quality accounting and tax services for homeowners associations, management companies, and individuals with real estate investments. My firm’s services include audited or reviewed or compiled annual reports, tax planning and tax return preparation, monthly or quarterly accounting and reporting, and QuickBooks software training and support. If you could improve one thing in our industry, what would it be and how would you change it? Education! Get the word out that there are organizations, like CAI, that provide extensive assistance and resources to Board of Directors of homeowners associations. I regularly recommend CAI seminars to my clients, but there is still so much misinformation out there. For example, recently I discovered an association who had obtained tax advice from someone who does not work with associations. The information they were given was incorrect for the tax situation this homeowners association was experiencing. Please get educated! Select your professional team of people experienced in the industry. “Low price” doesn’t always equal “low cost”; you could end up spending more to fix a problem caused by someone who was not experienced in the industry. List three things still on your bucket list? It is hard to pare this down to three things, but I think Fishing somewhere in the Northwest Territory, cruising the Mississippi on a paddlewheel from St. Paul to New Orleans, and taking a few months off to travel the circle tour of all the Great Lakes are my top items.

What retail store would you max out a credit card in? Not a retail store, but I could do large amount of damage if I were attending the February Gem and Jewelry show in Tucson. If you could have one super power, what would it be? Time travel. Do you prefer to read the CAI magazine in hard copy or online? A little of both; I usually check the titles online and then the hard copy gets read at intervals. One thing in this world you are most proud of? Personally, I am very proud of my husband, my kids by marriage and grandchildren. On the business side, I am proud of my ability to translate accounting jargon to layperson’s terms, so my clients and community managers I work with are better informed. What is your favorite tech tool? My very fast scanner. What is your biggest pet peeve? Delays in getting the information needed to complete the accounting or tax project. Different levels of service require different pieces of information to be obtained to get the project completed. An audit is very different from a tax return project. There is a reason why I ask for certain information; if there is ever a question about why something is needed, just ask, I will explain. Is there someone in our industry you would like to meet and have not yet? Gobs! I hope to attend the CAI National Conference next year, where I can meet them. What do you wish CAI offered that you haven’t found? I don’t think there is enough promotion of CAI in general. I continue to run into associations that do not know about CAI and its resources.

Favorite hobby? That’s a tossup; flower gardening or jewelry design and construction.

What industry job would you love to try for a day? I’d like to work with a landscape crew.

How do you recharge? Being outside.

What industry professional’s job would you not want to have? The accounts receivable clerk at any management company. I’m sure they hear more sob stories about why someone can’t pay their assessments on time than I could ever tolerate.

What is the strangest talent you have? This is a good talent for the industry I specialize in; I can spot differences in fund balances on financial statements and what is causing them almost immediately.

November | December 2016

Guidelines for Holiday Decorating By Heidi Stinson, Stinson Services

ecorating a community for the holidays can be exciting but also tough, especially with differences in cultures and expectations. While some communities experience residents going a little overboard with lights and trimmings, in general, seasonal enhancements aren’t too painful and have some great benefits for the community as a whole. They foster camaraderie among the residents and promoting a festive, holiday spirit within the community. The general consensus is that tasteful, seasonal decorations have a way of spreading good cheer during the holiday season and residents of cooperative and condominium housing want to be part of a community. Whether it’s with simple lights or elaborate displays, each community differs in the type and quantity of decorations allowed. There are associations that prefer modest touches and others that sponsor full-on contests between neighbors. Regardless of the decorating preferences, guidelines can typically be found in the governing documents and should be followed per rules and regulations.

Here are a few guidelines to follow when decorating for the holidays: •

Major holiday decorations should be displayed on the first day of the month in which the holiday falls. Examples: Halloween décor should not be displayed until October 1. Thanksgiving décor on November 1.

•

Minor holiday decorations should be displayed a week before or the week of the celebration. Example: Valentine’s décor displayed between February 7 and 14.

•

Multiple holiday decoration displays are not encouraged. Example: Valentine’s cannot be displayed with leprechauns when St. Patrick’s Day falls mid-March & Valentine’s day midFebruary. Put up the St. Patrick’s Day décor after Valentine’s day or don’t display the leprechauns and shamrocks at all.

Make nice with the neighbors and always maintain good holiday light etiquette. Here are a few tips: •

Holiday lights are OK to go up the day after Thanksgiving. You can take them down any time after New Year’s Day, but before January 6—that’s Three Kings Day and the last of the 12 days of Christmas. Even if your lights celebrate a different faith this holiday season, the Black-Friday-to-Three-Kings-Day window is still a great guideline.

•

Be aware of your neighbors’ floor plan. Does their bedroom window back up to the side of your house? If so, it might be in good taste to not put lights up there. If you’re not sure, don’t hesitate to ask your neighbors about the lights disturbing them.

•

It’s OK to keep the lights on all night, as long as you’re not disturbing any neighbors. But to save power, consider putting your lights on a timer.

•

If your neighbors are the ones participating in poor holiday light etiquette, approach with caution. You don’t want to be a Scrooge on their Christmas display; but if their lights are keeping you from sleep, it’s OK to say something. Be polite and offer a compromise, such as a turn-off time for the lights.

When you find yourself stressing about the holidays, try to remember the true spirit of the season and be grateful for the wonderment of the season. The holiday season is the perfect time to pause and reflect on the gifts you’ve been given and the people you have in your life. Acknowledging your gratitude has proven to be one of the best methods for reducing stress and increasing feelings of happiness, pleasure and joy. Happy Holidays to all. 24

Minnesota Communit y Living

November | December 2016

Tuckpointing · Concrete Restoration · Brick-Block-Stone Chimney & Foundation Repair · Waterproofing · Caulking Commercial & Residential

612-353-4646 EpicMasonryRestoration.com

Epic Masonry Restoration SWJ 013014 2cx1.5.indd 2

1/28/14 10:55 AM

We’re the pillar of your association. Very few law firms in Minnesota even practice in this area of law, much less wield the talent we bring to it. In any measure of ability – from years of experience, to leadership in state and national organizations, to the size and diversity of our client portfolio – our attorneys’ knowledge of community association law places Hellmuth & Johnson in a community of one. Our clients benefit from our experience in the following areas: Collection of Association Fees • Judgment Collections • Construction Defects & Warranties Property Insurance Claims • Enforcement of Covenants and Rules • Foreclosure of Liens

On your side. At your side.

Minnesota Communit y Living

8050 West 78th Street Edina, MN 55439

Custom Reserve Studies

Knowing your goals. And the most effective way to meet them. Our clients expect a high level of quality and service, and we deliver. Our promise is a custom, comprehensive study that meets your objectives. Ask us about ForeSite and how it enhances your study.

Serving all of Minnesota from our Twin Cities office.

For your no-cost proposal, please call Jacque Martin at (800) 221-9882 or visit reserveadvisors.com

YOUR ASSOCIATION BANKING PARTNER Community Advantage offers a variety of loans to help cover costly repairs. Our lending solutions are tailored to fit each associationâ&#x20AC;&#x2122;s individual needs. We offer a complete suite of financial solutions, including lending options, reserve investments and treasury management services. Building up your reserve account is the best way to be ready for any major repair projects that come your way. Our MaxSafe Reserve account offers up to $3.75 million in FDIC insurance so you know your reserve funds are secure and right where you need them. PETER J. SANTANGELO, CMCA President

RON ORNATOWSKI Assistant Vice President

5001 American Blvd. W., Ste. 1000 Bloomington, MN 55437 952-835-2780 rornatowski@communityadvantage.com communityadvantage.com Community Advantage is a division of Barrington Bank & Trust Company, N.A., a Wintrust Community Bank. November | December 2016

2016 Social Events Recap By Ben Brueshoff, PCS Residential, Social Events Committee Chair

2016 was highlighted by a dynamic and growing group of managers, vendors and members of the board. Even a severe storm during a planned St. Paul Saints outing didn't stop people from showing up for the fun! In October, the Oktoberfest event included a live polka band, hotdog and dessert cart, and costume contest! We wrap up the year with our annual Christmas Toys for Tots charity event; location TBD but it is sure to be filled with holiday cheer and beer. Our 2017 focus is to continue finding unique venues that create entertaining, social outlets for networking with colleagues and industry partners.

WANT A HEALTHIER, HAPPIER HOMEOWNERâ&#x20AC;&#x2122;S ASSOCIATION?

General Counsel for Associations

Construction Defect Representation Einar Hanson Jonathan Edin Benjamin Kirk

651-222- 0109 28

www.strobelhanson.com

Minnesota Communit y Living

Omega Property Management is one of the oldest homeowner association management companies in the Twin Cities and Western Wisconsin. We have thrived this long because every day we LEAD. MANAGE. SERVE.

Phone: 763.449.9100

omega-mgt.com

It's the End of the Year (continued from page 15) for everyone.) Because next year’s insurance costs can be the great unknown, temptation can again rear its head and suggest that it’s okay to pick an attractive rather than a realistic figure. Is your budget over-populated with line items? And why would this even be a concern? If I were a wag, my answer would be “budgetary hygiene”. And the year-end financials can inform on this. Again, because my firm’s client base is smaller associations, I believe that less is more because more can be obfuscating. I’ve heard the arguments for adding line items, appending subcategories, all that. Proponents usually focus on the presumed (but to my experience, seldom demonstrated) benefit of greater precision and

Call for MCL Articles Thanks for reading this issue of Minnesota Community Living. The CAI-MN Editorial Committee of property managers, attorneys and business partners wants to make this publication the best it can be, and our goal is to give you something to read that’s useful, interesting and timely. Everyone in our line of work knows how valuable it is to network, forge relationships and build community. Dealing with the challenges of the job comes with tremendous disappointments and rewarding outcomes, sometimes in the same day. That’s why we invite you all to share your experiences. You don't need to be a professional writer — we can help you develop your idea into an informative and entertaining article. If you have an idea for an article, or you’d like to suggest a topic for us to cover, contact Bryan Mowry at bryanm@cai-mn.com, or contact the CAI-MN office at (651) 203-7250.

consequently, greater control. The big picture tends to be overlooked because the focus is on how overblown the cleaning supplies line item is. If the annual budget number for paper towels and Mr. Clean is $200 and you spent $400, this likely is not a call to trim the budget fat. More likely, it’s an opportunity to ask why this $200 was chosen in the first place. (See above about the attractive figure.) Now if this cleaning supplies line were to be incorporated into (say) building repairs/maintenance, which let’s say has a $15,000 budget, the massive over-expenditure is seen more truly as small ripples in a big pond. So what is this big picture of which I speak? Money in and money out. On paper, these two have to zero out at year end. In real life, that’s seldom the case — which is why we bother to craft budgets at all. It’s important to know where the money goes but more important to know that it’s gone. The big picture is not the only picture. A budget is descriptive, not prescriptive. It informs, it does not instruct. The year-end financial statements are the proof of a budget’s ability to have dealt well with the real world. I like to tell my board members that budgeting is a multi-year process that we just keep getting better at. I have a friend who once said, “If you look at the numbers they will tell you a story.” And while it seems that most of the narrative is bound up in the expenses, the theme actually lies in the income. Year-end financials will suggest where you ought to make adjustments to the expenses. In my experience, there is precious little in a budget which is discretionary. (Which is good because if it’s optional, why is it in the budget?) You’re gonna spend what you gotta spend, so income needs to be up to level. Income is the starting and ending point of any fiscal examination. Money in: chop, chop, chop. Each expense takes its cut. At the end of the year, what color is the bottom number: black or red? Income is the longest lever as it is where the association can exert the most control over its matters. No one likes to pay more in dues. And some associations raise capital via special assessment rather than dues increases. That said, I’m hard put to find a counter-argument to my contention that a nominal increase every other year or so is a good strategy. The cost of things generally trends upwards. And like human bodies, associations cost more to maintain as they age. The fact that associations can set their own “tax rate” can give some the impression that this power is greater than the laws of economics. (See the above about the attractive figure.) Numbers are real and talk of need over want is a valuable distinction when discussing funding. “Those who fail to study history…” I won’t bother you with the rest of that quote. Instead, Happy Holidays, everyone. And save me a glass of eggnog.

November | December 2016

Ask the Attorney By Nigel Mendez, Esq., Carlson & Associates, Ltd.

This column is comprised of questions that have been posed to me by homeowners, property managers and related professionals regarding legal issues that they have encountered with respect to their associations.

Can My Association Ban Political Signs and Holiday Decorations?

I am frequently asked questions regarding whether something can be banned in an association. The questions usually come from boards that want to stop a practice they see getting out of hand, or from homeowners who have received a letter from their association reminding them that a certain activity is prohibited. The short answer to these questions is almost always: “Yes, the association can prohibit that action.” And the reasoning is often the same — the homeowner either agreed to that prohibition when

Minnesota Communit y Living

they purchased the unit, or agreed to allow the association to enact rules that prohibit such activity in the future. Restrictions on the use of a property are most commonly found in the Declaration or Rules and Regulations. Both of these documents can be amended to either add or remove restrictions. Every election year, I am often asked “can my association ban political signs?” Again, the simple answer is “Yes, they can ban any sign.” Homeowners will argue that “free speech” overrules any association rule. They will also point to various local, state or federal laws that specifically allow posting of political signs at various times of the year. What these homeowners misunderstand is that the First Amendment simply states: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. The First Amendment restricts the government from impeding on one’s ability to freely express themselves. It does not apply to an association that you chose to join. Likewise, not every state law or local ordinance that provides for the ability to post a sign applies to (continued on page 34)

2017 CAI-MN Law Firm Guide CAI-MN Vendor Finder

The winter Law Firm Guide is the most detailed tool CAI-MN offers for association leaders and board members to learn about and connect with the right law firm to serve their community. The Law Firm Guide provides more in-depth information about HOA law firms, their areas of expertise, and how they distinguish themselves from the rest.

CAI-MN has launched a new online platform for community association board members and managers to find the service provider that best fits their community’s needs. From accountants and attorneys to waste management and windows, the CAI-MN Vendor Finder helps connect communities to the business partners you need.

By listing of a company on the Law Firm Guide, CAI-MN in no way endorses the quality of the work or service provided by the company or its representatives

Benson, Kerrane, Storz, & Nelson, PC 7760 France Ave So, Suite 1350 Bloomington, MN 55435

Phone: 952-466-7574 Website: www.constructiondefects.law Contact: Alex Nelson Email: anelson@bensonpc.com Number of Attorneys: 10 Established: 1999 Description: Benson, Kerrane, Storz & Nelson is one of the leading construction defect law firms in Minnesota, representing community associations and other property owners suffering from various construction defect problems. Our firm’s core values are to serve others and to improve the communities where we all live and work. Our lawyers are experienced trial advocates who have been recognized by numerous local and national organizations for their legal abilities and professionalism. In addition to our experience and accomplishments, what further sets us apart from other law firms is our ability to represent our clients on a contingency basis. Meaning, our clients do not pay any upfront legal fees, and only pay us for our time if we are successful for them. With over 15 years of construction defect experience, we have recovered more than $275 million in settlements and verdicts for our clients. Specialties: Construction defect • Insurance claims & bad faith

2017 CAI-MN Law Firm Guide Carlson & Associates, Ltd 1052 Centerville Circle Vadnais Heights, MN 55127

Phone: 651-287-8640 Fax: 651-287-8659 Website: www.carlsonassoc.com Contact: Thomas P. Carlson Email: tcarlson@carlsonassoc.com Number of Attorneys: 3 Established: 1997 Description: Practicing in the area of community association law for more than 20 years, we are a go-to source for associations seeking legal services. We are a boutique law firm with extensive experience in this specialized area of the law. Our attorneys are leaders in the industry, frequently speaking at seminars and writing articles about community association legal issues. We represent hundreds of associations, including professionally managed and self-managed condominium, townhome, cooperative, single family and resort/recreational associations throughout the State of Minnesota. The small size of our firm and our unique focus on this area of the law allow us to provide the highest quality and most cost effective legal services to our community associaiton clients. Please visit our websites at CarlsonAssoc.com and MNCommunityAssociationLaw.com to learn more about our practice. Specialties: Assessment collection/lien foreclosure • Drafting, interpreting and enforcement of governing documents • Fair Housing Act/Discrimination • Board powers and duties • Litigation/dispute resolution

Felhaber Larson

220 South Sixth Street, Suite 2200 Minneapolis, MN 55402 Phone: 612-373-8418 Fax: 612-338-4608 Website: www.felhaber.com Contact: Fred Krietzman Email: fkrietzman@felhaber.com Number of Attorneys: 55 Established: 1928 Description: How our firm represents homeowners associations is what sets us apart from the others. We listen to our clients, we are cost effective without cutting corners, and we are passionate. We are “user friendly.” Our team of attrorneys knows homeowners associations inside and out. We have fantastic clients and we want your homeowners association to be one of them. Come test us out. Felhaber Larson is a full-service law firm. Browse our website at felhaber.com. Call attorney Fred Krietzman at 612-373-8418 to see what we can do for your homeowners association. Specialties: Homeowners associations • Construction defect resolution and litigation • Fair housing matters • Employment law • Commercial litigation

2017 CAI-MN Law Firm Guide Hellmuth & Johnson, PLLC 8050 W 78th St Edina, MN 55439

Phone: 952-941-4005 Fax: 952-941-2337 Website: www.hjlawfirm.com Email: info@hjlawfirm.com Number of Attorneys: 60 Established: 1994 Description: From years of experience, to leadership in state and national organizations, to the size and diversity of our client portfolio — our attorneys have an extensive knowledge of community association law. Our involvement extends from development and formation of community associations to ongoing representation. We also represent property managers, service providers, builders and developers of condominiums, townhomes, single-family communities, and cooperative associations. The services we provide for associations include drafting and amendment of declarations, articles of incorporation, bylaws, and association rules and regulations. Our team handles construction defect and warranty claims as well as property insurance claims and disputes. When needed, our attorneys assist with collection of assessments, enforcement of covenants and restrictions, and assist with annual meetings and corporate record maintenance. In a sector where surprises and overlooked details can be costly, our skilled community association attorneys provide the peace of mind that comes from being on solid legal ground. Specialties: Community associations • Construction defects • Insurance claims • Fair housing • Collections

Roeder Smith Jadin, PLLC 7900 Xerxes Avenue South Bloomington MN 55437

Phone: 952-388-0289 Fax: 612-235-7927 Website: www.rsjlawfirm.com Contact: Anthony Smith Email: info@rsjlawfirm.com Number of Attorneys: 7 Established: 2013 Description: Roeder Smith Jadin, PLLC, proudly provides comprehensive legal services to community associations and property management companies throughout Minnesota. We focus on building lasting relationships with our clients and provide exceptional legal services with the personal attention only a boutique law firm can deliver. Community associations face a wide variety of legal issues and could benefit from our honest and straightforward legal analysis and advice. Specialties: Governing document drafting, revision, interpretation and enforcement • Collections and lien foreclosure • Homeowner dispute resolution and rule enforcement • Corporate governance and advice • Litigation

Ask the Attorney (continued from page 30) an association. There is a law in Minnesota, Minn. Stat. 211B.045 that reads: All noncommercial signs of any size may be posted in any number beginning 46 days before the state primary in a state general election year until ten days following the state general election. Municipal ordinances may regulate the size and number of noncommercial signs at other times. Noncommerical signs would include political signs. However, I do not believe that this statute applies to associations for a few reasons. First, the last sentence states that after the election period, municipal ordinances go back into effect. This means that the statute is exempting the posting of signs from municipal ordinances that would otherwise prohibit the posting. Second, there was an attempt in the 2011-2012 legislative session to adopt an identical statute that would apply to associations. That legislation was unsuccessful. Clearly, if the legislature intended for 211B.045 to apply to associations, it would not need a new law stating that 211B.045 applies to associations. Finally, reading the statute in a way that applies it to associations would mean that all private agreements restricting the display of signs (e.g. commercial and residential leases) would be void under the law.

on the size, location or duration of the sign. Associations can enact restrictions that best fit the needs of the association. Once the political season has ended, the focus often turns to holiday lights and decorations. In associations, the issues extend beyond the colored lights versus white lights and flashing versus non-flashing debates that occur in many households. Many homeowners feel they should be allowed to decorate their porches, entryways or trees with holiday lights or ornaments. While some individuals might feel that a motorized Rudolph, complete with light-up nose, is a requirement for a happy holiday, others might believe that simple white lights are sufficient. Again, like signs, associations generally have the ability to control such displays. In summary, when a homeowner purchases a home that is part of an association, he/she agrees to abide by the governing documents. In essence, they are giving up their right to say “this is my house and I will do as I please” and instead are saying “this is my house and I will do as I please, provided that it is not in conflict with the governing documents.”

Restrictions on signs need not be limited to political signs. Many associations prohibit “for sale,” “for lease,” “for rent,” or “open house” signs. The restrictions can be either a complete ban or a limit

To have a question answered in a future article, please email it to me at nmendez@carlsonassoc.com with the subject line of “Ask the Attorney.” While I can’t promise that all questions will be answered, I will do my best to include questions that have a broad appeal. Questions will also be answered by other attorneys practicing in this area of law. The answers are intended to give the reader a good understanding of the issue raised by the question but are not a substitute for acquiring an opinion from your legal counsel.

Evaluating Potential Vendors (continued from page 21)

Construction Defect Lawsuits (continued from page 22)

description of the work area so debris and tools don’t spill over to other parts of your community. 4. Get a warranty or guarantee. Any warranties or guarantees offered should be provided in writing. 5. Get everything in writing. Sometimes after a contract is complete, additional services or requirements can be discussed informally with the assumption that things are “understood.” Make no mistake: there is no legal understanding beyond what’s printed in black and white on the contract. 6. When necessary, hire a consultant. On complicated or large magnitude projects it might be worth it to pay a consultant to write a project specification and oversee proper installation and completion. Trusting a vendor to perform work in your community always involves risk. To minimize those risks, try eliminating as many unknowns as possible. After all, if things go south, the legal and financial risks to your association can be substantial. 34

Minnesota Communit y Living

(iii) Termination of Declarant control. These time periods can be shortened by the Declarant to as little as 2 years, so complete review of the CC&Rs, purchase contracts, etc., is needed. Some of the limitation periods in Minnesota are extremely short, giving property owners as little as six months to take action against their builder when they discover a construction defect. If a limitation period expires before a claim is filed or otherwise asserted, the legal claim is subject to dismissal in its entirely. So, if you suspect significant or pervasive construction defects in a community you manage, don’t let your association drag its feet… time is always of the essence! Keeping track of any applicable limitation periods, and acting within them (or having your attorney do so for you) will protect not only your association, but also your management company from potential liability if action isn’t taken in a timely manner.

You’re Ready for Winter. But is Your Home?

Winter is Coming. Schedule a Home Fall Inspection Today!

Woolen sweaters, waterproof boots, jackets and coats, scarves and mittens. Check. You’re ready to hit the elements, but how about your home? What does a home winter check list entail? Glad you asked!

It Starts with a Fall Inspection. At Xtreme Exteriors, homes are regarded as a set of “systems” that when properly maintained, keep your home comfortable and running efficiently. A thorough Fall Inspection of your home can identify problems, such as ventilation issues, the integrity of your roof and gutters, rotting around windows or siding damage.

Jeff and Jeannie Sigler, Owners of Xtreme Exteriors. Your Dependable Single-Source Solution for Your Entire Home Envelope.

It Ends with Affordable Solutions. Should our Fall Inspection reveal issues, we’ll provide you with “the why” it’s a problem and effective solutions to solve it. We want you and yours to be warm and cozy this winter and for winters to come. Cocoa anyone?

Expect the Best.

MN License: BC362463

•

WI License: 962215

Call Us Today at 763.441.1334. Visit Us at www.xtremeexteriors.com

Making Homes Beautifully Functional Year Round.