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Minnesota’s premier homeowners association magazine

January/February 2010

In this Issue: Insurance and the Residential Contractor In the Hot Seat: Making Board Decisions

Volume 28 • Issue 1

Provide Great Customer Service Conducting Your Orchestra

Important Information for Landlords And Much More!

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Minnesota Communit y Living

Board of Directors

From the President

By Mark Gittleman | CAI-MN President

What’s Hot? CAI-MN is bringing together vendors, association managers, and boards of directors to discuss the hot topics of the day at our manager education seminars. We have a separate homeowner training track for board education but also welcome board members to our manager education events. We will continue to organize educational sessions on some of the core subjects within our industry at our manager educational events. At the same time, we are working hard to identify hot topics and bring in leading local and national speakers to address them. We are also moving most of our seminars to morning time slots to continue our trend of enhanced participation. I am pleased to report that our overall attendance numbers for our last two manager education sessions are up substantially from the average attendance in 2009. We have had an average registration of 80 attendees at our last two events devoted to core association insurance education. We have added a course in February on new Fannie Mae and FHA regulations and related requirements. Fannie, Freddie and FHA are constantly in the news and now they are hitting home behind the scenes in many of the real estate transactions that are backbone of supply

and demand in our industry. We will explore questions such as what criteria should an association consider in whether to seek FHA approval? How will an association that has existing FHA approval need to reapply for approval under the new regulations? What are the specific requirements of FHA and Fannie Mae for replacement reserves, insurance, and maximum levels of delinquency in payment of association assessments? What are the options if an association is out of compliance? We will be joined by leaders from the mortgage and real estate industry who are working with Fannie Mae and FHA on a daily basis. This is another session that we are tremendously excited about and which is generating a lot of interest. Finally, I want to thank our sponsoring vendors and managers for braving the snow and participating in the 2nd annual vendor show. We increased the number of vendors from 38 to 60 and had more than 250 homeowners, managers, and vendors registered for the event. I want to provide a special thank you to the CAIMN Membership Committee and in particular former CAI-MN President Mark Schoenfelder of Schoenfelder Painting, for their investment of time and leadership in making the event a success. We look forward to this recurring annual event. January and February may be cold in Minnesota but CAI-MN is focused on delivering education and networking on hot topics to our members.

President Mark Gittleman Phone 952.277.2707 President-Elect Holly Johnson, CMCA, AMS, PCAM Liaison to Vision Awards Committee Phone 763.225.6400 Secretary Jonathan Edin Phone: 651.222.2155 Treasurer Michael P. Mullen, CPA Phone 952.928.3011 Directors Tom Engblom, AMS, CMCA, PCAM Liaison to Golf Tournament Committee Phone 866.800.4656 Sarah J. Fjellanger, CIRMS Liaison to Legislative Action Committee Phone: 763.746.8278 Mark Johnson Liaison to Communications Committee Phone 612.381.9951 Joel A. Hilgendorf, JD Liaison to Membership Committee Phone 952.746.2167 Traci Lehman, CMCA, AMS, PCAM Liaison to Manager Seminar Committee Phone: 612.381.8600 Gene Sullivan Liaison to Education Committee Phone: 952.922.2500

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Committee Chairs Legislative Action Chair Michael Klemm, Esq. Phone 952.432.3136

Annual Meeting Chair Lisa Astelford, CMCA Phone 952.277.2787

Golf Tournament Co-Chair Tosh Tricas, CMCA, AMS, PCAM Phone 763.225.6400

Nominating Chair Joel A. Hilgendorf, JD Phone 952.746.2167

Communications Chair Steve Hoogenakker Phone 763.213.2410

Education Committee Chair Gene Sullivan Phone 952.922.2500

Golf Tournament Co-Chair Tom Engblom, CMCA, AMS, PCAM Phone 866.800.4656 January

Membership Chair Mike Laukka, CMCA, AMS, PCAM 952.831.8325 |Phone February 2010 3

CAI-MN Member News JoAnn Borden Receives PCAM Designation

JoAnn Borden, Property Manager at Gassen Companies, has earned her PCAM®! The PCAM® (Professional Community Association Manager) designation is the highest credential offered through the CAI Professional Management Development Program. Borden has worked in the association management industry for nearly 11 years and has been an active member and volunteer with CAI in the Minnesota Chapter. Congratulations, JoAnn!

Schoenfelder Painting becomes an EPA Certified Lead Renovation Company

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Minnesota Communit y Living



2010 February


February 2, 2010, 8:30 a.m. - 10:00 a.m. Sheraton Bloomington Hotel $30-early, $40-late/members; $50/non-members.

6 Insurance and the Residential

Managers Seminar Preparing a Proper RFP

February 16, 2010, 11:30 a.m. - 1:30 p.m. Sheraton Bloomington Hotel $30-early, $40-late/members; $50/non-members.

9 In the Hot Seat: Making Board

Managers Seminar Fannie Mae/FHA

Homeowner Training Track Reserves/Budgeting February 24, 2010, 6:15 p.m. - 8:00 p.m. Sheraton Bloomington Hotel Homeowner - Free, $30-Manager/Business Partner; $15 Manager/Business Partner Bringing two or More Homeowners.


Managers Law Seminar March 2, 2010, 8:00 a.m. - 11:00 a.m. Sheraton Bloomington Hotel $30-early, $40-late/members; $50/non-members.


By Tony Poetz

7 We All Need Something to Believe In! By Thomas C. Engblom


By Michael D. Klemm

10 CAI-MN HOTT Committee Announces 2010 Bare Bones Basics for Boards Programs By Sara Lassila

11 Conducting Your Orchestra: Customer Service for the HOA Audience By Tony Poetz

12 Volunteer for an Association Committee

15 Important Information for Landlords

Register online at For more information regarding an event, call Scott Franzmeier at 651.290.6278 or visit the CAI-MN Web site. Online registration is available at

[ ADS Index ] of Advertisers Allstar Construction Management................. 14

Hammargren & Meyer, P.A. . ............................ 5

American Building Contractors, Inc............... 12

Hellmuth & Johnson, PLLC......................... 8, 15

Association Dues Assurance Corporation..... 13

Horticulture Services, LLC................................. 7

BEI Exterior Maintenance............................... 14

Johnson & Lindberg, P.A................................. 10

Birch Lawn Maintenance................................... 4

Levin & Edin..................................................... 14

Breiwick Companies.......................................... 3

Minnesota Exteriors Inc................................... 10

Carlson & Associates, Ltd................................. 7

New Exteriors by SMA, Inc............................... 2

CA Banc/CondoCerts........................................ 4

Omega Management, Inc............................... 14

Construction Consulting & Inspections, Ltd......10

Reserve Advisors.............................................. 12

Gassen Companies............................................ 7

RJF Agencies..................................................... 6

Gittleman Management.................................. 16

Thomsen & Nybeck........................................... 8

departments 3

President’s Message



Mark Gittleman

Member News

Thank You 2010 Annual Partners

Platinum Gittleman Management Hellmuth & Johnson New Exteriors by SMA, Inc. Gold BEI Exterior Maintenance Community Association Banc Silver

Allstar Construction Management American Building Contractors Carlson & Associates Gassen Management Hammargren & Meyer PA Johnson & Lindberg Levin & Edin Omega Management

Bronze Michael P. Mullen, CPA, PLLC Schoenfelder Painting

SMART & DECISIVE The Best Value in Construction Law for Community Associations

That’s what our clients tell us. At Hammargren & Meyer, we’re smart, decisive lawyers focused exclusively in the areas of law that we know best. For prompt responses and straightforward answers, call Hammargren & Meyer. (952) 844-9033

Final Coat Painting............................................ 7 Published by Community Associations Institute — Minnesota Chapter, copyright 2010. 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 Chapter Staff Editor Jane Duntley at janeyd@, or at CAI–Minnesota Chapter, 1000 Westgate Dr., Suite 252, St. Paul, MN 55114.

January | February 2010


Insurance and the Residential Contractor By Tony Poetz, Production Supervisor, New Exteriors by SMA, Inc.


We’ve been here. We’ll be here.

Long-term dedication to your association.

ne of your mottos as a property manager is: plan for the best and prepare for the worst. This approach is an important part of your daily routine. When your association decides to launch a construction project, preparing for the worst becomes critical. That’s not to say that construction companies are guaranteed to make mistakes. On the contrary, they’re in your ballpark because they’ve shown that they can be trusted with a project of your scope. However, their work is complex and an overlooked aspect can turn into an expensive recovery. So what can you do to prepare for the worst? Know everything there is to know about construction project insurance. For starters, there are state minimums required of construction companies of a certain size. The Minnesota Department of Labor states that residential building contractors, remodelers and roofers that earn more than $15,000 per year are adherent to the following insurance limits*: 1) Liability — at least $100,000 per occurrence, $300,000 aggregate limit for bodily injury, and property damage insurance with limits of at least $25,000. 2) Workers Compensation — Minnesota Workers’ Compensation law states all employers are required to purchase workers’ compensation insurance or become self-insured.


An important note about these laws is that they are minimums. Many contractors carry millions of dollars worth of coverage depending on the size of their projects. In the case of a 100 unit townhome project, the standard settings will likely be around $1 million to $3 million dollars for liability and workers compensation. And how do you check this? Any contractor company worth its salt will either have an updated document with them or can have their insurance agent send you a copy within 24 hours. Don’t be afraid to ask for proof of insurance. This is one method of separating the good contractor from the bad. If there is any resistance to providing documents or the response is taking too long, treat it as a red flag in your decision process. Also, subcontractors are subject to the same minimums, but don’t need to carry as much as the general contractor. Don’t be afraid to ask for their documentation as well.

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Minnesota Communit y Living

We All Need Something to Believe In! by


Thomas C. Engblom, CMCA, AMS, PCAM, ARM, CPM, Community Association Banc & Condo Certs

s a child from the time of birth until around age 6, we believe in our parents, grandparents, family members, Santa Claus, the Easter Bunny, religious activities, toys, the boogie man, Halloween and cartoon characters. Yet, we all need something to believe in!

As a high school graduate, we believe in our family members, leadership, some authority, sports heroes, sports teams, New Year’s Eve, dating, our future as a member of society, college, trade school, America, and our dreams for the future. Yet, we all need something to believe in!

As a child from the age of 7 until 14, we believe in our parents, grandparents, family members, Santa Claus, the Easter Bunny, religious activities, the boogie man, Halloween, cartoon characters, sports heroes, sports teams, the Fourth of July, leadership, authority, our teammates, video games, and our best friend. Yet, we all need something to believe in!

As a young adult, we believe in family members, some leadership, some authority, being a member of society, cars, employment, the economy, the future of America, the military, the Patriot Guard, and our dreams for the future. Yet, we all need something to believe in!

As a maturing adolescent from the age of 15 until high school graduation we believe in our parents, grandparents, family members, religious activities, Halloween, cartoon characters, sports heroes, education, sports teams, the Fourth of July, our teammates, video games, our drivers license, leadership, authority, high school teachers, team mascot, first job and our life after high school. Yet, we all need something to believe in!

As a maturing adult, we believe in family, friends, being a member of society, employment, the economy, leadership, authority, Harley Davidsons, America, the democratic society, our dreams for the future, our property manager at our first condominium association, and Community Associations Institute. Yet, we all need something to believe in! As a new board member, we believe in family, our employer, retirement, being a member of society, employment, the economy, leader-

ship, authority, the future of America, shorter board meetings, our seasoned Professional Community Association Manager and their Code of Ethics: 1. Comply with current bylaws, standards and practices as may be established from time to time by CAI, subject to all federal, state and local laws, ordinances, and regulations in effect where the Manager practices. 2. Participate in continuing professional education through CAI and other industry related organizations. 3. Act in the best interests of the client; refrain from making inaccurate or misleading representations or statements; not knowingly misrepresent facts to benefit the Manager. 4. Undertake only those engagements that they can reasonably expect to perform with professional competence.

Something to Believe In continued on page 13



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January | February 2010


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Minnesota Communit y Living

In the Hot Seat: Making Board Decisions by

Community association directors are required to make decisions in a high-pressure environment in which a great deal of attention and scrutiny are focused on the board. Association members frequently hold strong and divided opinions regarding issues that affect their homes, personal finances and quality of life. Further, many issues are complex and require the board to consider multiple factors. This article addresses the legal framework for making board decisions.1

Standard of Conduct for Directors Appointed by Declarant. The Min-

nesota Common Interest Ownership Act (“MCIOA”), Minnesota Statutes Chapter 515B, states that a director appointed by the declarant is a fiduciary of the unit owners.2 A fiduciary has the highest obligations of good faith, loyalty, fidelity, fair dealing, and full disclosure of material matters affecting the client’s interests.3 MCIOA also states that any of the declarant’s representatives who are acting as directors of the association must (i) cause the association to be operated and administered in accordance with the governing documents and Minnesota law; (ii) be subject to all fiduciary obligations and obligations of good faith that apply to any person serving a corporation in that capacity; (iii) cause the association’s funds to be maintained in separate bank accounts in the association’s name; and (iv) cause the association to maintain complete and accurate records.4

Standard of Conduct for Directors Elected by Unit Owners. MCIOA

states that a director elected by the unit owners must act (i) in “good faith,” which is defined as “honesty in fact in the conduct of an act or transaction;”5 (ii) in a manner the director reasonably believes to be in the best interests of the association, and (iii) with the care an ordinarily prudent person in a like position would exercise under similar circumstances. A director who meets this standard is not liable as a result of being a

Michael D. Klemm, Esq., Severson, Sheldon, Dougherty & Molenda, P.A.

director.6 In contrast, a director is liable for acting dishonestly, unreasonably or negligently.

Reliance. As a general rule, a director is

entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, prepared or presented by (i) an officer or employee of the corporation whom the director reasonably believes to be reliable and competent in the matters presented; (ii) attorneys, public accountants, or other persons as to matters that the director reasonably believes are within the person’s professional or expert competence; or (iii) a committee of the board on which the director does not serve as to matters within its designated authority, if the director reasonably believes the committee to merit confidence. However, a director is not entitled to rely on information, opinions, reports, or statements if the director has actual knowledge concerning the matter in question that makes such reliance unwarranted.7

Delegation. Pursuant to Minnesota corporate law, a board of directors may establish committees and delegate specific powers to committees by resolution. Directors remain subject to the standard of conduct for directors despite delegation of power to a committee. Committee members are subject to the same standard of conduct as directors.8 The board’s authority to establish committees and delegate power may be limited by the association’s governing documents. Presumption of Assent. A director who

is present at a board meeting when an action is approved by a majority vote is presumed to have assented to the action approved, unless the director (i) objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate in the meeting; (ii) votes against the action at the meeting, or (iii) is prohibited from voting because of a conflict of interest.9

Indemnification. A corporation must indemnify a person made or threatened to be made a party to a proceeding by reason

of the former or present official capacity of the person against judgments, penalties, fines, attorney fees and other expenses, if the person acted in good faith, received no improper personal benefit from the conduct at issue and did not violate conflict of interest prohibitions, reasonably believed that the conduct was in the best interests of the corporation, in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful, and has not been indemnified by another organization. Subject to certain requirements, the corporation also must advance reasonable expenses, including attorneys’ fees. The corporation’s obligations regarding indemnification and advancements may be modified in the articles or bylaws, subject to certain statutory requirements.10

Insurance. Associations should maintain directors and officers’ liability insurance to provide financial protection in the event of a lawsuit related to the performance of their duties. Community association boards should be familiar with all of the association’s insurance policies and consult with an insurance agent who is experienced with assisting community associations to ensure that appropriate and adequate insurance policies are maintained. The information in this article is general information and does not constitute legal advice regarding action to be taken in any case. MCIOA does not apply to all associations, and the laws regarding directors may vary depending on the statute(s) that govern the association. Associations should consult with their attorney for assistance with making decisions in conformance with the applicable laws and governing documents and as appropriate for their particular situation. 2 Minn. Stat. 515B.3-103(a). 3 Commer. Assocs. v. Work Connection, Inc., 712 N.W.2d 772, 779 (Minn. Ct. App. 2006). 4 Minn. Stat. § 515B.3-120. 5 Minn. Stat. § 302A.011, Subd. 13; Minn. Stat. § 317A.011, Subd. 10. 6 Minn. Stat. § 302A.251, Subd. 1; Minn. Stat. § 317A.251, Subd. 1; Minn. Stat. 515B.3-103(a). 7 Minn. Stat. § 302A.251, Subd. 2; Minn. Stat. § 317A.251, Subd. 2. 8 Minn. Stat. § 302A.241; Minn. Stat. § 317A.241. 9 Minn. Stat. § 302A.251, Subd. 3; Minn. Stat. § 317A.251, Subd. 3. 10 Minn. Stat. § 302A.521; Minn. Stat. § 317A.521. 1

January | February 2010


CAI MN Homeowner Training Track Committee Announces 2010 Bare Bones Basics for Boards Programs By Sara Lassila, CPA, Committee Chair

The Homeowner Training Track (HOTT) continues in 2010 to promote the Bare Bones Basics for Boards Programs. Our speakers are volunteers who specialize in the Common Interest Community Association business. Many board members and homeowners benefited from these information programs during 2009. The Bare Bones Basics for Boards Programs for 2010 are: Reserves – Things to consider? How to plan? February 24, 2010

Changes in MCIOA and Legal Update August 25, 2010 Rules and Regulations/Collection Policies October 27, 2010 These programs will continue to be FREE to association board members and homeowner members. Business partners and professional managers may register for only $30, reduced to $15 if you bring one homeowner association board member with you, and further reduced to zero if you bring two homeowner association board members with you. What a deal!

The HOTT Committee is looking for additional homeowner members to join our committee. Please contact Committee Chair Sara Lassila if you are interested, slassila@ Visit CAI-MN online at for more information and to register for these fun and informative programs.

Business Partners – If you are interested in sponsoring one or more Bare Bones Basics for Boards Programs contact Taryn Ayres at

Insurance & Risk Management for the Association & Homeowners May 26, 2010 johnson_2.5x4.5_bleed.pdf


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Conducting Your Orchestra Customer service for the HOA audience By Tony Poetz, Production Supervisor, New Exteriors by SMA, Inc.


anaging a property is a lot like conducting an orchestra. Landscapers, exterior maintenance and insurance specialists, etc., are the strings, woodwinds and percussion in your symphony of coordination. They are each specialized in their own respects, but achieve their finest output when harmonized under your direction. The most important part of this multi-part movement is you, the conductor. (pause...or “rest”) “Isn’t the audience the most important piece?”, you ask. Sure, if the audience doesn’t buy tickets to your concert, you don’t really need your baton. But, once the audience is seated, you are in charge. From a customer service standpoint, this flies in the face of “the customer is always right.” It’s meant to. When Harry Selfridge coined that phrase in his 1909 London department store, he wasn’t in your shoes — trying to get rid of the carpenter ants chewing the rafter tails while two homeowners stand behind you insisting on their grandmother’s homemade, insecticide recipe (grape juice, red pepper and gasoline NEVER belong in the same spray bottle). “The customer is always right” speaks to an end result and the manner in which you deal with the customer. It’s okay to say, “I’ve been conducting this orchestra a long time, Mrs. Smith. I think it’s best if we give the exterminator a shot at those ants.” Businesses such as airlines and IT services that deal with upset customers on a frequent basis are constantly working on the most effective way to let the customer know they’re not always right. With reference to business consultant Alexander Kjerulf, here are a few reasons why “the customer is always right” is wrong and, a little dangerous: 1) It makes employees unhappy. Some customers will be unreasonable, irrational and unwilling to be reeled in no matter what the extent of your attention. If an employee believes you won’t support them when a customer is out of line, the employee finds resentment and becomes less effective. 2) It gives abrasive customers an unfair advantage. “The customer is always right” is most often

quoted by the most abrasive customer. They feel they have carte blanche because of their status and “there will be consequences” if their blanche isn’t carted. Rewarding this bad behavior with automatic submission leads to more bad behavior. Second, the longer you attend to the one or two abrasive customers, the longer your attention is diverted from the great majority who are pleasant and genuinely interested in working toward common goals. 3) It results in worse customer service. If you automatically side with unruly customers, employees: • lose loyalty • lose confidence • lose respect for other customers as they label all customers as “irrational” When employees know they can count on you to make a fair call in the midst of customer irrationality, they: • gain loyalty • care more about other customers • are motivated. 4) Some customers are just plain wrong. This is why you’re the conductor and they are the audience. You’ll do everything you can to appease an upset customer, but when they’re wrong; you don’t have a choice. You know very well not to spray the gasoline-based insecticide on the rafter tails. Conductors take requests, but arrange according to expertise. There may be pride involved when a customer suggests a different kind of cymbal/insecticide, but ultimately, they just want the song to sound good/ants gone.

Although your customers won’t love you if you give bad service, your competitors will.” Bob MacDonald, Gassen Company, Property Manager Supervisor

In a recent poll conducted by customer service expert Kevin Stirtz, customers were asked “What do customers really want?” The answers were as you can imagine. Here are some of them ranked: 1) Listen to me: Most customers have a legitimate reason for coming to you. Even if it’s not legitimate, your attention may be enough.

2) Blank for now. 3) Give me what I came for: They’re less interested in “how” you get it, just so you’ve got it. 4) Show me you care: In the customer’s eyes, anyone can do what you do to some degree. It’s your passion that sets you apart. 5) Be honest: The customer knows quality costs more. Tell them the truth and let them weigh the consequences. 6) Offer alternatives if I can’t get what I want: If red fescue won’t grow in your area to match Mrs. Mandery’s landscaping, maybe you can get something comparable. 7) Do what you say: Trust is crucial and though you may not think so, the customer is absolutely paying attention. 8) Keep me informed: Even if they don’t actually read the newsletter detailing the new 40-year shingles, they’ll at least have peace of mind that you’re on top of it. #2 was purposely left blank because it’s the most pertinent. It’s also striking in its honesty. The second most common request is: “Know more than I do.” This humble request from your customer speaks volumes. It says “I want to trust you,” “I can have faith in your abilities,” and “I will agree with you (even when we disagree) because of your expertise.” #2 says, “I know something about how the orchestra should sound. Please make it sound that way.” The customer is saying, “I’m not always right. That’s why you’re here.” We’ve spoken of irrational customers and extraordinary circumstances. We know those are the minority, yet they tend to command the lion’s share of our attention. The essence is that you’ve worked hard to become an expert and need to have faith in your property management abilities. Putting together your ensemble of snow removers, pool cleaners and window installers has taken dedication and time — much more than your audience has committed. They’re busy being expert store managers, expert teachers and expert truck drivers. At the end of their day they want to come home to beautiful music...conducted by you. January | February 2010


Volunteer for an Association Committee Sample Language From CAI National

Committees are an important part of our association operations. Committee members help keep our community vibrant; and, by augmenting paid staff, they save the association thousands of dollars each year. The association just wouldn’t be what it is without our active and effective committees. They deserve our sincerest thanks.

Knowing your goals. And the most effective way to meet them. At Reserve Advisors, we understand that no two reserve studies are ever the same. Which is why we always start at the same place – with you. We begin with a blank slate and then build a reserve study based on your special requirements.

Let us be your partner for the future.

However, to be successful, our association needs to cultivate fresh ideas and encourage additional resident involvement in our committees; so, we’d like your help on one of our committees. Committees give the board a way to gather information, offer new ideas and opinions and provide a training ground for future board members. All committees are advisory to the board unless given specific decision-making authority by the board or CC&Rs.

Serving all of Minnesota from our Twin Cities office.

The board provides each committee with a job description, goal and mission statement to help it succeed as a community resource. Our association has three types of committees: • Administrative committees, like our architectural control committee, are set out in our association’s bylaws and CC&Rs. They are ongoing, permanent and often have clearly defined power and authority. • Standing committees, such as our finance and facility management committees, are established by the board for an ongoing and specific purpose. These committees generally make recommendations to and act under the supervision of the board. • Ad-hoc committees, such as our summer picnic committee, are established by the board as needed for specific projects and tasks. When the task is complete, the committee is disbanded. So, if you’re thinking about running for the board and want to learn a little more about association operations first, or if you’re interested in helping improve your community or just want to get out and meet neighbors, we would be thrilled to talk to you about our committees and how you might be able to help. Contact any member of the board or call the manager for more information.


Minnesota Communit y Living

For your no-cost proposal, please call Nik Clark at (800) 221-9882 or visit

Something to Believe In continued from page 7 5. Exercise due care and perform planning and supervision as specified in the written management agreement, job description or duly adopted Board policies. 6. Disclose all relationships in writing to the client regarding any actual, potential or perceived conflict of interest between the Manager and other vendors. The Manager shall take all necessary steps to avoid any perception of favoritism or impropriety during the vendor selection process and negotiation of any contracts. 7. Provide written disclosure of any compensation, gratuity or other form of remuneration from individuals or companies who act or may act on behalf of the client. 8. Ensure that homeowners receive timely notice as required by state statutes or legal documents and protect their right of appeal. 9. Disclose to the client the extent of fidelity or other contractually required insurance carried on behalf of the Manager and/or client and any subsequent changes in coverage, which occur during the Manager’s engagement if the amount is lower than the contract amount requires. 10. See that the funds held for the client by the Manager are in separate accounts, are not misappropriated, and are returned to the client at the end of the Manager’s engagement; Prepare and furnish to the client accurate and timely financial reports in accordance with the terms of the management agreement, job description or duly adopted Board policies. 11. Recognize the original records, files and books held by the Manager are the property of the client to be returned to the client at the end of the Manager’s engagement; maintain the duty of confidentiality to all current and former clients.

13. Conduct themselves in a professional manner at all times when acting in the scope of their employment. 14. Not engage in any form of price fixing, anti-trust, or anti-competition. 15. Not use the work products of colleagues or competing management firms that are considered proprietary without the express written permission of the author or the management firm. Yet, we all need something to believe in! Looking back, 2009 was an interesting year for associations, boards of directors, vendors and management. The life cycles of associations have exceeded their life expectancy, while budgets are strapped and foreclosures are at an all-time high! The sky is falling and where do we go from here? The forecast is depressing and overwhelming, but with the proper assistance from an experienced manager or a Professional Community Association Manager, these issues will be addressed in a timely manner. Nevertheless, I have traveled 202 days in 2009 interacting with 9 Community Association Institute Chapters. I have attended numerous educational events, overwhelming committee meetings, board meetings for associations or chapters, golf outings, chapter trade shows, written articles, lectured at events and taught nine professional development management classes throughout the country for the betterment of the industry because we all need something to believe in!

Regardless of our position in the association, we can all make a difference in Community Association Institute Chapters and lead in 2010 for the association that is our residency. Volunteering for the committee, board, sponsoring an event or managing the property will make a difference. I leave you with the lyrics of Bon Jovi: “We weren’t born to follow, Come on and get up off your knees, When life is a bitter pill to swallow, You gotta hold on to what you believe! Do you have something to believe in? Tom Engblom has been a licensed instructor in Illinois for Real Estate for the past 22 years and is a National instructor for CAI. Tom began a career in property management in 1984 and earned ARM, CPM, CMCA, AMS, and PCAM designations managing a minimum of 3,500 units within the suburbs and Chicago for 20 years. Tom joined Community Association Banc, A division of Mutual of Omaha Bank, in March 2004 as a Regional Account Representative for the upper Midwest, achieving deposits in excess of $145 million covering Minnesota, Wisconsin, Illinois, Indiana, Michigan, Kentucky and Ohio. Tom can be reached at

Why do I keep a hectic schedule to make a difference to the industry I cherish and admire? I hope that I make a difference to the manager, board member or vendor in selecting the correct course of action relative to community associations — because we all need something to believe in!

12. Refrain from criticizing competitors or their business practices; Act in the best interests of their Employers; Maintain a professional relationship with our peers and industry related professionals.

January | February 2010


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Important Information for Landlords If you are an owner who leases your unit, we’d like to make the leasing experience successful and positive for everyone by informing you of your responsibilities. This will help preserve your property value specifically and maintain the association’s property value in general. Your tenants may not be familiar with common-interest community living. Please take a few minutes to explain to them that living in a community association is very different from living in a rental apartment community. Specifically, your tenants, like all residents, are subject to the rules and regulations of the association, and it’s up to you to educate them and see that they comply. The association will assist you in this area, but the responsibility lies with you. We recommend you provide your tenants with written copies of all policies and rules and advise them on the proper use of the association’s facilities. You can obtain copies of these and other useful documents from the manager. We strongly recommend that you have a written lease agreement with your tenant. As a lessor (landlord) of a home in a community

association, the lease you use must require tenants to comply with the association’s governing documents. In the event your tenant fails to comply with these documents, including the bylaws, or its rules and regulations, a representative of the association will first contact your tenants in an attempt to remedy the problem. The association will send you a copy of any notice sent to your tenant. If the tenant does not correct the violation, the association will contact you and expect you to remedy the violation using the recourse available to you through your lease agreement. If you are unable to correct the violation, the association may pursue appropriate legal action against the tenant, and possibly against you. The association asks that you provide the manager with the names and contact information of your tenants. The association will add your tenants to its mailing list, and they will receive the newsletter, invitations to participate on committees, notices of social activities and general association-related information. This information will also be used in case of emergency.

From CAI National

Follow these simple steps and you, the tenants and the association will all have a positive community association living experience: • Provide your tenants with copies of association rules. • Educate tenants about the need to follow association rules, and see that they comply. • Advise tenants on the proper use of association facilities. • Use a written lease agreement. • Make sure your lease requires tenants to comply with all association governing documents. • Provide the association with contact information for your tenants. Renters: If you don’t have a copy of the association rules or you’d like more information about the association, please contact a board member or manager.

The Easiest Maintenance Decision You Can Make. Associations face numerous maintenance decisions. However, when it comes to maintaining your association’s legal affairs, look no further than Hellmuth & Johnson. Hundreds of associations and property managers look to us as the definitive source for legal expertise, education and counsel. As one of the first firms in Minnesota to focus on this specialized area of law, we know the many challenges of running and managing an effective home owners association. For attorneys who know associations, call us or visit our web site

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January | February 2010



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CAI-MN Minnesota Community Living Magazine  

January/February 2010

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