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MCL May/June 2014 - From the President
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From the President

By Michael Klemm, CAI-MN President

Michael Klemm

Know Where You're Going?

"You've got to be very careful if you don't know where you are going, because you might not get there." - Lawrence P. "Yogi" Berra

Yogi Berra is considered one of the greatest catchers in baseball history. Playing for the New York Yankees, he was named to the American League All-Star team every year from 1948 to 1962, and he was recognized as the American League’s Most Valuable Player three times. To excel as a major league catcher, Yogi had to know the rules, recognize important situations and make timely and correct decisions. The same principles apply to community association volunteer leaders. The foundation for success is familiarity with the documents and statutes that govern the association. For many associations, the primary statute is Minnesota Statutes Chapter 515B, the Minnesota Common Interest Ownership Act (MCIOA).

It is risky to use the Declaration, Bylaws and MCIOA merely as reference tools, searching for answers to questions that arise from time to time. Imagine Yogi Berra behind the plate with a copy of the Official Rules of Major League Baseball, searching play-by-play to figure out what to do next. Obviously, the timeline for making decisions and taking action is much longer in common interest communities than in baseball stadiums. However, lack of familiarity with the framework for association governance may eventually lead to trouble.

The governing documents and MCIOA establish many requirements regarding assessments, reserves, financial controls, disclosures, meetings, enforcement and other matters. Compliance generally depends on knowing the requirements and planning ahead.

Being proactive may yield opportunities to use the flexibility provided by MCIOA and the governing documents to achieve the association’s long-term goals and to find solutions that fit the association’s needs and circumstances. For example, MCIOA provides flexibility for an association to fund replacement expenses by future special assessments, rather than reserves, but only if the association follows the requirements for adopting an alternative funding plan.

Familiarity with the association’s governing documents and MCIOA is necessary for community association volunteer leaders to enforce the association’s rights before the deadline. One example is the association’s right to cancel a variety of contracts within two years after expiration of the period of declarant control. Another example is warranties that are subject to a statute of limitation under MCIOA.

It is important to note that the governing documents may conflict with MCIOA or other state or federal laws. In that case, carefully following the requirements in the Declaration or Bylaws may, ironically, result in violation of the law. MCIOA provides that in the case of a conflict with the Declaration or Bylaws, MCIOA controls, unless it permits variation in the governing documents on a particular subject. Ideally, the governing documents should be revised to be consistent with the statutes that govern the association, except where an appropriate variation is allowed.

Articles by attorneys generally conclude with a disclaimer that the information in the article is general information, not legal advice, and the action to be taken in a particular situation depends on the association’s governing documents and applicable statutes. I hope this article will nudge community association volunteer leaders to review those documents and, if applicable, MCIOA. If assistance is needed, find an experienced association attorney to explain the documents and applicable laws. As Yogi Berra put it, “You’ve got to be very careful if you don’t know where you are going, because you might not get there.”

Published by Community Associations Institute — Minnesota Chapter, copyright 2013. 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 toMonte Abeler at montea@cai-mn.com, or at CAI–Minnesota Chapter, 1000 Westgate Dr., Suite 252, St. Paul, MN 55114.

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