SHARES WELL Connued from page 19


PROPER NOTICE TO ALL OWNERS AND POTENTIAL PURCHASERS Since any shared maintenance agreement will impact the respecve associaons’ monthly assessments and possibly their capital reserves, noce of any shared maintenance obligaon must be provided to all present and future owners as well as all potenal purchasers. The best way to ensure proper noce is to incorporate the shared maintenance agreement into the associaons’ respecve declaraons as well to specically reference the maintenance agreement within the associaons’ declaraons. When shared maintenance obligaons involve the granng of access rights or a specic right ofway, these rights are granted through an easement agreement that is recorded. If an easement agreement is involved, it is a good idea to reference the shared maintenance obligaons between the associaons in the easement agreement.


EFFECTIVE DECISION MAKING MECHANISM The deliberaon and decision making process among the members of a single execuve board can be challenging enough. Reaching consensus among the execuve boards of two or more dierent associaons can be even more challenging. Accordingly, the decision making process regarding such maters as the annual budgeng for and management of the joint maintenance items should not be wholly dependent on the consensus of disnct execuve boards. Proceeding by consensus would place far too many me constraints on the volunteer board members and likely delay required maintenance.


To avoid deadlock, only one of the parcipang associaons should have the decision making power to carry out the agreed upon maintenance. Typically, this decision making power is given to the associaon that owns the property that is the subject of the shared maintenance agreement. As a praccal maer, the associaon that owns the property will very likely be prohibited by statute or its governing documents from transferring any type of ownership interest to the other associaon that is parcipang in the shared maintenance agreement.


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PARTICIPATION, TRANSPARENCY AND VERIFICATION While one associaon should have the authority to carry out the shared maintenance responsibilies, the other associaon should be permied to parcipate in this process. This could be accomplished by having each associaon form joint maintenance commiees that meet once or twice a year to discuss vendors, expenses, cost saving strategies and other related maers. Since the associaon that owns the property will have the ulmate decision making power, these type of joint commiees possess no independent authority over the associaons and the shared maintenance items. Instead of commiees, the full boards could establish regular meengs to discuss shared maintenance items. These type of interacons help to minimize misunderstandings and promote cooperaon between the associaons.


Both of the associaons should have equal access and understanding of the costs associated with the shared maintenance items. One way to establish this transparency is for the associaon that is actually carrying out the shared maintenance items to provide the other associaon with its audited nancial statements or at least those porons of the audited nancials reecng the shared maintenance items. In addion, the underlying invoices for the shared costs should be made available for review and vericaon.


DISPUTE RESOLUTION PROCEDURE When pung together a shared maintenance agreement, it is dicult for associaons to imagine disputes arising over what seems, at the me, to be a very straighorward arrangement. However, ask any aorney who represents community associaons, and they will oer numerous examples in which shared maintenance agreements have broken down. To save costs and keep greater control over the process, the associaons should dene a dispute resoluon procedure that limits costs and ensures a prompt resoluon. This will oen include some type of private mediaon or arbitraon that does not involve the court system. To dissuade frivolous disputes and emoonal decisions, serious consideraon should be given to including a provision that makes the losing associaon


responsible for the prevailing associaon’s aorney’s fees and costs.


CONSULTATION WITH PROFESSIONALS When contemplang any type of shared maintenance arrangement, early consultaon with an engineer and an aorney could save an associaon considerable money and headache down the road. So that the associaon can beer understand the longterm impacts of a shared maintenance agreement, it is a very good idea to involve an engineer as soon as possible in this process. One of the rst orders of business would be for the engineer to perform a reserve impact analysis. It is also very possible that an updated reserve study would be necessary. The informaon gleaned from these engineering analyses will permit the associaon to properly negoate and structure the shared maintenance agreement. Depending on the individual circumstances of the contemplated agreement, more specic services may need to be provided by an engineer. For example, an engineer would need to perform storm basin calculaons before an associaon could permit a neighboring community to use its retenon basins.


Before invesng the me and energy involved in draing a shared maintenance agreement, an aorney can advise the associaon whether the contemplated arrangement is permied by the governing documents and related statutes. In addion, an aorney can help guide the associaon through this process by idenfying issues and helping to dra the actual shared maintenance agreement.


ABOUT THE AUTHOR Mahew C. Collins, Esq. is an aorney with CAI business partner member Marcus & Homan. He currently serves as a member of CAI’s Communicaons & Content Commiee.


He can be contacted via email at: mcollins@marcushoman.com


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