Why are we asking for your YES vote on amending Association documents?

Why are we asking for your YES vote on amending Association documents?

Changing condominium documents is not an easy task, as it requires approval of a two- thirds majority.  The board and the Association’s management company ask for your YES vote because Michigan condo laws have changed since Barclay was developed and many changes are overdue.

  • We want to take advantage of the beneficial changes in Michigan condo laws for the future of Barclay Park.
  • Parts of our condominium documents that have become outdated, including items referring to the original developer, no longer reflect State law or annual operations.
  • Most importantly, we want to take this opportunity to put Association fees on a more sustainable path for the future.  Doing so will protect condo values (influenced by monthly association fees) as these are often taken into account when buyers make their decision on whether or not – and where – to purchase.

All recommended changes have been assembled into one package because it is unlikely that we can repeat this effort multiple times.  Thank you for considering the information in this packet – and for returning a YES vote.

Voting on Amendment of Barclay documents has been extended 30-days (thru all of October and as late as Nov 15).

What are the changes to the Documents?

The following is a brief  outline of the proposed amendments to the documents.

Master Deed

  1. Language referring to the Developer that is no longer applicable has been removed.
  2. The value of each Co-owner’s vote at meetings will now be equal (one condo, one vote).  
  3. The Association will no longer assess its fee based solely on percentages of value. The new assessment formula allocates 80% of approved costs (and budget) by percentage of value, as set by unit square footage at construction, and 20% on an equal basis to better reflect how common area expenses are incurred, i.e., on a community-wide basis (lawns, snow, walks, roads, etc).

Condominium Bylaws

  1. The $25,000 fixed limit on additions to Common Elements has been changed to a floating limitation of 10% of the annual operating budget.
  2. Reserve funding has been changed to comply with FHA requirements.
  3. Changes in monthly fee assessment as indicated in the point 3 above (Master Deed).  
  4. Insurance has been revised.  The co-owner’s policy (HO-6) will cover the items for which co-owner is assigned maintenance and care responsibility (see Article IV, and additional details on  Insurance and the published Responsibility Matrix).
  5. Notification of mortgagee and loan guarantors is required. (Article V)
  6. Occupancy restrictions have been added in accordance with City ordinances.  Commercial use of units is prohibited.  (Article VI, Sec 1)
  7. Access by handicapped persons has been revised in accordance with Michigan law.
  8. Provisions related to satellite dishes have been simplified. (Article VI)
  9. Specific requirements for continued heat and winterization of vacant units have been added.
  10. Specific restrictions on flooring have been revised to specify performance standards rather than restricting types of flooring.
  11. The quorum percentage for meetings was lowered to 15% from 35%.
  12. Voting is now one vote per unit. Delinquent co-owners may not vote. Voting is made easier via technology.
  13. The requirement that any management contract may be terminable, with or without cause, upon 90 days written notice has been changed to 60 days.
  14. A new limitation was placed on the investment of Association funds to prevent loss and to match current requirements of law.
  15. A new article (Article XVI) has been provided on the right of the Association to fine for violations of Condominium Documents.

 

INSURANCE

Proposed changes to Insurance include the following:

SUBROGATION
For insurance purpose, subrogation is a legal right that allows your insurance company to make a payment that is actually owed by another insurance company and then, after the expenditure, to collect the money from the party that owes the debt. Actually, few, if any, insurance companies will waive subrogation. The language in the amended by-laws is a suggestion and is NOT binding.  It suggests that the Association and all Co-owners shall use their best efforts to see that all property and liability insurance carried contain appropriate provisions whereby the insurer waives its right of subrogation as to any claims against any Co-owner or the Association, A “best effort” is all that is being asked.

CLAIMS
All Co-owners pay directly for their own homeowner’s (HO-6) condominium insurance and indirectly for a portion of the Association’s insurance. The average cost of HO-6 insurance depends on the company and coverage, and ranges from $26 to $36 per month, or $312 to $428 per year, according to the National Association of Insurance Commissioners. The chart below approximates the average Association insurance costs per month and per year.  (The Association’s annual expense has remained low due to few claims, yet has stilled ranged from $37,000 to $42,000.)

Unit type Average Cost of Association Insurance
$ per month
per single unit
$ per year for all of each unit type $ per year / single unit $ per year for all of ea. type
Concord (x78) $8.35 $651.30 $100.24 $7,815.60
Bridgeport (x44) $10.68 $469.92 $128.16 $5,639.04
Greenwich (x44) $9.78 $430.32 $117.40 $5,163.84
Hartford (x47) $15.70 $737.90 $188.40 $8,854.80
Providence (x78) $13.38 $1,043.64 $160.52 $12,523.68
291 Units Total $3,333.08 $39,996.96

Note – all Association costs incurred must be allocated to the individual condo owners.  Given that there are few providers of Master Policy coverage, adverse claims experience carries a greater risk of increase for Association policies than for HO-6.

If a Co-owner should damage through fault a common element, and choose to use his or her HO-6 insurance to pay for the damage, the Co-owner will pay a deductible (on average $500 or less) and the Co-owner’s insurance company will pay the rest. If, however, the Association were to use its insurance to pay for the damage, the Co-owner would still pay his or her deductible and the Co-owner’s insurance company would pay the Association’s deductible (which is much higher at $10,000) minus the Co-owner’s deductible, with the Association’s insurance paying the rest.

In the above case, if the Co-owner’s insurance company paid the Association’s deductible, it would probably increase the Co-owner’s premium. But, if the Co-owner were not at fault, the Association would pay its deductible, resulting in a premium increase for the Association.

Such increase would be considerable, and, if doubled (which is not unusual), each Co-owner in Barclay Park could see a doubling of the insurance costs charted above.  That cost increase would continue indefinitely. We believe Co-owners are better off in the long run if the Association pays few claims (unless major) and, instead,  minor claims are handled by HO-6 condo owner coverage. This will stabilize the less-competitively priced expenses, and lessen the increase in Association fees. It is worth noting that Co-owners ultimately pay both for their own AND the Association’s insurance.

Responsibility Matrix – Summary of changes

The following changes have been made in the Responsibility Matrix

  1. Fire Suppression System: Fire suppression systems, specifically the interior sprinkler heads in all units and the exterior sprinkler heads on Concord units, has been changed from Co-Owner responsibility to Association responsibility.
  2. Garage Floor: The co-owner will be responsible for maintaining the garage floor and for the repairs needed over time due to the regular wear and tear. However, the Association will bear the responsibility if a structural failure occurs.
  3. Garage Door: The co-owner will be responsible for any damage to the garage door occurring from negligent use. The Association will be responsible for general maintenance and painting of garage doors.

In addition, the Association is not to be held responsible for any unauthorized repairs.

Continue to: Responsibility Matrix, highlighted with changes (PDF)