Cohousing-L Mailing List: Re: Some questions

[Peter Orbeton (peter.orbeton]

Nubanusit Neighborhood & Farm (NN&F) relies to a great extent on in-house
expertise with professional consultations when appropriate.

As for seeking advice from a management company, there are some
fundamentals to consider, and is there expertise in-house now or the
possibility of one or more residents becoming familiar with it/them.

New Mexico condominium law applies to Sand River. This means state condo
law prevails. Do your governing documents and in particular, bylaws, follow
current law? Even if your governing documents conflict in some way with NM
condo law or are out of date, you are bound to follow the law. Do you
periodically review your Bylaws and revise them based on changes to state
law? One need not consult an attorney necessarily; rather, Search - New
Mexico Legislature nmlegis.gov <https://nmlegis.gov/Search> using the
keyword 'condominium'. NN&F does engage an attorney when needed. One aspect
of attorney consultations is being comfortable with an attorney who not
only knows condo law, but also understands the underlying tenets of
co-housing, as I imagine your agreements actualize them. Good practice is
to periodically bring all governing documents, agreements, etc. up-to-date
to be consistent with the law.

For financial reports and taxes, what are your existing systems, and does
NM condo law require an audit? NN&F is located in NH, which does not
require it, and is confident our systems are transparent in the following
ways:

Although we don’t have a formal internal audit, we do essentially have in
place a system comprising a compilation; we follow basic accounting
principles, and provide detailed reports showing the balance sheet, income
& expense, and a transaction ledger.

All disbursements above $5,000 require two signatures, all operating
checking account disbursements require either a vendor invoice or an
expense report approved by the team lead accompanied by a receipt, and all
disbursements are electronically reviewed and approved by the Treasurer.

All income and expense transactions, including invoices and expense
reports, are recorded using Xero, a cloud-based accounting software
package. All banking accounts are accessible online (restricted access),
and all transactions are downloaded to the Xero software (also restricted
access).

The Treasurer handles all banking deposits and withdrawals, and our Bylaws
do not permit the Bookkeeper (in-house) to conduct banking. The bookkeeper
provides reports, which are posted online and accessible to all members. The
Board controls account signatories as the officers (Chair, Treasurer &
Clerk) and Board members provide the second signature when needed, and can
sign checks and make withdrawals in the Treasurer’s absence. Annual tax
filings are prepared by a CPA, whom we expect to be current with respect to
IRS regulations. All filed tax forms are also viewable online.

The NN&F Agreement & Guideline Handbook contains a number of
financial-related documents covering topics such as financial operations,
account funding, operating reserves, disbursements, and transfers between
team line items. Our annual budget, because we are self-managed and are a
small-sized association (30 units), is relatively low, and transparency is
relatively high.

Legal issues also extend to casualty and liability insurance matters.
Simply having insurance policies in place, required by the NH condo law, is
insufficient in my opinion. For example, signage for unmonitored play
structures or to provide notice for snow/ice dangers - slip & fall, or
community-owned PV panels. Also, would you expect a management company to
be knowledgeable about premises liability and attractive nuisances? While
consulting your agent or provider may be an option, there are some aspects
that require MBWA - management by walking around. Whom better to do it than
a community member?

Then add in your applicable building and fire codes, knowledge of
delineation between common area and limited common area, what a unit owner
may or may not do to their unit, etc. and it becomes both broad and deep
for a management company. Expensive too most likely as economies of scale
are not in your favor.

Tasks such as legal issues and taxes can be taken to a professional for, in
all likelihood, much less expense.

Thanks, Peter Orbeton
Former NN&F BoD Chair, BoD Member, and Treasurer
Now still walking around but only wearing one hat.

On Sat, Jan 9, 2021 at 8:14 PM Shari Hirst <sharihirst13 [at] gmail.com> wrote:

> Dear All-
>
> Many people at Sand River are concerned regarding the “risks” we have with
> financial reports, taxes and legal issues.  Please advise how your
> community handles their risks - we are considering a Management company who
> is able to advise how changes in the tax law and legal considerations
> affect a co-housing community.  Are you fortunate to have in house
> expertise?
>
> I would appreciate hearing your response asap.
>
> Thank you for your time
> Shari Hirst
> sharihirst13 [at] gmail.com <mailto:sharihirst13 [at] gmail.com>
> Sand River Co-housing
> Santa Fe, NM
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