Laguna Woods Village co-op board says no to guarantors, boosts fees for illegal golf-cart charging

LAGUNA WOODS — The United Mutual board has denied a resolution that would have reintroduced guarantors to the co-op.

As defined in a Village Management Services report, a guarantor is a third party that “guarantees” to pay someone else’s financial obligations when a member cannot or will not pay, established by a guaranty agreement.

Guarantors were disallowed in 2017 amid growing concerns of guarantor-dependent members — who were otherwise unable to meet United’s financial qualifications — at risk of defaulting on financial obligations, a staff report stated.

At the April 9 board meeting, United president Juanita Skillman, who opposed the resolution, explained issues the mutual has encountered in the past.

“When we did away with guarantors before, one of the problems we had was collecting from guarantor who was not in our state because other state laws don’t give us the rights (to do so),” she said. “Particularly, we had a couple that were outside of the country and those were problems we had to write off.”

Roberta Burke, a 20-year Village resident, said she had never heard of guarantor causing disruption, naming the directors “gluttons for punishment.”

Burke spoke against reprimanding all members for one member’s violation, the paperwork hassle and her personal stake in the resolution — her children’s future residential plans.

“One of my children may live there, and they may need to have a guarantor if they do not have the finances,”  Burke said, noting she’s invested a significant amount of work into her unit with intent to pass it on. “I have had to revamp my children’s future because you (disallowed guarantors) before, and now we’re going back to it.”

The resolution stated for a guarantor to be considered, they must earn an annual income of at least $90,000 and own marketable or income producing assets of at least $250,000, plus be able to afford the unit purchase price.

Prospective members must earn a minimum annual income of at least $24,000 and own marketable and/or income producing assets of at least $75,000.

Conceding with Skillman’s earlier comment, director Maggie Blackwell noted that an attorney indicated to the board that out-of-state funding and out-of-state assets would be “expensive and difficult” for the Village.

The resolution failed by a 4-7-0 vote, with the majority opposing guarantors. It will not take effect.

Post-vote, several members falsely anticipated the resolution would be sent back to committee for revision, which was never proposed, Skillman confirmed. Director Sue Margolis expressed interest in its reconsideration, indicating that the board may rework their guarantor policy into a future agenda item.

Golf cart charging fees

United passed a resolution that would double the $50 fee for members who charge their golf carts using mutual electricity without a permit.

As proposed, violators would be fined $100 upon first offense — a fine that would escalate by increments of $50 for each subsequent offense. The cap would be set at $250.

Furthermore, the member must obtain an annual electric golf cart charging decal within 10 days of the violation.

The board approved the resolution, 9-1-1, upon first reading. The resolution must now satisfy a 28-day notification requirement and will be revisited in a May meeting.

Financial qualification policy

United approved a resolution that would change three factors in its financial qualification policy when considering new members.

First, community property assets or contributions would be excluded from asset qualifications. The resolution indicated that conflict may occur when community property is considered in the transaction of obtaining sole property, per United’s one membership per individual policy.

“Consideration of community property assets or community property contributions to purchase the right to occupy a unit, albeit as sole property, may transmute the intended sole property into community property,” the staff report stated.

Second, capital gains would also face exclusion in member financial qualification process — as it remains undocumented within United’s practice and is often a rare, one-time event — and third, an applicant’s income would be recognized after depreciation of the rental unit is factored in.

The board unanimously passed the resolution, 11-0, upon first reading. The resolution must satisfy a 28-day notification requirement and will be revisited in a May meeting.

Resale report

The average resale price for a co-op in United Mutual in March was $302,619, up from $278,915 in March 2018, according to a VMS staff report. Resales year-to-date numbered 60, down from 84 the same time last year. Sales volume in March was $6.4 million compared with $11 million in March 2018.