Associa Mid-Atlantic Management Corporation


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WILLISTOWN KNOLL HOMEOWNERS ASSOCIATION
PROFESSIONAL MANAGEMENT SERVICES AGREEMENT

Contents

1. PARTIES

This is a renewal Agreement by and between these parties:

CLIENT - The Board of Directors for the Willistown Knoll Homeowners Association. Willistown Knoll is a planned community of 203 townhomes located along Street Road (Route 926) in Newtown Square (Willistown Township), Chester County, Pennsylvania 19073. Where applicable, the Association is also considered the Client.
MID-ATLANTIC - Mid-Atlantic Management Corporation, a firm incorporated under the laws of the Commonwealth of Pennsylvania, with corporate offices located in Suite 700, 4070 Butler Pike, Plymouth Meeting (Whitemarsh Township), Pennsylvania 19462.

The Board continues to have control of this Association and is responsible for its services and programs as established by the Client Documents. Mid-Atlantic's role continues to be to implement the decisions and policies of the Board and adhere to the Client's Bylaws. In circumstances where provisions of this Agreement are in conflict with Section 2 and Section 4 of the Bylaws, this Agreement shall apply. The Client also acknowledges this Agreement is the notice required under Section IF of the Bylaws.

In consideration of the mutual terms and conditions set forth in this Agreement, the Client appoints Mid- Atlantic to continue to perform certain services and Mid-Atlantic accepts that appointment in mutual agreement according to the terms of this Agreement.

2. DURATION

Subject to the renewal and termination provisions herein, this Agreement shall be in effect from the first of the month after this Agreement is executed to December 31, 2007, renewing for successive one-year terms as provided herein.

3. PROFESSIONAL SERVICES

The following pages describe all of the services being provided by Mid-Atlantic through this Agreement. Should the Client request and Mid-Atlantic agree to perform additional services not outlined herein, Mid- Atlantic will receive compensation described in either a supplementary agreement or at the hourly rate provided in the Management Staff Time Allocations section of this Agreement. This Agreement replaces one executed in January 2003. Both parties recognize that the language which follows outlines a continued relationship between the Client and Mid-Atlantic and provides for a program of services essentially similar to what is currently in effect.

A. Financial Management Services

The Client authorizes Mid-Atlantic to continue to bill and arrange for the receipt of assessments and other amounts due to the Client. Those receipts shall still be deposited in an operating checking account under the Client's name with a financial institution that is FDIC insured and selected by Mid-Atlantic. Mid- Atlantic shall continue to have sole signature authority on that operating checking account.

Reserve accounts which are invested in other banks, certificates, funds, or other investment vehicles shall be under the sole control of the Client and not Mid-Atlantic. If the Client decides to have one or more other accounts (including Replacement Reserves or Capital Contributions) which are in the same financial institution as the operating checking account, Mid-Atlantic is authorized to electronically transfer from those accounts to the operating checking account upon receipt of a Client-executed Investment Authorization Form. Two signatures are required on that Form before Mid-Atlantic can make any such internal transfer.

A record of income, expenses, assets, and liabilities will continue to be maintained utilizing the accrual method of accounting and Mid-Atlantic's current Chart of Accounts. Mid-Atlantic's computerized payables system, which includes computer-printed Client checks, is still being utilized. Mid-Atlantic is authorized by the Client and shall continue to provide the following financial services:

1. Budget Preparation

a. Prepare the initial draft of the annual budget at least ninety days before the start of each fiscal year.
b. Assist the Client in the finalization of the budget by answering questions or obtaining additional relevant information. The Client recognizes that its budget is an estimate of future costs and income. Adoption of each budget shall occur at least forty-five days prior to its effective date.
c. Prepare a mailing to owners of the approved budget when requested by the Client.
d. Develop an annual accrual budget analysis reflecting the monthly allocated amounts for each income and expense item.

2. Billing

a. Prepare a monthly computer printed reminder statement which includes all the following
activity as of the 10th of the month:
Previous amount billed
Payments received
Monthly association fees
One fixed late fee charge (charged as ofthe 10th)
Other special charges or credits
New balance due
A brief, uniform message to all owners
b. Provide a return payment envelope with the reminder statement for the convenience of owners.
c. Include a single-sided, letter-sized sheet mailer with each reminder statement mailing at no additional labor cost. Extra charges will be assessed for photocopying or for more than a single sheet mailing.
d. Mail the statements individually on a monthly cycle to all owners. Postage for this regular billing is the responsibility of Mid-Atlantic.

3. Accounts Receivable

a. Receive and process the owner payments utilizing a lock-box system. Payments are still to be received by the post office address and not in Mid-Atlantic offices. In no case shall cash be accepted by Mid-Atlantic on behalf of the Client at any office location.
b. Arrange for payments to be deposited within three business days into the separate Client operating account.

4. Assessment Records

a. Maintain a monthly record of assessment billings, charges, adjustments, and payments as received.
b. Respond to owners regarding their individual accounts.
c. Prepare one Client copy of a month-end Assessment Roll showing the following information:
Owner's name(s)
Unit address
Charges and payments for the period
Balance due

5. Delinquency Processing

a. Prepare any suggested revisions to the current delinquency procedure resolution for Client approval which are consistent with the Federal Fair Debt Collections Practices Act.
b. Administer the delinquency procedure by charging monthly fixed late fees, preparing warning letters in the Client's name consistent with the procedure, and answering questions regarding accounts.
c. Prepare account information to assist the Client's attorney in any litigation. Mid-Atlantic staff court appearances with the attorney may be an additional charge dependent upon Management Staff Time Allocations.
d. Issue five Client copies of a mid-month Delinquency Report containing the following:
Delinquent owners' names
Delinquent balance due - aged by billing dates
Last payment date and amount

6. Invoice/Disbursement Procedures

a. Monitor the current payment approval system for the Client. b. Receive and review all Client invoices and bills. c. Retain sole approval authority of those Client expenses which are from Client-approved contracts or other agreements, payroll, utility charges, and other routine budget expenses. d. Authorize reserve account funding as Client cash flow, budget, and priorities permit. e. Prepare and sign checks for payment of Client expenses within the Client's cash-flow limitations. Mid-Atlantic will not use its own funds to assist the Client's cash-flow situation nor will Mid-Atlantic be responsible for the consequences of insufficient Client funds. f. Mail checks to Client vendors. Postage for the routine payments to Client vendors is the responsibility of Mid-Atlantic. g. Maintain vendor files containing payment information and invoice. h. Issue annual 1099 Forms to qualified Client vendors, consistent with IRS guidelines.

7. Financial Reports

a. Continue to maintain the records necessary to produce monthly computerized accrual-basis financial statements.
b. Print five Client copies of the following each month:
Balance Sheet - lists assets and liabilities for the current and prior month with changes from prior month.
Income and Expense Statement (Profit and Loss) - shows the current month's activity, year- to-date totals, and compares with the year-to-date budget.
Budget Status Report - provides a comparative analysis on a month per month basis for income and expense categories.
c. Print two Client copies of the monthly General Ledger detail report, which reflects every general ledger entry for the month.
d. Mail or otherwise distribute the Client copies of financial reports generally by the sixteenth business day following the end of the month. Postage for mailing these reports is the responsibility of Mid-Atlantic.
e. At year-end closing, print one Client copy of the Year-End Cumulative General Ledger for the entire fiscal year.

8. Audit/Tax Preparation

a. Cooperate with the Client's independent Certified Public Accountant in preparation of the annual fiscal year-end report (audit, review, or compilation) by making the records, books, and files available for inspection and review at Mid-Atlantic's offices.
b. Review the resulting year-end report and make the CPA's recommended adjustments to the Client's records.
c. Assist the Certified Public Accountant in the preparation of annual federal corporate income tax returns. All tax returns are a responsibility of the Client, to be completed by the CPA.

9. Investments

a. Assist the Client in developing an investment policy or program which utilizes savings accounts, money market funds/accounts, certificates of deposit, and other prudent investment alternatives. The Client recognizes that Mid-Atlantic is not acting as an investment professional.
b. Provide support to the Client in its responsibility for investment of funds. This support may take the form of limited investigation of rates or assistance in completing necessary forms required by the banking institutions and investment firms.
c. Reflect relevant maturity dates and rates on the Client's Balance Sheet for reference purposes.

B. Administrative Management Services

Certain administrative functions and professional assistance required by the Client are still to be provided by Mid-Atlantic. Most of the services described in this Section continue to utilize Mid-Atlantic's labor and experience. Expenses (stationery, supplies, photocopies, etc.) related to these services remain the Client's responsibility. Mid-Atlantic will continue to utilize its own organizational system with the materials it receives. . Mid-Atlantic is authorized by the Client to continue to provide the following:

1. Files and Records

a. Maintain the present filing system of the Client's important papers, including such things as minutes, contracts, resident communications, public agency filings, financial information, insurance policies, resolutions, and legal documents.
b. Update the current list of owners and other related information such as mortgage holder, emergency phone number, settlement date, tenant's name (if applicable) - to the extent this information is provided.
c. Make the Client's routine community-wide books and records available for inspection by any owner or mortgage holder upon reasonable notice during regular business hours at Mid- Atlantic's regular office location. Access to individual files shall be determined by policy of the Client.

2. Communications

a. Prepare general correspondence dealing with routine operational matters between the Client and residents, contractors, agents, government officials, or other entities.
b. Arrange for the mailing or other distribution of notices required by the Documents or directed by the Client. In an effort to save costs, the Client shall utilize the reminder statement billing for most mailings. Except for an emergency situation and for an additional charge, Mid-Atlantic does not take or prepare Client's minutes, prepare the Client's newsletter, or deliver material to the residences.

3. Insurance Administration

a. Administer the present program for the Client to select a qualified insurance agent and carrier. It is not the intention of the parties to conduct a comprehensive insurance bidding procedure every year.
b. Provide insurance program specifications for approval by the Client.
c. Assist the Client and its qualified insurance agent in placing the required insurance. The Client retains sole responsibility regarding the type and amount of insurance coverage selected.
d. Receive and report to the insurance agent any known incident that may result in an insurance claim for which the Client may have responsibility. This Agreement specifically excludes Mid-Atlantic from acting in a claims-adjusting capacity. The Client may request and Mid- Atlantic may agree to provide administration of insurance claims, limited to investigating, reporting, supervising, or monitoring of such claims. Should that occur, Mid-Atlantic shall be compensated an administration charge of $40 per hour or 10% of the claim, whichever is less, which shall be regarded as part of the loss and may be· included in the claim.
e. Report to the Client any accidents, fires, or other claims related to the management, maintenance, and operation ofthe Client's property.
f. Prepare the necessary information to assist the insurance carrier in the annual workers compensation audit.

4. Rules Administration (including Architectural Review)

a. Assist the Client in any refinement of the present package of rules, regulations, and architectural review guidelines.
b. Suggest subsequent revisions to the current procedures for approval by the Client.
c. Receive written and signed complaints regarding rules violations and investigate as provided by present policy.
d. Identify those readily visible and observed rules violations as part of routine site inspections.
e. Inform residents in writing who are in violation of rules as is consistent with Client policy.
f. Take other actions to assist the Client in the administration of provisions of the Documents, resolutions, rules and regulations as are consistent with Client policy. Resulting Client- approved litigation which requires Mid-Atlantic staff involvement may be an additional charge as provided by the Management Staff Time Allocations section of this Agreement.

5. Policy Development

a. Inform the Client concerning significant legislation, insurance, financial practices, court decisions, or tax rulings pertaining to community associations which come to Mid-Atlantic's attention.
b. Support the Client development of resolutions to address important administrative and policy matters.
c. Offer advice and direction to the Client regarding its governing process and responsibilities.

6. Ownership Transactions

a. Provide Client information as requested by a seller, prospective buyer, or sales agent. Included would be the #5407 resale Certificate mandated by Pennsylvania law. Mid-Atlantic will directly charge a fee to a Seller or other party who requests that such information be provided. Mid-Atlantic is not expected to complete forms or applications for individual financing or for secondary market financing approval, and if it does, Mid-Atlantic shall charge the party requesting same.
b. Prepare the necessary correspondence, including payment status information, which will facilitate settlements. Neither Mid-Atlantic nor the Client shall be responsible for such requests if received less than ten days before the settlement date.
c. Upon receipt of notification of a sale of a unit, prepare the necessary records and files required for assessment billing and other communications.

7. Professional Services Coordination

a. Assist the Client in selection of consultants to accomplish specialized functions in such areas as engineering, energy conservation, law, architectural, or public accounting.
b. Cooperate with those consultants selected and retained by the Client.

8. Meetings Coordination

a. Provide for the annual residents' meeting and othcr meetings where voting is to take place.
b. Prepare notices, nomination forms, proxies and/or mail ballots which are requested to support the meetings.
c. Arrange for the necessary materials and procedures to facilitate those meetings. Costs related to such meetings shall be borne by the Client.

9. Management Report

a. Prepare a monthly status report highlighting financial, administrative, and property management services for the Client.
b. Issue the management report, along with other appropriate supporting information, just prior to each of the Client's regularly scheduled meetings.

10. Community Relations

a. Receive comments from owners regarding Client operations or decisions.
b. Investigate those significant issues which are submitted in writing and require such investigation as provided by present policy.
c. Advise those involved, including the Client, of the findings and any appropriate recommendations.

11. Lease Administration

a. Assist the Client in determining the Client's authority regarding leases of units as provided by the documents.
b. Provide advice regarding appropriate leasing rules and regulations when requested by the Client.
c. Request the required information regarding each known lease including copy of the lease, tenant name(s), and expiration date.

12. Committee Assistance

a. Provide fundamental, relevant material (correspondence, specifications, records) to Client- approved advisory committees, consistent with Client policy. The extent that Mid-Atlantic will assist Committee activity shall be judiciously limited by the Client liaison. Specifically excluded are attendance at Committee meetings or preparation of Committee minutes. Performance of other normal Committee functions are to be specifically approved in advance by Mid-Atlantic and the Client liaison and at a charge as provided by the Management Staff Time Allocations section of this Agreement.
b. Advise the Client regarding any significant trends or needs regarding Committee activity when they become known to Mid-Atlantic.

C. Property Management Services

The Client and Mid-Atlantic recognize that certain physical components of the Client's property still require routine services and resulting supervision. Those components are to continue to be maintained in a consistent manner with standards established by the Client subject to budgetary limitations. The property management services to be provided by Mid-Atlantic still relate to routine, recurring maintenance or repair services and specifically exclude major renovation, replacement, or capital improvement activity.

Contracts shall still be executed by the Client and costs related to such services, employees, or materials continue to be the Client's responsibility.

Mid-Atlantic is authorized to continue to develop, perform, and maintain the following systems and functions:

1. Property Inspections

a. Conduct inspections to maintain a current knowledge of the property. Mid-Atlantic staff continue to routinely visit the site to monitor contractor performance, identify maintenance needs, meet with residents, and follow-up with rules violations or architectural review matters. In addition to routine site visits, one comprehensive property-wide inspection shall be conducted each month from March through October.
b. Identify those situations requiring corrective measures and take those measures consistent with Client policy and budgetary limitations.
c. Report to the Client any major items which come to the attention of Mid-Atlantic as a result of such inspections.

2. Service Request Processing

a. Receive and record reasonable service requests for the types of repairs or maintenance which are consistent with established Client policy.
b. Arrange for prompt and satisfactory response to service requests for maintenance or repairs as permitted by Client policy, budget limitations, weather, and contractor availability.

3. Contractor Bidding Procedures

a. Continue the competitive bidding process for routine, non-emergency services where the cost will exceed $1,000 and is requested by the Client.
b. Prepare bid specifications on routine services for Client review and approval.
c. Distribute those specifications to three to five interested, prospective bidders.
d. Receive bids and other contractor information.
e. Develop a comparative summary regarding the bids received.
f. Submit recommendations to the Client regarding the bids received, adherence to specifications, and information on past performance (if known), which will assist the Client's decision.

4. Contract Development

a. Facilitate the Client's final selection of contractors for routine services.
b. Assist the Client in preparing contracts for routine services. While Mid-Atlantic will provide certain recommended contract language for routine services with Client-selected contractors, the Client will not rely on Mid-Atlantic for legal or technical accuracy or completeness.
c. Obtain relevant certificates of insurance from selected contractors providing routine services.

5. Routine Service Contractor Supervision

a. Coordinate the contractors providing these routine services for the Client:
  1. Landscape Maintenance
  2. Turf Chemical Maintenance
  3. Tree Maintenance
  4. Winter Storm Maintenance
  5. Building Exterior Maintenance as limited by the Client documents
  6. Trash Removal and Recycling Services
  7. Pest Control / Exterminating
  8. Cable/Antenna TV Systems
b. Monitor contractor performance to insure compliance with contract specifications. To support Mid-Atlantic's efforts, the Client shall assist in minimizing interference with contractors by unauthorized residents or volunteer leaders.

6. Emergency Services Program

a. Administer a 24-hour, seven day per week telephone call program to respond to Client service-related emergencies as defined by the Client and Mid-Atlantic in advance. This system shall continue to be through an answering service finn selected by Mid-Atlantic. The cost of the answering service shall still be borne by the Client, not to exceed $25 per month.
b. Maintain a list of contractors and personnel for the answering service. Listed personnel or finns are subject to call in matters seriously affecting health, safety, or a reasonable level of personal comfort. Services provided are at the expense of the Client.

4. STAFFING

Mid-Atlantic shall continue to utilize its staff in positions and functions which insure a depth of staffing and efficient, effective service for the Client. The Client acknowledges the following policies and conditions regarding Mid-Atlantic's staffing:

A. Staffing Costs

Mid-Atlantic will provide the staff to perform the services outlined in this Agreement. All personnel, training, insurance, and payroll costs of the specified staff shall still be borne by Mid-Atlantic and are included as part of the compensation in this Agreement. Mid-Atlantic still retains sole responsibility for the selection and retention of its staff.

B. Levels of Staff

Supervisory (Regional Director or Area Manager)
An experienced Mid-Atlantic supervisory-level staff member who coordinates the over-all management program with particular focus on the performance of Mid-Atlantic's management and administrative staff. This staff member shall be available to the liaison for major matters.
Management (Community Manager)
Mid-Atlantic staff member directly responsible for the daily management operations. The Community Manager is the primary link between the Client and Mid-Atlantic. The Community Manager is normally the Mid-Atlantic staff representative attending Client meetings.
Assistant Management (Community Administrator)
One or more other Mid-Atlantic staff members who work at the direction of the Manager in the administration of this Agreement.
Vice President, Financial Operations
A highly experienced Mid-Atlantic employee who is responsible for the performance of Mid- Atlantic's financial staff and coordinates the Client financial services as outlined.
Staff Accountant
The staff member directly responsible for the preparation of the Client's financial statements and other major financial functions outlined in this Agreement.
Accounting Assistant
This staff member works with the Staff Accountant in performing routine accounts payable and other financial activity for the Client.-

C. Meeting Attendance

The Client and Mid-Atlantic will schedule Client meetings on a regular basis well in advance and strive to make those meetings as efficient as feasible. The Mid-Atlantic Community Manager shall continue to attend up to fifteen Client meetings per year. Except for an unusual circumstance, regular meetings will not exceed three hours in length, and, if held in the evening, will end by 10:00 p.m. Meeting time which consistently exceeds those time parameters or additional meetings beyond those designated shall be at the additional charge of $50 per hour. Meeting attendance is dependent upon availability of the designated staff member, who has no obligation to attend meetings on weekends or holidays. Meeting attendance is also contingent upon cooperative weather conditions.

D. Client Liaison

Mid-Atlantic staff shall principally communicate with the Client through one designated liaison appointed by the Client.

E. Client Support

The Client shall intervene on behalf of Mid-Atlantic staff in a situation where an individual is demanding an inordinate amount of attention and time or is abusive.

F. Management Staff Time Allocations

Included in the calculation of the compensation levels detailed below is Mid-Atlantic's maximum allocation of professional staff time (Community Manager, Community Administrator, and Regional Director) required to provide the routine, professional services described in Section 3 of this Agreement which are not performed by Mid-Atlantic's financial department staff. As a result of recent experience with the Client, Mid-Atlantic allocates up to seventy-five average monthly hours of staff time to perform services such as site inspections, budget development, telephone work, delinquency processing, rules enforcement, maintenance supervision, emergency calls, payment authorization, meetings, administrative activities, related travel time, and the Client's prorated share of staff development and personnel time.

The Mid-Atlantic management staff members responsible for the Client have similar duties for other Mid- Atlantic clients. So that every client receives quality, professional service, each has agreed to honor such Staff Time Allocations.

Should Mid-Atlantic experience a pattern of three or more months when the time requirements significantly exceed the contracted maximum allocation, the Client shall be so advised. Should the pattern persist, Mid-Atlantic will receive compensation at a rate of $45 per hour for subsequent documented time in excess of the seventy-five hour average monthly maximum allocation. This hourly rate will also be used for other additional services which are approved in advance by the Client.

5. COMPENSATION

A. Monthly Management Fee

For the services specified in this Agreement, the Client shall pay a monthly fee which is due and payable the first day of each month for which the services are being rendered, including any renewable terms.

From the first of the month after this Agreement is executed through December 31,2007, the Client shall compensate Mid-Atlantic a monthly management fee of $-,---

From February 1,2008 through December 31, 2008, the Client shall compensate Mid-Atlantic a monthly management fee of $-,---. Mid-Atlantic shall receive no compensation for January 2008 as its means of addressing service-related issues raised by the Client.

From January 1, 2009 through December 31, 2009, the Client shall compensate Mid-Atlantic a monthly management fee of $-,---

From January 1,2010 through December 31, 2010, the Client shall compensate Mid-Atlantic a monthly management fee of $-,---*.

From January 1,2011 through December 31, 2011, the Client shall compensate Mid-Atlantic a monthly management fee of $-,---*.

  • Should the CPI exceed 5%, then this fee shall be increased by the amount CPI is greater than 5%. If the CPI is less than 5%, the fee is as scheduled. By way of example, if the CPI is 6% annualized as of June 1,2009, then the 2010 monthly fee beginning January 1 is increased 1% to $3,656 and the 2011 monthly fee beginning January 1 is increased 1% to $-,---. CPI is defined by the Philadelphia area (all), Consumer Price Index as printed by the U.S. Bureau of Labor Statistics as of June 1,2009 (for 2010) and as of June 1,2010 (for 2011).

Should this Agreement renew for one or more terms beyond December 31, 2011, the Client shall compensate Mid-Atlantic at the amount of the most recent completed term, increased by the greater of four percent (4%) or the percentage by which the U.S. Bureau of Labor Statistics Consumer Price Index, Philadelphia (PA-DE-NJ-MD) has increased as of the first month of the most recent completed term.

There continues to be a $10 fee due to Mid-Atlantic for subsequent ownership changes for each resold home.

Other Mid-Atlantic charges or rates referred to in this Agreement shall not increase by a percentage which is greater than the cumulative percentage increase for the management fees described above. Any federal, state, or local municipal tax charged directly on Mid-Atlantic's monthly management fee shall be paid by the Client.

B. Client Expenses

The Client recognizes that it will incur routine office and administrative costs such as stationery, telephone costs, postage, office supplies, and photocopy reimbursements. Mid-Atlantic will be reimbursed for those expenses it incurs on behalf of the Client which would ordinarily be experienced by the Client if the Client was providing the services directly without Mid-Atlantic. Photocopies made by Mid-Atlantic staff and equipment are charged at a rate not to exceed ten cents per copy. Large volume copying coordinated by Mid-Atlantic may be provided by a duplication firm at a lesser expense when adequate time is available.

C. Additional Services

The Client may request and Mid-Atlantic may provide additional, optional, or expanded services beyond those specifically outlined in this Agreement. Examples of such services include preparation for and participation in Client-related litigation, additional meeting attendance, administering to significant Client insurance claims or major capital renovations/improvements, or specialized personal computer programming requested by the Client. Such services must be approved in advance by the Client, and unless otherwise stipulated, shall be at the same hourly rate as outlined in the Management Staff Time Allocations section of this Agreement.

6. CLIENT DOCUMENTS AND RECORDS

The Contract Documents continue to consist of this Agreement, the Client's founding documents, and any Client resolutions in effect at the date of the execution of this Agreement. Any subsequent change in the Contract Documents which might alter Mid-Atlantic's responsibilities or rights shall require prior Mid- Atlantic approval.

The Client is still responsible for providing Mid-Atlantic with complete copies of all founding documents (including amendments), minutes, current resolutions, rules and regulations, contracts, property plans and data, current and accurate financial information, insurance policies and related material, significant maintenance-related information, other major outstanding matters, plus other pertinent information necessary to assist Mid-Atlantic in its efforts. Mid-Atlantic will continue to utilize its own organization system with the materials it receives.

These records and material are still the property of the Client, maintained by Mid-Atlantic. Records which are older than three years stored in boxes by Mid-Atlantic are subject to an annual storage fee charged to the Client. The Client recognizes that its records are not kept in a fireproof or highly secured environment and could be subject to loss or damage.

7. STATUS OF MID-ATLANTIC

The Client recognizes that Mid-Atlantic is still an Independent Contractor providing services for the Client as outlined in this Agreement or otherwise agreed to by Mid-Atlantic. Mid-Atlantic is not and has not been an agent of the Client. Nothing in this Agreement or in the relationship between the Client and Mid- Atlantic shall be deemed to constitute a partnership, joint venture, or other relationship except that of a Client and Independent Contractor.

8. ASSOCIA AND RELATED MATTERS

Mid-Atlantic is a member of Associa, a national company of association management companies and other entities which have common ownership. For the purpose of this section of the Agreement, all those entities, including Mid-Atlantic, will still be collectively called "Mid-Atlantic".

The Client acknowledges that Mid-Atlantic will have direct or indirect relationships with entities offering products and services to the Client Association and its members. These offerings may include group purchasing programs and dissemination of marketing information to Association members. Mid- Atlantic may receive fees as the result of such relationships.

The Client will be advised in advance of such a relationship when and if the Client is asked to consider purchasing any products or services directly for the Client Association. Purchase of any product or service offered through Mid-Atlantic is voluntary and is not in any manner required by the provisions of this Agreement.

The Client has agreed to have Mid-Atlantic produce and maintain an Association website for which the charge continues to be $55 per month. The website continues to be available by hyperlink from Mid- Atlantic's website.

Access to most areas of the Client Website continues to be password protected, for free and exclusive use of Association members who register for this service through the Website. All information submitted to the Website by Association members or contributed by the Client shall be the property of the Client and is hereby licensed to Mid-Atlantic for use in operation and maintaining the Website and related services. The Website and all computer programs and code used in the operation of the Website, as well as all intellectual property rights therein, and all revenue generated through the Website shall be the sole and exclusive property of Mid-Atlantic.

The Client may terminate its Website services through Mid-Atlantic with a ninety day written notice without terminating this Agreement. Should that occur or in the event of the termination of this Agreement, Mid-Atlantic shall cause the Website to be shut down by the date required under termination. Mid-Atlantic will then delete from its Website databases all personally identifiable data about Association members within thirty days of the final date of service by Mid-Atlantic. If the Client obtained its own domain name, Mid-Atlantic will assist the Client in arranging for the transfer of the domain name as requested in writing by the Client.

The Association Website will contain links to other websites. Use of those other websites is at the user's own risk. Neither Mid-Atlantic nor Associa are responsible for the content, products, or services of any third-party website and does not make any representations regarding their quality, content, accuracy, or security. Mid-Atlantic and Associa do not assume liability for the materials, information, and opinions provided on or available through the Association Website (the "Site Content"). Reliance on the Site Content is solely at the user's own risk. Mid-Atlantic and Associa disclaim any liability for injury or damages resulting from the use of any Site Content.

The Association Website, the Site Content, and the products and services provided on or available through the Website are provided on an "AS IS" and "AS AVAILABLE" basis. Mid-Atlantic and Associa make no warranty or representation with respect to the quality, accuracy, or availability of the Website and disclaim all warranties of any kind, express or implied, including warrantees of merchantability, fitness for a particular purpose, or non-infringement. In no event will Mid-Atlantic or Associa or its licensors or contractors be liable for any damages of any kind, under any legal theory, arising out of or in connection with the use of, or anyone's inability to use, the Association Website, the Site Content, any services provided on or through the Website or any linked site, including any direct, indirect, incidental, special, consequential, or punitive damages.

9. EMERGENCY EXPENDITURE

Through acceptance of this Agreement, the Client grants Mid-Atlantic the continued authority for disbursements or expenditure commitments without limit in those situations requiring emergency repairs or services involving danger to life or property which may be immediately necessary for the preservation and safety of the property or its residents. In all such cases, Mid-Atlantic shall make a reasonable effort to minimize costs and to consult with the liaison in a timely fashion.

10. INDEMNIFICATION

The Client continues to indemnify and hold Mid-Atlantic and its staff harmless for any and all liabilities sustained by Mid-Atlantic as a result of Mid-Atlantic's carrying out the provisions of this Agreement, or acting under the expressed, implied, or apparent direction of the Client, or as a result of the acts of the Client, its Owners, residents, contractors, or employees. Liabilities include claims, demands, causes of action, suits, court costs, penalties, damages, and expenses. Expenses include legal counsel as provided by the Client or reasonable legal fees, should Mid-Atlantic determine that it requires independent counsel. This indemnification is provided in all cases except willful acts, gross negligence, or criminal acts on the part of Mid-Atlantic. To the extent practical, the Client will provide coverage for this indemnification by having Mid-Atlantic as a named insured as its interests apply on the Client's insurance policies. The Association's insurance shall be considered primary coverage. This indemnification shall not be limited to the damages, compensation, or benefits payable under such insurance policies.

These provisions still survive the termination of this and any subsequent agreements. The Client shall promptly advise Mid-Atlantic should it become aware of a situation to which this indemnification may apply.

11. MID-ATLANTIC INSURANCE

Regardless of the previous indemnification provisions, Mid-Atlantic shall continue to maintain in force and for the entire term of this Agreement, standard liability and business insurance in an amount of at least $2 million. Mid-Atlantic shall still maintain blanket fidelity coverage of at least $400,000. Mid-Atlantic also recommends that the Client maintain fidelity coverage in its name for the protection of its funds.

12. BANKRUPTCY

Either party may still terminate this Agreement without notice to the other in the event a petition in bankruptcy or corporate reorganization is filed by or against Mid-Atlantic or the Client. Prompt notice of such action shall be given.

13. RENEWALS

Should either party decide not to renew this or a similar agreement at the end of the term of this Agreement, then the other party shall be so advised by registered letter more than ninety (90) days before the end of the term described in Section 2 of this Agreement. Otherwise or until a new agreement is executed, this Agreement shall remain in full force and effect for another term with the same ninety (90) day notice of intention not to renew a subsequent term incumbent upon both parties. Nonrenewal may be without cause.

14. TERMINATION

As the Client and Mid-Atlantic recognize the serious impact that a termination of this Agreement would have upon each other, both parties agree to first try to resolve any reason(s) of a possible termination. Should either party seriously contemplate such a termination, the other party shall first be so advised in writing with an explanation as to the reason(s) for possible termination. That party shall have at least forty- five (45) days time to attempt to resolve the situation(s) so as to retain the working relationship before a formal termination notice can be issued. 18 Provided the corrective period described above has been met, this Agreement may then be terminated by either party, with cause, without penalty, upon thirty (30) days prior written notice sent by certified mail. The ninety-day period shall commence upon the first of the month following notice. Cause is defined as a material breach of this Agreement. Unless both parties agree otherwise in writing, Mid-Atlantic shall continue to provide the described services and receive all of its Compensation and reimbursements as specified in this Agreement through the duration of the notice period. Upon a termination, each party shall appoint a representative to facilitate the turnover of Client records and materials. Mid-Atlantic will prepare a schedule of essential turnover dates. Within three days of the last Mid-Atlantic service date, Mid-Atlantic will have ready for Client pick-up, all original Client records and materials except those which are necessary to complete its financial service obligations. The Client shall review the items provided and execute a receipt accordingly. Mid-Atlantic may retain photocopies of those Client materials or records which it believes may have significant future value related to its obligations under this Agreement. The Client is responsible for photocopy costs, if any, incurred in the turnover of its records and files. Client records or information contained on Mid-Atlantic computer equipment which are of any significant value will have been provided in prior hard or paper copy format and not by disc or tape due to the proprietary nature ofMid-Atlantic's software. At no additional charge, Mid-Atlantic will cooperate with a timely audit (started within two weeks and completed within six weeks of receipt of final financial report) performed by an experienced auditor retained by the Client. Should the Client fail to have this audit performed as outlined, Mid-Atlantic shall not provide further assistance with financial matters and the Client hereby releases and holds harmless Mid-Atlantic of any claims that the financial books, records, and affairs of the Client were other than in accordance with acceptable accounting practices and standards.

15. MISCELLANEOUS

The parties agree to resolve any dispute under this Agreement by arbitration conducted by the American Arbitration Association in which all fees and costs thereunder shall be shared equally by the parties. The decision of the arbitrator(s) shall be final and non-appealable by either party. Judgment on the decision and/or award of the arbitrator(s) may be entered in the Court of Common Pleas in accordance with the applicable laws and rules relating to Common Law Arbitration.

Any notice required under this Agreement shall be by certified mail, return receipt requested and shall be deemed given and received three days after its postmark. Notice to the client shall be given at the home address of the current President. Notice to Mid-Atlantic shall be to its corporate offices in Plymouth Meeting, Pennsylvania or subsequent address.

This Agreement is the entire understanding and complete statement of the terms, conditions, considerations, and representations made by both parties. No variance, modification, or amendment shall be binding unless it is prepared in writing and executed by officers for both parties.

If any provision of this Agreement shall be determined to be invalid or unenforceable to any extent, the remainder of this Agreement shall not be affected and remain in full force. For the convenience of the Client and Mid-Atlantic, more than one copy of this Agreement has been prepared and executed. Each copy is in all respects the same and complete in itself so that anyone copy may be introduced as evidence for any purpose.

SIGNATURE PAGE

For the convenience of the Client and Mid-Atlantic, more than one copy of this Agreement has been prepared and executed. Each copy is in all respects the same and complete in itself so that anyone copy may be introduced as evidence for any purpose.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in several copies:


ATTEST: for the Willistown Knoll Homeowners Association

---signature on file---
MARION DERR   President
Date ---blank---
---signature on file---
LYNNE ZANE   Secretary
Date---blank---


ATTEST: for Mid-Atlantic Management Corporation

---signature on file---
W. STEPHEN CASTLE, AMS, PCAM   President
Date 2/12/2007