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THE TOP TEN QUESTIONS CONCERNING
PULTE'S SETTLEMENT OFFER
10. Should residents attend one of the meetings scheduled to take place on Jan. 4th at 3:00 p.m. and at 6:00 p.m?
Absolutely. As recommend by Favil West, residents should not take any action until after the resident meetings, one at 3:00 on Jan. 4th (Thursday) and the other at 6:00 p.m. on 7 January, Sunday.
9. Are there matters about Pulte's settlement program that have not been disclosed?
Yes! Please read on.
8. Can residents accept the cash offer and not have the work done?
Yes.
However, the homeowner will then assume of any potential risk of not having the work performed and the prospects for resale of the home may be adversely affected due to disclosure requirements and due diligence by real estate agents.
7. Are there any tax implications on the homeowner who accepts Pulte's offer and has the work performed?
No! As a lay person with no tax expertise, but based on my understanding of IRS Publication 525, "Taxable and Nontaxable Income," page 29, the income received from Pulte for the purpose intended should not be taxable, whether or not a Form 1099 is issued. However, one should always rely on advice from the IRS or your tax consultant professional and NOT rely on my advice alone. See the IRS language reprinted below.
6. What is the significance of Pulte's "8 hours" work estimate?
That's not entirely clear.
Pulte declares in their offer that the work should take about "8 hours." Is this estimate merely an estimate, or does the amount of time specified by Pulte in their offer letter carry some undisclosed or hidden meaning for the designated contractors performing the work? The "8-hour" estimate may be unrealistic in view of the fact that a recent home having the same work performed was completed in about 80 man-hours--and this was for the plumbing portion of the work alone.
5. Under what conditions may the designated contractors (American Leak Detection and K & R Painting & Drywall) opt out of the agreement to perform the work at the designated amounts?
We do not know.
4. What are the terms and conditions of Pulte's agreement with the designated contractor, American Leak Detection and K & R Painting & Drywall? Since Pulte is proposing to pass the burden of contracting and ultimate responsibility and liability for the repairs onto the individual homeowner, is not Pulte obligated to disclose?
We do not know.
3. What is the nature and full extent of American Leak Detection and K & R Painting & Drywall commitments to perform the work at the amounts being offered by Pulte?
We do not know.
2. Are homeowner interests better served by entering into an agreement with Pulte?
Yes, if the homeowner wishes to have the repair work performed (presumably at no additional cost).
And the really big question is:
1. Why must the homeowner and not Pulte assume responsibility for securing contractual services from plumbing and painting contractors in the amount of $7,800 for remedying an alleged constructional defect by the Developer?
We do not know.
While Pulte can definitely guarantee delivery of the necessary repairs, it's not clear that local contractors will always be in a position to do so for the period of time needed to complete the work for all affected homes and for the price that Pulte is offering.
Ron Johnson, Dec. 16, 2006
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Do you have any questions?
If you have any questions, there is an eForm on the Community's website regarding the Kitec plumbing issue. According to Mr. West, these questions will enable the participants to do some investigative work before the meeting and be better prepared with answers.
To visit the Association's website, click here: http://www.sca-hoa.org
If you haven't previously logged on the site, read this page and follow the instructions carefully:
http://www.anthemwebs.com/Documents/anthem_compendium050702.htm
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Excerpts from Pg. 29 of IRS Publication 525, Taxable and Nontaxable Income
"Expenses paid by another. If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income."
"Court awards and damages. To determine if settlement amounts you receive by compromise must be included in your income, you must consider the item that the settlement replaces. Include the following as ordinary income.
1. Interest on any award. 2. Compensation for lost wages or lost profits in most cases.
3. Punitive damages, in most cases. It does not matter if they relate to a physical injury or physical sickness. 4. Amounts received in settlement of pension rights (if you did not contribute to the plan). 5. Damages for: a. Patent or copyright infringement, b. Breach of contract, or c. Interference with business operations. 6. Back pay and damages for emotional distress received to satisfy a claim under Title VII of the Civil Rights Act of 1964. 7. Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income."