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Started by DorothyO • 17 replies • 1734 views

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DorothyO (Washington)
Posts: 293

Posted:

We have a 42 homes neighborhood built in 1992. A section of street was laid with substandard asphalt and hes been a problem ever since. The developer allegedly sued the asphalt company, but never repaired the street before the city took it over. The statute of limitations for this type of construction is long over. These are our options: LID for @ $120,000, or private loan @$80,000, or temporary fix for @$18,000. Our Bylaws state any action pertaining to management of the Association can be approved by 51% of homeowners. Any action involving the CC&R's needs 75%. There is nothing else anywhere about specific monetary actions, other than the Board can do what it needs to do to maintain the quality of the neighborhood. If 51% of the homeowners vote on any of these options, that means the other 49% are stuck footing the bill as well, even a $120,000? Am I understanding this correctly?

NameW (Virginia)
Posts: 74

Posted:

Without getting into specifics, essentially yes. This is true in just about any HOA. It is called Democracy. The majority rules (barring court restraining orders). What you are describing could either be done as a 'special assessment' which in some states can be passed with a simple vote of the Board of Directors, OR by a majority vote of the members.

TimB4 (Tennessee)
Posts: 21,059

Posted:

<
div class="NTForums_Quote">Posted By DorothyO on 12/14/2010 7:02 AM

The developer allegedly sued the asphalt company, but never repaired the street before the city took it over.

If your city has responsibility of the streets, why is the Association going to spend funds on something it no longer owns?

CarolF (Florida)
Posts: 435

Posted:

If the city took over the street, why is it your responsibility to fix it?

CarolF (Florida)
Posts: 435

Posted:

We were posting at the same time.....with the same thought!

RogerB (Colorado)
Posts: 5,067

Posted:

Dorothy, If the street was dedicated and accepted it is under their control and it is their responsibility to maintain. If certain homeowners want to repair the street they would need the city's approval. Since it is no longer part of the subdivision I believe they can not collect funds legally except by voluntary donations.

RogerB (Colorado)
Posts: 5,067

Posted:

To clarif my poorly worded post:
"under their (City's) control and it is the City's responsibility to maintain."
"they (the association) can not collect funds"

NameW (Virginia)
Posts: 74

Posted:

Teah, I missed that by over focusing on the question. It is a city street now. Not the property or the responsibility of the HOA. The HOA can contact the Mayor or council, but beyond that there is little to be done.

DorothyO (Washington)
Posts: 293

Posted:

Okay, here's the deal re; the city's responsibility. When the city took it over, apparently the Association was VERY lax in getting to the bottom of why the developer didn't fix it, and why the city wasn't fixing it. Six years went by and the statute of limitations ran out on any lawsuit deal. Over the years, various Presidents have attempted to have the city fix the street but the city has always said, yes, we will, but you guys are so far down on the priority list, who knows when we will get to it. The city now has what is called a "93-year infrastructure plan," where all the 75 year old streets and utilities are being replaced, starting with the oldest one first. This town has been here since 1892 and so the utilities are from the twenties. Our development is only seventeen years old, and has very low traffic. So, fugetta bout it! But I have been working with the Director of Streets and these are our options. Form an LID, in which, if approved by the City Council, the city bid the job, secure a bond, do the work and every homeowner will pay for it through an increase on their property tax. OR, do it ourselves by securing a loan to have a private asphalt company do it, OR contract with the city where we buy the materials and they provide the labor (but that is not the full asphalt job) OR wait and see what is in next year's city budget to see if there is any left over for them to fix it without us paying for anything (also wouldn't be the full asphalt job). Bottom line is the city has no money to this fix itty bitty street. We are low man on the totem pole no matter the cause or origin of the deterioration. Unless someone really wants to try to sue the city for something that happened 18 years ago. Which would also cost us a pretty petty trying to track down that paper trail.

My main concern is, if any one of these options makes it to a motion for action and is voted on by 51% of the homeowners, do the other 49% have any recourse if they are most definitely not interested in paying anything to get this street fixed, whether it is $428, $1,904 or $2,857 either through property tax, monthly loan or special assessment?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Dorothy,

You are going to have to read your governing documents. Look especially at the articles of incorporation and see exactly what is the function of the HOA. Typically, the HOA is allow to maintain the common area only. Depending on the wording of the documents, the HOA should have zero say in what is happening because the property you are talking about belongs to the city.

Check the documents and then ask that the Association consults with an attorney over any legal ramifications in getting involved with property that they do not own.

Tim

HeatherB4 (Florida)
Posts: 51

Posted:

My HOA just took out a loan for $350,000 to put down the final lift on the roads that was to be done by the devolper. Our BOD took out the loan and added it onto the yearly budget, no vote was obtained by the HO. I called the Manager of the HOA, he said that vote was needed because it was NOT a special assesment, it became a budget item.

SusanW1 (Michigan)
Posts: 5,202

Posted:

If the road is not fitting into the city's repair guidelines, because it is too new, but the residents really insist on it being repaired, the municipality may assess the homeowers and put it on the homeowner's taxes. Around here, that's a SAD (Special Assessment District) and it's done all the time. Yes, it just takes a majority of the homeowners to vote it in. Trouble is, when the government gets involved, expect an increase in the cost, up to 30% more for financing and administrative costs.

Unless it's REALLY in bad shape, wait it out. You'd be surprised how the government gets money to do things. Just be sure your homeowners complain enough to keep your request on the top of the pile of requests.

SusanW1 (Michigan)
Posts: 5,202

Posted:

BTW - the HOA would not be involved. The city would assess EACH home.

DorothyO (Washington)
Posts: 293

Posted:

Such helpful replies! I immediately contacted our city Street Director, with whom I have gone from Mr. to a first name basis, and asked him that question, how does a private citizen get the authority to work on a city street? Both contractors told me they have to do everything according to city code, so I suspect they are a sort-of agent for the city in that respect. Neither the contractors or the Director said we could not contract this our ourselves.

Much more interesting is whether our Bylaws allow for this in the first place! Thank you Tim for that gem. Our Bylaws do say this: "It is understood that the only common area expenses will be the upkeep of the fences, islands, parkways and the sprinkler system of the designated grass open area and parkway lighting area." These Bylaws were written before the developer turned the streets over to the city. Do the "parkways" mean streets? We have no designated parking lots or common parking areas. Once turned over to the city, they cease being a common area? The Bylaws also say: The Board shall acquire and pay for as common expenses of the subdivision all goods and services reasonably necessary or convenient for the efficient and orderly functioning of the subdivision and for maintenance of the the common areas. So, are "efficient and orderly functioning of the subdivision" and "for maintenance of the common areas" two separate entities? Or can it be read as, "for the efficient, orderly functioning and maintenance of the subdivisions common areas?

Folks, I think it is time to table this discussion and talk to a lawyer!

DorothyO (Washington)
Posts: 293

Posted:

Just an update. The Director of Streets just got back to me with the following:

"For you to hire a third party to perform the street work is fairly
simple. The contractor must be licensed to perform this type of work in
our City, they must submit a plan and get approval by the City Engineer,
get a right-of-way permit then perform the work."

Yee ha, that was the easy part! Figuring out what the Bylaws say is a whole 'nother ball o' wax!

DeeS1 (Michigan)
Posts: 223

Posted:

Our HOA has the option, as SusanW1 alluded to, of voting to make improvements to our roads as a special assessment district (SAD), requiring 51% community vote. As also mentioned, this jacks up the cost considerably .... our Township adds a 25% admin fee to the cost right off the top; however, the city has considerably more leverage to collect the fees through tax liens etc than our little HOA does. We believe that dramatically adding to our annual assessment or special assessing for such repairs could potentially sky rocket our delinquency rate and significantly increase our legal and collection costs -- unfairly burdening some homeowners more than others. Ultimately, we have decided that when the time comes, for us, creating as SAD might cost less overall and be less disruptive to HOA operations.

FYI -- our management company, while not lawyers, for what it's worth, suggested to us that since our Bylaws gives our community the "option" to vote for a special assessment, they imply a responsibility for the care of the roads, and it would not be improper for us to collect reserve funds for road repair if we wanted to go that way instead of the special assessment district. Obviously, we would have consulted the attorney prior to going that way, though.

DorothyO (Washington)
Posts: 293

Posted:

Thank you DeeS1 and SusanW1. Your SAD is our LID, Local Improvement Development District, and follows the same rule of thumb y'all mentioned - tacking on additional costs, 20% for administrative and another 20% for "contingincies," for a grand total of an additional %40 to the original estimate of $80,000, all to be paid for through the equal assessment of property taxes of each homeowner within the approved LID. And IF it turns out our Bylaws allow for the Association to pay for things we don't own, and IF a motion for action gets through, only 51% would be needed to pass, leaving the other 49% very, very unhappy. So, I'm almost inclined to go with SusanW1 -- wait, scream loud enough to the city, and hold out for the city to do its job. And as HeatherB4 pointed out, a loan, paid off through a special assessment of each homeowner could become a budget item which would require approval by 51%, which I seriously doubt we would get. Unfortunately, or actually fortunately, our small association has never needed a lawyer in the eighteen years it's been active, so as soon as I find one who has a working knowledge, if not an actually specialty in HOA law, I'll feel a lot better about knowing how to proceed. Thanks for everyone's input. I love this site!

DorothyO (Washington)
Posts: 293

Posted:

Final follow up: I love living in a small town! I just spoke to the premier real estate attorney in town for twenty minutes on the phone, for free! He is counsel for many of the homeowners associations in town, and has written their governing documents. He told me, without hesitation, that the association does not have the authority to spend association funds on non-common areas, UNLESS we change the Bylaws to allow that. We also set up an appointment for after the first of the years to thoroughly go over our governing documents and see how we can shape them to fit our nature and needs, as opposed to the developers from eighteen years ago. So thank you so much, especially TimB4 and RogerB.

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