Paying back the Developer

Started by CathyT1 • 7 replies • 2084 views

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CathyT1 (Washington)
Posts: 68

Posted:

Our HOA was recently transitioned from the developer to the homeowners. The developer left the property with major issues that need immediate attention. Can the Board withhold paying back the developer the loan the HOA owes back to developer?

HaroldS (Arizona)
Posts: 906

Posted:

I doubt it if it is a legal debt. If there were outstanding problems, why did you accept the HOA from the developer? What would your HOA do if your homeowners decided to also withhold their assessment payments because of these problems? Foreclose I presume. You need legal advice. Harold

CathyT1 (Washington)
Posts: 68

Posted:

Good point. We didn't know that these problems existed until the Board did a "layman's" walkthrough of the community. Now we cannot get the MC to contact the developer to schedule a transition walkthrough. I have decided to prepare a letter to the developer requesting this transition walkthrough.

Does anyone know if this is standard practice - for the developer to do a transition walkthrough with the new Board, etc.?

Any advice would be greatly appreciated.

GlenL (Ohio)
Posts: 5,491

Posted:

Cathy,
Harold is right get an attorney. There are some things a Board or MC can do and some things they need to stay away from and this sounds like one of those instances, you can bet the developer has one. You can go to http://www.communityassociations.net/ and click on Developer/Transition in the red box for articles on how to transition. You could also use the search feature at the top of the page to look for more posts on transitioning.

Studies show that 5 out of 4 people have problems with fractions

HaroldS (Arizona)
Posts: 906

Posted:

Cathy - I assume the MC is still the one the Developer was using. That should be the next thing you need to do - get another MC. The developer's MC is beholden to the developer, and wants to be sure they are hired for his next development - and they might even be an owned subsidiary. You've already seen they are not going to accomodate you. Do a check here for past posts about this subject. Harold

PaulM (Pennsylvania)
Posts: 1,347

Posted:

CathyT1:
Something sounds fuzzy. Why would the Board/HOA be paying back a loan to the developer? Are you saying that the entire association of residents has made a loan to the developer? and now since he has left some things undone, the association may not want to pay back?
Or, are you actually speaking about an escrow account the developer establishes with the municipality at time of construction of the community? If so, you do have several options.
Pls. explain further and perhaps some on the forum can address your concerns.
PaulM

CathyT1 (Washington)
Posts: 68

Posted:

Thank you for everyone's input. As a result, we will be speaking with an attorney this evening about issues with the developer and MC.

In response to Paul's post: The MC refuses to supply the new Board with information. We have rec'd copies of some financials, which show a liability to the developer to be paid back in 2006 and 2007. My assumption is that is it "start up" costs to hire the MC and HOA, etc.

I have never heard of an escrow account the developer establishes, how do I go about getting that information?

The new Board was given no direction, no information, no documents. It has been a little over a month and the MC has basically done nothing. We also requested to schedule our first HOA meeting almost 2 weeks ago, still nothing has been done, even with everyday follow-up. We usually get the run around, someone's out today, or they just basically don't know what they are doing. It is so frustrating.

PaulM (Pennsylvania)
Posts: 1,347

Posted:

CathyT1: how did your meeting with the attorney progress re 'paying back loan to developer' in lieu of the unfinished projects. This forum would be interested in your plan on how to proceed.
PaulM

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