Pay Dues directly to Developer without a formal HOA?

Started by StefanK • 5 replies • 1569 views

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StefanK (South Carolina)
Posts: 2

Posted:

The developer of my neighborhood has never formed an HOA, however he is requesting assesment dues each year to be paid directly to him. We have CCRs in place but all langugage refers to the HOA versus 'developer' Any thougths on whether we should pay dues directly to the developer of withhold until a fomral HOA is formed?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Stefan,

I would expect that there is an HOA but that it is under control of the developer. This is typical. If you don't believe that their is one, ask to see a copy of the articles of incorporation and the bylaws of the HOA. Also ask for copies of the financials (budget, balance sheet, etc.).

It's probably legit and the the assessment will need to be paid.

Tim

StefanK (South Carolina)
Posts: 2

Posted:

Thanks for the reply Tim. The builder confirmed there is no HOA established, only CCRs for teh subdivsion. In fact we issued a check for dues explicetly to a 'Neighborhood HOA' and it was returned with a demand to issue in the developers name instead. I'm relunctant to pay assesment dues without a governing body(HOA) in place as I have no input or recourse to protect my home and it' value. Thoughts?

RogerB (Colorado)
Posts: 5,067

Posted:

Stefan, I agree with Tim.
Read your CC&Rs to determine if and asssociation was establish; and if assessments payments are required they are payable to the association not the builder. Also, if it is a manditory association then the CC&Rs should state that every owner is automatically a member of the association. If the CC&Rs established a manditory association and the Developer did not establish Bylaws and did not incorporate I would take steps to make sure this is done before making any payment. Assessment payments should not be made payable to the builder or the developer.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By StefanK on 05/06/2011 6:31 AM

In fact we issued a check for dues explicetly to a 'Neighborhood HOA' and it was returned with a demand to issue in the developers name instead.

I understand the developer returning the check. He couldn't cash it.

I would request the info I suggested earlier and as Roger said, read your CC&Rs. If the CC&R's mention an Association being responsible for xyz and/or the enforcing authority - with the Builder being in charge, the builder would have the right to the assessment.

Of course, the Builder also needs to keep track of the assessments and what they are used to pay for.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi Stefan:

I agree with Roger in that the check potentially should be made out to the HOA. I have not reviewed your state statutes; however, in most states the developer is supposed to set up a corporation for the HOA prior to selling the first home. This corporation should then have a checking account for said assessments to be paid into for maintaining the common areas.

As Tim stated the developer would be responsible for tracking assessments and payments for maintaining the common area property. In which case the best way for him to be able to track this information properly would be to have a separate HOA bank account. You might ask the developer how he is planning to track this information with no proper HOA established. Also, ask him how he supposedly legally can request assessments to be paid without a proper HOA having been established. He should be able to provide you with any pertinent state statutes or laws regarding this information and situation.

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