Developer up to shenanigans?

if it helps, these are our CC&Rs

http://www.rrhomesllc.com/plats/53.pdf

Hi JeJ,

Welcome to the forum. Hopefully the members of the forum can offer you opinions and advice to help.

1) The developer is still in charge of the committee as he retains 250 votes for each lot he owns. What costs would he as the developer be responsible for, versus the HOA? He has planted some trees and put in some benches, but he has used money from the HOA to pay for these things. Wouldn't these costs be part of the "development" so he can sell his lots? Shouldn't he be responsible?

The Developer should be responsible for the initial installation of what was advertised when the homes were sold. This information may or may not be included on the county PLAT. However, a good indication of what would be required is the site plan used when selling the lots/homes.

The Association would be responsible for anything in addition or the required maintenance/repair of items already installed.

Basically, while the HOA is under his control, what should the HOA pay for vs the developer?

Just because the builder has the controlling interest in the Association doesn't mean that the HOA doesn't have it's responsibilities or share of bills. It only means that the builder has the votes to make the decisions.

I'm actually happy to hear that he has established a committee of homeowners to give input. This shows that he is willing to listen and possibly act to the owners.

2) Early on when the neighborhood was still very new, he paid for lawn care, landscaping and trees out of pocket, but is calling that a "loan" for $20,000. He has not disclosed exactly what the loan was for, nor has he disclosed the terms of the loan or when it will come due. What we know from other neighborhoods he has developed is that when he turns the neighborhood over, he pays himself for his "loan" out of the HOA account and then turns over an empty account to the new board. How do we protect the HOA money while it is still in his control?

You stay involved in the Association. Request copies of HOA financial statements and just keep track of the information. As things transfer over, follow up on what you have kept track of and have an audit performed.

Here is a link to thread on HOA talk that discussed things to do when control of the Association is turned over to the homeowners:

http://www.hoatalk.com/Forum/tabid/55/view/topic/postid/112796/Default.aspx

3) Anytime we ask to see the books or get details we get no response from him or evasive answers. I do not believe he is doing anything illegal, just that he is extremely disorganized and the HOA is suffering as a result. How can we ensure he is managing the neighborhood while it is under his control?

I've been unable to look at your CC&Rs (page wouldn't open for me). Therefore, I do not know the rights they might grant you. Typically, State laws give members the right to see the financial information of their HOA.

Let me do a little more research before giving you an opinion on this question.

Tim

Hi JeJ:

Tim offers very good advice … stay involved and periodically request financial statements regarding the association. This will also make the developer aware of the fact that he is potentially being monitored. What he is probably doing with regards to the “loan” is your governing documents which Tim posted contain the following section:

2.4 Association's Maintenance and Responsibility. The Association shall be responsible for the maintenance, operation and repair of all Common Areas shown on any plat where the Lot Owners are made mandatory members of the Association, any improvements constructed by Declarant on the Subject Property to be used by the Lot Owners, any walls, entrances, or other structures constructed along section line roads or entry way streets, any private gate (including mechanical/electrical equipment) and gated entrance, the private roadway inside the gate and any other areas shown on the plat as common right-of-way such as entrances and center medians.

Keep a tally on the percentage of Lots occupied by owners other than declarant and at some time the following section will take effect as stated in your CCR’s:

2.5 Interim Control of Association. Until such a time as eighty-five (85%) percent of the Lots are occupied by Owners, or the Declarant elects to turn over control of the Association to the then existing Lot Owners as described in Section 2.2 above, whichever comes first, the Association shall be managed by one or more persons, who do not have to be Lot Owners, under contract with the Association. Once eighty-five (85%) percent of the Lots have been occupied, control of the Association shall pass to a duly elected Board of Directors pursuant to the applicable provisions of the Certificate of Incorporation and Bylaws.

The following is all I found at this time regarding state statutes governing the HOA portion. As Tim pointed out there will also be the non-profit corporation statutes which also come into play and which I have not yet reviewed.

§60 851. Nature of developments.
The term "real estate development" shall include developments:
1. Which consist or will consist of separately owned lots, parcels or areas with either or both of the following features:
a. One or more additional contiguous or noncontiguous lots, parcels or areas owned in common by the owners of the separately owned lots, parcels or areas.
b. Mutual, common or reciprocal interests in or restrictions upon, all or portions of such separately owned lots, parcels or areas, or both.
2. The estate in a separately or commonly owned lot, parcel or area may be an estate of inheritance, estate in fee, an estate for life, or an estate for years.
Either common ownership of the additional contiguous or noncontiguous lots, parcels or areas referred to in subparagraph a. of paragraph 1. above, or the enjoyment of the mutual, common or reciprocal interests in, or restrictions upon the separately owned lots, parcels or areas pursuant to subparagraph b. of paragraph 1. above, or both, may be through ownership of shares of stock or membership in an owners association or otherwise. Laws 1975, c. 292, Sec. 1. Emer. Eff. June 5, 1975.

§60 852. Owners association.
A. An "owners association" may be formed by the owner or owners of real estate development for the purpose of:
1. providing management, maintenance, preservation and control of commonly owned areas or any portion of or interest in them, and/or
2. enforcing all mutual, common or reciprocal interests in or restrictions upon all or portions of such separately owned lots, parcels, or areas, or both.
B. An owners association shall be formed by the execution of an instrument signed and acknowledged by all owners of the real property included. Such instrument shall set forth in detail the nature of the obligations of the members and shall be filed of record in the office of the county clerk of the county wherein the real property is located. The instrument shall include a description of said real property.
C. The owners association shall have the power to enforce any obligation in connection with membership in the owners association by means of a levy or assessment which may become a lien upon the separately or commonly owned lots, parcels or areas of defaulting owners or members, which said lien may be foreclosed in any manner provided by law for the foreclosure of mortgages or deeds of trust, with or without a power of sale. In an action brought to enforce any lien authorized pursuant to the provisions of this section, the prevailing party shall be entitled to recover reasonable attorney's fees to be fixed by the court, which shall be taxed as costs in the action. No lien may be placed or mortgage foreclosed unless the homeowner was informed in writing upon joining the owners association of the existence and content of the owners association restrictions and rules, and of the potential for financial liability to the individual owner by joining said owners association.

Amended by Laws 1986, c. 48, § 1, eff. Nov. 1, 1986.
§60 853. Taxes and special assessments.
Each separately owned lot, parcel or area together with its proportionate interest in the common element, shall constitute a separate and distinct unit; for the purpose of assessment of taxes, special assessments, and other charges which may be lawfully assessed against owners of real property, and each holder of such shall be liable solely for the amount of taxes against his individual estate and shall not be affected by the consequences resulting from the tax delinquency of other unit holders. Laws 1975, c. 292, Sec. 3. Emer. Eff. June 5, 1975.

Laws 1975, c. 292, § 3, emerg. eff. June 5, 1975.
§60 854. Membership Covenants and restrictions.
Membership of said owners association shall consist of recorded owners of separately owned lots in the real estate development. Membership is transferred upon legal transfer of title to the separately owned lots. The owners association may also enforce the covenant and restrictions of the real estate development when specified by the covenants and restrictions.

Laws 1975, c. 292, § 4, emerg. eff. June 5, 1975.
§60 855. Application of act.
The powers granted the owners association under this act shall apply only to owners associations created subsequent to the effective date of this act. Laws 1975, c. 292, Sec. 5. Emer. Eff. June 5, 1975.

Laws 1975, c. 292, § 5, emerg. eff. June 5, 1975.
§60 856. Enforcement of restrictions and covenants.
Any person owning property in a real estate development shall be entitled to bring action against any other person owning property in such development to enforce any of the restrictions or covenants of the real estate development which are specified by the covenants or restrictions. In any action to enforce any restriction or covenant pursuant to the provisions of this section, the prevailing party shall be entitled to recover reasonable attorney's fees to be fixed by the court, which shall be taxed as costs in the action.

Added by Laws 1986, c. 48, § 2, eff. Nov. 1, 1986.
§60-857. Copies of recorded covenants and restrictions.
A copy or a certified copy of all the recorded covenants and restrictions of a real estate development shall be provided by the title company upon the request of any buyer of property in the real estate development as a part of the closing of the real estate sale. The buyer may be charged no more than Ten Dollars ($10.00) for the copy, and the copy shall be mailed no more than thirty (30) days from the date of the closing.
Added by Laws 1999, c.384, § 10, eff. Nov. 1, 1999.

Oklahoma under § 1065. Inspection of Books and Records says that if the corporation refuses to permit an inspection or does not reply to the demand within five (5) business days after the demand has been made, a homeowner can take the HOA board of directors to district court (small claims) for an order to compel an inspection of the books and records, and to make copies or extracts therefrom (during the usual hours for business). http://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=67071

Further, § Article 2 section 28. Corporate Records, Books and Files: The records, books, and files of all corporations shall be, at all times, liable and subject to the full visitorial and inquisitorial powers of the State, notwithstanding the immunities and privileges in this Bill of Rights secured to the persons, inhabitants, and citizens thereof.