not wanting to accept transition

Our developer, who is also the builder of our community is now wanting to turn over the HOA to the community! Our neighborhood isn't quiet yet completed, and the amount of homes, that are on the property, can't afford to support the HOA. The developer is ready to give up the HOA because he is tired of coming out of his pocket, so what are we to do, some one please help us out

How do you know your neighborhood can't afford an HOA? Do you know the costs that would be involved? It's mostly maintenance costs the builder has spent most of the investment money on the amenities already. So before you say the neighborhood isn't ready, identify exactly what it isn't ready for.

If all else fails, shop around for a management company to run your HOA. Keep in mind if it's being run by a management company, owner's don't have any rights to vote and are in almost the same boat as they were with the developer. So figure out what is more important to you and your neighbors as owners. Would you like to be in control or would you be okay if someone else was? That answer will lead you all to disband, hire a manager, or run the place yourselves.

OK, Phil, now that I've gotten over my initial shock and reaction, here's what I would suggest:

Start with your documents. Read the CCRs to determine what the common areas are. That's what the HOA is responsible for. Obtain a copy of the original HOA budget. That should break down all the annual expenses and is what determines what the annual (and monthly) HOA fee should be for each unit. You should have been given all of that with the initial offering package before you ever purchased your unit. Otherwise, shame on the builder (and you for buying without it).

If you don't have any of that, then you should be able to get a copy of the CCRs from wherever deeds are recorded or from your local city or town hall. Determine what the common elements belonging to the HOA are. Then determine the annual cost to maintain those elements. Then you need to find out the annual cost for other expenses such as liablity and property damage insurance (for both HOA property and property damage to others as a result of HOA actions), D&O insurance, attorney's fees, accountant's fees, etc. (Yes, the HOA should have an attorney and an accountant, the HOA has to file taxes, probably issue 1099's to contractors, etc.) If you decide to hire a professional property manager (and I recommend it if the community is larger than 25-30 homes or the community is complex - it can be a lot of work and you can get into trouble if you don't know what you're doing), you'll need to add in the cost of that, too. You will need to add in a contribution to a capital reserve fund to cover future major expenses (ie., road repair and maintenance if the roads are owned by the HOA, roof repair/replacement for multiple dwelling units, etc.) Once you've determined what the total annual costs are, you can break it down to a monthly assessment per unit.

There's a lot more than can be discussed. You might see if you could "pick the brains" of board members of other HOAs in the area. Of course, the best advice will come from an attorney experienced in HOAs or from a professional property manager. That help may not be free, but may be worth it.

Those expenses are what most HOA's face everyday. HOA's with a management company pays them and then the other additional costs associated with running a HOA like insurance etc...

Does the developer own any of the properties as a residence or rental? That may explain why he wants to reduce his role from the developer owner to an individual type level. Which is what he would become once he turned over the HOA to all the owners.

The dues should be divided evenly amongst all the owners in the HOA. If there is going to be only 36 actual finished homes and the developer isn't going to finish the other lots, then those 36 homes must pay the dues evenly amongst themselves. It's irrelevant if an owner has multiple properties. They must still pay the individual dues for each lot they own. Which if they use it as rental the cost is tax deductible to them. So that shouldn't be an issue but a benefit.

Find out what the costs are and make a budget. That way it can be decided what the dues amount should be set at.

That's typical language.

Based on the fact that the homeowners owns a majority of the lots, they should be the one's in charge. However, the Board doesn't have to accept the property until it is completed. The Board should also investigate what bonds were placed by the builder with the city and if the Association can lay claim to them.

Tim