CC&Rs owners not to know and refuse to acknowledge

We are a contractor. The bank foreclosed on a dvelopement taking the undeveloped land and 15 of the 68 lots the developer had not sold. We then foreclosed on all the private roads which was the only asset left from the developers assets. The developer recorded CC&Rs naming 3 people as the "architectual committee" 2 are the father son owners of the corp. There is a section 12 specifically stating all owners to pay the architectual committee $50 in road maint fees a month. We advised the owners that we will insure, pay the taxes for the land we now have title to and maintain debris and the snow removal. We sent out an invoice to all reducing the 50 in the cc&rs to $37. They have banned together and none paid the invoice the major claim being they did not sign the cc&rs nor did they know. Our claim is you are not required to sign and if you didnt know you did not or your title company did not do a title searh. These CC&Rs were recorded prior to any deed on their lots were recorded. Its a horrible situation as my recourse will totally shut down their nightly rental cabins.

I am basically trying to get feed back as to the strenght of CC&Rs. I understand them to be extremely strong. It was an extremely unorganized place. The owner of the roads was definetley the developer with a legal description and tax ID as well thats how we got the roads. The bank sold the lots they foreclosed on so the bank is long gone. Nothing in the cc&rs said anything about the roads to the owners it did say at their discretion thay can turn over the water and sewer plant insatalled by owner. I talked to another developement and their cc&rs filed 1980 has never lost any dispute including liens,judgements etc

The CC&Rs would be the contract the owners agreed to comply with. As you said, they are attached to the deed. Standard contract law would apply.

However, this issue is unique in the fact that the property (roads) do not belong to anyone in the Association as I would expect that the membership of the Association would be the owners of the lots. If you do not own a lot, you are not part of the Association.

Typically, the developer would have deeded the roads to the city or the Association when the development was built. However, prior to that happening you acquired the road due to failure of the developer to pay you for goods/services rendered. With the expectation that this was legally done, the end effect is that you own the road. You may sell or keep the road as you see fit.

The CC&Rs, per your posting, requires the membership to pay $50 per month for maintaining the roads that are owned by the Association. Per your Posting, the Association does not own the roads, you do. The Association does not have the authority to maintain property that they do not own.

As I see it, and I am not an attorney, you own a private road. Depending on your State/County laws, you may or may not be able to prevent ingress/egress. You may or may not be allowed to not maintain the road. However, you might be at risk for any liability an improperly maintained road contributes to an accident. You may want to check with an insurance company and see what coverage you will need for the Road.

You are not the Homeowners Association and, in my opinion, do not have a right to the $50 the membership would be required to pay to the Association (if one exists).

I understand that you were trying to collect money owed you. Unfortunately, you may be discovering why the Bank didn't go after the roads.

My suggestion would be to get with an attorney and the membership and see about selling the roads to the Association. Note, if the membership has not formed an Association, then they would have to do that first. You might not get what you were owed but you can probably get something. Perhaps you can offer to carry the note which will allow you to collect interest on the payments.

Tim

Steve, did you have an attorney advise your that you could do this or did you figure it out yourself? Either way as Tim has posted you need an attorney now! You will most certainly end up suing them to try to get some money, this is what happens when you - Buy a pig in a poke.

Definition of "Pig in a poke" - http://www.phrases.org.uk/meanings/a-pig-in-a-poke.html

Hi Steve:

I would highly recommend you check your State HOA statutes. As Tim stated the roads are not apparently owned by the HOA. In my state the homeowners within an HOA are responsible for paying to maintain HOA owned common area property/assets.

You state that the CCR’s state:

“There is a section 12 specifically stating all owners to pay the architectural committee $50 in road maintenance fees a month.”

Keep in mind CCR’s generally are written to maintain certain items which are maybe in the future to be turned over to the HOA as their property to be owned and maintained. It potentially appears to me that the roads at some point were supposed to be owned by the HOA.

My recommendation is to check with the local city/county government officials with regards to the association. For my association the developer had a “Site Improvement Agreement” with the City in which after certain items in the development was completed they then became city owned property such as the roads. It could be in your circumstance the roads were to be dedicated to the HOA to maintain. If they were not dedicated to the HOA, then potentially the section in the CCR’s which you reference would be null and void.

I am at this time with information provided agreeing with Tim, in that this is why the bank possibly did not go after the roads in the foreclosure. They possibly knew it would be an item they would need to maintain without HOA assistance because of not being owned by the HOA.

Steve,

I do not believe you are interpreting the meaning of the word successor correctly. I believe that the documents are talking about the successor of the HOA. Per you latest postings the HOA does exist. If I am correct, you are not the successor of the HOA. Additionally, if you are basing your right to the $50 per lot on the CC&Rs, the membership can easily amend the CC&Rs and completely remove that section. Since you are not a member of the Association (unless you own one of the lots) you would have zero say on the document.

You took possession of the roads because the developer owed you money and it was the only thing left that you thought would be worth any value. In reality, the only potential buyer of those roads is the Association. You said that they would not meet your price. My suggestion would be to sell the roads for what you can. Your legal fees to take this to court probably won't be worth the expense.

Of course, advice and opinions are free and varied. The choice is yours on how to proceed.

Since there are attorneys out there who might just tell you what you want to hear in order to collect legal fees, I would strongly suggest that you get 3 or 4 legal opinions.

Tim

Depending on your State HOA laws, if the proper procedure wasn't followed to adopt the new CC&Rs, then even if they were recorded, they could be thrown out.

Typical procedures to amend would have included a notice of a meeting and the actual holding of a meeting to adopt the changes. Per your posting, the developer held the meeting after the CC&Rs were recorded. Therefore, it is possible that those CC&Rs are not valid.


Well, if your going to reject any proposal they are offering why are you bothering to go through the motions?

Since it appears that your mind is already made up, I'm not sure what the purpose of your posting was for. Based on the content of your postings, I expect that the matter will be settled by a court of law and probably appealed by which ever side loses. This of course only earns money for the attorneys.

BTW, I don't think you would get any money on a regular basis. Typically the money goes into escrow and is used for repairs of the road. The money wouldn't be released until the repairs are complete.

Tim

Steve,

For my last post on this thread.

The CC&Rs are a contract between the homeowners. Most CC&Rs establish an Association to oversee and enforce specifics within the contract.

You are not a homeowner. You are not the Association. Therefore, I do not believe you are part of the contract.

As I said, I am not an attorney and I do not work within the legal profession.