Powers of the Board???

Started by DeniseC • 14 replies • 1609 views

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DeniseC (< Not Specified >)
Posts: 9

Posted:

We have a very crazy situation. Our HOA was started in '99 with declarant A and in '04 let the homeowners elect a board and run the business HOA end of things. They still had Declarnt title and owned more than 60% of the total lots. (I think declarant A just did not want to mess with the ARC forms and general complaints any more) Then sold the balance of lots to declarant B.

As time passes the CCR's list voting rights for Class A and B. With this about dues

CCR's, Article V, Section 5: Except as set forth in the next sentence, both annual and special assessments must be fixed at a uniform rate for all Lots. Notwithstanding the foregoing, a Declarant owning any Class B Lots shall pay 25% of the otherwise applicable or special assessment for any such Lot(s).

Under Voting
CCR’s Article 4 b Class B Lots – Class B Lots shall be all Lots owned by a Declarant which have not been conveyed to purchasers who are not affiliated with the Declarant. A decarant shall be entitled to three (3) votes for each Class B Lot owned by it. The Class B Lots shall be converted to Class A Lots on the happening of either of the following events, whichever occurs earlier; (i) when the total votes outstanding in the Class A Lots equals the total votes outstanding in the Class B Lots, or (ii) December 31, 2005

Now it is after Dec. 31, 2005 Still listed as declarant B they added additional property and still own more than 50% of the lots.

Does the Board have the right to make an agreement with declarant B to continue the assessment after Dec, 2005 at 25% of the homeowner rates?

Can the Board make such an agreement under the following listed in our bylaws

Bylaws Article IV Section 11 k - To exercise any other powers necessary and proper for the governance and operation of the Association;

North Carolina HOA

thanks former board member

BrianB (California)
Posts: 2,820

Posted:

i would question the passing of the lots initially... when declarant sold the lots, did they sell them to a third party, or an associated second party?

If to a third party, then the lots were "conveyed to a purchaser not affiliated with the declarant", and they became class A lots immediately upon sale.

I am not sure declarant title can be passed, honestly. I would need to see more of the bylaws and codes...

To answer your other question: In My Opinion, no, the board cannot alter the rules. I say that because to do so would be to change the CC&R's, and that takes owner's votes, not a board's. December 31, 2005 passed a year ago, and if they try to make a deal (1) it's a year late (2) I think it is out of their power, as it would alter the CC&R's.

DeniseC (< Not Specified >)
Posts: 9

Posted:

Declarant A did submit to the County records office stating declarant status to declarant B. Our documents do allow Declarant A and assigns Declarant status which was recorded. Declarant B then recored as Declarant additional properties without a vote.

The "deal" was made at the time of the sale and knowing that the Delarant status was recored the HOA could lose control of the Board and management of the HOA. At the time of the "deal" was a trade off. Keep control and allow Declarant B to continue class B rates though the build out. We also included some additional amenities which were not in the original plans.

for documents please feel free to email me for a more complete account of this situation. We are currently having some residents complaining about this topic and the board is currently looking for legal advice. Which was also given to the board at the time of the "deal"

BrianB (California)
Posts: 2,820

Posted:

if the transfer of declarant was legal, then i stand by the rest of my advice.. they are no longer a class B member, and owe the dues like everyone else. And no, the board itself cannot change the CC&R's. There may be other ways the board can do the sweetheart deal, but IMO, not by altering the CC&Rs.

GlenL (Ohio)
Posts: 5,491

Posted:

Denise on January 02, 2007 get an attorney who specializes in HOA matters. While I would argue that the lots were conveyed like BrianB said, I - A. Am not an attorney B. Not familiar with the laws of your State. C. Am not an attorney.

Our Association was supposed to have a total of 392 units but after the Declarant built 132 units they got out of the business and sold the remaining property to another builder who went bankrupt and sold to another who sold to a third. They are now building their Association separate from ours but the only road in is through our community and thanks to a past President who thought he could deal with the new guys gave away some of our rights "making deals". You can bet your bottom dollar that the new Declarant has an attorney advising them, get you own NOW! And yes I know attorneys are expensive and new Associations have limited funds available but remember one way or another you will pay; either for professional services or the lack thereof. IMHO

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

DeniseC (< Not Specified >)
Posts: 9

Posted:

yes, we all have HOA lawyers addressing this issues. I am no longer a Board member so I am out of the Loop. I just wanted some additional info knowing I helped with the deal at the time. The HOA ended up with the better end of the stick at this point. Once again Declarant B could have changed CCR's extending the Class B time frame and did not. (knowing or not knowing) that it would be very expensive at 400 + lots at $300 each. That is why I think the Board could make the "Deal" We ended up with additional parking lot for the pool, extended deck space, a splash park, 30 x 40 storage building, and club house and parking in another common area with room for a second pool if needed latter.

Could the costs for the extra amenities be charged back to the HOA if we charge Declarant B full rate dues?

Thanks for your help

Happy New Year

p.s. what is IMO

GlenL (Ohio)
Posts: 5,491

Posted:

IMO - In My Opinion IMHO - In My Humble Opinion

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

DeniseC (< Not Specified >)
Posts: 9

Posted:

knowing that a formal vote to change CC&R's would be required. Could an agreement be made at a special meeting with a quorum?

I personally feel that the Declarant B and the current board at the time only wanted the best for both party's. A good working relationship knowing we would have to work together for a number of years. Why bankrupt Declarant B and have half of a development as work in progress with a fire sale to any builder willing to take on the completion. Glen you know first hand and experianced this personally. Having the HOA force it's legal hand for dues could bring down our home values with a builder and poor workmanship or smaller homes just to over come the bottom line.

I am taking the side that the faster the Declarant sells the faster the HOA will get full dues. At build out it will be 894 homes with current dues of $305 per home. Our reserves are over $150,000 to date and growing everyday with a one time capital gains fee at closing. In the past 2 years our operating expences are under budget and the balance put into reserves. It is not like we are hurting for the cash. The Builder is selling about 10 homes per month.

Thanks Glen for the translation I guess I need to consult with my 14 year old on all the terms. (I feel so out of touch)

BrianB (California)
Posts: 2,820

Posted:

the CC&R's can be changed with a member vote at a special meeting called just for that reason. Quorum is required, as well as the % necessary to amend the codes (see your bylaws for that number... 66%, 70%, 80%, etc.). While you are doing that vote, see if you can also get a vote to allow the board itself to correct spelling, grammatical and accidental omission errors in the CC&R's without a special meeting/vote of the members. Nice amendment to have, in case you ever notice that there is a minor mistake down the line. Might as well try to get that when you have everyone together, rather than call a special meeting to change "shill" to "shall".

Once the CC&R's are changed, you will want to RECORD the new CC&R's, so that all future owners get the updated, legal copy when the title company searches, etc., as well as send updated/new Codes to all current owners. that will help keep folks from getting bad copies when they buy.

RogerB (Colorado)
Posts: 5,067

Posted:

Dennise, Article V, Section 5 states "Class B lots shall pay 25% of the otherwise applicable or special assessment for any such Lot(s)."

Meanwhile, it appears to me that Article IV only refers to Voting. If so, though poorly written, it seems the reference is only related to the voting weight to change from 3:1 to 1:1 after 12.31/05. In my experience a class B lot has a specific definition which can not be redefined by the Article related to Voting.

Based on that interpretation, I think the Board, in good faith, could countinue the Class B lot assessments at 25%.

BrianB (California)
Posts: 2,820

Posted:

good catch roger! i agree... i didn't see the "voting" header...

DeniseC (< Not Specified >)
Posts: 9

Posted:

thanks guys, this is such a big help. YOUR THE BEST!!! I will refer this to the current board and the lawyer in charge I will let you know of the results.

RitaB2 (Virginia)
Posts: 2

Posted:

I live a newly built community and it will take two years before this community is completed. Our social committee was establish without having any elections. This committee is not offcial until the community
is 75% complete. Can you give me some advice on how to establish an
official social committee.

RitaB2 (Virginia)
Posts: 2

Posted:

Posted By RitaB2 on 01/04/2007 12:37 PM

I live in a newly built community and it will take two years before this community is completed. Our social committee was establish without having any elections. This committee is not offcial until the community
is 75% complete. Can you give me some advice on how to establish an
official social committee.

DeniseC (< Not Specified >)
Posts: 9

Posted:

Well, before we were resident control. We set up our social committee with a chair, and a few voluteers with paper and pen and they brain stormed ideas of what they would like to do as events and etc. Picked a few good ones for the first year. Worked out a budget for each event. Submitted to the Board / Developer and waited for an approval. Adjust the budget if needed. walked flyers and newsletters before the event for a good turn out.

I do not think it would be that hard. Just jump in and do it (but always keep the board informed on details and up dates) I would suggest a very simple event at first like an easter egg hunt, Ask for donations of plastic eggs and candy from neighbors, Add a few tables for face painting, bean bag toss, bunny hop contest etc. Music is also a good thing for the back ground.

The hardest part we found out is finding the voluteers (but that could be just us). Remember with voluteers to ask how much time they can donate, and when, if it is for just one hour assign them a 1 hour job. Next time they might be able to donate more and not feel that they have to live for the HOA.

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