Developer Accountability

Started by SteveH20 • 4 replies • 1491 views

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SteveH20 (South Carolina)
Posts: 32

Posted:

Our HOA is still controlled by the Developer who is essentially the BOD in the association. The association ended 2010 with a deficit of about $9,000 primarily due to nonpayment of HOA annual dues (several foreclosures).

We currently have a couple of homeowners who told us of a recent South Carolina Supreme Court ruling that ruled if the BOD (Developer) sets the annual dues at the beginning of the year they are responsible for paying any deficits incurred in that fiscal year.

Anyone heard anything regarding this issue or the court ruling?

PeterT3 (Illinois)
Posts: 28

Posted:

Steve:

I have not heard that or any reference. But, you should check your declarations. Ours stated that the developer had to cover the deficits at turnover. In ours, the dues were artificially low and the developer had spent more because he wanted to sell. There was a significant deficit that the developer in fact covered. If you have a similar statement in the CC&Rs then there is nothing the developer can do.

CarolF (Florida)
Posts: 435

Posted:

I came across this legal blog from an attorney in SC that specializes in HOA matters. Perhaps you have seen it, but I'm noting it in case you have not.

http://sccommunityassociationlaw.com/

GloriaM1 (North Carolina)
Posts: 14

Posted:

Steve:

South Carolina has some catching up to do in the conduct of HOA's. Developers get away with a lot and almost always leave the association holding the bag. Unfortunately there is not a transition law in SC as there should be in every state making the developer, state engineer, zoning officer, planning rep and board members a part of a walk about performing a punch list of items that are in need of making right, before the HOA board takes over.

Alas, this would be a wonderful world and this does not exist. Therefore I would suggest the "I wishes" and go for the "resolution" you need the funds! Performing a good budget for 2012 and perhaps a special assessment to help the operating account come up to par might be the better way of looking at this. Just my 2 cents.

SteveH20 (South Carolina)
Posts: 32

Posted:

All,

Thank for the attention and input.

A major issue I failed to mention was we are not close to turnover, we are about 45% built out and home sales are near zero. Development maintenance is so poor homebuilders are not attracted to build here. Thus we are facing long term issues regarding deficits as the Developer has refused to collect regular dues or a special assessment he enacted in February from owners that ignore him.

We have a “boiler plate” CC&Rs (very one sided towards the Developer) which has very little or no mention of his accountability now or in the future.

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