Developer Run Hoa

Started by DavidB27 • 3 replies • 1711 views

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DavidB27 (Pennsylvania)
Posts: 1

Posted:

Hello,

I have some quick questions about a developer run HOA in western PA.

1. Does the developer have to pay assessments on undeveloped units. EX. 100 units... 25 units have been sold ..75 have not been sold or developed. HOA budget is 20,000. Do the homeowners have to pay 200.00 a year or 800.00 a year for the HOA?
2. Does the developer have to have meetings and give notice of meetings?

Thanks,
David

TimB4 (Tennessee)
Posts: 21,061

Posted:

Hi David,

Welcome to the forum.

Quote:

Posted By DavidB27 on 03/05/2012 5:49 PM

1. Does the developer have to pay assessments on undeveloped units.

The determination on when a lot is charged an assessment will depend on what your governing documents specify. The Governing Documents would be:

The Declaration of Covenants Conditions & Restrictions (the deed restrictions)
The Articles of Incorporation (if the Association is incorporated)
The Bylaws

Typically, for a developer controlled community there are two classes of membership. 1 for the owners and 1 for the developer.

Quote:

Posted By DavidB27 on 03/05/2012 5:49 PM

HOA budget is 20,000. Do the homeowners have to pay 200.00 a year or 800.00 a year for the HOA?

Typically a developer will artificially keep the assessments low and cover many of the costs themselves as a way to entice buyers. This can be a huge wake-up call when the members have control of the Association.

The only income an Association receives is from it's members. If one class of membership is exempt from paying assessments, then the others have to pay more to cover the expenses. That's just the reality of it.

Quote:

Posted By DavidB27 on 03/05/2012 5:49 PM

2. Does the developer have to have meetings and give notice of meetings?

The developer must comply with the governing documents and any applicable Laws.

Typically, only one meeting a year is required. When my Association was under control by the developer they only had one Board meeting and one membership meeting per year. The Board meeting was held 1 hr prior to the annual meeting.

Here is a link to Community Associations Network PA resource page that you might find useful.

Hope this helps,

Tim

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi David:

I will add to Tim’s response with the statute sections pertaining to your questions:

5314. Assessments for common expenses

(a) General rule.--Until the association makes a common expense assessment, the declarant shall pay all the expenses of the planned community. After any assessment has been made by the association, assessments shall be made at least annually, based on a budget adopted at least annually by the association. The budgets of the association shall segregate limited common expenses from general common expenses if and to the extent appropriate.

(b) Allocation and interest.--Except for assessments under subsection (c), all common expenses shall be assessed against all the units in accordance with the common expense liability allocated to each unit in the case of general common expenses and in accordance with subsection (c) in the case of special allocation of expenses. Any past due assessment or installment thereof shall bear interest at the rate established by the association at not more than 15% per year.

(c) Special allocations of expenses.--Except as provided by the declaration:
(1) Any common expense associated with the maintenance, repair or replacement of a limited common element shall be assessed in equal shares against the units to which that limited common element was assigned at the time the expense was incurred.

(2) Any common expense benefiting fewer than all of the units shall be assessed exclusively against the units benefited.

(3) The costs of insurance shall be assessed in proportion to risk, and the costs of utilities that are separately metered to each unit shall be assessed in proportion to usage.

(4) If a common expense is caused by the negligence or misconduct of any unit owner, the association may assess that expense exclusively against his unit.

(d) Reallocation.--If common expense liabilities are reallocated, common expense assessments and any installment thereof not yet due shall be recalculated in accordance with the reallocated common expense liabilities.

5308. Meetings

The bylaws shall require that meetings of the association be held at least once each year and shall provide for special meetings. The bylaws shall specify which of the association's officers, not less than ten nor more than 60 days in advance of any meeting, shall cause notice to be hand delivered or sent prepaid by United States mail to the mailing address of each unit or to any other mailing address designated in writing by the unit owner.

The notice of any meeting must state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws; any budget or assessment changes; and, where the declaration or bylaws require approval of unit owners, any proposal to remove a director or officer.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi David:

What I would recommend is for you to purchase a large binder, dividers, and highlighters. Put all your governing documents in the binder separated with the dividers (Articles of Incorporation, Bylaws, Declaration, X Amendment to Declaration, etc). Then sit down thoroughly read and every time you see the word “Declarant” or “Developer” highlight that word in say Bright Orange so it will stand out.

Then read them again and specifically look for such words as “Special Declarant Right” as you want to note these even maybe with a Bright Orange asterisk in the margin. These are potentially items which the developer may have reserved as having the unilateral right to change, if properly reserved meeting the criteria in the statutes. Potential other changes not reserved then might be considered an increase in his rights and to amend for those changes would require:

5219. Amendment of declaration

(d) When unanimous consent or declarant joinder required. -- Except to the extent expressly permitted or required by other provisions of this subpart, without unanimous consent of all unit owners affected, no amendment may create or increase special declarant rights, alter the terms or provisions governing the completion or conveyance or lease of common facilities or increase the number of units or change the boundaries of any unit, the common expense liability or voting strength in the association allocated to a unit or the uses to which any unit is restricted. In addition, no declaration provisions pursuant to which any special declarant rights have been reserved to a declarant shall be amended without the express written joinder of the declarant in such amendment.

If you are told at any point by the developer that they can make any change they desire to the Declaration because they have more votes than the owners … I would argue otherwise. If the right to change an item was not reserved, then the change most likely increases the right to build something different than already implied and expressed in the Declaration.

I also recommend that you get in the habit of checking the County Records at least every 3 months or more often. Generally most county records have a website to search their records. Go to this site and enter your association name. It then should show documents on file such as the Declaration, Plat, etc. which are required to be filed by law. Now what you want to check for is if there have been any Amendments to the Declaration which you may not have been aware of and have been filed. You do not want something changed behind your back and which you may not be aware of … because if you disagree with the change you only have one year to challenge:

5219. Amendment of declaration
(b) Limitation of action to challenge amendment.-- No action to challenge the validity of an amendment adopted by the association under this section may be brought more than one year after the amendment is recorded.

Lastly, read your state statutes and at least be somewhat familiar regarding the rights of both the developer and the homeowners.

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