MarthaC3 (Virginia)
Posts: 1
Posts: 1
Posted:
Ok, I've looked back through past discussions and haven't seen a case like ours. I live in a 100 lot, single-family, declarant controlled HOA. The community is 10 years old and on our 3rd developer/declarant -- first two went belly-up. The first 2 developers never filed a tax return, co-mingled developer and HOA income and expenses (as near as we can tell, as they never provided any financial statements,) obviously never set up reserve accounts or had a reserve study done, and deferred maintenance items (like work on streets, ponds, park, and community center).
When we moved into the community in 2009, we got a disclosure packet at closing. Trusting fools that we are (and because the moving van was already in the driveway of our beautiful new home), we did not stop the closing to examine the packet. Had we read the docs, we would have seen that there was no financial statement, and that the docs say that all lot owners are members and pay HOA assessments, except for Declarant, who pays only for lots with an occupied (in one place in doc) or unoccupied house (in another place within the the same doc). And the declarant has the sole authority to appoint Board members. Our current Board is the declarant, his construction manager (non-owner, non-resident, and oh yeah, he works for the declarant)and one homeowner representative. And the declarant has total architectural control. And the declarant has votes equal to number of lots sold plus one. And the declarant retains total control as long as he owns one lot.
And, of course, the first two developers kept the assessments artificially low ($70/mo) to attract more buyers. So, when the new developer came on board (also in 2009) and hired a management company, we were about $60k in the hole for that year. Our first ever Capital Reserve study was just completed, and we're about $200k underfunded. We were told that the Reserve Study was required in VA, but not required to be funded. Can this be true?
How does declarant/developer control of HOA not violate conflict of interest? The declarant can (and, in fact does) develop new sections with lower quality materials and with lower monthly assessments. The declarant can (and does) choose his construction company (which somehow always miraculously comes in with the lowest bid)on maintenance work needed in common areas. He can (and does) turn over assets to the HOA that are in disrepair (ponds, streets, community center.)
We have a wonderful neighborhood that is in deep poo. The financial problems, coupled with deferred maintenance issues, have created a contentious, fractious environment. We've talked with an attorney several times and have gotten some concessions from the developer. But litigation isn't really a viable option -- there are only 75 +/- homes in the community and we're already facing more special assessments and increased fees. We've contacted the State Ombudsman, but that was fruitless. We've met with county officials and written our state legislators -- to no avail. Where do we go from here?
Oh my gosh, it was sort of like therapy just to post this. Look forward to any and all comments.
When we moved into the community in 2009, we got a disclosure packet at closing. Trusting fools that we are (and because the moving van was already in the driveway of our beautiful new home), we did not stop the closing to examine the packet. Had we read the docs, we would have seen that there was no financial statement, and that the docs say that all lot owners are members and pay HOA assessments, except for Declarant, who pays only for lots with an occupied (in one place in doc) or unoccupied house (in another place within the the same doc). And the declarant has the sole authority to appoint Board members. Our current Board is the declarant, his construction manager (non-owner, non-resident, and oh yeah, he works for the declarant)and one homeowner representative. And the declarant has total architectural control. And the declarant has votes equal to number of lots sold plus one. And the declarant retains total control as long as he owns one lot.
And, of course, the first two developers kept the assessments artificially low ($70/mo) to attract more buyers. So, when the new developer came on board (also in 2009) and hired a management company, we were about $60k in the hole for that year. Our first ever Capital Reserve study was just completed, and we're about $200k underfunded. We were told that the Reserve Study was required in VA, but not required to be funded. Can this be true?
How does declarant/developer control of HOA not violate conflict of interest? The declarant can (and, in fact does) develop new sections with lower quality materials and with lower monthly assessments. The declarant can (and does) choose his construction company (which somehow always miraculously comes in with the lowest bid)on maintenance work needed in common areas. He can (and does) turn over assets to the HOA that are in disrepair (ponds, streets, community center.)
We have a wonderful neighborhood that is in deep poo. The financial problems, coupled with deferred maintenance issues, have created a contentious, fractious environment. We've talked with an attorney several times and have gotten some concessions from the developer. But litigation isn't really a viable option -- there are only 75 +/- homes in the community and we're already facing more special assessments and increased fees. We've contacted the State Ombudsman, but that was fruitless. We've met with county officials and written our state legislators -- to no avail. Where do we go from here?
Oh my gosh, it was sort of like therapy just to post this. Look forward to any and all comments.