HOA vs Developer Lawsuit over Detention "Pond"

I am the President of a small HOA of 78 Homes.

The developemnt was started in 2002 with the developer creating a 78 lot Section 1 of 2. He built per his City and County approved plans that included a "dry" detention basin.

Soon after the build out of the infrastructure and PRIOR to an HOA being created or home sold, he allowed this "dry" basin to fill up with water. He then installed a fountain on this water. He marketed and sold Lake lots, homes and marketed lots to other builders that did the same.

Due to the way the City did business in 2001, the detention facility was never inspected for operation after the initial building and final platting process.

Through out the years of the developer controlled HOA, he spent countless dollars of HOA money to support operation of a "lake"...dye, fountain repair/replacement, weed killing, fish stocking, etc.

In May of this year the Developer resigned from the Board, ACC and removed himself completely from HOA activities. He basically left the HOA and continued to sell the remaining lots to one builder.

The homes are still being marketed by builders as "lake amenity" lots and houses.

The HOA (now resident controlled) has now had it's detention basin inspected by the City. It was found to have been retaining water at a 6 foot depth. They are discussing requiring the HOA to pump ou tthefacility and return it to the design, which is a "dry facility".

You can imagine the anger this has caused. The lake was sold to all residents as an amenity. It was openly advertised as an amenity. It is the focal point of the neighborhood. It is enjoyed by all for fishing, walking, jogging and relaxing.

Now the Developer is not part of the HOA and is basically a Member that is selling lots to a builder.
We have ACC control, we have total control of the HOA and we self manage.

We are faced with a huge expense to clean this basin out and return it to a dry state. Owners are mad, due to the loss from paying premium dollar for a lake lot and now are finding out it was originally designed to be dry.

I believe the developer committed fraud in selling these lots after intentionally allowing the detention basin to fill with water, addding a fountain and marketing a lake as an amenity.

I believe each home owner has a case against him, and the HOA has a case as well.
Does anyone here have experience with anything like this?

We are looking for the City to help with this as well, due to their lack of inspection of the facility throughout the years.

Is a lawsuit in order? Thoughts?

The size of the basin was engineered to a specific size per code. It is meant to be dry and detain a specific amnount of rainwater. By holding it at the level it is at, all the storm sewers in the neighborhood are half full of water. They are engineered to be dry, so that they detain water to a certain level. Our having water in the basin, renders it's detention function useless.

If we get the amount of rain that it was designed to protect against, we get 12+" of water in the streets.

The developer (who owns 6 lots) fraudulently mis represented the basin as a lake and put all of our homes in danger of flooding. While in control of the HOA, he took no action to solve the problem, but furthered it by allowing the lake to exist.

Resolving the problem will cost about $30,000 and will illiminate the "lake" than all homeowners were sold as an amenity.

Why would we voluntarily create a special assessment to pay for his mistake? Are you saying we could all vote to approve a special assessment against the developer as an owner?

The pool example does not apply here. We were sold an amenity and the fact it was dual purposed as a detention basin. The truth is, it was supposed to be a dry bain and not to be used for a lake. Our HOA does not have insurance for a body of water, and never has. The residents have only been in control of the HOA for 7 months. In this 7 months we have straightened out tons of mistakes and poor practices. This problem was just discovered.

In 2001 the City did not require bonds for this purpose. They started that in 2004.

Right now we are working with the City who is doing an engineering review on the detention facilities. Water depths, available storage, pump capacity, etc, etc. They are going to get back with us to determine the action to be taken. The most drastic will be a total emptying of the basin. In any case, residents will be outraged at the loss of a 2 acre recreational lake or the reduction of it to a swampy wetland.

A lawsuit is our last resort, but just looking for feedback and comments to vet this out. We are self managed, we do run a tight budget and we are just now, after 7 months, recovering from the developers mess he abandoned us with.

Just got 2 requests for lot takedowns today, so he is making money. $35k a lot to be exact.

We are hoping the City can help leverage the developer, but time will tell.

Daniel

the best bet of your association is to contact an attorney...ultimately depending on the financial stake of the develop the money may have to come from the association but a seasoned attorney can help you. I would assume the people who bought lake lots and ultimately all who bought could file suit against the developer for fraud. Perhaps a class action suit is in order as ultimately it could and probably will have a negative effect on property values.

Yes, you do have a case against developer who will likely declare bankruptcy and you will receive no money and need to pay your lawyers. Well, this is what typically happens.

Our neighborhood was roiginally supposed to have 2 sections. That was brought to a halt in 2007 when the market collapsed. But in the past 2 years he has sold almost all lots in our section and has hopes to build the second section.

This is where he made a huge error. He never secured an outfall agreement with the HOA. We now own the facility and he has no other means to get his stormwater to the county ditch. He needs us to build a second section, albeit a seperate subdivision and HOA from ours.

Now we have discovered this problem with the "lake" and the City and County are not happy with him.
Nor are the residents.

So if he wants to continue with another neighborhood, he will have to address the issue.

We have a little leverage, in that he needs us to develop a new neighborhood next to us.

It's a mess, that is for sure.

Our HOA started out under the developers control, as most do. He made numerous errors in running the HOA and keeping control, until finally, there was nothing he could do to retain control. When faced with removal, he quit.

Yet HE still wants to develop. Our HOA property is only 2 acres and numerous City right of ways that we maintain.
The two acres is detention "pond" and a small track around it.
The developer has property to our south that was supposed to be a section 2 of OUR neighborhood. Since running into all the problems he created for himself, he opted to start a new subdivision next to us and create a new HOA.
However , those plans were halted by the City when they found out he did not have a storm water agreement with us.

So he has 24 acres to develop, a builder that wants more lots and he cannot get any of this going till we wash out the storm water issue.

Unfortunatley, he made another blunder and that was filling it up with water and selling it as lake lots when they never were supposed to be.

Now he is faced with fixing our detention, then adding more detention, plus more due to the issue of the lake.

The City is willing to help us work out something with the developer, but I fear he will not budge or will simply fold. BUT, there is a possiblitly we could, through a lawsuit get his land awarded to us.

There is no doubt we will need to get lawyers involved if we can not sit down and work out an agreement.

What?? LOL. That is not how lawsuit judgments work. Could you negotiate with the developer to dismiss the lawsuit if he sells your HOA the land for $1 or so? Sure. Will the judge give you his land, hell no. Doesnt work that way.

If I was the developer, I'd just sell the remaining land to another developer. Pay out all the profits as salary. Bankrupt the company. The end.

Mel

Good advice on "deciding" what you want.

I get the feeling that the only thing they want so far is a pound of flesh from the developer. In like we do not like you and we now have you over a barrel and we are going to put it to you.

I think their dislike, I gottcha ya view of the original developer is clouding how to move forward.