HOA or not HOA

I have recently built a house in a rural lake subdivision where I have owned the property for over 25 years. I have run into numerous problems in the building process, but that is a whole different story. In reviewng the history and evolution of the subdivision I have come across some interesting points that are confusing me.

Here is what I have found out: The subdivision was developed in the mid 1960's by a group of investors calling themselves The Lake Association Inc. Subsequent to that another group calling themselves The Lake Club Inc. was formed. The articles of incorporation for the Club Inc. call for them to own and maintain the common areas and conduct club business. The Association Inc. went bankrupt in the 1970's but first divested themselves of the common property handing title to it over to the Club Inc. There were an original set of restrictions recorded by the Association. When the Association went bankrupt and out of existance the club board recorded another set of similar but (in places) conflicting restrictions. An example is Club membership is mandatory in the first set of restrictions and optional (as ruled by a court decision) and as set forth in the second set of restrictions. The Club never put the new set of restrictions in front of the property owners for approval, although approval of 2/3 of the property owners is required by both sets of restrictions for changes or amendments. Subsequent to that the Club deleted the original restrictions from its published set of rules. The original restrictions contained a paragraph giving rights to the club "as if they were the subdivider" when a stated percentage of the lots are sold. That percentage has been sold. The second set contain no such statement. The first set of restrictions has not been enforced in over 30 years and contains many elitest restrictions that are not common practice today. Now the Club Inc. has hired an attorney who is telling them that they are a HOA and that the board can make private property regulations, asses fines and place leins none of which is permitted in any of the publicly recorded restrictive documents or articles of incorporation of the Club Inc. Enforcement of both sets of restrictions is given to the courts "at law or in equity."

I agree it is a mess. Originally the subdivision was a "vacation home" subdivision, now there are some very high dollar homes going in. As you can imagine it is setting up a battle between the "haves" and "have nots." Sooner or later we are going to go to court about some of the bullying that is going on. I am interested in your thougths. I know there are no black/white answers.

Roger, Thanks for your reply. This is indeed a very tangled web. I'll try to clarify a bit. The Developer and Association Inc. were the same corporation. The Club is a seperate non profit corporation that came along while the Association was still in existance.

DEVELOPER/ASSOCIATION DID:
*Subdivided and sold lots in the subdivision.
*Put in place CC&Rs #1 that required approval of the Association and 2/3of the property owners to amend or change.
*Association went bankrupt making CC&Rs #1 non-amendable.
*Association turned title to common property over to Club.
CC&Rs #1 required acceptance into the club prior to property purchase.

CLUB HAS DONE/IS DOING:
*Club Inc. took ownership of common property.
*Club Inc. recorded CC&Rs #2 on the deeds (seperate document), but did not get approval of Association or 2/3 of property owners. Actually only a few of the club members knew that this was happening. They could not then or now get 2/3 of the lot owners to approve CC&Rs #2 as they are skewed toward those who already have homes built. (the old I got mine, screw you)

CC&Rs #2 do not require club membership. But do require property ownership to qualify to be a member. So club represents only its members not the property owners (according to CC&Rs 2.) Club (mostly the haves)is now acting like a HOA and bullying some other members (the have-nots)in an effort to get them out. Less than half of the lots are built so over half are owned as "fishing lots." Club board is making "by-laws" that cover the sames private property issuss as the CC&Rs and still not getting approval of property owners or even Club's members.

Hope this clears it up a little. I know what I think, but I want some other input to be sure my opinions are valid. Of course the courts could come up with ANY opinion if it comes to that.

Arthur, I am still confused. I view the Developer and the association as two different entities with the Developer's appointed Board members being in charge of the association. I can see the Developer going bankrupt but to me that does not equate to the association ceasing to exist.

Is it possible that the Club Inc. Developer acquired the remaining lots. And if so did they had sufficient voting power to amend(change) the Declaration in its entirety including the name of the association? If that is the case then the 1st CC&Rs could be amended (superceeded) in their entirety by the 2nd set of CC&Rs (which are an amendment to the 1st set).