Unusual Bylaws

Started by SharonH9 • 14 replies • 1493 views

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SharonH9 (Virginia)
Posts: 216

Posted:

Sister owns lot in my neighborhood. My husband and I own a house. Sis is trying to sell lot. She has an interested potential
buyer.

Sister has never paid membership dues. Association president says she must pay 3 years of back dues or the buyer of her lot
will not be considered a member in good standing and will have to pay $15,000 to hook up to Association sewer.

Bylaws say the new owner must wait 3 years, pay dues for 3 years, have no voting rights or rights to use common areas before can hook up to Association sewer or must pay $15,000.

Association President says the back dues are not negotiable between buyer and seller. Sister must pay them not buyer.

She and I think this is a strange situation. My question is can the Association dictate terms of the contract between
the buyer and seller?

I have stated before that the CC&Rs expired. What is left is a Nonprofit Association with a community sewer and 2 ponds.

I am trying to get on BOD to work on changing some of these "funky" bylaws. I contacted the Board President and Secretary
by U.S. mail indicating my desire to run for a vacancy on board. My letter was sent over a week ago. So far I have heard
nothing from either the Secretary or President. Sis called the President yesterday and received a letter from Secretary
today. How long should I give them before I contact them again. The annual meeting will be next month and I want to get
flyers out to voting members. I also asked for a member list. I think they are purposefully avoiding me because we have had issues with the BOD which have been resolved. I have tried multiple times to communicate with BOD. No one responds.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

The HOA wants the delinquency paid when the property sells as would be expected. If the seller wants to assume the debt, it will leave that seller in "bad standing." The debt won't get extinguished by the sale. If there's a lien for this debt, your sister's deed will have a cloud and that lien must be paid to clear your title, which title insurance would balk with that cloud.

She needs to pay her debt as she agreed when she bought that empty lot.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

No one is dictating the terms of the contract. But there is a lien, the back dues. If your sister wants to sell this property, with the 3 years lien she is free to do it. The buyer will have to pay cash, because no bank will finance a property or give a loan to build on a property with a lien.

And it sounds like, in addition to the lien, there is a $15,000 sewer hookup fee. Cities do this all the time, it's quite normal to have a hookup fee.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Back dues and hookup fee isn't funky at all. It's all quite normal.

SharonH9 (Virginia)
Posts: 216

Posted:

Quote:

Posted By KellyM3 on 04/24/2013 6:14 PM
The HOA wants the delinquency paid when the property sells as would be expected. If the seller wants to assume the debt, it will leave that seller in "bad standing." The debt won't get extinguished by the sale. If there's a lien for this debt, your sister's deed will have a cloud and that lien must be paid to clear your title, which title insurance would balk with that cloud.

She needs to pay her debt as she agreed when she bought that empty lot.

Kelly,

Membership in the Association is not required. We didn't agree to membership or were provided any documents when both of us purchased our properties. The CC&R's expired long ago. The association was called something different than it is now. The association never recorded anything and there are no deed restrictions and no liens. We have both owned our properties for 6 years.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

If membership is not required, and there are no CCRs, how do you explain the HOA sewer? Sewer sounds like a common area, and sewers ain't free.

SharonH9 (Virginia)
Posts: 216

Posted:

Quote:

Posted By SteveM9 on 04/24/2013 6:47 PM
If membership is not required, and there are no CCRs, how do you explain the HOA sewer? Sewer sounds like a common area, and sewers ain't free.

It is not a typical HOA. My point is if the buyer of my sister's lot is very interested in buying her property, he or she could write a check to my sister for the 3 years of dues (its only $225), then sis could turn around and write a check to the Association for the 3 years of dues. Thats what I think is funky. The members in good-standing pay $5,000 for sewer hook-up and nonmembers and members not in good standing are supposed to pay $15,000. So it is easy to skirt around the member issue. I just think this needs some revision and is the unusual part of the situation.

The homes connected to the sewer pay a yearly assessment to pay for sewer maintenance.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Sometimes a higher sewer rate ($15k) is put into the bylaws for people who want to hook into the sewer at a future date, in another neighborhood, non members. I think the president is wrong in saying the check "must" come from your sister, but yes, it must be paid. Typically if you have a friend or relative interested in buying real estate from you, its at a much lesser amount than you could get if you put it up for sale with a realtor. Ever thought of really putting it up for sale to see what it may bring in the open market?

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

So it is easy to skirt around the member issue. I just think this needs some revision and is the unusual part of the situation.

Many times, it's so difficult to change bylaws/ccrs its almost not worth it for such a small revision.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Sharon

If the back dues are only $225.00 I would pay them, sell my property, and get myself out of the HOA debate.

Also were it me, I would tell you not to get involved in any way with my buyer buyer and blow the sale on me.

SharonH9 (Virginia)
Posts: 216

Posted:

Quote:

Posted By JohnC46 on 04/25/2013 5:46 AM
Sharon

If the back dues are only $225.00 I would pay them, sell my property, and get myself out of the HOA debate.

Also were it me, I would tell you not to get involved in any way with my buyer buyer and blow the sale on me.

Good advice. I'm not getting involved at this point and told my sister the same thing you just said. I just think the President is off base by telling her she has to pay the back dues not the buyer. Why does the President care who pays it as long as they get the money?

The Association is suffering from a BOD who fly by the seat of their pants. It's a real challenging situation and I sympathize with the BOD to a point. Sometimes they need to just sit back, analyze things and make well thought out,informed and practical decisions. The president has gotten quite power hungry over the years and I personally think he does a very poor job as president.

JeffT2 (Iowa)
Posts: 880

Posted:

Your sister will need a real estate lawyer for the closing, so she can ask the lawyer about these issues. A stern letter from a lawyer to the president might loosen the requirements. Otherwise, easier to pay the dues.

It is possible that the bylaws are not properly set up with requirements for membership or classes of members that would prohibit new members from voting for three years.

Iowa code for nonprofits 504.1602 says you are entitled to inspect and copy records including the membership list after five days written notice. The nonprofit has 10 days to propose in writing an alternative such as sending the list to you. I would contact them again and quote the law to them. The law says that you have to describe the purpose for which you want the records. You might want to also get the accounting records.

Once the annual meeting has been noticed, 504.711 says the nonprofit has two days to prepare the membership list and have it available for inspection and copying. This does not require the written notice. If they do not make the list available, then action taken at the meeting may not be valid.

They may not have an accurate membership list.

I would not rely on the president for getting on the ballot for the annual meeting. Get proxies from the members.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Sharon,

I'm using your previous threads as a basis, I am of the following understanding.

1) You are in a development that does not have recorded deed restrictions, hence no HOA.
2) What you refer to as the Association is actually simply a corporation that provides water and sewage to your development.
3) Membership in this Corporation is voluntary.
4) Those who are members may receive lower costs for services provided.

Based on this thread I understand that:

1) Your sister is not a member of the Corporation
2) The corporation has informed her that since she is not a member in good standing, they will consider purchasers of her property also not in good standing.
3) Not being a member in good standing results in a hook-up fee of $x,xxx
4) The corporation is offering her to become a member in good standing if she pays assessments for the last three years.

Is this correct?

Expecting it is, I do believe that at the very least your sister needs to disclose the hookup fee.

She can also socialite a legal opinion for legal options.

Based on your past threads, I don't think it's going to be resolved without her either paying the past fees or for her to utilize one of the legal options (which would be provided by her attorney). Since she is looking at selling the property, she should likely look at the costs involved for each option to help make her decision.

SharonH9 (Virginia)
Posts: 216

Posted:

Quote:

Posted By TimB4 on 04/25/2013 2:44 PM
Sharon,

I'm using your previous threads as a basis, I am of the following understanding.

1) You are in a development that does not have recorded deed restrictions, hence no HOA.
2) What you refer to as the Association is actually simply a corporation that provides water and sewage to your development.
3) Membership in this Corporation is voluntary.
4) Those who are members may receive lower costs for services provided.

Based on this thread I understand that:

1) Your sister is not a member of the Corporation
2) The corporation has informed her that since she is not a member in good standing, they will consider purchasers of her property also not in good standing.
3) Not being a member in good standing results in a hook-up fee of $x,xxx
4) The corporation is offering her to become a member in good standing if she pays assessments for the last three years.

Is this correct?

Expecting it is, I do believe that at the very least your sister needs to disclose the hookup fee.

She can also socialite a legal opinion for legal options.

Based on your past threads, I don't think it's going to be resolved without her either paying the past fees or for her to utilize one of the legal options (which would be provided by her attorney). Since she is looking at selling the property, she should likely look at the costs involved for each option to help make her decision.

Tim

I am impressed. You have the situation correct and can write it down clearly and concisely. The Association makes a distinction between dues and assessments though. There are more undeveloped lots in the subdvision than developed. Folks owning undeveloped lots really have no incentive to be members of the corporation. I am softening a bit towards the BOD because it appears that they are trying to make a difficult situation more fair and equitable. I believe I can take some credit for that because their current dues and fees structure has changed since we bought our property. I have made my opinions be known and sometimes it has not been taken very well and they sued us twice but compromises were reached. Now, if I can get on the board, I believe more progress can be made in a positive direction.

One other problem is that the sewer line map has some errors and shows that sewer lines are located in places where they are not. A buyer is also taking a risk that the sewer line might not be close to their property. Ultimately it could cost a property owner $5,000 for sewer access but also thousands of more dollars to bring the lines to the house. This would also require approval by the county as well as the corporation. Neither the corporation or the county will pay for that. It really is quite a mess.

Now if I can get the BOD to be more open with records and meetings and reduce the hook-up fee by about half I will feel victorious. Their expenses just do not support charging that much for access to the sewer. Paricularly since a property owner has so many obstacles that they might encounter.

Thanks.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By TimB4 on 04/25/2013 2:44 PM

She can also socialite a legal opinion for legal options.

Socialite? Boy was I off.
Obviously I meant solicit.

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