HOA Storm Water Management Area SALES

Who is placing these properties up for auction? Are these tax sales? Why are the HOA's not purchasing the properties themselves?


My understanding is that even if the HOA does not own the storm water land, the property is nonetheless subject to the ordinances that created it. That is, the land cannot be used for anything else. If the HOA does not purchase the property from the winning bidder at the auction, that person is stuck with a useless piece of property. I see no incentive for the association to buy the property at any price.

The HOA is not the developer, so I do not see how the association could be held liable for the developer's failure to transfer ownership of the storm water area to the association.

Nance,

I took a more careful look at the opinion letter from the director of the property tax division. I saw nothing in there to support your previous statement that common areas are not taxed. In fact, the opinion states that they are taxed but not taxed separately. That is, each owner is supposed to pay a share of the taxes on the common areas.

The letter goes on to state that it is the responsibility of the owners to inform the assessor as to how the taxes are to be allocated among the owners. After a certain date the declaration is supposed to state a formula for allocating taxes. For declarations recorded before that date the taxes on common areas are divided equally among the owners.

I suspect that those HOA's where the storm water basins were sold had not informed the assessor that they were common areas and had not provided a formula for allocating the taxes among the owners. The assessors then treated the basins like any other property with unpaid taxes.

Your association should ensure that it has a tax allocation formula, that the formula has been adequately communicated to the assessor, and that the assessor knows precisely which parcels are common areas subject to the allocated taxes.

I just wanted to add this... Those small notices in the paper ARE considered your HOA's notices and everybody else's. That is considered a PUBLIC notice. Which then encompasses EVERYBODY including your HOA as a notice. Your HOA is owned by ALL the members and may not have a specific address. That address may be the management company. It may be a person's address the utilities for the HOA were put in. Not all HOA's have actual buildings mail goes to. If it went to an individual, it may not have had their name on it but just address. Which means they probably tossed out the notices. It wasn't addressed to them by name and thus not supposed to open it.

I would suggest to do some investigation and call up the Tax assessor's office. See what address they have on hand for your HOA. That way you should all get personal notice besides the PUBLIC ones in the newspapers. Which by the way where liens and foreclosures are printed as well. Good information to have.

I see no inconsistency between the two links you provided. Both the circuit court and the director of the property tax division are of the opinion that the HOA is not liable for taxes on the common areas.

The court did not address who is liable for those taxes. That question is answered by the director, who states that the owner/members of the HOA are liable. If the HOA was formed before the adoption of the UCIOA then the owners are proportionally liable for payment of the taxes. Owner/members in HOA's formed after UCIOA are assessed based on the formula in their respective declarations.

The director's opinion also makes it clear that it is the responsibility of the taxpayers to make sure the assessor has the information to properly assess. "As with any special property tax treatment, it is incumbent on the taxpayer to provide the assessor with sufficient information to properly tax and assess the property." I interpret this to mean that if you know the assessor is assessing a common area improperly then it is your responsibility to give him the information he needs to assess it correctly.

Hi Nance:

If you go to the Tax Assessor’s website someone has to be listed as the owner and an address to send information for that parcel of property … my guess is it is potentially still the developer. Therefore, most likely the developer received notices but has done nothing similar to what happened a while back in my subdivision.

In my state a developer is supposed to have common area property under the association name from the beginning and which the developer did not take care of … and similar to yours the property showed up in the paper for back taxes. Now if the developer had performed properly and completed proper documentation in my state the property is not taxed. This is because most of these in my area are considered open space or in essence “parks” and in one of these in my subdivision is a storm water basin.

LOL … what I did is when the developer wanted to start charging assessments I asked what we were paying assessments to maintain. When it was brought up that it was to maintain the common area I then pointed out that the “Association” currently did not own any common area property to maintain. Took a while to fix the snafu, but until then that problem was the developer’s problem to pay for fixing.

As to your question as to why someone would purchase that type property … most property is listed by a Block # and Lot # and unless someone drove by prior to the auction to review the property … they most likely thought they were just purchasing a regular empty building lot. Would you not have liked to be a fly on the wall when they found out otherwise? 