CC&R'S Changes Devalued My Property

I Purchase a High End Home in a 14 5 Acre Subdivision With CC&R'S that Limited the Sq Footage to a Min of 2500 Sq Foot. Now The Other Property Owners are Wanting to Build Spec Homes and Are Changing the Min Sq Footage to 1800 Sq Foot. This Will Devalue My Property They Said Since they are the Majority They Can Do What Ever They Want. Do I Have any Recourse at All, My Life Savings are Tied up in My Property. Thanks for any Help

Hi Bryce:

Welcome to HOATalk ... What does your agreement say is required to ammend?

Also you should potentially consult with a local attorney who is knowledgeable regarding contracts and real estate laws ... in some areas attorneys will offer a "free" short consultation so you need to be sure and have your questions organized to keep it short. Be sure to ask the attorney that you would like to know which possible laws are being violated if others have already built homes meeting the requirements and Creditors have already lent alot of money for those homes based on the documents. When individuals purchase a home based on a contract they should be able to sell a home based on similar construction rights in the contract.

You might also utilize Google on the internet and search using quotes for the following string: "court case" "square footage" ... I remember a couple of years ago seeing a court case where the Judge denied other owners changing the documents because it would defraud others who had already built homes. I do not remember which state the case was but it would give an attorney food for thought on this issue.

Bryce,

I know this advice is a bit late, but putting all your life savings into a house in a subdivision may not have been a very good investment strategy. You should have diversified your portfolio.

A HOA does not add or subtract the value of your home. That is a misnomer. What effects the sale of your home is location, what the houses have sold for (including foreclosure/short sales) in the last 6 months, and the equal square footage/rooms of those home that sold. You may have the bigger house, which means what the other homes of similar size in that few mile radius have sold for will be what your home value is compared to.

My neighborhood is an older one. However, we have houses that range from 1200 square feet 3 bedroom 1 to 1.5 baths to 4/5 bedrooms with 3 or more baths and around 3K square feet. Do they sell equally? No. They sale for what a home may sell for similar within a few mile radius. So a house in a neighborhood 2 miles down the road may be what the home value is.

Keep in mind it's NOT the sales price you put on your home that is your home value. I can put 200K on mine and try to sell it. Would the bank approve or appraise it for that much? Heck no. They would appraise it according to what I stated earlier plus condition.

So the HOA changing the new requirments just helps the builder/developer save a dime or two. Plus should sell the homes faster. People may want smaller homes than larger ones. So the developer is changing it to attract more buyers as that is what HOA are supposed to do. ATRRACT HOMEBUYERS!!!

Janet,

I am 66 years old. You are the only person I have ever encountered in my entire life (and not just on this forum) who raises the issue of devaluing the "collateral attached to a Security Agreement for a Secured Creditor."

From what I can make of your arguments, you are of the belief that a mortgage borrower is liable to the lender for any and all negative changes in the value of the property no matter what causes the change. You also seem to believe that the borrower is liable even if the change in value is speculative, imaginary, or unrealized by way of an actual loss. In your quoted text above, you seem to imply that entities who were not parties to the mortgage contract also have a duty to protect the lender's collateral.

You have raised this issue so many times that it seems to be a personal obsession, your very own white whale. I confess to being mystified by where this would originate. Are there some statutes that you can cite or case law to support your conclusions? My instincts tell me that you misunderstood some substantial element of mortgage collateral and have taken to the mountaintops to extol your conclusions, as erroneous as they may be.

In my own state, a lender has no recourse against the borrower unless he has sustained an actual loss. Even then, the lender has only 60 days in which to file suit and the lender cannot file suit at all if the property is smaller than three acres. And this is in a state not known as being especially consumer-friendly.

And Larry …

Before you ask with regards to “Conveyance” here is how the term in my state is construed:

38-10-123. Term conveyance, how construed

"Conveyance", as used in this article, includes every instrument in writing, except a last will and testament, whatever may be its form and by whatever name it may be known in law, by which any estate or interest in lands is created, aliened, assigned, or surrendered.

The important term here would be “interest in lands created”. All property owners interest in lands within an HOA is “created” by the CCR’s. As noted above it does not matter what its form or what its name is known in law …

However, you also need to note that this section is “outside” of the CCIOA. Again, too many get focused on one section of laws while ignoring possibly other just as or more important sections.

Janet,

Thank you for the responses.

The operative phrase in 38-10-177 is "the intent to hinder, delay, or defraud." Without the element of intent to defraud, this statute would have no application to a mere change in the value of the lender's collateral.

Regarding conveyances, your statement that "All property owners interest in lands within an HOA is 'created' by the CCR’s" is also wrong. The property interest does not exist until a deed (or other conveyance) is executed to convey title to the buyer. The CC&R's are a limitation on what may be done with the property but do not by themselves constitute a conveyance. The statute itself states that a conveyance "created, aliened, assigned, or surrendered" an interest in the property. CC&R's do not do that. BTW, the same statute also exempts a last will and testament from being a conveyance. Does that mean if Uncle Norman kicks the bucket and leaves me a house in an HOA that the CC&R's will no longer apply?

You totally baffled me with this one:
"I was initially under the same opinion as you until subjected to the last few years of Bull $hit. It is amazing what you can learn above and beyond what you think is possible. I had this last year a number of attorneys point out complete “illegal” violations and which some violations also could be considered 'criminal' in our case."

What bothers me most is that you have identified yourself in other threads as a public official who sits on a some sort of county zoning board. This places you in a position of public trust and the public has a reasonable expectation that whatever decisions you make will be made in compliance with public policy, which includes both statutory and common law. You, for whatever reasons, have misunderstood and misapplied statutes, grossly distorting their plain words to create laws that exist only in your mind. God only knows how many times you have prevented a person from doing something lawful and beneficial because you felt that altering the value of a lender's collateral (and not necessarily the applicant's lender) was a criminal act. You would be doing everyone a favor to remove yourself from that position before doing any more damage.

From your own posting [emphasis added]:

Hi Tim:

This is what the CO statutes state:

38-33.3-201. Creation of common interest communities

(1) A common interest community may be created pursuant to this article only by recording a declaration executed in the same manner as a deed and, in a cooperative, by conveying the real estate subject to that declaration to the association. The declaration must be recorded in every county in which any portion of the common interest community is located and must be indexed in the grantee's index in the name of the common interest community and in the name of the association and in the grantor's index in the name of each person executing the declaration. No common interest community is created until the plat or map for the common interest community is recorded.

38-33.3-209. Plats and maps

(1) A plat or map is a part of the declaration and is required for all common interest communities except cooperatives. …..

Janet,

Yes, a development is created according to a PLAT. This, to my understanding, is done first.

A "common interest development" is then created when the deed restrictions are created and recorded (which may include or reference the PLAT).

Bryce,

AS for recourse, you will need to initially show damages. My suggestion would be to higher an appraiser to appraise your home. If the current appraisal of your home is higher then the appraisal (not necessarily what you actually paid) when your purchased, then it is likely that the change did not cause you any damage.

If the appraisal is lower then you need to ask the appraiser if the property they compared yours to were also lower than at the time you purchased your property. If they are, then the change still didn't cause you any damage.

If the appraisal does indicate you uncured damage, then you need to consult an attorney as you will need to show if the actual change to the CC&Rs caused all or only some of the damage.

Now, if you are concerned that the smaller homes will bring in buyers who have a lower income bracket than you and the other initial purchasers and you have a concerns of that lower income bracket, then you may simply want to consider moving. I say this because regardless if your concerns are real or perceived, I doubt you will be happy in the development you now find yourself in (one with a minimal square footage being 700 sq feet less than when you purchased).

Larry,

Based only on what has been posted, I agree with you that the OP likely doesn't have much of a case. As you said, until the unit is sold, there are no actual damages (only perceived damages).

I made the suggestion of obtaining an appraisal so Bryce would have some sort of quantitative evidence of any damage at all. Because I am thinking as you are, I further suggested that once he obtained the appraisal, and then only if it did show possible damage, to take the issue to an attorney to explore legal options. The attorney, who would have access to all the paperwork that we don't have, would then be able to render a more informed opinion.

As I said, based on the info that has been provided, I agree with you.

Hi JohnB26:

The developer in my situation did not have any "super majority" … all lots have one vote no matter who owns. However, state laws also supersede. Both my husband and I would not have signed any "unconscionable contract". Unlike many others who purchase in an HOA we actually read our contract … and even at one point stated we were not willing to purchase based on one section. To which the developer as his right (owning all property at time), was frantic stating because he owned all property could give waiver regarding said section.

No, he was not empowered to waive a section of the CC&Rs to an individual 'buyer'.

He could only waive HIS personal enforcement of same.

The next BOD is free to enforce the contract which YOU signed.

He probably was, however, allowed to amend AND FILE new CC&Rs.

CAVEAT EMPTOR

Perhaps. However, the issue is similar to the one UpS is having.

No necessarily true depending on circumstance ... in my state a couple of HOA's are being investigated under "criminal" violations.

Keep in mind should a property owner who purchased based on CCR’s and which the “construction guidelines” in that document are in essence an “implied and expressed warranty” be defrauded?

Please explain to me why any family (especially a legally disabled family) should be placed in the position after defrauded of having no home, zero equity, and a ruined credit record if they have to “short sale” a home due to changes to the “implied and expressed warranty” they purchased under which was changed only to unjustly enrich others (mainly a.k.a. another developer)? There is also the question that if another developer purchases property and signs documents agreeing to abide by the original CCR’s, then changes those documents … that developer should have chosen NOT to purchase the property if they are only purchasing with intent to defraud others who have PRIOR vested property rights.

Does anyone else not see the potential future housing bubble bursting again? If developers are purchasing properties with intent to defraud other prior investors (both Consumers and Mortgage Lenders) after they purchased based on what had been already implied and expressed and a lot of money invested based on those expressions. If they (both parties) are then placed in a position of having to “short sale” not only do they have a loss, but other surrounding neighborhoods loose when their homes are devalued when the “short sale” home becomes a comparable.

but the covenant that they signed was amendable

it was amended

if the contract's provisions for amendment were not followed - breach of contract

if not for CAVEAT EMPTOR we would not have capitalism