HOA being strong armed by developer!!

There are 6 homes built in our sub division. That leaves the majority of the remaining lots under control of the developer. Every time we have a POA meeting and vote on something, he says that he has final say so because he owns the twenty some lots. Typically, he tables items in his favor. Most recently, he wants to increase sewer rates because he mismanaged our funds and now there is no money to fix our system. We have asked for accounting and tax documents from previous years and he still hasn't submitted them to us. He pays himself $100 monthly for administrative fees from our account! Not sure what that is for, as our sewer fees are direct deposited into his account. He even withdraws $200 yearly for tax preparation! He lives out of state and during a heated POA meeting, he said he would return the following month and purchase his air fee using our account! We are at our wits end and would like some advice. Thanks!

He has owned the property for 20 years now.

Mack, unfortunately these types of problems are not uncommon in Declarant controlled HOA's. It's one of the risks you run by being an early buyer. Somewhere in your CC&R's there should be the terms of transitioning from Declarant control to homeowner control, it is typically something like after 75% of lots are sold or after X number of years. The years start when the first lot is sold. You might also familiarize yourself with ORC 5312 which governs HOA's in OH: http://codes.ohio.gov/orc/5312

Thanks for your response Glen. Yes, transfer happens once 75% of the lots are sold. And that won't happen in my lifetime! He has sold 6 in the last 20 years. The six homeowners have paid thousands into the sewer fees over the years to hopefully build a savings if something should happen. The only expense we've had is a $25 dollar electric bill each month for the lift station pump. Now the pumps are going bad and he expects us to pay increased sewer rates to cover the additional cost. Each of us pays $32 each month for sewer, which is $2304 annually. Deduct the electric bill and we should clear around $2000 each year. Our 2013 ending balance is $70!!!! IS HE LEGALLY ABLE TO DEFRAUD US LIKE THIS??? This is getting out of control!!!!!!!!!!

I dont know if its fraud or not. Have you looked at his books? Lets say his annual expenses for the sewer are $2300 annually. That leaves $4 extra per year after 20 years thats $80. Your not going to get anywhere unless you and your six neighbors agree to start a fund and contribute to it for legal expenses. And all sit down together and go over everything. I get it, your mad, but your answers lie within the laws and your CCR/Bylaws. Complaining will yield you no answers.

Use the law to help you. Have a lawyer mail him a document request. If he fails to respond file an injunction with the court to produce the documents.

There are laws specific to Ohio too.
--------------------------------------------------
The owners should take control of the board as soon as possible so that the association can focus on owners’ concerns as opposed to the developer’s interests. Condominium associations are governed by Chapter 5311 of the Ohio Revised Code, which mandates a timeline for gradual transfer of control. Once the developer has sold 25% of the units, owners must fill the seats of not less than one-third of the board.
--------------------------------------------------

You 6 homeowners need to band together and use your state laws to get your HOA into better financial shape. If you dont know how to navigate the court system, you need a lawyer to help you.

buy = but (no editing allowed)

Mack, I truly sympathize as you are in a tough situation there. What I'm curious about is "why now?" If I interpret your note correctly, the homeowners are at "their wits end" now after twenty years!! Other questions:

- Where are the utilities located that you're all paying 'fees' for? (i.e. are they on common space?) And has the developer completed the utilities implementation for the entire development? (Our state requires this before the HOA begins picking up implementation / maintenance costs.)

- Why, in your view, have only six homes been built? How many total lots?

- Is there a designated attorney representing the HOA? If not, you best get ready for that move by the declarant if you all begin taking some action. Then he will charge the HOA (meaning you) for all the attorney fees.

You all are between the proverbial rock and a hard place. You can either continue to be abused, or you can seek out a private attorney and take this guy to court. If you do that, I guarantee this guy has made mistakes that will bite him down the road. However, that road will be long and costly. Not only that, but he has shown his true colors with the 'air fee' threat. When this fellow really gets pissed, you haven't seen anything yet....

If you homeowners take legal steps, you want to be sure the attorney is experienced in 'HOA law'. Please keep us posted on this.