Partial Assignment of Declarant's Rights

Started by HenryM4 • 32 replies • 4591 views

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HenryM4 (Florida)
Posts: 36

Posted:

When Our HOA was established (2007), there were two classes of members; Class A members who had one vote for each lot owned and Class B members who had 3 votes for each lot owned by the Declarant. However, in our HOA's Covenants, Conditions and Restriction (CCR), CLASS B membership ceased as of December 31, 2010.

Recently (8/8/2013), our original Declarant partially assigned declarant's rights to another builder. The original Declarant sold all the lots (14 of 27) he owned to the new builder.

In the PARTIAL ASSIGNMENT OF DECLARANT'S RIGHTS (which was recorded with our Florida county's CLERK OF THE COURT), there was a clause in it that essentially allowed the new builder relief on one or more RESTRICTIONS in our HOA's CCR.

Given the Declarant only had 14 of 27 lots in our community at the time of the partial assignment, can the Declarant amend the CCR as he did without a 2/3 vote (that's what it takes to amend our HOA's CCR) of 27 votes?

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Since he is the declarant and has not handed over the HOA to the members yet, its likely he can do anything he wants without the 2/3 vote. The 2/3 vote guidelines is likely for the HOA members to follow ONCE the hoa has been turned over to the members. Not before.

But I duno, I have not seen your docs. Just going on what info you have provided.

HenryM4 (Florida)
Posts: 36

Posted:

Assuming the Declarant can do what he did in the Partial Assignment of Delarant's Rights, even assuming the Declarant can amend the CCR on his own, isn't the Declarant still required to amend the CCR before doing things that run counter to the CCR of record?

For example, the houses in our community must be a minimum of 2,000 square feet of living space ON THE GROUND FLOOR. This restriction is in our CCR and the partial assignment did NOT provide relief for this restriction.

However, the new builder in our community is building 2-story houses with less than 1,250 square feet ON THE GROUND FLOOR. One of the 2-story houses looks like a box with a 2-car garage slapped to its side!

HenryM4 (Florida)
Posts: 36

Posted:

Under Article VII, General Provisions,Section 3. AMENDMENT AND TERM of our CCR, it states the following:

Declarant shall have the right to amend, modify, or vacate the Use Restrictions as to any or all of said lots provided however, that said lots affected by said amendment, modification and/or vacation shall be those at that time owned by Declarant or, if said lot is not owned by Declarant said amendment, modification and/or vacation shall also be joined in and executed by both the Declarant and the subsequent grantee of any lot in this subdivision included in the amendment, modification and/or vacation. The covenants and restrictions of this Declaration shall run with and bind the land, for a term of twenty-five (25) years from the date this Declaration is recorded, after which time they shall be automatically extended for successive periods of ten (10) years. This Declaration may also be amended during the first twenty-five (25) year period by an instrument signed by two-thirds (2/3) of the lot owners, and thereafter by an instrument signed by not less than seventy-five (75) percent of the lot owners, except that any amendment which would affect the surface water management system, including the water management portions of the common areas, must have the prior approval of the Southwest Florida Water Management District or its successor agency. Any amendment must be recorded. Declarant shall not be liable or responsible to any third party or lot owner in the performance or non-performance of any actions which Declarant is authorized to perform under the terms and conditions of this Declaration of Covenants, Conditions and Restrictions, including without limitations, the amendment to any restrictions contained herein.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Henry

Did you not post the answer to your own initial question? What you posted says the Declarant can change the Covenants.

HenryM4 (Florida)
Posts: 36

Posted:

No, I wasn't really answering my own question. I was supplying more info to SteveM9's "But I duno, I have not seen your docs. Just going on what info you have provided."

So, the answer to my initial question is - the Declarant CAN amend the CCR all by his lonesome without approval from the residents (lot owners) who bought homes in the subdivision under the old rules (the Rs in the CCR) and expected those same Rs to apply to future builders/residents for the sake of property values and "continuity" in the subdivision.

But, in our case,

1. the CCR has NOT been amended, at least, not yet, and
2. the new builder is doing things that are contrary to the CCR of record, that is, he is building 2-story homes whose ground floor is far less (1,250) than the 2,000 minimum square footage stated in the CCR of record.

Surely, we should be able to STOP what the new builder is doing because what he is doing will have an adverse affect on the property values of homes built by the original builder (our builder) who followed the CCR, pretty much, to the letter.

DouglasK1 (Florida)
Posts: 2,046

Posted:

As far as I know, the only way to stop the builder from violating the CCRs would be to sue them. You need to hire a lawyer (assuming you haven't already), get an opinion as to how much of a case you have and your chances of prevailing, and if things look positive, file the suit. Don't expect this to be fast or cheap.

Escaped former treasurer and director of a self managed association.

HenryM4 (Florida)
Posts: 36

Posted:

More than a couple of residents are pretty much resigned to being trampled on with the HOPE things will won't be as bad as some think. The "some" would be willing to hire an attorney, but the "more than a couple" are another story altogether.

It's been suggested to me that we could go "pro se" (new term of me) with some guidance from someone who knows what is needed to file a lawsuit and navigate through the legal system. I'm retired, so I have the time, but not the knowledge. And the "grief" can be very "consuming."

I'm left with the feeling - Ah, Amerika! If you have the money, you can hire someone to fight for your rights. Otherwise, there's a good chance you have no rights at all!

The LEGAL SYSTEM should be easier to navigate. If you want to do this, follow this script. If you want to do that, follow that script. From my vantage point, the American legal system is deliberately difficult. Money rules as money rules so many things, especailly politics!

I want to thank everyone who responded. Truly!

I feel like I'm beginning to understand things. I'm new to HOAs, and the more I learn, the less I want to live in a subdivision governed by a HOA. There are too many variables that are totally out of a resident's control. One day your subdivision has a "reputable" builder, the next day it doesn't.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Henry

HOA's are fine. They are not the problem. The issue is who controls the BOD especially when someone (the Declarant) with a voting majority does or others, even elected by fellow owners, one does not agree with. At least when elected (under owner control), there are things one can do like recall them, vote them out, etc.

I am not nor do I play a lawyer.

You seem to be hanging your hat on the fact that "maybe" the Declarant has yet to modify the actual Covenants versus his right to do so. Most here believe he has the right to modify so the fact that he has not seems moot or at best, a way for a lawyer to make money fighting it and in the end, the same thing happens. I love run on sentences..........LOL

In the end game maybe your association will be better off with all lots sold, full dues being paid, under owner control, etc. versus the size of some houses. If so, help them get sold and the association under owner control versus fight it.

HenryM4 (Florida)
Posts: 36

Posted:

John,

Thanks for your response.

You wrote, "You seem to be hanging your hat on the fact that 'maybe' the Declarant has yet to modify the actual Covenants versus his right to do so."

At this point, I am not hanging my hat on the fact that "maybe" the Declarant has yet to modify the actual covenants verus his right to do so.

If everything I read in response to my original question is true, I now know the Declarant can amend the CCR without a 2/3 votes of all lot owners. I also know that the Declarant has has NOT yet amended the CCR. I also know that the new builder is violating the restriction in teh CCR of record having to do with the minimum square footage on the ground floor.

I do think there is a big difference between 2,000 square feet (minimum) on the ground floor vs. 1,250. If you saw the beginnings of the new builder's 2-story house, I think you would agree it doesn't fit the neighborhood! I'm not the only resident in our subdivision who thinks as I do.

It seems perfectly clear to me that the new builder is violating the CCR of record. Whatever money I or anyone else has to pay a lawyer to stop the builder from violating the restricitons in our HOA's CCR will be paid for by the losing party, so says our CCR, and the losing party will be the new builder/Declarant. If the new builder is NOT the losing party, the game is rigged!

The CCR exists for a reason - to maintain the integrity of our subdivision. Follow our HOA's "governing documents" and no one will have reason to object.

What am I not understanding?

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Those who fail to learn from history are doomed to repeat it.

This exact scenario happened all over the place in the 1980s when real estate crashed. Builders all over the country went bankrupt, banks owned the unfinished developments, etc. Other developers bought these HOA's and put whatever they wanted, including mobile homes. Since the developer basically owns the HOA, they can do whatever they want. And change CCR's etc.... Once the developer turns this over to the members, they have to follow these new rules. Basically for eternity.

HenryM4 (Florida)
Posts: 36

Posted:

Steve,

What are you saying?

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Dont buy a house in a developer controlled HOA.

HenryM4 (Florida)
Posts: 36

Posted:

Well, you're more than 4 years late with that advice. :-)

I thought you MIGHT be saying I should be thankful the new builder/Declarant is building a house (even if it's smaller than our CCR's minimum square footage) instead of installing a mobile home on a lot in our subdivision.

HenryM4 (Florida)
Posts: 36

Posted:

Per the 2013 Florida Statutes, Chapter 720 Homeowners' Associations, section 720.3075 - Prohibited clauses in association documents - , paragraph 5, on page 26, it reads

(5) It is declared the public policy of the state that prior to transition of control of a homeowners’
association in a community from the developer to the nondeveloper members, as set forth in s. 720.307, the
right of the developer to amend the association’s governing documents is subject to a test of reasonableness,
which prohibits the developer from unilaterally making amendments to the governing documents that are
arbitrary, capricious, or in bad faith; destroy the general plan of development; prejudice the rights of existing nondeveloper members to use and enjoy the benefits of common property; or materially shift economic burdens from the developer to the existing nondeveloper members.

JackE1 (Indiana)
Posts: 26

Posted:

OK Henry I'll stipulate that you are one hundred percent right and the new developer is violating the minimum square footage rule. You and your neighbors take them to court, the old developer then amends the square footage section making your lawsuit null and void. Now you would have to sue the old developer and try to prove that his actions were: arbitrary, capricious, or in bad faith; destroy the general plan of development; prejudice the rights of existing nondeveloper members to use and enjoy the benefits of common property; or materially shift economic burdens from the developer to the existing nondeveloper members.

Oh and don't forget that somewhere along the line the city approved the smaller footprint because all they care is that it meets code.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By JackE1 on 05/17/2014 4:26 PM
OK Henry I'll stipulate that you are one hundred percent right and the new developer is violating the minimum square footage rule. You and your neighbors take them to court, the old developer then amends the square footage section making your lawsuit null and void. Now you would have to sue the old developer and try to prove that his actions were: arbitrary, capricious, or in bad faith; destroy the general plan of development; prejudice the rights of existing nondeveloper members to use and enjoy the benefits of common property; or materially shift economic burdens from the developer to the existing nondeveloper members.

Oh and don't forget that somewhere along the line the city approved the smaller footprint because all they care is that it meets code.

I think Jack hit the nail on the head.

JackE1 (Indiana)
Posts: 26

Posted:

I forgot this in my prior post:

Homeowners -$$$$$$$$ HOA -$$$$$$$$ Attorneys +$$$$$$$$$$$$$$$ Caching.

HenryM4 (Florida)
Posts: 36

Posted:

"Clear and unambiguous" HOA CCR restrictions, the kind that are NOT open to interpretation, are ENFORCED by the courts in Florida. This is a fact, not smoke!

The new builder didn't just miss the "minimum" restriction by a little, he missed it by a lot for reasons that are NOT supported by the size of the lot upon which the 2-story houses are being built. The lots are big enough to build a house that meets or exceeds our HOA's "minimum" restriction.

The "Partial Assignment of Declarant's Rights" written by the old developer/Declarant with input from the new builder, I'm sure, only allowed the new builder to do things that are "reasonably necessary" to facilitate the sale of the lots. For example, contrary to our HOA's restrictions, in the partial ssignment, the new builder was allowed the right to build a TEMPORARY sales office, not one housed in a model home. EVEN the old developer can NOT change "restrictions" that destroy the general plan of our subdivision, and from what I've gathered, the old developer/Declarant no longer wants anything to do with our subdivision. That train left the station at the time the "Partial Assignment of Declarant's Rights" was negotiated, written, signed and finally recorded almost a year ago.

In our CCR, the prevailing party's reasonable attorney's fees are reimbursed by the non-prevailing party, and given all of the above - Florida "Public Policy" and supporting case law, the blatant disregard for our HOA's CCRs' "clear and unambiguous" mimimum restriciton that in no way, shape or form was "reasonably necessary" to violate, the fact that our old developer/Declarant no longer wants anything to do with our subdivision (it's in the past!) and even if he did, he too can't trump Florida "Public Policy" and supporting case law, I find it hard to believe the new builder has a legal leg to stand on.

The new builder's people have been huffing and puffing and dragging their feet. Their huffing and puffing has scared a few of the residents in our subdivision into cowering before them and say to the rest of the homeowners, "Let's not piss off the builder," but that's FEAR talking, not the facts as I understand them!

And given the fact that nothing has happened to the 2-story houses in almost three(3) weeks, the new builder knows one or more of his employees screwed up, and that he doesn't have the law on his side no matter how much his legal team is paid. I suspect the new builder's team has been in CYA mode since they were "advised" the 2-story houses they are building violate our HOA's CCRs(CCR = Contract).

After the debacle that occured in Florida's housing market after 2008, the Florida legislature updated its Homeowners Association laws in 2013. Thank God I live in Florida!

I've HEARD our nation, including our state, is ruled by laws, not men. We'll see!

TimB4 (Tennessee)
Posts: 21,062

Posted:

Henry has now started three threads, (this one, Declarant vs. Manager of HOA and HOA PUBLIC POLICY in Florida)on the same issue.

I'm not sure why the three threads and I'm not sure why the discussion is continuing.

The issue, as I understand it, is that a new builder started building three homes that don't meet the required square footage on the main floor as outlined in the existing CC&Rs. Everyone here, and the legal opinion obtained by Henry, agree that this is a violation of the CC&Rs. Henry has already stated that he can not afford the legal battle himself and that the neighbors he has spoken to about the issue are not willing to fund a legal battle over the issue either. Henry (or someone) brought the issue to the Associations Board who, based on Henry saying the work has stopped on those houses, apparently brought the issue to the builder.

It appears that Henry is now concerned that the new builder may simply amend the CC&Rs to allow smaller square footage. Henry is concerned that such a change may or may not have an adverse affect on his property value. Regardless of Henry's concern, the actual change has not yet occurred.

As I stated in a different thread, I don't think that it's realistic to believe that the builder will simply tear the houses down without a court battle (which Henry has said he can't afford). It is possible that Henry's Association will take legal action, but this will need to be funded by Henry and his neighbors (through assessments) and it's possible that the membership won't support such a fight. Based on Henry posting that his neighbors don't want to fund the expense, I would expect that the membership in general wouldn't want to fund the expense either.

Therefore, realistically, and I'm not saying that it's right or wrong - I'm just being realistic, the houses will likely continue to be built in some form or another. I did point out a possible solution of adding a room or two to the existing plan so the minimum square footage is met. However, this compromise will cost the builder time and money (drawing the new blueprints and getting new building permits), may cost the builder a buyer (as the buyer may not be willing to pay for the extra rooms) and may even require defending some legal actions for breach of contract (if the buyers bring such an action).

With all of those possible problems, I can see why the Builder may simply choose to amend the CC&Rs if allowed to do so. Now, if Henry believes that such a amendment would violate State statutes, being a civil statute vs. a criminal statute, Henry can certainly bring legal action against the Builder to see if the amendment can be stopped. Unfortunately, Henry has already said that he doesn't have the funds to exercise that option. Therefore, as I said, realistically, the houses will likely be built.

So, other than to perhaps have someone agree with him, I'm not sure why Henry started three different threads on the same issue.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By TimB4 on 05/18/2014 2:44 AM
Henry has now started three threads, (this one, Declarant vs. Manager of HOA and HOA PUBLIC POLICY in Florida)on the same issue.

I'm not sure why the three threads and I'm not sure why the discussion is continuing.

So, other than to perhaps have someone agree with him, I'm not sure why Henry started three different threads on the same issue.

To paraphrase a quote (that has been incorrectly attributed to both Einstein and Franklin), The definition of insanity is asking the same question over and over and expecting a different answer.

Escaped former treasurer and director of a self managed association.

HenryM4 (Florida)
Posts: 36

Posted:

The questions I posed in "Declarant vs. Manager of HOA" were never answered.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By HenryM4 on 05/18/2014 3:34 PM
The questions I posed in "Declarant vs. Manager of HOA" were never answered.

Actually they were:

Larry's answer to all of those questions was:

"The issues you have raised are very specific to documents that we have not seen. Since this is an issue that may effect the value and marketability of your home you would be best to consult with an attorney and let him review all the relevant documents. "

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Henry

I believe you are shopping for answers/replies that you want. While many of us think you might have a case, when push comes to shove what we think means squat.

Unless you (and some others) are willing to put your money where your mouth is (meaning seek legal advice), you might well win the Internet posting battle (all agreeing here with you) but lose the war when the "smaller" house construction goes forward.

I lost a job one time and when I said to the President of the company but I was right. He replied yes you were right, but you were "dead" right.

HenryM4 (Florida)
Posts: 36

Posted:

I AGREE with you.

And the NEW BUILDER's workers re-started work on ALL three(3) of the 2-story houses early this morning. They are moving fast because the 2nd story is almost framed in, and it wasn't yesterday!

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Before you sue, you should investigate what he might do to get his houses built. Think like him. Can he just change the CCR's and your lawsuit would be for nothing?

HenryM4 (Florida)
Posts: 36

Posted:

Based on my understanding of Florida PUBLIC POLICY and Florida case law and the fact that in the Partial Assignment of Declarant's Rights, the new builder was only given the right to do what was "reasonably necessary to facilitate the sale of lots," we think the builder has gone far beyond doing what is "reasonably necessary."

The lots these 2-story houses are built on can EASILY accommodate houses that meet or exceed or "minimum" restriction. The builder made a CONSCIOUS decision to do whatever was best FOR HIM to "faciliate the sale of his lots," the existing homeowners and their HOA's CCRs be damned.

It's my understanding that "Clear and unambiguous" restrictions are ENFORCED by the Florida courts.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Henry

I am not nor do I play a lawyer.

I would "reasonably necessary" is far from "clear and unambiguous". I would say they are darn near polar opposites.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Again, you need to put yourself in the developers shoes and think of what he might use for a defense. It would be very easy for the developer to show that there are no buyers for McMansions anymore now that the real estate market crashed and therefore building smaller homes is reasonably necessary to facilitate the sale of lots.

HenryM4 (Florida)
Posts: 36

Posted:

The builder CHOSE to buy the lots in our subdivision. He has a legal staff that knows what can and can't be done in any HOA community. And now, after what seemed like a steep learning curve, so do I, at least, I know enough to know what the builder is/was doing is/was wrong!

When do you want me to give the builder $50,000 of the equity in my house, now or later?

BTW, if the builder knew he was right, he wouldn't be volunteering to add square footage to the 2-story houses in question. Yes, he's going to ADD square footage to them so they'll abide by our HOA's restrictions. That GOOD news came around noon today!

I can feel the calm after the storm!

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

So all is good? Your happy now?

HenryM4 (Florida)
Posts: 36

Posted:

All is good, and I am relieved. At this point in my life, the less I have to deal with situations like this one, the better.

Thanks to HOATalk, I realized I was going to have to do my DUE DILIGENCE, read, read, read, study, study, study, learn as much as I could from my HOA's "governing documents," ("governing documents"? What are they?), a developer's rights, my rights, my state's statutes governing HOAs (You mean there are statutes governing HOAs?), to the point where I could begin to ask what I thought were reasonable questions and/or make sense of everything I was trying to tie together. If I sounded like I was going around and around, it's because I was going around and around! I knew nothing! I was starting from scratch. It didn't help that I felt UNDER THE GUN!

However, it did help that I have a brother who is a lawyer. He provided some case law to me through a tool called FASTCASE. Using FASTCASE, he could search a legal database containing previously settled cases. Using words and boolean operators like AND and OR, you create a search argument. With a search argument like

Covenants AND Restrictions AND (amend OR modify OR vacate),

you can find all previously adjudicated cases that contain all the words in your search agument. You have to read/scan each case to see if it pertains to your issue. You may even have to change your search argument so the cases that are found are better related to your particular issue.

With a search arguement like

Clear AND and AND unambiguous

you can find every case that has those three words in it somewhere, not necessarily in that order, meaning not ncessarily "Clear and unambiguous".

Now I think I know enough to take my FIRST HOA class - HOA 101.

Thanks for everyone's help. I hope some of what I learned and wrote about helps others. Slowly it all started to come together/make sense. The more I learned, the stronger I felt about my chances of winning in a court of law.

Like I said in this discussion or another, I think you have to know the law almost as well as "your" lawyer IF you want to get the best results FROm "your" lawyer and FOR yourself. If you don't take the time to understand the law as best as you can, you could be throwing money down a rat hole. I've been there, done that! "Never again" is my motto!

BanksS
Posts: 403

Posted:

Quote:

Posted By HenryM4 on 05/19/2014 6:30 PM

Like I said in this discussion or another, I think you have to know the law almost as well as "your" lawyer IF you want to get the best results FROm "your" lawyer and FOR yourself. If you don't take the time to understand the law as best as you can, you could be throwing money down a rat hole. I've been there, done that! "Never again" is my motto!

I certainly agree with you. One should always do as much research as you can even when hiring professionals to help you.

By the way, I'm happy to hear your issues have been at least partially resolved.

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