Developer will not post bond for the streets

Started by JosephB7 • 5 replies • 1243 views

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JosephB7 (North Carolina)
Posts: 11

Posted:

NC development with 4 phases. Developer #1 completes Phase 1. Developer #1 looses remaining property to bank in 2010 and new Developer #2 (large national builder) takes over to complete Phase 2,3 & 4. Developer #1 tries to turn over roads in Phase 1 to city but city tells Developer #1 that they must post a bond to ensure that the city doesn't get stuck with roads that are in need of repair. Developer #1 tells city that they are unable to post bond and has walked away. Developer # 2 tells city that they are not responsible for Phase 1 roads.

It looks as if both Developers will try to pass the roads in Phase 1 to the HOA at turn over. Phase 2,3 & 4 will be completed with Developer #2 posting bonds for the roads in their completed Phases and turning over to the city.

Developer #2 controlled HOA with Developer #1 working as sub contractor / advisor to Developer # 2.

Could the homeowners bring suit against either Developer to force them to post the bond and have them assume the liability ? Could the cost for the suit be paid by the HOA that is controlled by Developer #2 ? $450,000 HOA budget that is fully funded.

I don't believe the homeowners should bear the responsibility of posting bond and assume the liability.

Your thoughts would be greatly appreciated.

GlenL (Ohio)
Posts: 5,491

Posted:

All excellent legal questions, you should contact an attorney and not rely on a internet forum for legal advice. For instance I'm not an attorney but I would say that the Homeowners would not have access to the $450,000 until turnover however the developer who I assume is still in charge does and could use it to defend a suit.

Studies show that 5 out of 4 people have problems with fractions

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

I don't believe the homeowners should bear the responsibility of posting bond and assume the liability.

How you feel, and the reality of the situation are two different things. When all is said and done, it looks like the homeowners will be paying for the road construction as there is no one else left to pay or sue. Your it.

Never buy in an unfinished development. Lesson learned.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Joseph

Many out here, myself included, can give all kinds of advice but your association is between a rock and an expensive hard spot.

Basically I dislike lawyers, but it is time for you all to lawyer up. My advice is talk to those in Section 1 and put a "war chest" together and retain a lawyer to advise.

With politicians, pressure and "donations" can help as in getting them to have the bureaucrats accept the roads. I am not saying go to the bribe.....but.......

Hope this helps.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

have the bureaucrats accept the roads.

The city could also choose to accept the roads.......... but create a special tax district and charge only the homes in phase 1 an additional tax to build the roads. Might be an additional $2000 per year or whatever added to your property taxes. When you try to sell, this will definitely impact the price of your home because the taxes will be much higher than any other house in town. Food for thought....

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By SteveM9 on 05/29/2014 4:27 PM

have the bureaucrats accept the roads.

Interesting idea from Steve. I believe the OP said the roads were built but the city is hesitant on accepting the roads as they may have not been built properly and could cost the city money down the road. Maybe the answer could be an expiring tax district. Meaning additional taxes for a period of time versus forever.

Should be looked into before the "donations"..........LOL

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