Developer owes HOA Money... HELP????

What State?

I would think the lien is your only choice, but at the same time there are requirements for liens and I don't think you meet them.

I know you don't want to hear this but you need to contact a lawyer. See if you can find someone who either lives in the community or someone in the community might know. The complication sounds like the promises (wheither verbal or written) are not related to the houses to be sold.

I might be wrong but I would erroring on the side of caution. The Association can be sued if you place a lien on a house and you don't have the proper documentation or cause. One of the constants in the world is that deadbeats know the rules and will use it against you if you aren't careful. So if and when you get a lawyer make sure to sue for the legal fees as well.

Gina:

I would file complaints with anyone that will listen. I agree with the other Brad that I don't know that you have the right to lien right now. I think you should explore your legal options. Chances are if he has liquidated himself though he knows he is in the wrong and is preparing to withstand the backlash.

Hi Gina:

If he owes $10k cash and $10k landscaping, then he owes $20k. Even if your lawyer cost $18k and you got $20k with no legal fees from the developer, you'd still be ahead by $2k...

The lawyer will be able to guide you through the process and choose the right avenues to pursue.

J. Patrick Moore, CMCA

Hey,

I am having a similar situation. Our developer is our builder and he hasnt completed our subdivision either. There are empty lots with holes and debris and at one point the company that was collecting our assoc dues, stopped. They told us to stop sending them payments. Now after 7 months they send us a bill for back dues. We are in the process of seeking legal action because most of us don't have grass, or sidewalks. The attorney we spoke with said that he couldn't find any record that the association even exists, all the records he could find said that it was dissolved. Also, is it normal for none of the residents living in the community to not be on the association? We need help desperately!!!!

Hi,

Sorry this was my first post. Thanks for the reply. I live in Illinois. This has just been a nightmare. Several of us have filed complaints with the Attorney Generals office.

Unfornately, HOA's are essentially "Sales tools" used by developers to sell the property. It sounds "great" that a homeowner is supposedly "in control" of their neighborhood and can keep their property values up by enforcing "unity". The homeowners are also attracted to the amenities many of these developers offer. It's MUCH MUCH cheaper and easier to have one large community swimming pool than each homeowner having one of their own. Having clubhouses, sports areas, walking trails, lakes, or other special areas is always a great idea on paper and in the paper.
However, once the developer has developed the land to pre-determined quantity, the developer wants to move-on. There's NO money involved for a Developer after the intial investment and development. They make their money from the "front end". If a developer can buy the land for $100K and put 10 houses on it and charge $20K per lot, they've doubled their money. (Except Minus amenity costs). Amenities are usually a small price for them to pay if they are selling the lots at a high rate. Basically, amenities come out in the wash for developers. If the developer does NOT turn the community over to the homeowners, the developers get stuck maintaining and paying for amenities use/replacement. That's money draining out of their pocket. Hence, if they hand over the community to the homeowner's the homeowners are now responsible for paying and maintaining the property.
I wanted you all to get an idea of what has been going on before the HOA was officially "born". HOA stands for HOMEOWNER's ASSOCIATION. That means that ALL the homeowners in that community agree to abide by, create, modify, and live by agreed upon set of rules (CC&R's) to keep home values up. Essentially, ALL the homeowner's own an interest in their community. Basically, the homeowner's are shareholders in a corporation. HOA's are funded by the homeowner's for the homeowners. Whatever is collected in, must be spent out on the maintenance and operational costs of the HOA property. HOA's collect money by collect dues/fees or special assessments divided equally amongst ALL the homeowners.
The situation that your HOA is in, is that the developer promised amenities and never delivered. Most likely they ran out of money and was never able to fully sell ALL the lots. The developer then decided that they could hand over the community to the HOA (Homeowner's) and have the homeowner's be responsible. The developer no longer has the controlling interest in the community. That puts the HOA in a bad situation. The homeowner's now have to make up the differences or put in their own amenities if they still want what was "advertised". If the developer still owns land in the HOA, the only option may be to lien against them for UNPAID dues like any other homeowner. The developer is at the point where they may have to be treated like a regular homeowner and face the same lien/foreclosure consequences as any other member would. That may be the only avenue to pursue at this point. Hiring an attorney means money has to come out of every members pocket if everyone wants represented equally in the HOA.

Yes Gina,

The AG responded to some of the residents. We have asked for a copy of the balance that is in reserves, the company responsible for collecting the dues hasn't provided it to us. They just send bills and we don't know how the money is being spent. In our by-laws it states we should have snow removal of private drives and sidewalks and when we brought this to their attention they said they weren't aware of this and the monthly dues do not cover snow removal. "Well it's in our by-laws". We are afraid that if we pay the back dues they say we owe, the money will go into the developers pocket and not towards any of the work that is supposed to be done. The attorney we talked to said the records that he was able to find, said the association was dissolved. How can we find out if this is indeed still in existence?

Gina,

as Gloria said, start with the local government to see if any completion bonds are being held by them. Next, Michigan has no HOA law, so unless you can prove some type of fraud the AG probably won't get involved. By all means find a local attorney (drop me a note privately, I'm in SE Michigan and I can give you some names and numbers). They will probably want to place liens on all of the properties, with the thought of foreclosing as soon as possible and selling them to cover the needed repair costs.

Joe