Declarant Questions

Started by NpS • 7 replies • 1900 views

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NpS (Pennsylvania)
Posts: 4,216

Posted:

Many posts have said that, prior to transition, the Declarant is in total control. Since I have no experience with this, I wanted to understand whether there are any limitations. Would appreciate answers to the following questions.

1. Can the Declarant record a modified set of CC&Rs after some houses have been sold?

2. Can the Declarant add or remove HOA obligations after the CC&Rs are filed?

3. Are there restrictions on how much the Declarant can raise fees while in control?

4. Are there any statutory provisions that protect a buyer from winding up with a totally different HOA that she bought into?

Sikubali jukumu. Read all posts at your own risk.

MikeL13 (South Carolina)
Posts: 83

Posted:

I don't know about the rest but the answer to number one is yes.

GlenL (Ohio)
Posts: 5,491

Posted:

1. Usually, I believe there are one or two states that have limited this and if there is a VA mortgage, I believe they ban changes.

2. Not sure what you mean by obligations but if you mean amenities like clubhouse, pool etc. I would say could be added but not subtracted.

3. Not to my knowledge. Usually the reverse is more apt to happen, by keeping the fees artificially low to sell units.

4. Not to my knowledge as a HOA near me found out when the McMansions stopped selling and the builder went to the Zoning Board to resize lots and reduce square footage. The H/O's protested but all the ZB was interested in was did the requested changes meet code. They did and so the changes were approved.

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

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By NpS on 09/19/2014 6:02 PM
Many posts have said that, prior to transition, the Declarant is in total control. Since I have no experience with this, I wanted to understand whether there are any limitations. Would appreciate answers to the following questions.

1. Can the Declarant record a modified set of CC&Rs after some houses have been sold?

Once he has sold just one lot he has bound himself (and the buyers) to the terms of the CC&R's. Therefore, he could not just slip in a new set of CC&R's as the buyers' deeds will reference the original covenants. He could, however, force an amendment if he still owns enough lots to satisfy the percentage required to amend the CC&R's.

Quote:

2. Can the Declarant add or remove HOA obligations after the CC&Rs are filed?

Unfortunately, while he controls the HOA he could enter into contracts that would bind the association and its members for all eternity. (A recent thread on this forum was about a developer who used his control of the HOA to enter into a lease between the association and the developer for the common areas.) It is not likely that agreements that bind the homeowners to something not set forth in the CC&R's would withstand a challenge in court, especially if the agreement benefits the developer while he controlled the board.

Quote:

3. Are there restrictions on how much the Declarant can raise fees while in control?

This would be controlled by state law. Developers often keep the fees artificially low to appeal to buyers. In my state an association under declarant control would face the same 20% increase limit that any other HOA would face.

Quote:

4. Are there any statutory provisions that protect a buyer from winding up with a totally different HOA that she bought into?

Not sure about statutes but contract law would prohibit the developer from forcing homeowners to join an association not set forth in the CC&R's. Some and maybe all states prohibit forcing anyone to join an association against their will.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Thanks Mike Glen and Larry.
I never realized how treacherous being an early buyer could be.

Sikubali jukumu. Read all posts at your own risk.

LarryB13 (Arizona)
Posts: 4,099

Posted:

NpS,

By far the most important lesson I have learned from this site is to use caution when buying into an unfinished development because despite everyone's good intentions at the beginning things can and do happen that ruin everything.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By NpS on 09/19/2014 6:02 PM

1. Can the Declarant record a modified set of CC&Rs after some houses have been sold?

Typically, the Declarant holds the voting power. Therefore, they typically have the votes to amend the CC&Rs and any other governing document. They would still have to follow procedures, but the result would most likely be that the documents are changed how the Declarant desired.

Quote:

Posted By NpS on 09/19/2014 6:02 PM

2. Can the Declarant add or remove HOA obligations after the CC&Rs are filed?

See answer to #1.

If the obligation is within a governing document and the Declarant controls the voting power, then the governing documents can be changed to remove the obligation or add a new one.

Quote:

Posted By NpS on 09/19/2014 6:02 PM

3. Are there restrictions on how much the Declarant can raise fees while in control?

As others have said, this would depend on your State statutes.
However, if the limit is within the governing documents, see answer to #1.

Quote:

Posted By NpS on 09/19/2014 6:02 PM

4. Are there any statutory provisions that protect a buyer from winding up with a totally different HOA that she bought into?

This would vary by State and something that would likely need to be answered by an attorney versed in the applicable laws of that State.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Thx Tim. Scary stuff.

Sikubali jukumu. Read all posts at your own risk.

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