Wrong CCRs put in place

Anyone ever been involved in an HOA where the wrong type of CCRs were put into place and recorded?

I have run into a situation where the home builder apparently either asked their attorney or an HOA attorney for a set of governing docs and they were given a set for a condominium complex, even though these are single family homes.

The consequences of the wrong set of CCRs was that the association had to have all the buildings insured at a rate twice what it would be if they were listed as single family homes.

None of the homes shared any common elements with the exception of the driveway in front of their homes. None of the buildings were connected, all utilities were separately metered. 7 homes were paying $16K annually for fire protection. In a couple of cases, even though the CCRs forbid it, homeowners had duplicate policies in place.

Builder is out of busness and lawyer does not return phone calls.

Unfortunately, it is not as simple as amending the CCRs. They have to be a new set put into place as much of the document is tied together with references to different exhibits.

They don't have an HOA attorney as they are 7 units. They were living, so to speak, paycheck to paycheck, dues wise.

This may be a tax issue. Check with Tax Assessors office. Sounds strange but it happened to me in our patio homes. A few of them did share a wall but most were separate. There were no qualification for Patio Home. It was either condo or single home. Which did not fall under single home due to shared common property...

You can still modify and refile the existing documents. Just wanted you to be aware of why the documents may be why it was done the way it was.

RichardP13,

How is the “Unit” defined in the Documents?

Good suggestion Larry.

For Ellie:

"Unit" means the elements of a Condominium that are not owned in common with the Owners of Condominiums in the Project; such Units and their respective boundaries being shown and particularly described in the Condominium Plan, deeds conveying Condominiums, and this Declaration. A Unit consists of all the land within, and all improvements now and hereafter constructed within the boundary lines of the Unit and does not include other interests in real property that are less than estates in real property, such as exclusive or nonexclusive easements. In interpreting deeds and plans, the existing physical boundaries of a Unit, or of a Unit reconstructed in substantial accordance with the original plan, shall be conclusively presumed to be its boundaries, rather than the description expressed in the deed or Condominium Plan or regardless of minor variances between boundaries shown on the Condominium Plan or in the deed and those of the building and regardless of settling or lateral movement of the building. Whenever reference to a Unit is made in this Declaration, in the Condominium Plan, in any deed, or elsewhere, it shall be assumed that such reference is made to the Unit as a whole, including each of its component elements.

Here is the dilemma as I see it. The CCRs have a maintenance schedule along with a 43 page "Home Care Guide", which outline all maintenance responsibilities of homeowner/association. For instance, the association shall perform inspections of each of the buildings roofs, balconies, and planters annually, with the drains and drain lines semi annually. The repairs are the sole responsibility of the homeowners. Utilizing the maintenance guidelines, the owner is supposed to perform specific inspections and repairs by season. If the homeowner doesn't inspect and/or repair, the association may exercise its right to enter the unit to make the inspections/repairs and bill homeowners accordingly.

The insurance section states the association shall insure all buildings and the owners may not have duplicate coverage. An ethical agent would have questioned the CCRs. The new agent put into place the exact policy at 25% of the cost of the other.

So, bottom-line, the association shall inspect, the homeowner shall repair and the association shall insure all buildings. I wonder what workers comp would cost with that mess.

Most likely what will happen is someone will take the old document, gut out the bad passages, insert proper language in a couple of key areas, maintenance and insurance and have an attorney friend vet the process. Because of minor common area concerns and assessments, there must be CCRs in place.

All 7 homeowners are on board with the changes.

Larry,
Are you suggesting what I think you are suggesting? No CC&R's, thus no HOA.

Richard

If there are only 7 it should be easy enough to accomplish what ever want they to do if hey all agree. Seems it would simply be a cost item.

Assuming that these are fee simple lots without a common area there would be no need for an HOA. (I currently live in a development with CC&R's but no HOA.) If you have only 7 homes in a subdivision that is already completed, there is little need for CC&R's unless you just cannot live without a means of hassling your neighbors because they put their garbage cans out an hour early.

When I was growing up decades ago in the Midwest, CC&R's were almost unheard of. When they were used, the most common purpose was to keep the undesirable elements out. You know, Blacks, Hispanics, Italians, Russians, Jews, Democrats, etc. Neither I nor anyone I knew at the time lived in such a development and saw no need for those kinds of restrictions.

Banks

You said:

Our County codes are pretty restrictive as it is. One can't even put up a garage or storage building on a vacant lot unless it has living quarters attached.

Does mean I can put up as many of those "structures" as I wish like on a vacant lot as in slum housing?

I would assume in a farming region I could get the local authorities to go along with such as I need a place to house my seasonal workers.

Well maybe out in the country is OK but do I such where I live? Maybe this is why I want "restrictions" about where I live.

Things are not as black and white as you seem to think they are.

Larry,

One lot, seven units.

Actually, where I live, there is one lot, 82.4 acres, 317 units, single family homes, detached.

Larry

This is in the City of Los Angeles and there are hundreds of these types of developments. I have managed about 6 of these types and the CCRs for those have always been detached single family homes. Someone put the wrong docs in place. Hoping the attorney provides the right ones or there could be litigation because of the insurance.

Richard,

The community should jump through the proverbial hoops and not all unreturned phone calls to dictate correcting a huge, alleged, error by the attorney in filing the CC&R's. Everyone seems on the same page so, with effort, this be corrected.

If all buyers bought homes and fully accepted the correct CC&Rs (though mistaken ones were actually filed), the process could be tad easier. Never heard of this but hiring a community lawyer really shouldn't be ignored. This issue truly exceeds the limits of most of us that chatter on HOATalk forums.

If you have one lot with seven units … I would agree with Larry. If you have managed other of these type developments, the question would be did their docs have the development platted on ONE LOT or MANY LOTS. This fact is potentially what will make all the difference. If everyone owns the one lot vs. everyone owning their own individual lot … then you are potentially considered condo NOT single family. In most states a "Unit" is defined as the property for which boundaries are defined. In a single family subdivision in most states a "Unit" is a LOT because the boundaries for each persons property is defined by the lot dimensions.

Richard:

This is not an easy fix as you seem to believe. The issue you have is your own above noted statement. Because you have many owners who own one piece of "Real Property" you are considered a Condominium Project and not a Planned Development. Your owners do not own separate interests in separate pieces of "Real Property" they have combined ownership of one single piece of property. You cannot just change your documents without potentially defrauding everyone's secured creditors who also have rights based upon how this was initially set up.

As noted by Janet, I don't think you'll be able to change from a condo to anything else. To break it into separate lots could require a morass of utility easements and the like. It's hard to say if the now separate lots could even be legally documented.

There's a reason the lawyer isn't returning calls.

And you're sure those aren't separately deeded residences inside a HOA, and not a condo like you own.

Furthermore, the shell of your "home" is probably owned by your condo association, so there really isn't anyway to separately insure it.

Both these and mine are deeded the exact same way.

http://www.davis-stirling.com/MinimumLevelsofInsurance/tabid/1255/Default.aspx#axzz3NhLrZ1Cn

The overlapping insurance as described in this link is probably why your docs state owner is not to purchase:

http://www.davis-stirling.com/MainIndex/PrimaryInsurance/tabid/3238/Default.aspx#axzz3NhNyisNQ

Larry offers very good advice and I would agree with his thoughts.

Are your neighboring parcels condos?

Then why didn't you catch that these were a condo, and you referred to them as SFR in your first post. A professional would know that a SFR is just a type of construction.

Richard, you've obviously made up your mind the direction to go, even though the people you've asked disagree with what you are planning, so I wish you and the homeowners luck. I would strongly suggest however that they hire competent legal advice and not rely on "having an attorney friend vet the process."

Food for thought: You insist this is the community that got it wrong and the others got it right, looking at the picture you posted, I would disagree but the insurance agent wouldn't have written the policy, in fact couldn't have written the policy if there were not a legal basis to do so.

Richard,

As I understand it, the CCRs are generally messed up and need updating. You suspect that the original attorney screwed up.

Your solution is to restate the CCRs to correct these issues:

1. expensive insurance requirements
2. weird, awkward inspection and maintenance requirements (43 pages)
3. opportunity to update other things

I'm assuming that you will not change from condo to HOA, due to all the difficulties expressed here.

Glen

The majority of the posters, including yourself, have suggested amending, or legally "restate" the doc. Where is the disagreement?

The law of probability would suggest that in 8 developments, if 7 had one type of doc and the last one had something different, the general consensus would be the one got it wrong, not the other seven.

When I pay $10K for a master policy covering 317 homes and 82.4 acres and another cost $16K for 7 homes and maybe 1 acre, I tend to question. I may be wrong, but I do question. I owe that much to a client.

I am sure everyone's governing docs are above reproach and without flaws.