Can our HOA sell unused, excess land?

I am new to this forum and have not found a discussion on my question. Some background. I live in Georgia and am a HOA member in a 189 member development. The HOA is 14 years old. Over 10 years ago, as the developer moved out, a parcel of land was deeded to the HOA. This parcel is about 11 acres and sits to the west of our development. The documents filed at the courthouse describe the property as "open space". It actually has a seperate street address and receives it's own property tax bill (less then $50 a year). It is NOT listed as or used as a HOA common area. All of our HOA amenities are near our entrance area. All are cleary noted in documents as common use areas and on a seperate tax and deed documents.

The 11 acres is not accessible to our community. No road, no path, no walking trail, nothing. A stream and flood zone area sepaerates us from this property. I suspect it was purchased by the devloper as part of the original land purchase but they decided not to develop it.

The property can be accessed by leaving the community and driving 2.7 miles to a GA. State Hwy. The land sits beside this highway. You can't see or even hear any activity from our community from it's location. It's wooded and looks to have about 8+ acres of land suitable for home construction.

We have no resources to "develop" the land. I chaired a Property Review Committee late last year to look at options. We got a ball park assessment that the current value was $600K+. The land is zoned R30 (residnetial).

We suggested the property be put up for sale and the money go into our reserve fund. One attorney said we can't sell it. Says it requires 100% vote to do so. I've nudged the Board to look at options. They seem to not be interested (to much effort IMO)

Any suggestions? It just sits there, unused. Few homeowners even know we own the land. The sale could be a big windfall for us. I maintain the property is NOT common area. It's actually a residentail lot and marked as open space on the plat and a residental lot on tax records. Suggestions would be welcome.

What is his reasoning for the 100% approval?

Such a requirement would be found in either the statutes or the declaration. I am always suspicious of off-the-cuff advice from an attorney because I have found so many whose advice is wrong. I make a point to ask attorneys for a citation to the authority they rely on.

Great question. I don't like attorneys and avoid them whenever possible. First when my 3 person HOA approved committee took this study on late last year we looked at the HOA covenents and found nothing that suggested 100% approval. Most of what we had seen dealt with 2/3" approval, some only 50%+1.

The attorney did provide a GA court ruling but as I read it (and I'm not a lawyer) it seemed to address HOA owners access to a lake and suggested the lake was common grounds for use and recreation. I do understand that. His feeling was the 11 acres were also common use.

Our situation deals with a piece of property not designated on any document as Commom Use Grounds Property. Our Clubhouse, pool, tennis courts, etc are shown on plats and in documenmts as common use grounds. This specific property was intended for residential construction. It is zoned for that R-30 (in GA) and the plat maps show it as R-30 property. The deed and plat from the developer shows it as R-30 "open space". It's a stream and woods, which we can' get to because of the stream. County records reflect the same thing. R-30 zoing and just open space. (the lots were never devloped because the devloper saw the cost to bridge the stream and the flood plain. They are long gone. Out of business.

I am looking to speak with another local attorney that may say based on documents that it was in fact residential lots, never developed and can be offered for sale. Just trying to see if anyone has done it in the past few years.

Yes, you may be correct. I'm hearing that. I'm banking on the GA Code that discusses Common Area definitions and use. This property IS NOT shown as Common Area, it never has been. It's deeded to the HOA but it's listed as a residential street address on the deed, on the property tax/land description records and on the plat. The words Common Area are on other plats that have our Clubhouse, Tennis courts, pool, etc. This property, which is on the opposite side of the HOA community is listed as Residential R-30/open space. It's intent was to build more homes on but they never did. Wooded and not accessiible from our homes.

GA Code also says (if I'm reading it right) that you send those that must give a yes/no vote a certified letter. If they do not respond in 30 days then the vote is deemed to be Yes. Of course I'm not a lawyer. I just would like to dump the property and get some funds to improve the Common Area.

DennisG7 (Georgia) :

Your HOA should immediately make sure that the master insurance policy explicity underwrites the public liability risks of that remote site if there is any possibility it is not identified and incorporated with common land. Think "bandit" toxic waste dumping or underage kids racing on dirt bikes or whatever darn thing just waiting to bite you in the butt.

Next better make sure that your HOA -if not a statutory realty vehicle like a condo - has incorporated authority to own and ultimate lease out or sell that remote site. What is its approved zoning again ?

> I just would like to dump the property

If you sell the property without required owner approvals or for a low price you would not be using good business judgement. You would be open to suit from an owner who decides they oppose the sale or believes you should have received a better price.

Thanks for the suggestion. I have told our Board that we may have some significant liability issues. Injury, dumping, toxic stuff, lack of posting private property, etc. Most of that discussed last fall. I assume that they are either covered ;) or they are not real concerned.

I've been here since year 2 and am not real excited about the board. Never have been able to get them to do much about issues. We have a nice hood, 300K-375K homes. Since the original build out not a lot done to improve stuff. We have a pretty decent reserve fund but a discussion for getting some overhead cover and seating outside of the tennis courts has been "in review" for nearly 4 years. Oh, I don't play tennis, I'm retired military and just tend to my yard and walk my dogs.

Same Board President for 12 years. Scares me. A brand new treasurer a couple weeks ago. The last one never attended meetings. I emailed her today and asked if there has EVER been a financial review much less an audit. Not to anyones knowledge. Not suggesting anything is screwy but seems to me to be pruedent. I've gotten off course.

My 3 person team spent about 32 days pulling this written land use report together on options, maps, zoning, tax,and even chatting with a couple of brokers about land values. Presented a pretty nice report with photo's, aerial views, etc. Took the Board until May to tell us they were not doing anything. We submitted our report 30 Sep. Very frustrating.

Agree. We don't need to give it away. It's been there since there was dirt. We've had broker give us an informal assessment. Also had an apprasial done. All that was a led up to us presenting to the board last fall. The Board will have to accept the offer, if one is made.

The written opinion from a "private" county apprasial company states that the "estimated land value is $695,180.00" I got this from the appraiser who does work for the county last fall.

I too felt that the attorney was maybe mixing apples and oranges. In using this citation. This property had nothing to the value of the community. It may be a liability.

The land is identified and recorded as a different plat and listed in the Quit claim deed from the developer as "tract 4 open space 11.84 acres" It is in a separate plat book and page dated a couple of years after the community was being completed. The HOA Common Area is also clearly listed at the opposite end of the community. They built out from east to west. When they got to the stream they stopped. Thee 11.84 acres on the other side has sat vacant. Most of the community doesn't know it's our land.

It appears that deeded 4 separate tracts as they built out. This being the last. It was never developed at all. My guess is that they decided to fold up there tent when did a cost analysis on cross the stream and accounting for the flood plain area. Additionally the only way it can really be accessed is to drive out the community and take a couple of left turns for about 2.7 miles to get to the edge of the property. No sure why it was purchased but it have been part of the original purchase of land. Not sure. The developer is long out of business.

The county property records lists as a seperate parcel of "11.68 acres, with a street address. That's it. I'm for pushing this along but if the HOA Board doesn't want to do it, well it's been mentioned about every 2-3 years and zip has been done other then the report we handed over to the board last September.

The attorney is not even one we hired. They went to the Mgmt. Company and had them ask the attorney that's on retainer. I asked them if I could see the correspondence they sent him regarding this. They sent nothing, just asked in an email.

The case may be the closest thing to your situation that has been decided by an appellate court. With case law, you get the facts of the case that may be similar or different in various ways. Since the 11 acres is not on the same plat, I think the case would support your view that the ownership is separate from the community - not just physically but from a rights of residents standpoint.

One thing I don't understand is that the taxes on a nearly $700k property are only $50.

Not sure that the MC should respond to your request without approval from board. Think you may need to revisit how to get the board interested in your project. It makes sense to me. Why doesn't it make sense to them.

The county property assessment taxes are unreal. In 2014 the Tax Commissoner sent the HOA a tax bill for $1.06 (I am looking at it) for the 11+ acres. We do enjoy low taxes and good schools in the county. New homes about 1 mile from us are going up at mid 400's. Another community is planned on 30 acres about 3/4 mile and they are in the low-mid 300's, much like ours.

My ad hoc committe (3 of us) saw the sale as a windfall for our HOA. Our reserves are good but this would double them! Now to just get focused on finding an attorney that will give us a legal opinion that works.

I'm not on the board, never been interested as I think they move way too slow, I'd ruffle feathersSame HOA rsdident for about 12 years and although he's a nice guy I can't seem to get them fired up about this. They read an EMAIL opinion of one paragraph from the mgmt companies attorney and called it a day.

You folks are inspiring me.

Dennis

Dennis

IMO the land could be sold and the profits added to the Reserve or maybe to Capital Improvements. I also do not see all owners having to agree as I do not see it as "common property".

One tactic could be to get opinions on what Capital Improvements owners would like to see.

You seem to think like me. Last year we provided the HOA a road map on how to do this. We knew that an inducement was to get the members to ID the top 2-3 capital improvements they would like to have. Our tennis courts are in top notch shape, our pool was just emptied and redone about 2 years ago.

But there are some new items that could be considered. We suggested that members list the top ones and it could serve as a carrot to get get a 2/3's vote support That's what I think might be needed to proceed.

We gave them a list of 8-9 things that needed to be done to lay the ground work. To dte they only had the mgmt company contact an attorney and it's all stopped. I just found out about the attorneys respone about 6 weeks ago.

We delivered our report in Sep 2014. They asked the atty in March 2015, 6 months!!!. He responded via email in March. I ran into our HOA President in late May and asked how it was going. That's when I was told "It takes 100% approval..." I asked him to send me the attorneys response. Got that in June. So here I am.

Getting the members excited about a bigger picnic area or a new kiddie pool would help get support. We pushed this point last year. Nothing that I can see happened, except for attorney email.

Dennis,

This is a bit off your original topic, and you may have already thought about this, but . . . keep in mind that any new capital improvements will incur additional operational costs and long-term replacement costs. There may be impacts to your insurance premiums, property management costs, and other costs as well.

We're going through the same debate in my HOA. We have money that we'd like to spend on capital improvements; however, considering all of the associated costs, it's hard to pull the trigger.

Lots of homeowners want amenities, but paying for them to get built (which you may not have to worry about), operate, and eventually get replaced is not something they want to do. Plus people bought into an HOA with known amenities and known monthly costs. Adding amenities is nice, but a potential dramatic increase in monthly costs (while possibly something you're allowed to do) may not be received favorably.

Hm, sounds a bit like our community. After the store offer was declined, I suggested that we consider clearing out the excessive growth, as one of the trees fell in the street one year. Fortunately, someone happened by, hacked it up with a chainsaw (for firewood, I guess) and hauled it way. Even more fortunate - this tree didn't smack a car and/or passerby in the head.

Until this thread, I didn't know having this land could impact the master insurance, so I think I'll bring that to our board and suggest they check with the insurance carrier. Maybe that will encourage them to at least consider clearing the land of the overgrown trees, grass and who knows what else is in there. I'd suggested that once upon a time, noting the city was about to build some sidewalks in front of it and with the two bus stops that also went in, I was worried about some jerk hiding in it and then mugging someone (who would then turn round and sue the Association for negligence or some such). The response was - we'll address it if/when the city sends us notice ordering us to clean it up." Okie-doke....

I just checked our CCRs, they are silent on the issue except for:
"There shall be no transference of property rights to county or any other government entity without the concurrence of 100% of the owners."

It seems odd that it only mentions selling to government. This is interesting because we sold the county a strip of land outside our wall when they widened the road from 2 to 4 lanes, and we didn't have an owner vote on it. The board at the time made the decision. Of course, if we hadn't sold, the county would have condemned, so it's really moot anyway.

RichardJ7
You have asked a good question. I am a one of the "orignal" homeowners to our community. The property developer used 2 different builders to build it out between 2001- 2004. There were phases that started at the entrance and built out along a northern road and a southern road. If you take the letter Y and lay it on it's side. The base leg is the entrance and then it splits. My home was built on the southern side. At the end of the southern section behind the last area of homes is a stream that runs north-south. Beyond that lay the 11.68 acre "Tract 4" The area adjacent to the stream is all in a flood plain (about 3 acres) Beyond that the land rises up and is all buildable to GA State Hwy 92.

Both builders apparently opted not to continue the building accross the stream and up the rise.
The developer was not to be seen. They could have gone to the area and built out - perhaps some single family homes, but I guess the cost to install a new clubhouse, pool, etc was more then they wanted to deal with. My estimate is that about 15 homes could be built there. I have aerial maps, plats, etc and it is very buildable.

Anyway, the developer deeded the property to the HOA in August 2004. It is listed as Open Space and is recorded as a street address (Windflower)which is the main street in our community. Because it can even be seen from our homes and since there was no road built the site sits there unknown by many. The State Hwy runs N-S and acts as the far west border. I've made many visits as we prepared our Land Use Review Study for the HOA Board. There is a single fire hydrant on the main road, county water, a county sewage connection point about 250'-300' away, and power and phone lines. I think Comcast also has service in that area. Not a lot of homes but accross the hwy there is a small subdivision. The Hwy is the border between our county and the next one to the west.

The County Tax records list the area as "Open Space" 11.68 acres. The land has a street address on Windflower with an easement between to homes down there. The property description says it is Zoned R-30 (Residential) but the tax is dirt cheap for the entire 11 acres. Last year it was $1.06, Ive got a copy in our study.

Your observation may be correct about the tax but I've found nothing in the records that list it as Common Area. I think the developer opted out of building there because of the cost to cross this stream and continue new roads and utilite. My guess as they are long gone and the LLC went out of business a few years ago.

Bottom line is it has a street value of nearly $700K. After taxes and sales commission we still net around $320K or more. Nice profit to put in our reserve fund. A new builder/developer has property zoned residential and ready to develop. Unless I can convince the HOA to do something, we have a white elephant! I seem to be losing that battle. WIMPS.

Dennis -

The Cobb County tax records show that the parcel is being taxed as common property belonging to your HOA.

Section 5.3 of your CCR’s states that land transferred from the Declarant to the Association “shall thereafter be Common Property to be used and maintained by the Association for the benefit of its members.”

And, on page 10 of your CCR’s, it says:

5.4 Partition. The Common Property shall remain undivided and no Owner shall bring any action for partition or division of the whole or any part thereof without the written consent of all Owners of all portions of the property located within the Community and without the written consent of all holders of all Mortgages encumbering any portion of the property, including, but not limited to, the Lots located within the Community.

Good luck with that.

That was a nice find, Richard. Can paragraph 5.4 not be amended by a less-than-100% vote of the members?

Obviously you have tracked us down. I don't recall giving our name but I did give a street name. We are in Cobb County, GA, just northwest of ATL. Yep, I've said all along this is HOA property. It may be called Common Property and in fact require 100% ok. All docs call it "open Space" or a residential lo. Nothing says "common grounds" or "recreational area" The 100% may be tough to get past. Plus I've been told a few would not agree because they are at odds with the HOA Board. Heard that a few times since last year. There are a couple of issues that I still wonder about.

The original CCR does say on the front cover sheet that the HOA does not submit to the GA Property Owners Assoc Act. This CCR was done in 2000 when they formed and it has never beeen updaated or amended. Impact to us? Don't know. Why it was done? Don't know.

The CCR also says on pg 1 that the property described in Exhibit A is incorporated and subject to this declaration. The property in question here is NOT described in Exhibit A (which has plats and Land Lts for the community. It is in fact a lot that is listed in Exhibit B "Additonal Property WHICH MAY UNILATERALLY BE SUBMITTED TO THIS DECLARATION BY DECLARANT" That of course is the original developer. In August 2004 the developer Quitclaim deeded the "Open Space" property of 11.68 acres +/-. Does this Quitclaim then fold this land into the original CCR? The Quitclaim gives us the land but there is no mention of the CCR and the declaration regarding the Open Space. Nothing that I have seen.

I'm wondering if we have an out on this. Amending the CCR requires a vote but are we stuck at 100% or what.

My goal has been as I firt stated. To get this 11+ acres sold and let a new developer build homes. We can restrict it to the R-30 class in a sale. Put a nice check in the HOA piggy bank and add some capital improvements which have been asked for during the past 7-8 years.

I got no skin in this other then a homeowner looking to enhance value for us. I don't swim, play tennis or shoot hoops. This 11 acres has been of no value to anyone that I can see.

Yeah, probably not but you'd have to review the exact language. Come to think of it, our CCRs here specifically say there are sacrosanct parts that cannot be amended.

Isn't Cobb County where the Atlanta Braves are getting a new stadium? It's not surprising that the land might be quite valuable now and maybe even more so in the future. I'm not familiar with the area at all, but I do remember hearing about that new stadium.

Dennis

I am all for your idea and you seem to have done your homework but now one thing hits me in the face. As NPS discovered, your own Covenants say all land deeded to the association is Common Property and all owners must approve any sale. How did you miss this or did you decide to gloss over it?

How much are fees annually?
How much goes into reserves each year?

That's a good idea. We can establish a reserve and go for it. It will give us a quick sale if we can pull it off.

Bottom line:
Annual budget = $80k
Annual reserve c $9k
Net gain from sale = $320k

Question = How to get owners motivated so that you wind up with 100% approval to sell.

Recommendation 1:
Offer a 25% rebate on dues for 4 years.
Net gain from sale = $320k
4 years of rebates = $64k
Net contribution to reserves = $256k.

Recommendation 2:
No dues for a year.
Net gain from sale = $320k.
Waiver of dues for a year = $80k.
Net contribution to reserves = $240k.

Recommendation 3:
Something similar that will get people off their asses. Put something significant in everyone's pocket now. Those who like the idea will do the selling for you.