Can Developers Turn-Over a HOA That is in The RED?

Started by CharlotteP • 4 replies • 2239 views

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CharlotteP (Georgia)
Posts: 3

Posted:

This question is related to the question posted about the Declarant/Developer by JeanetteA. Other homeowners are also being told that at 75% homeowner occupancy the developer can turn-over the development although it is in the RED. We haven't seen any books and this situation I'm told, was created by a high deinquency of HOA fees, mismanagement by the former MC, failure to keep adequate financials, and failure to provide oversight by the Declarant/Developer.

I want to know if the Developers can be relinquish their responsibility, they are a LLC.
CharlotteP

BradD2 (Florida)
Posts: 418

Posted:

I would think they can, but there might be a state law against it. What state are we talking about? The other issue is that the developer can then be sued by the Association for putting them in the red. My guess is that it was mismanagement and/or keeping the dues low so that he could sell houses faster.

CharlotteP (Georgia)
Posts: 3

Posted:

This is in the state of Georgia. And your guess is right, the HOA fees are still very low compared to other HOAs with fewer amenities. The CC&Rs have a disclaimer on the cover page stating the development does NOT submit to the provisions of the Gerogia Property Owners Assoc Act.

However, under Article I Definitions of the Board of Directors it states the developer/BOD is vested with the authority to manage the affairs of the association under the Georgia Nonprofit Corp Code OCGA 14-3-101.

We appreciate your advice on this
CharlotteP

PaulM (Pennsylvania)
Posts: 1,347

Posted:

Charlotte: refer to your official docs (Declaration for Declarant) on what responsibilities the Declarant/Developer must fulfill to the association prior to relinquishment to the residents. There may be reference to:
- HOA dues paid by developer for each unit the developer owns prior to sale
- a cash reserve fund initiated by developer for capital expenses long term
Also check your state's docs; the state does dictate what responsibilities he has to the residents of the association.

RogerB (Colorado)
Posts: 5,067

Posted:

Charlotte, to answer your question - Yes, the Developer can turn over to the homeowners not matter what the condition is if the homeowners accept it. I believe a better question is; "Can the homeowners refuse to accept the turnover prior to a transition audit?"

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