Where do we go from here?

Started by PamelaT2 • 13 replies • 1457 views

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PamelaT2 (Maryland)
Posts: 9

Posted:

We took over HOA management from our developer a few weeks ago. When we were reviewing the developer's approved architectural change requests, we found that one owner neglected to request approval for a fence and a unground pool. We found further, that construction of the pool began last June and has yet to be completed. Apparently the owner paid for the fence and pool up front, and the contractor never completed the work. Now, when we asked the developer if they have been sent a violation letter to the owner, we were told that they never knew that the homeowner built the fence and pool in the first place. We find this impossible, to believe, since the house right next door was constructed beginning in April/May, 2015. There was no way that the construction manager did not see the house next door building both a fence and a pool. The developer wrote us an email denying all knowledge of the owner's violation of the covenants. My question is what should the Board of Directors do? Should they send the owner a letter, identifying the exact violation of the covenant, or should the Board deny knowledge of the violation, just like the developer did?
One other owner build a small patio and did some landscaping, this is nothing compared to a pool and a fence. The developer also left us an over $5000 deficit, by not billing the 2014 owners for their $750, 2015 annual assessments.
Please advise.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Hi Pam,

If there is no restriction on the fence or the pool and it's likely that they would have been approved, then simply send the owner a letter stating that there is no approval on file and ask that they provide their copy or submit a request.

As for the 2014 assessment, read your governing documents as there may or may not have been a requirement to bill/inform the members if there was no increase in Assessments from 2013 to 2014.
If there was no requirement for notice then send out letters saying that they are owed, no late charges will incur if paid by mm/dd/yyyy.

PamelaT2 (Maryland)
Posts: 9

Posted:

All architectural changes must be approved by the developer before installation. Each homeowner signs that they will abide by the covenants when they go to settlement. The Board of Directors know that the developer is lying about not finding out about the owner's violation until after they turned control of the management over to the HOA. Once the developer gives approval of the change we must complete construction within six months. The owner has not seen the contractor for 3-4 months, so there is an unfinished pool in their yard. I just want to know if the Board of Directors will be held accountable for not enforcing the covenants, now that the developer has run for the hills. The Board could rubber stamp the pool and the fence, but there is still the matter of the owner not being able to complete the construction within the time frame outlined in the covenants. This is a new Board of Directors who are treating the covenants like the Bible in their decision-making.

MarkM31 (Washington)
Posts: 351

Posted:

Is this a procedural violation or a physical violation?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Pam

The first question is would the BOD had approved the changes if asked? If yes, then the bottom line problem is how long the changes are taking and what can the BOD do. If there presently are no time lines for a project to be completed then there is little the BOD can do except empathize. Might be one of the BOD's first Rules and Regulations concerning project completion times and become part of the approval for such procedure.

If the BOD would not have approved the changes but does not care to fight the good fight then blame it on the developer have given them permission though no one can prove such. I expect the owners will claim the developer told them it was OK.

As far as the 2015 dues, bill the 2014 owners of record now.

If your were left with no Reserves Funding, you have a major issue to face.

SueW6 (Michigan)
Posts: 814

Posted:

Did you have a lawyer when you took over from the previous HOA?

Your corporation just took over - and so you accepted all the liabilities, assets, outstandings, etc that go with taking over another business.

I doubt if you can collect anything that the previous "owner" didn't.

PamelaT2 (Maryland)
Posts: 9

Posted:

The fence and pool are procedural violations. All external improvements must be approved by the developer, prior to Sept. 28, 2015. Starting on Sept. 28, 2015 the HOA Board must approve the ACR. I think that the owner should write up a request for review by the Board, so that the enhancements can be approved. As for the owner dealing with the contractor, that probably will require a legal recourse.

MarkM31 (Washington)
Posts: 351

Posted:

Quote:

Posted By PamelaT2 on 10/17/2015 12:07 PM
The fence and pool are procedural violations. All external improvements must be approved by the developer, prior to Sept. 28, 2015. Starting on Sept. 28, 2015 the HOA Board must approve the ACR. I think that the owner should write up a request for review by the Board, so that the enhancements can be approved. As for the owner dealing with the contractor, that probably will require a legal recourse.

Don't fight procedural violations too hard, especially if the change is certain to be passed. The HO can likely say that the developer must have lost the approval, and you'll play heck to prove otherwise. If the change is likely to be rubber stamped, you are fighting for the sake of fighting.

PamelaT2 (Maryland)
Posts: 9

Posted:

Quote:

Posted By JohnC46 on 10/16/2015 6:23 AM
Pam

The first question is would the BOD had approved the changes if asked? If yes, then the bottom line problem is how long the changes are taking and what can the BOD do. If there presently are no time lines for a project to be completed then there is little the BOD can do except empathize. Might be one of the BOD's first Rules and Regulations concerning project completion times and become part of the approval for such procedure.

If the BOD would not have approved the changes but does not care to fight the good fight then blame it on the developer have given them permission though no one can prove such. I expect the owners will claim the developer told them it was OK.

As far as the 2015 dues, bill the 2014 owners of record now.

If your were left with no Reserves Funding, you have a major issue to face.

I know that the developer would have approved the fence and deck. All ACR approvals are made in writing. The Board would also approve the enhancements, when and if submitted by the owner. The timeframe for completion of the enhancements are clearly stated in the covenants; if memory serves me, it is six months. The developer is denying any knowledge of either the fence or pool construction, by the non-compliant homeowner.

We initially had seven outstanding 2015 assessments, two members paid immediately. The Board designed a "friendly" 2015 dues collection letter. The collection letter requested payment by November 15, 2015. The Secretary/Treasurer hand delivered the letters to the five outstanding homeowners. When we went to settlement, each of us knew that there would be annual assessments due, just because I might not have been billed, I knew I owed the money. I believe that each homeowner knew that they would have to eventually pay the piper. How are we to pay our community's bills? The developer left us with just enough reserves to cover landscaping for 2016. However, the 2016 budget does not include snow removal fees. I suggested that our website alert everyone of the June 1, 2016 annual assessment due date. I also suggested that the homeowner might want to start making small equal payments beginning in Dec. 2015 with completion of the entire 2016 HOA dues by June 1, 2016.

CyrstalB (Maryland)
Posts: 457

Posted:

What is your objective here? What do you want to see being done as a result of this information?

It is not unusual for developers to not follow their rules, in fact one of your documents states that they as the controlling party, (the one with all the votes) has the authority to amend the rules as they see fit.

So at the end of the day, what is your objective exactly? Is it the "violations" or is it the money? Do you want the HO's to back fill the proposed pool area? Do you want to force them into action in some way?

You are right that everyone signed the contract, welcome to the world of HOA's and Contract Law, now it's your job as a Board to decide how to make those two items work together to the best of your ability. Sadly, because the developer sets these types of precedence it can make it ever so difficult.

Have you made yourself familiar with the MHAA? There are new laws in MD that limits, if not eliminates the HOA from collecting fines and fees on violations through the Contract Lien law. I am not an attorney, and you should check yourself, but from what I read, you cannot attach a lien for fines etc, only for non payment of assessments.

And finally, your developer may of had a bond issued for his developing the neighborhood and you may have an avenue there to see if there's any recourse for his leaving your bank account empty. (although that is not unusual either).

PamelaT2 (Maryland)
Posts: 9

Posted:

Quote:

Posted By CyrstalB on 10/18/2015 5:21 AM
What is your objective here? What do you want to see being done as a result of this information?

It is not unusual for developers to not follow their rules, in fact one of your documents states that they as the controlling party, (the one with all the votes) has the authority to amend the rules as they see fit.

So at the end of the day, what is your objective exactly? Is it the "violations" or is it the money? Do you want the HO's to back fill the proposed pool area? Do you want to force them into action in some way?

You are right that everyone signed the contract, welcome to the world of HOA's and Contract Law, now it's your job as a Board to decide how to make those two items work together to the best of your ability. Sadly, because the developer sets these types of precedence it can make it ever so difficult.

Have you made yourself familiar with the MHAA? There are new laws in MD that limits, if not eliminates the HOA from collecting fines and fees on violations through the Contract Lien law. I am not an attorney, and you should check yourself, but from what I read, you cannot attach a lien for fines etc, only for non payment of assessments.

And finally, your developer may of had a bond issued for his developing the neighborhood and you may have an avenue there to see if there's any recourse for his leaving your bank account empty. (although that is not unusual either).

First, I greatly appreciate your frankness. I was the only one of the 12 homeowners present at the turnover meeting with the developer, who completed the ballot and nominated my husband, and two of my neighbors to the Board of Directors. I joined this site to find out as much information about how best to help my husband and neighbors develop a functional HOA. I have also done a literature search. .

With that said, I just want to find out if our HOA can choose to ignore the covenant violation, (unapproved pool and fence), just like the developer did. No, we do not want to fine the homeowner, especially since the owner will no doubt have to sue the contractor and seek some type of judgment. The contractor damaged the community sidewalk, which leads to the owner's home, during the pool construction also.

There are other structural issues that have been found in the community after a walk through by the Board. Yes, the Board does plan to leverage resolving structural issues in the community, with the developer's plans for bond releases with the county.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Pam

It is quite common when a BOD takes over from the Declarant that the BOD sends a letter outlining how some things might be different such as drawing attention to any changes to be made must be approved by the ARC. Set a new tone immediately.

As far as the existing issues either wait for the violators to ask for retroactive approval and give it, or approach them and say the BOD will retroactively approve if they ask, or ignore it and if they issue is raised say that was between the owner and the Declarant with the BOD having nothing to do with it.

You seem to be anguishing over an issue not causing any problems.

PamelaT2 (Maryland)
Posts: 9

Posted:

Thanks to all for the needed advice. I just joined Maryland Homeowners Association, Inc. also. The anguishing has stopped. We are going to let sleeping dogs lie. The Board has greater issues at hand, including an unpaid electric bill from 2014, unpaid assessments from 2015, etc..

CyrstalB (Maryland)
Posts: 457

Posted:

Quote:

Posted By PamelaT2 on 10/18/2015 9:02 AM
Thanks to all for the needed advice. I just joined Maryland Homeowners Association, Inc. also. The anguishing has stopped. We are going to let sleeping dogs lie. The Board has greater issues at hand, including an unpaid electric bill from 2014, unpaid assessments from 2015, etc..

Yes, it does sound like you have larger issues at hand and it's important for you and your boards own well being that you remember this:

The entire HOA will still exist tomorrow and the day after and the day after that regardless of all the issues that arise. DO NOT carry the worry and concern about it with you all the time. No matter what is or isn't done, it is just an HOA. It should never feel as if it is as important as your own personal life, family or work. It's just an organization at the end of the day, and that is NOT worth your spending your personal emotional energy worrying yourselves to death over all of the issues that will arise, especially with a group of people who most likely don't give two shiots about it.

Feel free to reach out to me [email protected] I did some "time" in a MD HOA and would be happy to offer any insight possible from all of my board experiences.

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