COMMON AREA OWNERSHIP

Started by JimD17 • 11 replies • 2597 views

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JimD17 (South Carolina)
Posts: 15

Posted:

After being elected to HOA board I have discovered that a large portion of the common area was never transferred from the developer to the HOA as required by the covenants upon completion of all of the housing units which was nearly twenty years ago.

Not sure how or if we should pursue this matter. The developer has never been charged HOA fees on this so called common area common area. Also an individual obtained a tax deed recently for one of these developer owned parcel on which property taxes were delinquent.

Seems to me the HOA should be able to charge HOA fees from the owners of all of these parcels or force the developer to quit claim the deed to the HOA.

Any suggestions.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Jim,

I always wondered why someone would purchase a tax lien on common property? If it was dedicated properly it would be impossible to develop it and the new owner would be responsible for both taxes and insurance. Has the holder of the tax deed tried to do anything with his parcel?

More to the point of your question: If the developer cannot be found or if he is not willing to transfer the deed to your HOA then you may have to file a quiet title action in court.

Generally there would no assessments on common areas as they are supposed to belong to the association. Assessments and what properties will be assessed are normally set forth in the declaration.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Jim,

Nice try.
I suspect that your governing documents specify that the Developer doesn't pay assessments (as most do say that).

Have you verified land records to see who actually owns it?
Is the development fully built out?
Has anyone contacted the developer to see about transferring the property?

JimD17 (South Carolina)
Posts: 15

Posted:

I also do not understand why any one would obtain a tax deed on this property as it is just a small parcel of land which could not be developed. Maybe they thought the owner would redeem the property and he would get his money back plus a good rate of interest. As you state and another reply also mentioned it will probably not be possible to collect HOA fees on common area as they are generally not assessable on common area. Our only option may be to obtain title on these parcels from the current owners. If we take title then we would be responsible for property taxes so maybe there is really no downside to just leaving the parcel ownership as is.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Jim

Maybe, just maybe dues can be collected if owned by someone other than the original Declarant.

Story going around SC about someone who bought a house lot at a foreclosure??? sale assuming they could sit on the lot and sell it later at a profit. They did not realize there was mandatory $16K club initiation when a lot was sold. They got a bill for the $16K.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Typically common area has no tax bill. Depends on state laws... If it was still in the developer's name and not part of the common area, it might have a tax bill. If you have no idea where to start, you may need a lawyer. You will need a lawyer to type of the paperwork to do the transfer anyway.

JimD17 (South Carolina)
Posts: 15

Posted:

Thanks for each of the replies. The more I research this matter the more complicated it gets. Probably will have to hire an attorney to straightened this all out. In checking our covenants they do state that common area is exempted from paying HOA assessments. However, in another section it defines "common area" as real property deeded to the association and designated as common area in the deed. I am thinking since it was never deeded to the association these parcels are not common area and therefore not exempted from assessments. If they are subject to assessment the owners may want to deed them to the association so the board would need to decide if we actually want them if we have to pay property taxes on them.

JimD17 (South Carolina)
Posts: 15

Posted:

MarkM31 (Washington)
Posts: 351

Posted:

I think it clear why anybody would purchase that small parcel, they thought it would be worth more to your HOA than the buying price, and it probably is. While you think you can laden him with dues, he can probably make life a headache for your HOA.

Best to resolve this ASAP, and don't break out the artillery yet, you may not win a shooting war.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By JimD17 on 11/21/2015 1:24 PM
The developer has never been charged HOA fees on this so called common area common area.

Seems to me the HOA should be able to charge HOA fees from the owners of all of these parcels...

Your documents should state what properties are subject to paying assessments. Normally this would just be the residential lots. Do your docs allow you to arbitrarily determine what properties are subject to assessment?

Escaped former treasurer and director of a self managed association.

JimD17 (South Carolina)
Posts: 15

Posted:

According to our documents the common area is not subject to HOA fees. However, since this area which has always been considered "common area" has never been deeded to the HOA. There fore it is still owned by the original developer so legally I would think it is not actually common area.

GenoS (Florida)
Posts: 4,276

Posted:

After 20 years you might be able to claim title to it through Adverse Posession.

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