How would you dissolve CC&R or reinstate HOA?

Facts:
State - texas
community has CC&R
CC&R state that all owners are members in the association
The association was incorporated 20 years ago, but has no bylaws/articles of incorporation
Association has never operated
Declarant status has been passed to me
Declarant has 10 votes for each lot
total number of lots is 59
Trying to buy two more lots to get to 30 votes out of 89 (?) or would it be 30 votes out of 59? or would it be 30 votes out of 86(?)
Declarant appoints arch committee
arch committee has final say on all improvements
it takes 3/4 of owners of all lots to dissolve CC&R
declarant can amend declaration so long as declarant has a majority of votes (how many votes is that?)
CC&R goes to 2050 and renews every 10 years unless 75% of owners vote to no renew.
I believe that Texas law says if CC&R dont state how many votes to dissolve, then 75% can dissolve CC&R.
CC&R say that CC&R are in force and shall not terminate while declarant owns any property.

I would like to either reinstate the HOA and evenly enforce the CC&R or dissolve the CC&R

Not sure how to bootstrap the HOA

Do a one time 2K initial assessment to fund legal fees and manager to look for violations
Establish a yearly 200-300 assessment to pay for ongoing enforcement

Would like to send out a letter which will either let owners vote for the above plan (or abstain) or vote to dissolve the CC&R. People that dont vote to dissolve CC&R are effectively voting to activate HOA. Go house to house to talk to owners about it and explain the choice.

My thought is either path is acceptable, but the status quo of risk of lawsuits between owners and unevenly enforced CC&R is not good. I would on balance like to dissolve CC%R

What are the constraints or things to think about?

I am currently looking for an HOA specific lawyer, but wanted to ask here first to get an idea of what to ask them to establish their capability.

Im hesitant to email CC&R because this is high stakes and want to ensure anonymity, but can post snippets to answer direct questions.

Andy,

What common area does the Association have (roads, sidewalks, green areas, storm water retention ponds, entrance monuments, etc.)?

What amenities does the Association have (playgrounds, pool, clubhouse, recreational courts, etc)?

What services does the Association to provide (street lights, trash/recycling, ice control, etc.)?

For common areas, that property will have to be deeded to another entity (sold off, given to city/County, etc.) along with the responsibility to maintain (which may be an issue with storm water retention ponds).

For amenities, those items will need to be taken down, sold, self incorporated, given to public, etc.

For services, those items will need to be addressed as well (who will pay for the street lights, length of current contracts need to run and then each lot is responsible for their own, etc.).

Some of those items may require amendments to the CC&Rs.

Once those things are done, then the membership can consider abolishing the Association by amending or abolishing the covenants.

NOTE: Typically to declarant rights belong to unsold lots. If a lot was once sold and you buy it back, an argument can be made that decalarnt rights (concerning voting) is invalid. Check with an attorney!!

I bought the lot directly from the declarant (original developer). The CC&R specifies that the declarant can assign declarant rights to anyone. The declarant rights dont say anything about needed to even own property.

That seems like a lot of money just to have an HOA to be the CCR police.

Andy

I fail to see how Declarant rights passed to you simply by buying a lot. What am I missing?

In my experience, declarant assigns declarant rights only when there are unsold lots that haven't been developed yet.

Yet I don't see in your posts where you intend to develop and sell some lots.

Please explain.

Also, what is the exact language in your docs about transfer to homeowner control. - Because obviously, you can't have it both ways.

I asked for the exact language in your docs about transfer to HOMEOWNER CONTROL. I did not ask for the language that allowed the developer to transfer developer rights to someone else.

Also, are there unsold lots that you intend to develop - or have all the lots been sold?

Thanks.

The developer sold me one 100 acre lot. Im trying to buy 2 more (but not from the developer). All lots had been sold except the 100 acre lot.

no need to be nasty. Im not sure why you are being so hostile. You wrote "all lots had been sold"

No not all lots had been sold. A 100 tract had not been sold. I bought the 100 acre tract from the developer who also passed declarant rights to me.

The declarant does not have total control, the declarant does get 10 votes for each lot along with additional privileges like appointing the arch committee.

I can also subdivide the 100 acres to create more lots (and get more votes).

Don't think I'm being nasty at all. Just putting myself in the shoes of someone else in the community and not liking what I see coming down the pike.

Nothing you have said indicates that the developer ever has to give up control. I find fault with that kind of thinking. So yes I am hostile to that idea.

what do you see coming down the pike?

If the HOA is established then people need to follow the CC&R. (they need to follow the CC&R now but no one is holding them to the CC&R)

If the CC&R are terminated then everyone is ok.

yes

there is no maximum listed

I have read the plat.

Im not sure what you are asking. How they feel doesnt have any impact on the legalities of rights as declarant. The only "control" the declarant has is to appoint the architecture committee.

Personally I think it would be best to remove the CC&R because the community hasnt been following them and so many people are in violation.

I am trying to figure out the best way to do so.

The only way is to get 67% of the owners to vote to amend the CC&R to allow removal of the CC&R. Can you amend the CC&R to allow removal of the CC&R?

If the declarant has more than 50% of the total votes, the declarant can unilaterally amend the CC&R.

That would be roughly 7 lots total. (64 total lots).

I dont think I can acquire 7 lots.

However spinning up the HOA might be sufficient to get people to decide to terminate the CC&R

I was thinking about suggesting a vote with two options:

1) reinstate the HOA (although it never operated the corporation exists) with a one time assessment to properly fund it , while giving a large number of examples of violations (fences, boats, not submitting requests to arch committee (no one has ever))
2) Terminate the CC&R

There actually is no way to terminate the CC&R specified in the CC&R, however texas law says that 67% can amend the CC&R. So we would probably first have to amend the CC&R to allow termination.

The weird situation is: I am about to build a house, but there is no active arch committee. If I build a house and dont submit plans to the arch committee for approval, then I am at risk of getting sued at a later date because Im in violation of the CC&R. Pretty much every home is in violation because none of them submitted the mandatory arch approval docs.

Here is how I calculate the various voting scenarios based on how many lots the declarant owns:
67% need to approve
total lots 64 ( I have fully counted them now)

declarant lots: 3 (30 votes)
91 total votes requires 61 votes to amend. With 30 declarant votes only 31 other votes (or roughly half the community) needs to vote to amend to allow termination.

Declarant lots: 2 (20 votes)
82 total votes , 55 votes required to amend, with 20 declarant votes it requires 35 other votes to amend to allow term

declarant lots: 1 (10 votes)
73 total votes, 49 votes required to amend, with 10 declarant votes it requires 39 other votes to amend to allow term

Does this seem reasonable?

Here is what texas law says about amending CC&R, this was added in 2011 to curb HOA abuse.

(h) Except as provided by Subsection (h-1) or (h-2), a declaration may be amended only by a vote of 67 percent of the total votes allocated to property owners entitled to vote on the amendment of the declaration, in addition to any governmental approval required by law.
(h-1) If the declaration contains a lower percentage than prescribed by Subsection (h), the percentage in the declaration controls.
(h-2) If the declaration is silent as to voting rights for an amendment, the declaration may be amended by a vote of owners owning 67 percent of the lots subject to the declaration.

3. If you don't think that how they feel about your ability to manipulate voting rights is important, then you know nothing about the workings of a healthy HOA.

Well said.

Not sure that's accurate. Must declarants pay assessments on lots? Or can they claim voting rights on un-assessed lots?

this statute provides a possible way to amend the CC&R:

http://www.statutes.legis.state.tx.us/Docs/PR/htm/PR.201.htm

3 owners can get together and for a petition committee

they need to have 75% of the square footage of all lots to modify. Im estimating the total subdivision is just under 200 acres.

Im going to try to get 67% of homeowners on board first. (I think I need 50%)

Then I might try the petition committee route because I would only need to get 10 of the 5 acre lots to come on board. The benefit to them would that they could subdivide their lots.

A lot is worth around 500K.

1. You have a piece of paper on which you claim declarant rights. The legality of your claims is for a court to determine, not you.

2. Manipulating voting rights is a long honored tradition among politicians and thieves.

3. A benevolent dictator is a dictator nonetheless.

I have a hard time believing a judge would rule against an owner who built without ARC approval when there is no functioning ARC. You don't mention how old the houses are, but there could also be some statute of limitations involved.

The CCRs for my HOA give the ARC a time limit in which to respond (15 or 30 days, I don't recall offhand) after which the request is deemed automatically approved. This seems like a good clause to remove ambiguity when there is no functioning ARC.

MATH ERROR

100/year x 100 lots = 10,000/year

(simply count the zeros)