Declarants Turnover Timeline Once Homeowners Have Voting Rights

For some reason the search feature wasn't working so my apologies if this has been answered before. Either way...

We are 225 home community under declarant (the developer) control currently. The declarant made an addendum last year to be in control until 100% of the homes are sold. As of today they have two spec homes left to sell. Its a long story but we the homeowners want to take control over immediately. We would keep our management company in place but we don't want the declarant making any more decisions for us.

The motivator is that we currently have a debt with the declarant that they are currently having us payback a portion of. Its our understanding that once they are no longer in control that we do not have to pay back that debt.

The question I have is, once these two spec homes are sold when does the declarant have to turn control over to us? Do they have a legal obligation to do it within a certain time period? We, the homeowners, would have voting rights and we are wondering what we can do to take control.

Thanks in advance for the help!

I've never heard of a debt to a developer that disappears at turnover.

Can you explain?

To which governing document was this "addendum" added? Once he has started selling lots, the declarant cannot unilaterally change the CC&R's, which is where I would expect to find language about when a turnover would take place.



This sounds fishy. The declarant-controlled association owes money to the declarant? Normally the developer is required to pay all expenses to build and maintain the infrastructure and amenities until he turns it over to the homeowners. Even then, he is required to turn over everything in good condition. Your question makes it appear that the developer has been financing his development with your money.

My best advice: find yourselves an attorney NOW.

Gotcha.

1. How big is the deficit now?

2. How much is going into reserves?

3. Has an independent reserve study been done? If yes, what percent funded are you?

You might have a claim against him at some point for under-funding reserves.

Once all the houses are sold, you might have a claim that he he has to go.

Not sure which is your bigger problem.

Very messy indeed.

Suggest that you lawyer up once your reserve study is complete.

Correct. The community is 10 years old with 225 homes total. We just broke even last year for this first time that we didnt run a debt after paying for the pool management, landscaping, etc. So every year across those 10 years the debt we becoming less and less but as of the end of 2015 the total was $256k. Now the developer has us paying $60,000 per year, as of January 2016. We "negotiated" to only pay back $60k this year and $60k next year. But we learned that the moment the declarant is no longer in control they cannot collect on the debt. They cannot do a special assessment to pay it either. Now we are in a situation where the homes sold faster than they were prepared and we only have 2 homes left. Most likely everything will be sold before the end of this year.

So thats why we are wondering that once the declarant is forced to turnover the community to the homeowners after 100% of the homes are sold, what that actual time period is. The verbiage doesnt really exist in our documents.

I wish it just said "the declarant is required to turn over the community to homeowner control within 30 days of the final home being recorded as sold". But unfortunately nothing that exists.

We are currently completing a reserve study so that will hopefully help our case once we know any unknown costs.

Here is the verbiage you are requesting:

"Section 8. Budget Deficits during Declarant Control Period: Declarant may advance funds to the association sufficient to satisfy the defecit, if any, in any fiscal year between the actual operating expenses of the Association (exclusive of any allocations for capitol reserves) and the annual and special assessments for such fiscal year. Such advances shall be evidenced by promissory notes from the Association in favor of the Declarant and shall be paid back to Declarant if and to the extent that sufficient funds are generated by assessments in future years until such time as Declarant no longer has the authority to appoint the directors and officers of the Association."