builder may violate covenants

Started by GloriaL • 15 replies • 3453 views

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GloriaL (Georgia)
Posts: 195

Posted:

I noticed today that a builder has placed a sign on each of two vacant lots in our subdivision advertising the type of home he intends to build on each lot. While the homes are impressive and stately, our amended Covenants (which were voted upon, approved by the required 2/3 Membership,including the builder of these two lots, and registered) specifies that the homes "shall be constructed with a finish on all four sides of either brick, stacked stone or rock, or a combination thereof." As our Board of Directors is scheduled to meet this Friday to discuss enforcing covenants and violations, I feel this is an issue which we need to discuss. Do we contact the builder now as the sign has just been posted, do we wait until construction begins? The builder was sent an amended copy of the Covenants when they had been registered. How do we procede? These two Lots, which are 3.6 and 5.6 acres, have been for sale from the builder since the subdivision was started approximately 6 years ago, but this is the first time that a photo of homes to be built has been posted on the Lots. According to our CC&R, under ARCHITECTURAL CONTROL, "no house...shall be commenced, erected...have been submitted to and approved by the Association's Board of Directors..." What should the Board's first step be?

RogerB (Colorado)
Posts: 5,067

Posted:

The developer may still control the Architectural Committee even after turnover of control of the Board and be autonomous from the Board's control. If so they could issue a variance. You need to check this out first. If they are indeed in violation the Covenants should be enforced by providing them of the violation to restrictions. Each lot should be cited separately.

GloriaL (Georgia)
Posts: 195

Posted:

Quote:

Posted By RogerB on 06/26/2007 12:10 PM
The developer may still control the Architectural Committee even after turnover of control of the Board and be autonomous from the Board's control. If so they could issue a variance. You need to check this out first. If they are indeed in violation the Covenants should be enforced by providing them of the violation to restrictions. Each lot should be cited separately.

How could the developer still have control of the Architectural Committee when the Association was turned over to the HOA four years ago? I don't understand how that works. The developer has been treated as any other HomeOwner since the turnover of control. The Board has acted as the Architectural Committee during these years, and in fact had sued the builder for deliguent dues and won. You said that we need to check this out first, but specifically how do we procede? The violation to the Covenants would be based on the photo of the planned house as the Board has not been notified of any intent to build.
Thanks,
Gloria L.

RogerB (Colorado)
Posts: 5,067

Posted:

Gloria, since the homeowners control the ACC then I presumethe builder must submit a request to the ACC for approval prior to beginning any modification to the property. I stand corrected, no need to check anything except the approval by the ACC prior to any modification to the lot. If concern, the Board can send a letter to the builder advising on the ACC requirements in the CC&Rs.

GloriaL (Georgia)
Posts: 195

Posted:

Thank you, Roger, for that clarification. At our BOD Mtg on Friday, we will discuss contacting the builder right away to advise him of the change in the Covenants (which he voted to change). I am concerned that he placed these signs without contacting the ACC or the BOD first. These are the only two lots left in our small subdivision of only 27 homes which are not developed. It seems that limited funds and no reserve fund can be eaten up quickly by attorney fees. We are starting the deal with non-compliance issues and do not have the authority to fine HomeOwners. To have to fight a builder about compliance seems like a daunting task.

GloriaL (Georgia)
Posts: 195

Posted:

As an additional note to this topic, I have already received a phone call from a HomeOwner in our Community asking about the proposed home on each of these two Lots, and questioning whether the builder will be held to our Covenants. Should our first step be with a letter/phone call from the BOD to the builder to comply with procedures and stipulations in our CC&R or a formal letter from the attorneys? Again, I see dollars flying out the door.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Our developer turned over control to our HOA prior to EVERY lot being built, and in the letter that was sent specifying the turnover, the developer RETAINED the right to Architectural Approval for NEW CONSTRUCTION of homes (not fences, decks, ect, but homes) until ALL LOTS (not a specified time) were completed. The BOD had Architectural Control over all other items that an HOA typically has ARC control over.

During that time (all lots are built out now), which was about a 6-year-period, we had to get "legal" with at least 2 builders for various reasons, one did not pay assessments, and the other was not maintaining his lot.

These things the developer no longer handled, since the HOA was turned over to us.

We received a formal letter where all the "directors" and "officers" of the HOA that the developer created "resigned" and the letter also clarified the Architectural Control issue.

In your case, are the "builder" and the "developer" one and the same? If not, I would suggest contacting the developer and trying to obtain the "resignation" document/letter that spells out their Architectural Control stipulations.

Many developers like to retain ARC over NEW HOME CONSTRUCTION because their name is attached to the development and their reputation depends on the homes remaining of a "certain" look etc.

Good Luck.

GloriaL (Georgia)
Posts: 195

Posted:

This "builder" is not the "developer", but one of the builders who owned Lots, even though he never actually built on the Lots but sold them to other builders who then built..sounds complicated. In any case, when the developer turned over control to the HOA, there was never any note of holding back any control over anything. for the only two undeveloped Lots. This builder was elected to the BOD for its first term when the HOA initially took over, then resigned after a few months. The BOD has had contact with the "builder" requiring maintenance of the curb/lawn area and collection of dues which became deliquent. He has since been paying dues, mowing the curbside, and voting on issues just like any other HomeOwner. In fact, he voted to change the Covenants requiring four sides brick, etc. Where would the BOD begin to search to find if the "builder" has held special rights to develop which are not covered under our Covenants for NEW CONSTRUCTION? If anyone can help, it would be most appreciated.

Thanks.

GloriaL (Georgia)
Posts: 195

Posted:

As Secretary, I just searched through our HOA documents, and found the vote forms for the change in our Covenants requiring the exterior of all construction to be four sides brick which happened in 2006 and have since been registered. Included was the signed vote form from the President of the builder's Company voting YES for these changes. We need direction as to how to procede without causing bad feelings with the builder, yet enforcing our Covenants.
This year started off hard at the Annual Meeting.
1. One HomeOwner wanted to sub-divide his Lot (which was voted down by one vote as our Covenants stipulate NO SUBDIVISION OF LOTS,and would require a Covenant change).
2.The BOD asked to increase our Annual Dues from $300 to $400 per year as we have absolutely no Reserve Fund, and end each year with a few hundred dollar balance barely (which was voted down by a large vote).
3.The third vote was for a one time Special Assessment of $275 per Lot to extend and improve the fencing at the entrance to our Subdivision (this was also voted down).
We are faced with several HomeOwners and non-compliance to the Covenants. We have sent a first notice, and on Friday, the BOD will probably approve a second notice to go out. If still no compliance, then our Attorney will have to send a notice. Now, a builder is planning on building two homes which will also not comply with our Covenants.
We have no Reserve Funds and a Community which doesn't see the need for funding one. Any thoughts on how to keep our Covenants strong on a limited budget?

MicheleD (Kentucky)
Posts: 4,491

Posted:

Okay, sounds like you do have some issues there. First, in regards to compliance and violations, it would be in your best interest to begin tackling those. Begin a database (not a hard thing to do, can be just a list of violators on a sheet of paper with columns for address, violation, date violation observed, letter of notice of violation sent, etc etc).

Then regarding the builder, if he is in no way connected with the developer, then I would contact the developer and request any documents that formalized the official handover. There should be some somewhere and that would help give you the confirmed authority to put the line in the sand, so to speak, when dealing with any ARC approval of new construction.

Next, I would review the governing documents and determine what percentage increase to the annual dues the BOD can authorize WITHOUT a member-wide vote. It might take you a couple years to get up to your "reserve" goal, but it's a start.

Also, please clarify for me, are you saying the builder voted FOR a covenant that restricts home exterior to brick on all four sides and is now trying to go to vinyl?

GloriaL (Georgia)
Posts: 195

Posted:

Quote:

Posted By MicheleD on 06/27/2007 8:15 AM
Okay, sounds like you do have some issues there. First, in regards to compliance and violations, it would be in your best interest to begin tackling those. Begin a database (not a hard thing to do, can be just a list of violators on a sheet of paper with columns for address, violation, date violation observed, letter of notice of violation sent, etc etc).

Then regarding the builder, if he is in no way connected with the developer, then I would contact the developer and request any documents that formalized the official handover. There should be some somewhere and that would help give you the confirmed authority to put the line in the sand, so to speak, when dealing with any ARC approval of new construction.

Next, I would review the governing documents and determine what percentage increase to the annual dues the BOD can authorize WITHOUT a member-wide vote. It might take you a couple years to get up to your "reserve" goal, but it's a start.

Also, please clarify for me, are you saying the builder voted FOR a covenant that restricts home exterior to brick on all four sides and is now trying to go to vinyl?

GloriaL (Georgia)
Posts: 195

Posted:

Thank you for all the help.
1. At our BOD Meeting on Friday, we can draw up a form to keep track of violations, date observed, notice, etc. That sounds like a perfect method in which to document our progress.
2. Any and all documents held by the Developer were physically handed over to the HOA, including their sketchy handwritten Minutes. Nothing in there indicating any deal for new construction, other than what is written in our CC&R, and procedure for the ARC.
3. Before the last Annual Meeting, the BOD debated about increasing the Annual Dues by the amount of 10% allowed without a member-wide vote. Unfortunately, the BOD decided not to ask for that small increase thinking that the vote to increase to $400 from $300 would pass easily. This is an affluent area, but the vote went down. I am certain the Dues will be increased by 10% for 2008, and hope the Membership can see the need for a Reserve Fund. As we have had no issues for the past four years, and the Board has been extremely frugal with expenditures and well run, the Membership doesn't see the need. Unfortunate and short-sighted, IMO.
4. The proposed two new homes look to be clapboard or hardiplank. Viny siding is already banned in our Covenants. And YES, the builder (who held two votes for the two lots he owns) did vote FOR a Covenant restriction of exterior finishes to be four sides brick, stone, rock or a combination thereof.

JM2 (Oregon)
Posts: 439

Posted:

Hi Gloria:

It might be wise for your BOD to send the builder a letter, noting that the signs on the lots have been noticed, and that the letter is a friendly reminder that any house plans would need to be approved in writing by the ACC prior to the commencement of construction. That way, you're not saying that he is currently in violation (which I presume he is not?) but in a nice way, "firing a shot across the bow" to let him know the ACC requirement needs to be met. If he doesn't meet it, then when construction starts (= excavation) you simply send him a violation letter and issue a stop-work order. The letter could even be drafted ahead of time, so that everything is ready and in place if & when excavation starts.

You might even want to see if your city/county has a website that tracks the permit process.

J. Patrick Moore, CMCA

GloriaL (Georgia)
Posts: 195

Posted:

Quote:

Posted By JM2 on 07/01/2007 7:36 PM
Hi Gloria:

It might be wise for your BOD to send the builder a letter, noting that the signs on the lots have been noticed, and that the letter is a friendly reminder that any house plans would need to be approved in writing by the ACC prior to the commencement of construction. That way, you're not saying that he is currently in violation (which I presume he is not?) but in a nice way, "firing a shot across the bow" to let him know the ACC requirement needs to be met. If he doesn't meet it, then when construction starts (= excavation) you simply send him a violation letter and issue a stop-work order. The letter could even be drafted ahead of time, so that everything is ready and in place if & when excavation starts.

You might even want to see if your city/county has a website that tracks the permit process.

J. Patrick Moore, CMCA

As an update, our BOD Pres. contacted the builder and had a candid, pleasant conversation, then followed up with a letter confirming the conversation and verbal agreements. The builder said he was unaware of the revised Covenants (although he voted FOR the changes and was sent a copy after the Covenants had been properly registered). He said he is just marketing the Lots presently but will abide by the Covenants when building. He said..he said..he said. After building six houses from scratch, I am a bit skeptic of what builders say is not always what builders do.
Our BOD has gone to our Town Hall seeking info on another Lot and what is being built there, so I know we can review permits as they become part of the public record. I am not certain if all current permits are available as they are issued on the Town website, but I will find out. That would make keeping track much easier.
Thanks for that info.

ChristineO1 (Virginia)
Posts: 1

Posted:

This sounds familiar to the situation in my neighborhood. The builder is the developer in my part of Fredericksburg,va. My hoa apparently is owned by the developer so we are getting no where. Even with a stop work order my developer is continuing to build subsized housing that violates his own covenants. Any ideas from anyone on how to help. We the homeowners are ready to take our HOA and stuff it. Is there an acrediting body to the HOA we can unite with?

PaulM (Pennsylvania)
Posts: 1,347

Posted:

ChristineO1: Since you believe the developer is still in control, it would seem your ally at this time may be your local municipality office. The developer had to have approval from them for his overall development plans, and also for any successive changes he has made to those plans.

There should be an official there who can advise you on what appears to be 'subsidized housing', the status of it and whether a stop work order has been issued. Also, inquire if any amendments to the original official CC&R documents have been filed. If so, all unit owners should have received a copy.

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