Past dues after transition from developer to neighborhood

Hi all,

About 5 months ago, our developer formally transferred management from himself (declarant) to neighborhood. He named the initial board of directors as the CCR and bylaws allowed him to do. So here I am, President. To make a long story short, we inherited some terrible accounting practices. We've completed ALOT of work and have determined that 10 of 62 lots are past due. Since we inherited terrible records, we've given them the benefit of the doubt and asked for documentation to prove otherwise. Some past dues were cleared up in this matter. The rest are these 10 left. These residents refuse to pay their past dues because the developer (declarant) poorly managed the neighborhood. Thus, here we are now, we confronted him and he said he was willing to transfer to neighborhood. The past due residents are current from the point the neighborhood board took over. Past due on old dues.

The board cannot obsolve past debts...do they have any ground to stand on? Some have even claimed that since they bought their lots from foreclosure, they aren't part of HOA (false).

We're at the point where the courts are going to get involved since the board cannot do anything about their past debts. Is their beef with us? Is their beef with the declarant? Now that we've transferred management, does the declarant have any power or is he just a lot owner? He still owns a dozen lots or so. What do you all think?

Our late fees and dues policy states that after 90d, the invoice is sent to attorney for action. That day is fast approaching (15 Nov). The past due residents have had multiple notices from the HOA with no action.

Understand on dues from point of purchase forward - we're on same page there.

Got it, finances were our #1 priority, followed by state of disrepair on pool area & playground. Developer had no reserve account and our bank account had less than $2k in it when we officially took over. And then getting the handful of people with trailers in their driveways/side lawns to comply with CCR.

Is the developer typically still the declarant after transition? Our governing documents state that all lot owners have 1 vote per lot, nothing about more votes allotted to declarant. The documents do however state that the delclarant can approve variances and exceptions to assessments due...but he no longer manages the neighborhood. So our residents are concerned that the developer can still provide exceptions and has "power". I'm of the opinion that he's just a lot owner with 12 votes (1 per lot)

We're trying to understand if the developer/declarant has any power at this point - besides voting.

What do you mean the declarant turned over "management" to the neighborhood."?

There was a turnover or not.

An auditor should have been brought in to look at all financial reports and ascertain that all accounts were up to date.

The developer (Declarant) signed this document and sent it to us. Is this not a huge piece of turnover? Is the declarant still a declarant with powers at this point?

The undersigned Declarant, which is the developer of XXXX, hereby consents and agrees that the following resolutions be adopted, taking the action in lieu of a regularly called meeting as permitted in Section 10-3-40,Code of Alabama
(1975) .
RECITALS:
1 Article IV section B of the By-Laws of X, Inc. give the Declarant X, LLC, an Alabama limited liability company the exclusive right to appoint the Board of Directors no later than sixty (60) days after the closing of the sale of the last residential lot within X that is owned by the Declarant or at such earlier time as the Declarant may voluntarily turn over these rights to the voting members.
2 The Declarant appointed X, X, X, X to be the initial

directors of X, Inc.
1 The Declarant still owns Lots in X, giving it the power to appoint members of the Board of Directors.
2 The Declarant desires to remove the said X, X, X, and X from their positions as members of the Board of Directors and to appoint and designate X, X, X and X as members of the Board of Directors.
3 Upon making the said appointments, the Declarant desires to turn the X, Inc. over to the Lot Owners. L NOW, THEREFORE, BE IT RESOLVED, that X,

X, X and X are hereby removed from their positions as members of the Board of Directors of X, Inc.
2. BE IT FURTHER RESOLVED, that X, X, X and X are appointed to serve as members of the Board of Directors of X, Inc.
3. BE IT FURTHER RESOLVED, that effective immediately
upon the said X, X, X and
X taking their respective positions on the
Board of Directors, control of X, Inc. shall be turned over to the Lot Owners.

To include:

- allowing variances to the ARC (now within neighborhood)
- exceptions as to whether assessments need to be paid

To me, those don't make any sense, because they would negatively affect our neighborhood and he has no interest in having anything to do with our community anymore.

That's interesting. He hasn't been building in our neighborhood. Instead, he has been selling his lots to third parties who are then building on those lots.

We're going to pursue that. Will talk to the attorney.