💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in

MaryM9 (Alabama)
Posts: 4
Posted:
We have a "builder's board" that has begun ask for dues; however, home owners are not allowed at the board meetings. It appears, also, that books will be handed over, perhaps in 2009. We got a "budget" per se which included a pool (not built yet) and an awfully lot of money for landscaping and maintenance.

Is it legal to have "taxation without representation"? Many of the homeowners are not happy with the current status quo. We are very concerned the books will be handed over and our HOA will be in debt before we even begin.

Please help me with suggestions to counter this "THIS IS THE WAY WE'RE GOING TO DO IT. JUST PAY YOUR MONEY AND BE QUIET" attitude.

Thanks.

BradD2 (Florida)
Posts: 418
Posted:
It depends, what state?
Jadedone4 (Virginia)
Posts: 495
Posted:
MaryM9, as Brad mentioned, what state, and also, what do your governing documents establish...? The combination of the two sources should shed light on what options your community has. May not be much, but it would be a starting point.

Also, remember that this is your builder, they are building one of your most prized possessions in life (at least one that is purchased). While there are some circumstances where taking the "hardline" approach with a builder is the only recourse, there are others where working with them, in attempts to get the community involved in the process - is also equally important.

... I know with all the 2x4's laying around it might be tempting to "knock some sense" into the builder, but working with them, will get you further along in the process, and you will learn/know more about the community.

As Brad mentioned, check your state resources, and then compare with your governing documents. Also, if you are in local municipality (parish, county, city, etc) check there for resources, local codes, etc), which expand either your community's rights, offer more guidance than state codes/statues, or provide assistance/interpretations to your governing documents.

Find the resources that will assist you and use them - the more you understand the process, the better you will be in communicating with the builder/developer.
MaryM9 (Alabama)
Posts: 4
Posted:
I'm in Alabama. And I agree about working with builder; however, this builder is not easy to work with nor does he want to be. Tremendous turnver in the organization .... sued, BBB complaints (he needs to look up and see what's happening with his homes. Yes, I love my house! But not the administration)

I only want "clean" books when the HOA is turned over -- not in debt nor no idea where the money has gone. And to not let homeowners be at board meetings -- what are they trying to hide? (Maybe not anything, but how would we know?)

Thanks for your information,
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Hey Mary! I am from Alabama too! Unfornately, HOA's aren't as popular in our state as others. That means our state laws on HOA's are rather non-existant or limited. Hopefully, as more HOA's form, there will be stronger legislation written.

If your HOA is still under the builder's control, there isn't much you can do about it at this point. That's because your not technically a "HOA". HOA stands for Homeowner's Association. It's where the homeowners of the area agree to create and maintain rules, regulations, and fund their area amongst themselves in association with eachother. When the builder has it, it's not quite in the owner's hands. Thus it's really a builder controlled HOA.

Don't worry, your builder/Developer will definetely want out of the HOA business ASAP. They will want to turn over the HOA as soon as their contract allows them to. That's because HOA's are really "Sales tools" for a builder/Developer. It's an "attraction" for buyers to think that they will be able to have amenities such as pool, tennis courts, lawncare, or other such items at low costs. It's much cheaper to have a group owned pool than an individual one in your backyard. A HOA let's you split the costs of big items amongst everyone. Not a bad deal in the end.

It's costing your builder/developer money to run the HOA right now. They have to pay a Management company to handle their costs. They are responsible for putting in the amenities. Pools are well over $10k for inground. So the Builder/developer does have high costs to cover. Their profits are really tied up in the profit they make selling off their lots. After the lots are sold off and houses built, there's no more money for them to make. That's when they decide to turn it over to the homeowner's to control. The HOA can decide to manage the HOA themselves or to hire a Management company. It's not necessarily required to have a MC.

Your not being invited to their meetings at this point are typical. That'se because the builder is still in control. The builder will eventually assign a board from the homeowner's right before the transition period. I would recommend strongly that you butter the builder up to get one of those spots. It may be at those meetings with the builder's assigned board members that the meetings may become "open". After the first year, the homeowners will be able to vote from within their own pool of owners. Sometime during this period, things should start to open up and information flow more freely.

By the time the builder turns over the HOA officially, the books should be open for review. It just sounds like you will have to wait until the transition period happens. Then things will be better. Go Tide!!!

Former HOA President
Jadedone4 (Virginia)
Posts: 495
Posted:
Mary (and Melissa),

I few differing points... the minute the first assessment is taken, the HOA is considered "formed," and is required to follow the governing documents, and state laws. In the absence of state law, the governing documents take precedence. If the governing documents have specificity which allow viewing of the books - be they documents, resolutions, or financials - there should be language instructing an owner on how to do this ("normal business hours," "open to members in good standing," etc). I would tend to agree with Melissa's point about the limits of what you can do now - up to the point of telling you that you SHOULD be getting documents (do not limit yourself to what the developer is "not" giving you - head to your local/municipal agency, if any, for plats, proffers, plans, etc - and to the courthouse for reuqired filings from the builder/developer), members (start an email listserv with everyone's address, so that you can share information, find out who has legal, audit/financial, enineering, etc - experiences and can assist the community with their talent), and additional resourses (auditors, engineers - both for inspections, and a management company - provided tha tyour community wants one), in order, so that when transition occurs you are better prepared.

There is NO contract per se between the builder/developer and the community - just the governing documents, which articulate what the builder/developer has stated are the events which trigger owner control. This is called a covenant/declaration for a reason - the builder/developer has legally agreed to the terms and conditions which were filed with the court - to build a community as per plan submitted. All of the amenities, common areas were thought out, drawn, and approved (hopefully) by your local municipality.

I do not agree that it is "only" costing the builder/developer money by being the HOA (his/her employess most likely sit on the first board, making decisions for the community, on behalf of developer). The developer (if you review your governing documents) has a portion of the assessments on the lots which are still being developed, and are owned by builder/developer. Allow me an example of this.. when I visited the local agency which held the proffers, plats, etc - I viewed that for my community - the builder/developer paid just over $90K for each of the townhome lots, which were built and sold at over $700k each. So while there is delay in profits, the builder/developer is also investing heavily in the market where the homes are located.

You and your community SHOULD be invited, or at the very least made aware of meetings, unless Alabama does not have the "open meeting" law requirements. I will tell you that the builder/developer will have these meetings at time/place convenient for them, and not you (usually conference room of builder, and during regular business hours, when most new owner's are at work). Do not "expect" this process to be balanced - the builder/developer does want to erect the homes as fast as possible, and any "roadbumps" from owners may be perceived as hindering progress (not saying this is right or fair, just a caution that it does exist with SOME builder/developers).

If and only IF your documents state that the transition will be staggered, will the builder be required to install an owner to the board, during this period. There are often triggers (25, 50, 75% sold) that effect the addtion of owners to board. However, sometimes (as I have experienced with my community), the builder/developer will just "dump" everything in owner's laps. If your doc's do not call/allow for this, try to work with the builder towards presenting this as a viable option in getting things done. If it does, be OPEN to understanding both sides of the coin - owner and builder/developer prespectives.

Find out if the builder/developer was required to submit bonds to your local municipality in order to build. If so, you can be part of that process, as the local municipality will have to come out and do an inspection prior to the builder getting those funds returned. The more you know the better off your community will be.

Do a searh on here, first page upper right corner "search engine" for transition.. you will find a few checklists which are quite helpful, and other posts on the subject - from new owner who not long ago were in same shoes...

Go to www.cai.com, there are additional resources there, and some that maybe Alabama specific...

MaryM9 (Alabama)
Posts: 4
Posted:
Thank you for replying to my query. Yes, Alabama does have Open Meetings but only for state government. My husband and I fear the builder will not comply with that restriction -- he certainly hasn't yet; however, perhaps he is not considered state government.

We are being assessed, and expected to pay. This is our main gripe -- we don't mind paying (we bought into a community with a HOA for a reason), but then not to be able to attend board meetings to see how our money is being spent or mispent. Again, I feel like I should walk in front of their offices with a placard: TAXATION WITHOUT REPRESENTATION!

We do have convenants in place, although the builder seems unable to find Attachment B and C which are referred to. No problem with there being a "board" with only builder administration, but once they begin to ask for money?

RogerB (Colorado)
Posts: 5,067
Posted:
Mary, is your HOA incorporated? If it is, look at Alabama's requirements for corporations in regard to open meetings. They may or may not require open Board meetings but probably require an annual meeting of members. The members can always request the Board meeting be open. Also, I'm surprised they do not have a "sunshine law".
MelissaP1 (Alabama)
Posts: 13,836
Posted:
HOA's aren't that common in Alabama. They are growing more in popularity but aren't as prevalent as they are in other states. There are laws but not alot interest to create any. I never really had to deal with many state laws when running my HOA. It was usually just local and our rules.

The builder/developer will be collecting dues as soon as they form the HOA. A HOA is ONLY funded by it's members for it's members. So even though the board is in the builder's hands, you still have to pay. I believe this will help setup your budget after turn over. You may expect changes on the amount of dues you pay once the builder/developer leaves. Our dues actually went down. Although that involved some extenuating circumstances. (We had one water meter for the whole HOA. You didn't pay dues, we turned your water off. However, we changed to separate meters and each owner is responsible for their own water bills now).

I don't believe there has to be an open meeting at this point. The HOA is a corporation at this point and you are a shareholder. However, you and your neighbors aren't controlling shareholders. Your a minority vote. So no matter how the owners vote at this point, the builder still has 51% of the voting power. There really isn't any need to attend the meetings until you have more control and voting rights.

Basically, even if you attend these "board" meetings of the builder/developer, your going to make yourself even more frustrated. There's nothing you can do until the majority vote is turned over to the homeowners. So be patient. Nothing is written in stone at this point. Relax. If you think you have problems now, they will be NOTHING compared when the HOA turns over to the owners. Believe me, builders/developer mistakes are much more easily rectified than a group of bad owner decisions.

Former HOA President
MaryM9 (Alabama)
Posts: 4
Posted:
I think the homeowners are just cncerned this board will leave us in debt. The builder's past actions do not lend credence to their abilities to keep the HOA out of debt.

The Sunshine Law -- is that the one that says about Open Meetings? Yes, Alabama does have one, but in reading through the text, it appears only to refer to the Government.

Thanks for everyone's input. I'll continue to read each e-mail and learn more and more -- !
GloriaM (North Carolina)
Posts: 829
Posted:
Mary:

I would suggest that you write a letter documenting your request to be present at the next meeting. State that you are concerned and want to be a proactive homeowner in your community. Let him know you are very interested in the HOA and want to volunteer for the board appointment or committees. Who can resist a volunteer?
PaulM (Pennsylvania)
Posts: 1,347
Posted:
MaryM9: review your official documents (Bylaws) regarding the 'Appointed Board' which is the board the builder/declarant has appointed to 'serve at his pleasure'. This is the board in place UNTIL such time the declarant 'turns over' the association to the residents, usually when a certain percentage of units are sold. Your Bylaws should give the specifics.

It sounds like this is the Board in place at this time and you have not had an actual elected board of residents. You are still bound to pay the assessment fee. Try to find out if the declarant has contracted with a MC (management company-perhaps where you send your payment?) to learn if he intends to have an open meeting at some point prior to the turnover. If not, contact him directly. Don't think the builder is too concerned about holding meetings to inform his 'buyers'; that's why he has an appointed board to be his eyes and ears.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

  • ✓ Ask follow-up questions
  • ✓ Share your experience
  • ✓ Get expert advice
  • ✓ Access 350,000 discussions
Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here