Dissolution of HOA

ConchoP (Texas)
Posts: 208

Posted:

Our by-laws and deed restriction do not have a clause on how to dissolve the HOA.

We have no board and have no one wanting to be on the board.
I have searched and unable to find how this is done in Texas.

We are a unincorporated non-profit Association, would we follow the Sec. of the State of Texas guidelines and file s Certificate of Termination - Nonprofit Corporation or Cooperative Association?

NigelB (Texas)
Posts: 254

Posted:

Quote:

Posted By ConchoP on 03/31/2017 1:17 PM
Our by-laws and deed restriction do not have a clause on how to dissolve the HOA.

We have no board and have no one wanting to be on the board.
I have searched and unable to find how this is done in Texas.

We are a unincorporated non-profit Association, would we follow the Sec. of the State of Texas guidelines and file s Certificate of Termination - Nonprofit Corporation or Cooperative Association?

What do the ByLaws and/or deed restrictions say about amending them?

You could always get the fractional percentage required to amend, to agree to insert a clause into the ByLaws about dissolution, specifying how many members it took to agree to dissolve the association.

The problem occurs when the HOA owns property, what happens to it. Who is responsible for the upkeep of monuments, lighting of monuments, who is going pay the electric bill, is there an irrigation system, is there landscaping on common areas. No HOA - then it's up to volunteers. What happens to the assessments that have already been collected? How are they distributed?

If there's no board, who has the authority to do anything?

ConchoP (Texas)
Posts: 208

Posted:

It takes 70% to amend deed restrictions. Our issue is when the "developer" was acting as the board...he didn't do anything,no meeting,no annual assessments, he didn't even tell homeowners that HOA was established in Dec. of 2014 - we found out in 2016.

He has 3 votes to our 1, and has 85 lots left to build on out of 335 and he keeps adding more plats so he will constantly out vote us. Currently he is under a law suit that the HOA was named in. Because the certificate of management is still in his name they served him the citation. He never told the board we elected last November about the suit and has not conveyed any property, monuments, lighting or funds. And he left us with crappy roads that the county won't take over.

When the board found out about the law suite everyone but the President jumped ship. I met with our County Commissioner yesterday for two hours and he had no idea how bad this has turned out. He suggested dissolving the HOA and state a new one with other the developer. Our CC&R only state we have a mandatory HOA and doesn't Name it as the development hoa. was helping us research how to do this. He told be today that it's usually dissolved by 75% vote by the home owners and suggested I look out our bylaws and CC&R. I told him there was not a dissolution clause, so he was going to keep digging for information.

Is it possible to dissolve an HOA if you can't seat a board?

NigelB (Texas)
Posts: 254

Posted:

Quote:

Posted By ConchoP on 03/31/2017 2:44 PM
It takes 70% to amend deed restrictions. Our issue is when the "developer" was acting as the board...he didn't do anything,no meeting,no annual assessments, he didn't even tell homeowners that HOA was established in Dec. of 2014 - we found out in 2016.

He has 3 votes to our 1, and has 85 lots left to build on out of 335 and he keeps adding more plats so he will constantly out vote us. Currently he is under a law suit that the HOA was named in. Because the certificate of management is still in his name they served him the citation. He never told the board we elected last November about the suit and has not conveyed any property, monuments, lighting or funds. And he left us with crappy roads that the county won't take over.

When the board found out about the law suite everyone but the President jumped ship. I met with our County Commissioner yesterday for two hours and he had no idea how bad this has turned out. He suggested dissolving the HOA and state a new one with other the developer. Our CC&R only state we have a mandatory HOA and doesn't Name it as the development hoa. was helping us research how to do this. He told be today that it's usually dissolved by 75% vote by the home owners and suggested I look out our bylaws and CC&R. I told him there was not a dissolution clause, so he was going to keep digging for information.

Is it possible to dissolve an HOA if you can't seat a board?

I would think that if the developer has more votes than the homeowners then the developer has total control of the HOA regardless of whether or not there is a board. You don't even have enough votes to do anything.

This could be a real problem - let's just say that the lawsuit the HOA is named in is settled in favor of the plaintiffs - you guys (the HOA membership) are liable for any court ordered settlement, and the HOA could very well raise assessments to cover that settlement.

This is not a good situation to be in and you really need some legal advise

ConchoP (Texas)
Posts: 208

Posted:

Yes the developer has more votes than homeowners however...the board that jumped ship was hand picked by him. I don't think anyone would run for the board.

I did meet with a lawyer and he did say that the funds the developer won't turn over can be used to settle the law suit along with possible any future annual assessments. He said we could come back and sue the developer..but again that takes money.

We are really between a rock and a hard place. So the possibility of dissolving the HOA came up, the commissioner thought that a judge could rule to dissolve if we had no, board and could not election a board in addition to showing that the developer basically did nothing when "he" was the board.

GwenG (Florida)
Posts: 669

Posted:

Texas likely has a Not for Profit Corporation law, it will specify how to dissolve the (non-operating) corporation. Without a board, your corporate HOA exists but is not functional. Most corporate laws give shareholder/members the right to petition the courts for a receiver to begin dissolution of corporate assets and close the corporation. This might happen in any community that cannot seat a board of directors. The courts would assign an outside agent to manage the community to either function on its own or settle the accounts and dissolve the corporation.

In Florida, for example, our governing documents do not address this dissolution and neither does the HOA statute. The Corporate Statute administered by the Secretary of State would specify the step by step process to dissolve the corporation.

The problem is, as stated by another poster, that your non-operating HOA is named on the lawsuit and owners are going to have to cough up money for an attorney to limit the money damage.

Do the CCR's provide for a release of parcels from the Restrictive Covenants? That is included in some Declarations with a 75% vote. It is not an amendment; it is a release provision. Unfortunately, it does not let you escape the legal complications. It only permits you to be free of a mandatory HOA and gives the community no authorities, including the authority to collect assessments. Your legal counsel should advise what would happen if your HOA could not levy a special assessment for legal costs; would the individual owners' be liable and could the courts lien homes? Perhaps that is a distinction without a difference.

The problem of maintenance and sale/assignment of the common property that has not yet been conveyed is minor, in comparison with the potential liability this Developer has caused your community. Since the Developer still owns the common property, it might be part of the assets seized in the lawsuit if necessary to settle.

I am very sorry to hear about your community's misfortune. I hope that you will continue to keep all of us informed about your situation and how it resolves.

Please get legal representation asap (someone strong in real estate, contract law)!

DouglasK1 (Florida)
Posts: 2,046

Posted:

Deed restrictions will still exist regardless of whether the corporation exists or not.

Escaped former treasurer and director of a self managed association.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By ConchoP on 03/31/2017 2:44 PM
It takes 70% to amend deed restrictions. Our issue is when the "developer" was acting as the board...he didn't do anything,no meeting,no annual assessments, he didn't even tell homeowners that HOA was established in Dec. of 2014 - we found out in 2016.

He has 3 votes to our 1, and has 85 lots left to build on out of 335 and he keeps adding more plats so he will constantly out vote us. Currently he is under a law suit that the HOA was named in. Because the certificate of management is still in his name they served him the citation. He never told the board we elected last November about the suit and has not conveyed any property, monuments, lighting or funds. And he left us with crappy roads that the county won't take over.

When the board found out about the law suite everyone but the President jumped ship. I met with our County Commissioner yesterday for two hours and he had no idea how bad this has turned out. He suggested dissolving the HOA and state a new one with other the developer. Our CC&R only state we have a mandatory HOA and doesn't Name it as the development hoa. was helping us research how to do this. He told be today that it's usually dissolved by 75% vote by the home owners and suggested I look out our bylaws and CC&R. I told him there was not a dissolution clause, so he was going to keep digging for information.

Is it possible to dissolve an HOA if you can't seat a board?

In some States under the law the developer can have excessive rights. While sometimes not right unfortunately it is the law. The issue you will potentially run into is if the County guy stated you need 75% to disolve that would require 252 votes (75% of 335). If you subtract (335 Total Units - 252 Required Votes = 83). Per your statement the developer has 85 Lots; therefore, you need to potentially wait until the developer sells at least 2-3 Lots before you can potentially consider this option.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Concho

Why would you want to dissolve your HOA? Do you realize any common areas (pools, parks, retention ponds, entrance signage/walls,etc.) would still require some level of an HOA to deal with them.

GwenG (Florida)
Posts: 669

Posted:

Douglas posted:

Deed restrictions will still exist regardless of whether the corporation exists or not.

You are so right and many do not appreciate that the HOA is not equivalent to the corporation. The corporation is authorized by the Declaration and these are two separate but related entities. (To oversimplify, one is the property side--and runs with the land--and one is the business side--and does NOT run with the land.)

If the Declaration contains a provision for releasing parcels from restrictions by a vote of xx%, and release is affirmed, the deed restrictions can be voided. The bigger problem is that any third parties with an equitable interest in the property might have a hissy fit and object to the vote to release its collateral interest from the restrictions have its security devalued by dissolution of the HOA.

The Declaration also might have its own "renewal" provision after a certain # of years and owners could let the restrictions expire.

In Florida, they can be MRTA'd out in 30 years. I don't think Texas has a MRTA law. But, none of these are shields from the effects of an adverse outcome in the lawsuit.

@JohnC46; ConchoP has far greater problems to deal with the mowing the lawn. Dissolved HOA's often petition their municipalities/counties to take over ownership and/or maintenance of common areas and set up municipal service tax districts. ConchoP has filed as an inactive corporation, but there are assets and accounts that need to be distributed and appear to be held by the Defendant Developer. The HOA will need legal representation to defend itself on the lawsuit and that will cost money this HOA does not have possession of. ConchoP has a huge problem and is attempting to solve it through self-help.

@ConchoP: I hope this does not come back at you as in "No good deed goes unpunished." I urge you to get help soon. Someone needs to get your homeowners on board with this problem because it is they who will pay whatever damages are placed against them.

ConchoP (Texas)
Posts: 208

Posted:

I see as a no win situation.

1) Try to talk to developer - he is in Breach of Contract because when "he" was the acting board he never had a meeting; never kept minutes; didn't charge annual assessments; didn't enforce deed restrictions; deed restriction state homeowners would pay an HOA at closing...some homeowners paid HOA fee at closing other did not. He filed the Bylaws with the county in Dec. 2014 and never told homeowners until we accidentally found out about them in July - Aug of 2016 and we approached him about it. And even though is more of a ethical issue he failed to tell the board about the lawsuit that was filed in Feb. 2016,
So now... we may or may not be able to seat a board...plus the board has a high chance of paying higher insurance rates because of the suit.

I feel that the leverage by doing this is to show homeowners and the court you tried to reach an agreement out side of court. If he shows signs of resistant..then let him know we will our have to send letters to all the homeowners and look at our legal options.

IF we stay as an HOA we will possible have no funds and possible have future assessments garnished and our roads will remain crappy and developer remains in voting power of 3 to 1. Until he stops building - he as at least 2 other plats planned each with at least 30- 40 plats.

If we dissolve, we have no money...possible NOT have future assessments garnished, write new bylaws, establish new HOA boundaries and will inherit crappy roads...but developer would have no voting powers and maybe be able to sue developer and get enough to pay for some of the road fixes.

Either way it's a lose - lose....it's cost money..time and alot of educating the homeowners...

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Concho

Like it or not the developer, not you owners, is in charge.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By JohnC46 on 04/02/2017 6:31 PM
Concho

Like it or not the developer, not you owners, is in charge.

JohnC46 ... You tend to state that a lot ... are you a developer? First of all that statement would depend on what STATE you are located. While some states may allow a Developer to in essence "defraud" consumers and their secured creditors who purchased or lend money in good faith based on a contract. Other states do not!

With what I know now in my state if a developer changed my contract which I and my secured lender purchased under in good faith and did not have a "reserved" right under the law to make that change. I would file with BOTH my Local Attorney General and State Attorney General violations of Theft of a Contract and Real Estate Fraud. And if I found that they had already engaged in a similar activity in another subdivision in the past 10 years I would add Criminal Racketeering.

Developers are not GOD and in many States are limited.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Janet

Yes I am fond of saying the developer rules especially when they have the votes to properly do so, including changing the Covenants/Bylaws without owner approval. Even your post showed they could do what you would object to if they had the "reserved right" to do so.

Many that have issues, are first time HOAers and did not understand what they were getting into. Most got into an HOA thinking well we owner's control by voting and that is the democratic way to do things. Little did they realize that while under developer control, the developer controls the votes. My belief is Concho falls into this category.

I am on my 6th HOA (MA,OH,IL,SC) and I will not buy in unless under or very close to being under owner control. Not that I distrust developers, but I know they will do what serves them best which means they may well change the ground rules to rules I may not only dislike, but to those that I would not have bought into.

Not all developers are honest. Not all owners are honest. One of our biggest complainers about our former developer (we are two years into owner control) wanted the developer to "raise" the price of his home as he was doing some type of a reverse mortgage to buy it. The higher price would have given him more money in his pocket. I believe he even offered a bribe. Our developer was one of the most honest people you would ever want to do business with and he would not play the game. That owner did nothing but bad mouth everything the developer did from that day on.

NigelB (Texas)
Posts: 254

Posted:

Quote:

Posted By JanetB2 on 04/03/2017 12:32 AM

Posted By JohnC46 on 04/02/2017 6:31 PM
Concho

Like it or not the developer, not you owners, is in charge.

JohnC46 ... You tend to state that a lot ... are you a developer? First of all that statement would depend on what STATE you are located. While some states may allow a Developer to in essence "defraud" consumers and their secured creditors who purchased or lend money in good faith based on a contract. Other states do not!

With what I know now in my state if a developer changed my contract which I and my secured lender purchased under in good faith and did not have a "reserved" right under the law to make that change. I would file with BOTH my Local Attorney General and State Attorney General violations of Theft of a Contract and Real Estate Fraud. And if I found that they had already engaged in a similar activity in another subdivision in the past 10 years I would add Criminal Racketeering.

Developers are not GOD and in many States are limited.

The state we are speaking about is the state that the original poster is from - Texas.

When under developer control, the developer rules. The developer writes the Bylaws and the CC&R's (deed restrictions), the developer determines under which circumstances the ByLaws and the deed restrictions can be changed and generally, it cedes to itself the right to change those deed restrictions at any time prior to the other class of members gaining control of the HOA.

The changing of the deed restriction by the developer is not fraud. When you buy into a subdivision that is still under developer control you get a copy of the ByLaws and the CC&R's, the buyer should be fully aware of the fact that the developer has the right to change those conditions.

In the State of Texas - the developer has total control over the HOA until such time as the covenants provide for it passing to the class of members that purchased the lots in subdivision.

JeffT2 (Iowa)
Posts: 880

Posted:

Quote:

Posted By NigelB on 04/03/2017 7:41 AM

Posted By JanetB2 on 04/03/2017 12:32 AM

Posted By JohnC46 on 04/02/2017 6:31 PM
Concho

Like it or not the developer, not you owners, is in charge.

JohnC46 ... You tend to state that a lot ... are you a developer? First of all that statement would depend on what STATE you are located. While some states may allow a Developer to in essence "defraud" consumers and their secured creditors who purchased or lend money in good faith based on a contract. Other states do not!

With what I know now in my state if a developer changed my contract which I and my secured lender purchased under in good faith and did not have a "reserved" right under the law to make that change. I would file with BOTH my Local Attorney General and State Attorney General violations of Theft of a Contract and Real Estate Fraud. And if I found that they had already engaged in a similar activity in another subdivision in the past 10 years I would add Criminal Racketeering.

Developers are not GOD and in many States are limited.

The state we are speaking about is the state that the original poster is from - Texas.

When under developer control, the developer rules. The developer writes the Bylaws and the CC&R's (deed restrictions), the developer determines under which circumstances the ByLaws and the deed restrictions can be changed and generally, it cedes to itself the right to change those deed restrictions at any time prior to the other class of members gaining control of the HOA.

The changing of the deed restriction by the developer is not fraud. When you buy into a subdivision that is still under developer control you get a copy of the ByLaws and the CC&R's, the buyer should be fully aware of the fact that the developer has the right to change those conditions.

In the State of Texas - the developer has total control over the HOA until such time as the covenants provide for it passing to the class of members that purchased the lots in subdivision.

According to Texas nonprofit law, a director shall discharge the director's duties, including duties as a committee member, in good faith, with ordinary care, and in a manner the director reasonably believes to be in the best interest of the corporation. So developers cannot do anything they want, and there are other laws. Just saying. There are limits.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By JeffT2 on 04/03/2017 8:26 AM

Posted By NigelB on 04/03/2017 7:41 AM

Posted By JanetB2 on 04/03/2017 12:32 AM

Posted By JohnC46 on 04/02/2017 6:31 PM
Concho

Like it or not the developer, not you owners, is in charge.

JohnC46 ... You tend to state that a lot ... are you a developer? First of all that statement would depend on what STATE you are located. While some states may allow a Developer to in essence "defraud" consumers and their secured creditors who purchased or lend money in good faith based on a contract. Other states do not!

With what I know now in my state if a developer changed my contract which I and my secured lender purchased under in good faith and did not have a "reserved" right under the law to make that change. I would file with BOTH my Local Attorney General and State Attorney General violations of Theft of a Contract and Real Estate Fraud. And if I found that they had already engaged in a similar activity in another subdivision in the past 10 years I would add Criminal Racketeering.

Developers are not GOD and in many States are limited.

The state we are speaking about is the state that the original poster is from - Texas.

When under developer control, the developer rules. The developer writes the Bylaws and the CC&R's (deed restrictions), the developer determines under which circumstances the ByLaws and the deed restrictions can be changed and generally, it cedes to itself the right to change those deed restrictions at any time prior to the other class of members gaining control of the HOA.

The changing of the deed restriction by the developer is not fraud. When you buy into a subdivision that is still under developer control you get a copy of the ByLaws and the CC&R's, the buyer should be fully aware of the fact that the developer has the right to change those conditions.

In the State of Texas - the developer has total control over the HOA until such time as the covenants provide for it passing to the class of members that purchased the lots in subdivision.

According to Texas nonprofit law, a director shall discharge the director's duties, including duties as a committee member, in good faith, with ordinary care, and in a manner the director reasonably believes to be in the best interest of the corporation. So developers cannot do anything they want, and there are other laws. Just saying. There are limits.

Jeff

Cheaters cheat, so for the sake of the conversation let us assume most developers are honest and not looking to cheat.

Several real life examples of changes made by developers that owners were unhappy with:

1. Original docs say no pets of any kind. Developer realizes this is hurting sales. They decide cats and dogs allowed.

2. Phase One single family homes. Phase Two was referenced in original docs as existing but the developer decided to build duplexes.

3. Original docs say no fences more than 4 feet tall. Developer decides to allow 6 foot privacy fences.

Allow me to ask you:

A. Do you believe that above were all done legally? I do.

B. Do you believe that initial owners might be very displeased? I do.

C. Do you believe the developer/director was acting in the best interest of the corporation? I do. I might not like it, but I agree they could be considered in the best interest of the corporation as they make for more sales.

JeffT2 (Iowa)
Posts: 880

Posted:

Quote:

Posted By JohnC46 on 04/03/2017 8:49 AM

Posted By JeffT2 on 04/03/2017 8:26 AM

Posted By NigelB on 04/03/2017 7:41 AM

Posted By JanetB2 on 04/03/2017 12:32 AM

Posted By JohnC46 on 04/02/2017 6:31 PM
Concho

Like it or not the developer, not you owners, is in charge.

JohnC46 ... You tend to state that a lot ... are you a developer? First of all that statement would depend on what STATE you are located. While some states may allow a Developer to in essence "defraud" consumers and their secured creditors who purchased or lend money in good faith based on a contract. Other states do not!

With what I know now in my state if a developer changed my contract which I and my secured lender purchased under in good faith and did not have a "reserved" right under the law to make that change. I would file with BOTH my Local Attorney General and State Attorney General violations of Theft of a Contract and Real Estate Fraud. And if I found that they had already engaged in a similar activity in another subdivision in the past 10 years I would add Criminal Racketeering.

Developers are not GOD and in many States are limited.

The state we are speaking about is the state that the original poster is from - Texas.

When under developer control, the developer rules. The developer writes the Bylaws and the CC&R's (deed restrictions), the developer determines under which circumstances the ByLaws and the deed restrictions can be changed and generally, it cedes to itself the right to change those deed restrictions at any time prior to the other class of members gaining control of the HOA.

The changing of the deed restriction by the developer is not fraud. When you buy into a subdivision that is still under developer control you get a copy of the ByLaws and the CC&R's, the buyer should be fully aware of the fact that the developer has the right to change those conditions.

In the State of Texas - the developer has total control over the HOA until such time as the covenants provide for it passing to the class of members that purchased the lots in subdivision.

According to Texas nonprofit law, a director shall discharge the director's duties, including duties as a committee member, in good faith, with ordinary care, and in a manner the director reasonably believes to be in the best interest of the corporation. So developers cannot do anything they want, and there are other laws. Just saying. There are limits.

Jeff

Cheaters cheat, so for the sake of the conversation let us assume most developers are honest and not looking to cheat.

Several real life examples of changes made by developers that owners were unhappy with:

1. Original docs say no pets of any kind. Developer realizes this is hurting sales. They decide cats and dogs allowed.

2. Phase One single family homes. Phase Two was referenced in original docs as existing but the developer decided to build duplexes.

3. Original docs say no fences more than 4 feet tall. Developer decides to allow 6 foot privacy fences.

Allow me to ask you:

A. Do you believe that above were all done legally? I do.

B. Do you believe that initial owners might be very displeased? I do.

C. Do you believe the developer/director was acting in the best interest of the corporation? I do. I might not like it, but I agree they could be considered in the best interest of the corporation as they make for more sales.

I generally agree. The nonprofit law is for things like the board awarding contracts to the developer at inflated prices, or perhaps using HOA funds for a lawsuit that primarily benefits the developer not the HOA, or using HOA funds to pay for developer construction. Also possible are some lack of maintenance issues, not enforcing the docs in self-serving ways.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By JohnC46 on 04/03/2017 6:39 AM

I am on my 6th HOA (MA,OH,IL,SC) and I will not buy in unless under or very close to being under owner control. Not that I distrust developers, but I know they will do what serves them best which means they may well change the ground rules to rules I may not only dislike, but to those that I would not have bought into.

You and I both .... LOL ... As the old saying goes "Once bit twice shy".

I agree that many are new owners not understanding HOA's and you do have some honest developers.

Potentially the list you stated above the one item I would potentially disagree (unless was reserved as potential change and disclosed to buyers):

"Phase One single family homes. Phase Two was referenced in original docs as existing but the developer decided to build duplexes."

The reason being is the Developer originally could choose anything under the sun they wanted to build and the sky is potentially the limit. However, after they made their choice and if they did not reserve the right to change and disclose possible change to buyers, after going out and fishing for buyers they should not be able to turn around and in essence defraud those buyers and their mortgage lenders. I have an issue with this when many hundreds of thousands of dollars are spent on possible "Hollow Promises".

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By JeffT2 on 04/03/2017 8:26 AM

Posted By NigelB on 04/03/2017 7:41 AM

Posted By JanetB2 on 04/03/2017 12:32 AM

Posted By JohnC46 on 04/02/2017 6:31 PM
Concho

Like it or not the developer, not you owners, is in charge.

JohnC46 ... You tend to state that a lot ... are you a developer? First of all that statement would depend on what STATE you are located. While some states may allow a Developer to in essence "defraud" consumers and their secured creditors who purchased or lend money in good faith based on a contract. Other states do not!

With what I know now in my state if a developer changed my contract which I and my secured lender purchased under in good faith and did not have a "reserved" right under the law to make that change. I would file with BOTH my Local Attorney General and State Attorney General violations of Theft of a Contract and Real Estate Fraud. And if I found that they had already engaged in a similar activity in another subdivision in the past 10 years I would add Criminal Racketeering.

Developers are not GOD and in many States are limited.

The state we are speaking about is the state that the original poster is from - Texas.

When under developer control, the developer rules. The developer writes the Bylaws and the CC&R's (deed restrictions), the developer determines under which circumstances the ByLaws and the deed restrictions can be changed and generally, it cedes to itself the right to change those deed restrictions at any time prior to the other class of members gaining control of the HOA.

The changing of the deed restriction by the developer is not fraud. When you buy into a subdivision that is still under developer control you get a copy of the ByLaws and the CC&R's, the buyer should be fully aware of the fact that the developer has the right to change those conditions.

In the State of Texas - the developer has total control over the HOA until such time as the covenants provide for it passing to the class of members that purchased the lots in subdivision.

According to Texas nonprofit law, a director shall discharge the director's duties, including duties as a committee member, in good faith, with ordinary care, and in a manner the director reasonably believes to be in the best interest of the corporation. So developers cannot do anything they want, and there are other laws. Just saying. There are limits.

Amen

. What I have noticed in my state is when CCIOA the HOA laws make statements such as "Shall Not" which is similar to cannot not, will not, must not, etc. If violated there is most likely a criminal or fraud law that is also violated. Guess that is why nobody (shall not) violate that law ... LOL

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By ConchoP on 03/31/2017 2:44 PM
It takes 70% to amend deed restrictions. Our issue is when the "developer" was acting as the board...he didn't do anything,no meeting,no annual assessments, he didn't even tell homeowners that HOA was established in Dec. of 2014 - we found out in 2016.

He has 3 votes to our 1, and has 85 lots left to build on out of 335 and he keeps adding more plats so he will constantly out vote us. Currently he is under a law suit that the HOA was named in. Because the certificate of management is still in his name they served him the citation. He never told the board we elected last November about the suit and has not conveyed any property, monuments, lighting or funds. And he left us with crappy roads that the county won't take over.

When the board found out about the law suite everyone but the President jumped ship. I met with our County Commissioner yesterday for two hours and he had no idea how bad this has turned out. He suggested dissolving the HOA and state a new one with other the developer. Our CC&R only state we have a mandatory HOA and doesn't Name it as the development hoa. was helping us research how to do this. He told be today that it's usually dissolved by 75% vote by the home owners and suggested I look out our bylaws and CC&R. I told him there was not a dissolution clause, so he was going to keep digging for information.

Is it possible to dissolve an HOA if you can't seat a board?

Concho ... There are some statements you made that I have questions. There are many numbers floating around so I want to be sure to clarify.

1. On what date did you purchase your property?
2. What is the date your CCR's were filed with your County Records?
3. What does your CCR's state as the TOTAL number of lots the developer will create?
4. What does the Plat / Map show as the number of lots the developer created?
5. Please provide more detail when you state: "Our CC&R only state we have a mandatory HOA and doesn't Name it as the development HOA."

I find it very difficult to believe due to past real estate market that your developer could have filed with County Records to establish an HOA supposedly in Dec. 2014 and has built and sold around 250 homes between then and now. Somehow that just does not compute.

NigelB (Texas)
Posts: 254

Posted:

Quote:

Posted By JeffT2 on 04/03/2017 8:26 AM

Posted By NigelB on 04/03/2017 7:41 AM

Posted By JanetB2 on 04/03/2017 12:32 AM

Posted By JohnC46 on 04/02/2017 6:31 PM
Concho

Like it or not the developer, not you owners, is in charge.

JohnC46 ... You tend to state that a lot ... are you a developer? First of all that statement would depend on what STATE you are located. While some states may allow a Developer to in essence "defraud" consumers and their secured creditors who purchased or lend money in good faith based on a contract. Other states do not!

With what I know now in my state if a developer changed my contract which I and my secured lender purchased under in good faith and did not have a "reserved" right under the law to make that change. I would file with BOTH my Local Attorney General and State Attorney General violations of Theft of a Contract and Real Estate Fraud. And if I found that they had already engaged in a similar activity in another subdivision in the past 10 years I would add Criminal Racketeering.

Developers are not GOD and in many States are limited.

The state we are speaking about is the state that the original poster is from - Texas.

When under developer control, the developer rules. The developer writes the Bylaws and the CC&R's (deed restrictions), the developer determines under which circumstances the ByLaws and the deed restrictions can be changed and generally, it cedes to itself the right to change those deed restrictions at any time prior to the other class of members gaining control of the HOA.

The changing of the deed restriction by the developer is not fraud. When you buy into a subdivision that is still under developer control you get a copy of the ByLaws and the CC&R's, the buyer should be fully aware of the fact that the developer has the right to change those conditions.

In the State of Texas - the developer has total control over the HOA until such time as the covenants provide for it passing to the class of members that purchased the lots in subdivision.

According to Texas nonprofit law, a director shall discharge the director's duties, including duties as a committee member, in good faith, with ordinary care, and in a manner the director reasonably believes to be in the best interest of the corporation. So developers cannot do anything they want, and there are other laws. Just saying. There are limits.

It goes without saying that there are limits, but as long as the developer is acting in good faith then everything is subjective. As has been pointed out previously, a developer may feel a need to amend the covenants because of a situation that was unforeseen at the time the original covenants were enacted. The homeowners may not like it, but the developer is most likely legally entitled to do so.

And who is going to challenge it? If an individual homeowner decided to take legal action, the developer using the HOA will defend themselves, and any any legal expenses will be paid by the HOA and/or levied on the HOA members (which include the individual who brought the legal action).

A far better course of action for a homeowner who is in disagreement with the deed restrictions of a developer controlled subdivision is to (1) Not buy in the first place, or (2)Sell and find somewhere to live that is not as restrictive. Less heartburn, less expense.

ConchoP (Texas)
Posts: 208

Posted:

Concho ... There are some statements you made that I have questions. There are many numbers floating around so I want to be sure to clarify.

1. On what date did you purchase your property? - 2010

2. What is the date your CCR's were filed with your County Records? - 2008

3. What does your CCR's state as the TOTAL number of lots the developer will create? - It does not state how many lots will be created

4. What does the Plat / Map show as the number of lots the developer created? - Currently there are a total of 335 lots...250 sold lots...85 developer owned

5. Please provide more detail when you state: "Our CC&R only state we have a mandatory HOA and doesn't Name it as the development HOA."
- After re-reading It seem as though it does name the HOA. ...Section 3 Road Maintenance and Home Owner's Association:...Subject to mandatory membership in the XYZ Section One Road Maintenance and Home Owner's Association

...then in Section 3 (f). The Developer shall cause the Association to be established, at which time, all members shall become bound by its rules and regulations, and said rules and regulations shall supersede and take place of this Section 3.

I find it very difficult to believe due to past real estate market that your developer could have filed with County Records to establish an HOA supposedly in Dec. 2014 and has built and sold around 250 homes between then and now. Somehow that just does not compute.
- The bulk of the homes were built from appox. 2012/20113 to 2015 due to oil boom. Other builders are also have purchased lots and built homes.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By ConchoP on 04/04/2017 10:30 AM
Concho ... There are some statements you made that I have questions. There are many numbers floating around so I want to be sure to clarify.

1. On what date did you purchase your property? - 2010

2. What is the date your CCR's were filed with your County Records? - 2008

3. What does your CCR's state as the TOTAL number of lots the developer will create? - It does not state how many lots will be created

4. What does the Plat / Map show as the number of lots the developer created? - Currently there are a total of 335 lots...250 sold lots...85 developer owned

5. Please provide more detail when you state: "Our CC&R only state we have a mandatory HOA and doesn't Name it as the development HOA."
- After re-reading It seem as though it does name the HOA. ...Section 3 Road Maintenance and Home Owner's Association:...Subject to mandatory membership in the XYZ Section One Road Maintenance and Home Owner's Association

...then in Section 3 (f). The Developer shall cause the Association to be established, at which time, all members shall become bound by its rules and regulations, and said rules and regulations shall supersede and take place of this Section 3.

I find it very difficult to believe due to past real estate market that your developer could have filed with County Records to establish an HOA supposedly in Dec. 2014 and has built and sold around 250 homes between then and now. Somehow that just does not compute.
- The bulk of the homes were built from appox. 2012/20113 to 2015 due to oil boom. Other builders are also have purchased lots and built homes.

Been looking around and found the following which might help if developer is not allowing owners on the BOD:

Sec. 209.00591. BOARD MEMBERSHIP

(c) The declaration may provide for a period of declarant control of the association during which a declarant, or persons designated by the declarant, may appoint and remove board members and the officers of the association, other than board members or officers elected by members of the property owners' association. Regardless of the period of declarant control provided by the declaration, on or before the 120th day after the date 75 percent of the lots that may be created and made subject to the declaration are conveyed to owners other than a declarant or a builder in the business of constructing homes who purchased the lots from the declarant for the purpose of selling completed homes built on the lots, at least one-third of the board members must be elected by owners other than the declarant. If the declaration does not include the number of lots that may be created and made subject to the declaration, at least one-third of the board members must be elected by owners other than the declarant not later than the 10th anniversary of the date the declaration was recorded.

If the Plat shows 335 Lots (75% = 251.25) ... So after the Developer sells 252 Lots he needs to allow the BOD to have 1/3 members as the Owners. That is the closest time I have found for gaining some control. TX gives a lot of control to the developer. In my state at 75% the owners would be majority of BOD. If you want your laws changed you need to harass your state legislators. If your county thinks the situation is a mess maybe your State Legislators will also and can fix laws to prevent or help with the mess. Otherwise you need to wait it out or sell and buy in a different development ... maybe one with no developer.

ConchoP (Texas)
Posts: 208

Posted:

JanetB2 - thanks for the information, sounds like we can do that starting in 2018.

Right now I don't think he could get anyone to be on the board if he asked.

All of the board except the President resigned because of the lawsuit. Our President can elect board members to fill the position for the time remaining.
But we were in the middle of elections, so we still will need to have elections with the newly elected board members as incumbents.

We just need to decide to dissolve the HOA or keep going. Each will present its' own problems.

PitA
Posts: 1,416

Posted:

You can NOT dissolve the HOA. The HOA exists (whether incorporated or not) in order to maintain and operate any commonly owned elements of the subdivision.

The HOA incorporated in order to shield it's members from PERSONAL liability in the event of a major lost lawsuit.

If incorporated, the members of the HOA may lose the COMMONLY owned assets but generally keep their personally owned personal assets (their homes).

If unincorporated the 'deep pockets' doctrine comes into play - the people who own the most lose the most.

You 'may' be able to dissolve the existing corporation but then, if prudent, y'all will need to re-incorporate ASAP.

OR

move if you don't like your accomodations

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By PitA on 04/06/2017 10:34 AM
You can NOT dissolve the HOA. The HOA exists (whether incorporated or not) in order to maintain and operate any commonly owned elements of the subdivision.

PitA ... Can you state the OP's State Laws regarding your statement???

In Colorado it would be found under 38-33.3-218. Termination of Common Interest Community. Therefore, if you are making a general statement it would in some states be false.

SleepyC (New Mexico)
Posts: 8

Posted:

States vary HUGELY on the law on stuff like this.

Just because your state is a certain way does not mean the original poster's state is like that *at all*.

I know of no one who is an expert on HOAs in all 50 states. If anybody knows of such a person, please let me know.

One thing original poster could try, that might help in my state, is contacting your local state/county/city politicians.

Sounds nutty at first I know, but helping voters is what they do.

Unlike your own lawyer, your elected representative won't charge you for their advice.

But I agree with all who said you need a Legal Eagle.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By SleepyC on 04/16/2017 11:11 AM
States vary HUGELY on the law on stuff like this.

Just because your state is a certain way does not mean the original poster's state is like that *at all*.

Very true ... which is why when we have someone from a different state ask a similar question on someone else's thread, we usually ask them to start their own thread. We try to keep questions from various states separate.

We have members from many states who can offer their experiences and knowledge. Some also have homes in more than one state so they have multiple state knowledge.

By the way ... Welcome to the Forum.

JanetB2 (Colorado)
Posts: 4,219

Posted:

BTW ... My hubby and I were both born in New Mexico. We moved from NM to CO in 2009 due to job transfer.