Obligation by developer/Declarant to pay lot assessments

Started by WayneH4 • 3 replies • 1375 views

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WayneH4 (North Carolina)
Posts: 1

Posted:

My community was formed after January 1, 1999, as a non-profit corporation under Chapter 55A of the North Carolina General Statues and is subject to the North Carolina Planned Community Act, Chapter 55A of the NC General Statues, among others.

The developer/Declarant has not yet turned over the association to the homeowners. The developer/Declarant still owns lots within the community.

The developer/Declarant asserts that it does not need to pay assessments on the lots it still owns. Reason given is because NC state statute allows payment of any budget shortfalls in lieu of lot assessments. I have not been able to identify any such language. Do statutes allow the option claimed by the developer/Declarant?

Excerpt from the Declaration of Covenants, Conditions, and Restrictions:
"The Declarant, for each Lot owned within the Property, hereby covenants, and each Owner of any Lot by
acceptance of a deed therefore, whether or not it shall be so expressed in such deed, is deemed to
covenant and agree to pay to the Association: (1) annual assessments or charges which are Common
Expenses, and (2) special assessments for extraordinary maintenance and capital improvements, (3)
special assessments for purchase, construction or reconstruction of improvements; (4) to the
appropriate governmental taxing authority, a pro rata share of assessments for public improvement to
the Common Properties and public road if the Association shall default in payment thereof; and (5)
assessments (fines) levied as a result of violations7of the Declaration rules, policies and design
guidelines."

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Wayne

While not commenting specifically on your situation, we had a similar situation in SC. Our developer contended that no dues/assessments were due until a home had received a CoP (Certificate of Occupancy). When I got on the BOD, I questioned this. The BOD Lawyer said that while that had been the way it was, he felt the BOD could legally contest it. After considering the cost of pursuing it, the BOD concluded the cost our lawyer said it could cost us to pursue it was not worth the return as he said he doubted we could collect damages and we could only collect going forward. We agreed to drop the issue.

You must look ask yourself the same question. Is it worth pursuing?

GwenG (Florida)
Posts: 669

Posted:

I think you first must validate the provision that Declarant claims in the statute.

Notwithstanding that, your Dec language sounds clear to me: Declarant has promised to pay the same assessments as a parcel owner on parcels it owns. This is the contract between Declarant and Owners. HOA's can construct obligations that are more restrictive than other (higher) governmental entities. In this instance, the Declarant has opted to put a greater obligation on itself than that required by statute (presumably).

There MAY be an exception here if the CCR's have "Kaufman" language, which expresses a specific intention between the parties to be governed by future statute changes that adversely affect substantive contractual rights. The language is described by the phrase ..."as amended from time to time" when it references the applicable statute.

If the Kaufman language is present, all parties pre-agreed to be ruled by the statutory changes over the years, as they are amended. In that case, your Declarant may be able to legally avoid the obligation it agreed to.

JanetB2 (Colorado)
Posts: 4,219

Posted:

If you are a Planned Community and not Condos here is a link for your state statutes:
http://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByChapter/Chapter_47F.html

My question to developer would be ... "Please state the section of law you are referencing". The section in the above link regarding assessments states:

§ 47F-3-115. Assessments for common expenses.
(a) Except as otherwise provided in the declaration, until the association makes a common expense assessment, the declarant shall pay all common expenses. After any assessment has been made by the association, assessments thereafter shall be made at least annually.
(b) Except for assessments under subsections (c), (d), and (e) of this section, all common expenses shall be assessed against all the lots in accordance with the allocations set forth in the declaration. Any past-due common expense assessment or installment thereof bears interest at the rate established by the association not exceeding eighteen percent (18%) per year. For planned communities created prior to January 1, 1999, interest may be charged on any past-due common expense assessment or installment only if the declaration provides for interest charges, and where the declaration does not otherwise specify the interest rate, the rate may not exceed eighteen percent (18%) per year.
(c) To the extent required by the declaration:
(1) Any common expense associated with the maintenance, repair, or replacement of a limited common element shall be assessed against the lots to which that limited common element is assigned, equally, or in any other proportion that the declaration provides;
(2) Any common expense or portion thereof benefiting fewer than all of the lots shall be assessed exclusively against the lots benefitted; and
(3) The costs of insurance shall be assessed in proportion to risk and the costs of utilities shall be assessed in proportion to usage.
(d) Assessments to pay a judgment against the association may be made only against the lots in the planned community at the time the judgment was entered, in proportion to their common expense liabilities.
(e) If any common expense is caused by the negligence or misconduct of any lot owner or occupant, the association may assess that expense exclusively against that lot owner or occupant's lot.
(f) If common expense liabilities are reallocated, common expense assessments and any installment thereof not yet due shall be recalculated in accordance with the reallocated common expense liabilities. (1998-199, s. 1.)

We are not attorneys; however, I potentially call BS ....

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