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MikeR19 (Kentucky)
Posts: 9
Posted:
Hey all,
New to the site, new to HOA's. I deal with property rights in my profession a lot though, so I'm somewhat knowledgeable.

I was the first to break ground in my neighborhood, consisting of 55 lots. I was told by the builder that an HOA would be set up. Fast forward a year later. The neighborhood is now at about 50% occupancy, with the remaining houses close to being finished. Come to find out from calling the developer himself that an HOA is NOT set up to be established. However, he did say that he would gladly have his attorney set one up if that's what the occupants wished. We have a Facebook group page set up, and it seems like most of the people in it are in favor of an HOA (at least 1 person has voiced her opinion that she does NOT want one because she "doesn't want people telling her what she can and cannot do with her own house"). We have a Declaration of Restrictive Covenants, so I don't know if she realizes that those are the governing rules that dictates what she can and cannot do.

Here are my questions and concerns:

1. IF we get an HOA established, does it have to be a VOLUNTARY HOA, seeing as how there are already occupants and there was no prior HOA in effect?

2. I assume the answer to #1 is yes, is has to be voluntary. So, with that being said, how does a voluntary HOA go about enforcing any violation of the Restrictive Covenants? (e.g. Someone erects a shed that is not of the same material as the house, as the RC's say it must be).

3. We don't have an common areas and the streetlight utility bill will be covered by the County. What would our dues go towards exactly? Incidental expenses to sign/drainage repair??? Should we even have dues?

4. We do have a large drainage basin, but that lies across a few lots. The owners of those lots are responsible for mowing the basin, correct?

5. Should we wait until every house is complete, every house is occupied, or not wait at all to have the HOA set up by the developer? My concern here is that the developer may choose to relinquish his police powers at any time (per the RC's) if he so chooses. If he doesn't relinquish, he has those powers for 5 years from the plat recording date (May 2016).

My main concern for all of this is that, without an HOA, it would be up to an individual property owner to challenge any RC violations. And really, who is going to step up and be "THAT guy?" I feel that, with an HOA established, be it mandatory or voluntary, there would at least be a group of people to collectively object a violation, and thus, a greater chance of it being resolved. I know that, with a voluntary HOA, there's not much power to enforcing this, but it's a least something. If we could get it to become mandatory, that would be great, but I know that would most likely mean 100% of the occupants would have to agree, which I don't see happening.
PitA
Posts: 1,416
Posted:
1. IF we get an HOA established, does it have to be a VOLUNTARY HOA, seeing as how there are already occupants and there was no prior HOA in effect?

What does the declaration state?

2. I assume the answer to #1 is yes, is has to be voluntary. So, with that being said, how does a voluntary HOA go about enforcing any violation of the Restrictive Covenants? (e.g. Someone erects a shed that is not of the same material as the house, as the RC's say it must be).

If the HOA is truly voluntary, it can't.

3. We don't have an common areas and the streetlight utility bill will be covered by the County. What would our dues go towards exactly? Incidental expenses to sign/drainage repair??? Should we even have dues?

See answer to #4.

4. We do have a large drainage basin, but that lies across a few lots. The owners of those lots are responsible for mowing the basin, correct?

? Who actually owns the basin ? Even if the 'association' merely has an easement (else the homeowner could fill it in) the association is probably responsible for its' maintenance.

5. Should we wait until every house is complete, every house is occupied, or not wait at all to have the HOA set up by the developer? My concern here is that the developer may choose to relinquish his police powers at any time (per the RC's) if he so chooses. If he doesn't relinquish, he has those powers for 5 years from the plat recording date (May 2016).

Your 'developer' is about to take the money and run. Personally, I would run WITH him.
MikeR19 (Kentucky)
Posts: 9
Posted:
You have confused me more.

There is no association set up (yet). The declaration doesn't even mention an HOA.

The drainage basin is an easement set up across certain lots. The fee simple rights to the land would fall to the owner of that lot.

What do you mean I should run with him????

PitA
Posts: 1,416
Posted:
Quote:
Posted By MikeR19 on 06/26/2017 10:22 AM
You have confused me more.

There is no association set up (yet). The declaration doesn't even mention an HOA.

The drainage basin is an easement set up across certain lots. The fee simple rights to the land would fall to the owner of that lot.

What do you mean I should run with him????


For whose benefit was the easement created? The homeowners as a GROUP ! There MUST be an association to fund the maintenance of said drainage basin.

Since your developer is absolutely clueless, he will either go bankrupt or run away with the money.

When the drainage easement is NOT maintained, who will be responsible for the resulting flood damage?

Who owns the entrance signage?

Any 'common ground' at all?

Insurance?

Run, Kimosabe, Run Far, Run Fast BUT RUN
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Mike

With Covenants in place, there well maybe be an HOA. Just that is not active. I suggest you closely review the Covenants with maybe legal advice.
TimB4 (Tennessee)
Posts: 21,059
Posted:
Mike,

Bottom line is that without reading your covenants, it's unlikely we can give a good answer.

Typically, the Covenants establish the existence of an Association (regardless if the formality of having a Board exists or not).

If your covenants specify that an Association does a,b and c then that document created the HOA.
Incorporation (which is what I think your Developer meant when they said they could set an Association up) creates the Corporation known as HOA, Inc.

If your covenants didn't establish an Association, you will need the advice of an attorney (or two)specializing in property and contract law.
MikeR19 (Kentucky)
Posts: 9
Posted:
Attached is the Restrictive Covenants. (I had to convert a PDF to Word, so some of the formatting and words are distorted, but you should be able to get the main points).

As I mentioned in my original post, there is no HOA set up.

HOWEVER, I have been in DIRECT contact with the developer and he is willing to have his attorney get the wheels in motion.
📎 Attachments (1):

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📝1627351858171.doc(53 KB)
LetA (Nevada)
Posts: 2,679
Posted:
If there is no HOA in place right now, how can one be established once all the lots are sold? I don't think it can be done.
Typically HOA's need to be registered with the state as LLC's or other non profit entity, HOA's have to be declared in the purchasing docs, deeds, registered with the county recorders office. Basically there needs to be a paper trail. The developer can't just spring it up on all the buyers once all the lots are sold.

Check with your local jurisdiction to see if HOA's are required by local ordinances. Here in Clark County Nevada all master planned communities must be in HOA's been that way since 1998.
JanetB2 (Colorado)
Posts: 4,219
Posted:
Quote:
Posted By MikeR19 on 06/26/2017 9:07 AM
Hey all,
New to the site, new to HOA's. I deal with property rights in my profession a lot though, so I'm somewhat knowledgeable.

I was the first to break ground in my neighborhood, consisting of 55 lots. I was told by the builder that an HOA would be set up. Fast forward a year later. The neighborhood is now at about 50% occupancy, with the remaining houses close to being finished. Come to find out from calling the developer himself that an HOA is NOT set up to be established. However, he did say that he would gladly have his attorney set one up if that's what the occupants wished. We have a Facebook group page set up, and it seems like most of the people in it are in favor of an HOA (at least 1 person has voiced her opinion that she does NOT want one because she "doesn't want people telling her what she can and cannot do with her own house"). We have a Declaration of Restrictive Covenants, so I don't know if she realizes that those are the governing rules that dictates what she can and cannot do.

Here are my questions and concerns:

1. IF we get an HOA established, does it have to be a VOLUNTARY HOA, seeing as how there are already occupants and there was no prior HOA in effect? Potentially you need to check with your local County Records to see if you have CCR's or in essence via CCR's an HOA attached to your property title. This should also be reflected in your Title Insurance documents. If as I suspect (because generally a City anymore will not approve subdivision without being HOA) is the case you potentially are not a Voluntary HOA.

2. I assume the answer to #1 is yes, is has to be voluntary. So, with that being said, how does a voluntary HOA go about enforcing any violation of the Restrictive Covenants? (e.g. Someone erects a shed that is not of the same material as the house, as the RC's say it must be). My guess from your statements is you are not voluntary HOA ... check with your Local County Records and also review your Title Insurance which should note any property encumberances.

3. We don't have an common areas and the streetlight utility bill will be covered by the County. What would our dues go towards exactly? Incidental expenses to sign/drainage repair??? Should we even have dues? This should be described in your CCR's as to what is determined as your HOA's Common Expense.

4. We do have a large drainage basin, but that lies across a few lots. The owners of those lots are responsible for mowing the basin, correct? Depends ... Again, what is stated in your CCR's??? You are asking us questions when you have not stated the exact wording in your documents. Without that information we cannot really answer this question.

5. Should we wait until every house is complete, every house is occupied, or not wait at all to have the HOA set up by the developer? My concern here is that the developer may choose to relinquish his police powers at any time (per the RC's) if he so chooses. If he doesn't relinquish, he has those powers for 5 years from the plat recording date (May 2016). You need to look at your State Laws!!! In my state (and many others) the Developer MUST establish an HOA PRIOR to the sale of any homes. This is so that the CCR's can be filed with the County Records and then attached to the property titles prior to the sale of future properties..

My main concern for all of this is that, without an HOA, it would be up to an individual property owner to challenge any RC violations. And really, who is going to step up and be "THAT guy?" I feel that, with an HOA established, be it mandatory or voluntary, there would at least be a group of people to collectively object a violation, and thus, a greater chance of it being resolved. I know that, with a voluntary HOA, there's not much power to enforcing this, but it's a least something. If we could get it to become mandatory, that would be great, but I know that would most likely mean 100% of the occupants would have to agree, which I don't see happening.

MikeR19 (Kentucky)
Posts: 9
Posted:
If you read through this thread, I DID post my restrictive covenants.
DouglasM6 (Arizona)
Posts: 724
Posted:
Your document mentions the Association more than once. It does exist, it's just dormant. As far as the "nobody telling me what I can and can't do" lady, she will need to be given a copy of the CC&R's. Actually, all the residents should receive a copy.

In this situation, I would send out a letter to all of the owners telling them there needs to be a BOD in place. Even if the BOD does nothing, there really should be a Board. I would suggest a meeting time and place and state that there will be an election. Make this your "agenda" for the meeting. I would state in the agenda that if you fail to get a quorum for the election, the attendees will appoint a three person Board. I would also put in language explaining why it's important to have a BOD. You can mention things like Changes to the CC&R's, or maybe even dissolving the HOA completely. Things like that will usually get people to show up.

It's going to be a tough row to hoe. apathy and dormancy are favored in many HOA's.

Good luck to you.
MikeR19 (Kentucky)
Posts: 9
Posted:
Ok, I must be going crazy. I just reread the document and see NO mentioned of an association. I do see a paragraph on how the Developer can amend the document with certain approvals. I wonder if that's a loophole for us to get a mandatory HOA established.
DouglasM6 (Arizona)
Posts: 724
Posted:
Open the document. Hit Control+F and type in Association. It's mentioned in three places. It says "Developer or the Association" in two of those.

Your HOA exists, you just need Directors.
MikeR19 (Kentucky)
Posts: 9
Posted:
Ok, I did that. You actually beat me to the punch. I'm sorry for doubting you. The places that "Association" is mentioned falls under the definition of "Person," the "Gargbage & Refuse" section, and the "Exterior Maintenance" section. Does mere mention of the word Association necessarily mean that one exists? If so, is it MANDATORY? Or does that much have to be spelled out?
MikeR19 (Kentucky)
Posts: 9
Posted:
...and by "established," I mean exists. I know that a board of directors, president, bylaws, etc. must be set up. I am merely referring to the existence of one. There is some opposition in my neighborhood already. One person does not want one. One person has stated that if one does get established, it would have to be VOLUNTARY.
DouglasM6 (Arizona)
Posts: 724
Posted:
The whole "Voluntary" HOA thing confuses me. Since it's mentioned in your docs, it's not voluntary, The BOD will be volunteers that are appointed and/or elected. Unless the term Voluntary means that you can simply say " I volunteer to be the president" and poof! you're the president.

It's impossible for me to know exactly what's going on, but I feel strongly that you're going to have to shove this down some people's throats. Force feeding CC&R's people who have lived without them for a long time is not going to be easy. As I said earlier, I think a letter explaining that there IS an association and the only way to make changes or dissolve it legally is to form a BOD and work together. Have the meeting, appoint/elect your directors and move forward.

I do not envy you. Good luck!
MikeR19 (Kentucky)
Posts: 9
Posted:
I first found the term VOLUNTARY on this forum, after one of the residents had brought it up. VOLUNTARY is referring to the fact that since a HOA was not firmly established as the neighborhood began selling, that any HOA established thereafter would be strictly voluntary. People wouldn't have to pay dues if they so didn't choose, and whatnot. Yes, the covenants still apply, but the Association does not exist at this moment (or does it? by mere mention of the word), and thus have no teeth in enforcement of the covenants.
DouglasM6 (Arizona)
Posts: 724
Posted:
I could be wrong on this. But I feel the "association" exists, but the BOD does not. I haven't read the entire document yet, but since it does mention assessments there needs to be a BOD. You're correct about the dues, if I'm reading it correctly. There is no mention of dues or fees, so it would be voluntary. Good luck with that.

If the developer is willing to have the lawyer help out, go with that.
PitA
Posts: 1,416
Posted:
The places that "Association" is mentioned falls under the definition of "Person," the "Gargbage & Refuse" section, and the "Exterior Maintenance" section.

Does mere mention of the word Association necessarily mean that one exists? ~ YES

If so, is it MANDATORY? Or does that much have to be spelled out? ~ YES, mandatory

The HOA actually exists as per your CCRs, but, it may not be actually INCORPORATED.

Y'all need to INCORPORATE as it provides a 'corporate shield' of one's personal assets.

eg. unincorporated - someone is injured on/by a common element and wins a 10 million dollar judgment = many homes will be foreclosed to pay same
incorporated - someone is injured on/by a common element and wins a 10 million dollar judgment = the common elements are gone BUT y'all keep your homes

The key section is 'Exterior Maintenance'

ps. your 'developer' is in fact, as proved by the lack of incorporation, an idiot
JanetB2 (Colorado)
Posts: 4,219
Posted:
Quote:
Posted By MikeR19 on 06/28/2017 3:51 AM
If you read through this thread, I DID post my restrictive covenants.

I did read through the thread ... the CCR's DO NOT have a stamped Record File Date with your County Records. Therefore, go back and read my previous post so you can check to see if they are attached to your Property Titles. If they had not been filed and attached to everyone's property titles you potentially will need to get 100% of all owners to agree to an HOA. This will depend on your State Laws.
JanetB2 (Colorado)
Posts: 4,219
Posted:
Keep in mind if the CCR's you posted were not Filed with your Country Records and attached to everyone's property titles ... you potentially might not be able to enforce this document.
MikeR19 (Kentucky)
Posts: 9
Posted:
It is recorded. The PDF scan was too large to upload to this site, so I had to convert it to Word. There's a stamp on it.
JanetB2 (Colorado)
Posts: 4,219
Posted:
Quote:
Posted By MikeR19 on 06/30/2017 4:03 AM
It is recorded. The PDF scan was too large to upload to this site, so I had to convert it to Word. There's a stamp on it.

That is good ... Did you check with your County Records to be sure attached to property titles or alternative is to look at your Title Insurance documents. Potentially if filed and attached to properties then you have an HOA. In that case you need to follow your CCR's and Bylaws to elect a Board of Directors. Generally then the elected BOD between themselves will decide who will hold which office with regards to President, VP, Secretary, Treasurer, etc.

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