Builder went Bankrupt and Common area still deeded to him

Started by DerekZ • 4 replies • 1153 views

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DerekZ (Arizona)
Posts: 1

Posted:

Hello, First time posting here, would greatly appreciate any help. So The neighborhood had been built out since about 2009, there was really no board in place until we moved in and put members in place about 4 years ago. Through some digging and issue that have arose I have discovered that all the common areas are still deeded to the builder who went bankrupt a number of years ago. After 2 failed lawyers I figured I would reach out here. The CCR's were created and signed back in 2004. Now in the CCR's it says "upon issuance of a certificate of incorporation to the association by the arizona corporation commission, the developer shall turn over any accumulated funds or assets to the association...." So the owner of the building company was reached by one of the lawyer however he said he would not sign over the deeds to the HOA. This HOA statement leads me to believe that it should have been automatic when the HOA received its incorporation. It also says in numerous places that the HOA takes control after 75% build out or 5 years from the signing of the CCR's. The community is very small only 13 homes and the HOA does not have the funds to get another lawyer right now. Just seeing if anyone has any experience with anything like this or any advise. All we want is to own the common areas that we are paying to maintain. Thanks

GenoS (Florida)
Posts: 4,276

Posted:

It sounds like turnover of the area deed(s) should have occurred automatically, or nearly so. You may need an attorney to press the issue. It would be a contract violation on the part of the developer who did not abide by the CCRs that HE wrote. Another avenue to investigate is the bankruptcy. Bankruptcy happens in Federal court so you might want to investigate the details of that. At the time of the bankruptcy, did the developer list the common areas for which he held the title as assets? Depending on the circumstances, you might prod the relevant authorities in the direction of getting him for bankruptcy fraud. The courts do not like that one bit. Again, it depends on the particulars.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By DerekZ on 07/04/2017 5:42 PM
Hello, First time posting here, would greatly appreciate any help. So The neighborhood had been built out since about 2009, there was really no board in place until we moved in and put members in place about 4 years ago. Through some digging and issue that have arose I have discovered that all the common areas are still deeded to the builder who went bankrupt a number of years ago. After 2 failed lawyers I figured I would reach out here. The CCR's were created and signed back in 2004. Now in the CCR's it says "upon issuance of a certificate of incorporation to the association by the arizona corporation commission, the developer shall turn over any accumulated funds or assets to the association...." So the owner of the building company was reached by one of the lawyer however he said he would not sign over the deeds to the HOA. This HOA statement leads me to believe that it should have been automatic when the HOA received its incorporation. It also says in numerous places that the HOA takes control after 75% build out or 5 years from the signing of the CCR's. The community is very small only 13 homes and the HOA does not have the funds to get another lawyer right now. Just seeing if anyone has any experience with anything like this or any advise. All we want is to own the common areas that we are paying to maintain. Thanks

You potentially need to also review your HOA State Laws. In my state the Developer is to have Common Area turned over to the HOA PRIOR to the sale of homes. Of course in my last HOA the developer did not do that initially, but us owners when developer wanted to initially start HOA fees ... our question was what were the HOA fees to cover. LOL ... When developer stated "Common Area Property" our response was the HOA DID NOT OWN any Common Area Property. Needless to say developer fixed in short order. If your CCR's note assests which your Developer has not turned over you might check with your local Attorney General and / or your State Attorney General regarding the issue. Again, that is why you need to read your State HOA Laws to see if there are any violations.

ChesterB
Posts: 63

Posted:

Derek,

Do an internet search on Arizona's adverse possession law. It may or may not apply in your situation but it may be worth a look.

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