Developer (Declarant) Compliance Refusal

We are in a 4 year old cluster home development in Tenessee where there are 41 sold units out of a planned 95 units. The developer has literally not complied with any of the by-laws and CC&R's and only two months ago, at the insistence of several homeowners, did he appoint a BOD which is required by the documents. Only since then, we have found that he has "loaned" money to the association (according to him) the past 2 years to pay for the common expenses - our association provides all exterior maintenance, homeowner's insurance, a pool, clubhouse, etc.- and as dues have been collected he has "repaid" those "loans" from association funds to his company. The 41 units cannot begin to support all the costs of the extensive common areas in a devlopment planned for 95 units. By-laws require a 2/3 vote to borrow money and we have never voted on anything. We hired an outside mgt company who has gotten what few financial documents as exist and we find we will be broke within 60 days. The CC&R's provide that the Class B member (developer/declarant) is responsible for shortfalls during the fiscal year. He refuses to pay and claims we must have a special assessment or change the fiscal year and immediately raise the monthly assessments (dues). He never collected a required 3 months dues for a capital reserve fund at any closing so there is no reserve fund due to his negligence - he says he just thought it was too much money for people to have to pay at closing. He, as Class B member, has veto powers over any BOD action, so the association, under the BOD cannot seek legal help. If I, or several of us as individuals, pay the expenses required for legal help, can we hope to recover our legal fees in the event our complaints go so far as a court proceeding? We're in a jam with a very hardheaded individual who is totally ignorant of, and unwilling to comply with, the CC&R's.

Howie:

Each association is different, look at your documents closely, with only 41 of 95 units sold the developer is firmly entrenched as still the majority. My association the developer had six votes for every lot they owned. Not sure if that is the case in yours but if it is or close to that then they clearly have over 2/3's of the vote of the whole association.

We all know developers are in it to make money, they often set dues very low to attract buyers and will skimp corners if they can to make a profit.

Thanks for the reply. Actually, contrary to CC&R's, there has never been an appointed BOD until 4 months ago when, at my insistence, the developer appointed one. Only then did we find out about the "loans" and the non collection of Capital Reserve, etc. There is no board to hold responsible, the developer has done it all.