End of Declarant control - Az Condominium Act- 2017

Started by MN1 • 10 replies • 1503 views

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MN1 (Arizona)
Posts: 5

Posted:

Hi,
As per the AZ condominium act 2017, the period of declarant control ends "Ninety days after conveyance of seventy-five percent of the units that may be created to unit owners other than a declarant." Does "created" include units "under construction" or is it units that are completely created. We have an issue where some units are under construction and the builder has vanished. The builder has been controlling the HOA and homeowners would like to take over because of the sad state of affairs of the common areas.

Thanks in advance.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Per your posting, the phrase is may be created.

Hence, it would be the number of lots/units in the overall development plan.

Example: Development has 3 phases. Each phase has 100 lots.
75% of lots that may be created = 225 (300 lots multiplied by .75)

JanetB2 (Colorado)
Posts: 4,219

Posted:

Check with your local government Planning Department to see what is happening with the builder. They will also potentially have a contract such as a Site Improvement Agreement (SIA) as noted in my area with the developer and may have information to help you and may know if builder went bankrupt. They should be able to provide you with a copy of that contract (as it should be public record) or it may be available via your local County Records office. That is where I would start my research.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By MN1 on 03/12/2018 7:46 PM
the period of declarant control ends "Ninety days after conveyance of seventy-five percent of the units that may be created to unit owners other than a declarant."

The word conveyance seems to me to mean sold. 75% of the planned number of units must be sold in that case.

Escaped former treasurer and director of a self managed association.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

This question arose in my prior HOA. It was decided the answer was when the unit was closed on meaning the buyer took possession.

MN1 (Arizona)
Posts: 5

Posted:

thanks for the responses. I have submitted a request with the City of Phoenix to get details of the community and builder if possible.

Assuming that the builder is gone and we currently have 21 units sold to homeowners and totally 30 lots. What are next steps that we can use in order to have the homeowners form the HOA the least expensive way without the use of lawyers etc?

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By MN1 on 03/13/2018 7:16 PM
thanks for the responses. I have submitted a request with the City of Phoenix to get details of the community and builder if possible.

Assuming that the builder is gone and we currently have 21 units sold to homeowners and totally 30 lots. What are next steps that we can use in order to have the homeowners form the HOA the least expensive way without the use of lawyers etc?

If you have a total of 30 lots in the subdivision and 21 units sold then you have potentially “almost” exceeded the 75% (30 Lots x .75 = 22.5 lots). If the builder is gone I would follow your governing documents and State Laws for calling any meeting and would just move forward with establishing a proper HOA Board of Directors. One question you need to answer however ... do the current owners PAY any HOA dues at this time and if paid to whom are they paid? This is another avenue to pursue with regards to potential developer control. If none are billed or paid to any prior developer in past ... I would take th ball and RUN FORWARD.

TimB4 (Tennessee)
Posts: 21,062

Posted:

If the 75% hasn't been sold and the developer is gone, the bank (or entity holding the unsold lots) likely inherited the declarant rights.
You need to find out who that is and ask that they transfer control now.

KerryL1 (California)
Posts: 14,550

Posted:

MN1, just to get your language straightened out a little bit; you do have an HOA, but what your want is Owners to be on the board of directors, not the developer.

MN1 (Arizona)
Posts: 5

Posted:

thanks for the responses. There is an accounting company that the developer hired that collects our HOA dues currently. they just do the basics in terms of paying the bills and trying to keep the common areas clean. The accounting company has setup a meeting once with the owners to apprise us of the situation. I am trying to find out where the builder has transferred control to.

JanetB2 (Colorado)
Posts: 4,219

Posted:

As Tim noted it might be the bank who took over from the developer. Again, potentially your local government Planning Department may have your answers. If a bank foreclosed ... most likely they will NOT want to run the HOA and will turn over to owners. Especially since you are so close to owner turnover already and which should be pointed out to them if they question the situation.

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