Developer Will Not Relinquish Control

Hi All. Question for those of you with experience with Developer Controlled HOA's:

My neighborhood (Georgia) is in a situation where the Developer will not relinquish control of the HOA. The bylaws provide the developer (Declarant) with 4 votes for every homeowner vote. The Declarant has designated a single person to make all decisions. This person, by proxy, controls 100% of the Declarant's supervote. He holds no meetings and provides no financial data to the homeowners. We cannot call for, or request a meeting, because we don't have the authority to do so. The handful of times that a homeowner has attempted to hold a meeting, neither the Declarant nor his representative will show up. They answer no phone calls, and are otherwise unreachable.

We have nothing, other than a bill that shows up every 6 months. The bylaws state that the Declarant's supervote control will expire 20 years after the first lot was sold, and that control of the HOA would transfer to the membership at that time. This date is rapidly approaching and I have been told that the Declarant plans to change the bylaws to remove or modify this date requirement (Developer still owns 1 or 2 lots, thereby exempting the 100% buildout turnover requirement).

The homeowners don't have the organization or funds to hire an attorney. Even if we did, the Declarant is going to spend our HOA dues defending the attorney we hired - essentially forcing us to pay for both attorneys. It has really forced us between a rock and a hard place.

Have our HOA dues been mismanaged? - Don't know, we aren't privy to how the funds are spent
Have our HOA dues been stolen? - Don't know, we aren't privy to that information
How much money is held in reserves? - Don't know, we aren't privy to that information

I would appreciate any thoughts from those of you who have had experience dealing with a difficult developer through the transfer process.

Thanks,

John

Sue... You don't need a Real Estate attorney when dealing with a HOA. A HOA isn't Real Estate. You need a lawyer that specializes in HOA's or a lawyer with corporate/contractual law. Many times a "general" lawyer will do as long as you know what you want or need.

Developer control means just that. Just have to make sure your prepped for turn-over when that happens. Form a committee now for that. You won't have specifics but maybe able to educate yourselves with the rules in meantime.

Thanks all. I was afraid that was going to be the case. My deed does not show anything other than the transfer of ownership from the previous homeowner. Perhaps the home title will have more information? I will have to stop at the county records office and start asking questions.

John

We have all of the documents. At this point, we are unsure of whether or not any of the CC&R's have actually been broken. Every year we are presented with a one page print of a planned budget. It is overly simplified and states things like landscaping - $50,000, electricity - $15,000, etc. There is never any reporting of actual budget, expenditures, or account balances. It is my understanding that the Declarant feels he is meeting the requirement for financial disclosure through this single page document.

The 20 year turnover is approaching, but no one knows the exact date as it is tied to the sale of the first home in the development. I will need to visit the county records to determine when that date occured. Without a meeting or any interaction with the Declarant, it is incredibly difficult to obtain any information. It is my "understanding" that the Declarant plans to modify the CC&R's to dismiss the 20 year turnover requirement, but until this happens, we're not sure what basis we would have for a suit.

Last year a group of homeowners met with an attorney who had agreed take the case, but wanted a $5000 retainer to even begin looking at it. We were unable to come up with that amount and things fell apart.

It's a very tough situation as the handful of grassroots movements through the years have been met with heavy resistance (to include cease and desist letters from the Declarant). I'm just trying to do my homework to be ready if and when we are able to create another opportunity.

The GA nonprofit corporation laws allow you, as a member of the corporation, to see financial reports and to inspect the financial records of the corporation. It also requires all of the directors and officers to act in the best interests of the corporation (not in the their own interests).

You might want to hire an attorney to get access to the records to see where all of your money is going, which won't cost you that much. (You can try looking up the laws online and do it yourself, too.)

As you start to assert your rights to see and understand the association, you will be putting the pressure on, so the developer will realize that they cannot do whatever they want in secret. This may also help with negotiations to turn over the association.

JohnC,

Easy there. I have accused no one of anything. We are given an annual proposed budget that looks something like this:

Landscaping - $50,000
Electricity - $15,000
Management Fees - $20,000
Dues Received - $200,000

It has more items, but is all large round figures. We see no actual expense information of accounting or reserves. I would think that if someone wanted to embezzle money from an HOA, this would be the way to do it. Those that have asked for information regarding actual expenditures have been told that homeowners are not privy to that information.

Regarding my comments on what I "think" the Declarant is going to do with the 20 year turnover requirement, this is what I have been verbally told by the Declarant's representative. Of course until they actually follow through making a change, they havent necessarily done anything wrong.

As we are authorized no meetings, it is difficult to coordinate any type of turnover committee. I am simply trying to reach out for information from others that might be kind enough to offer advice.

Thanks all!

We had done that but been unable to get the $5,000 retainer. I think I'll start with the county records office and ask around the AG office to see if there are any paths not involving such a large expense.

Thanks again all.

This is an old post - set up a new topic and ask your question there.

As you can see there are hundreds of topics on this website, but eventually they Peter out and everyone goes on to the next thing. When you pull up a conversation, note the date it was first posted - the older it is (say 3 months), the more likely it's run its course. Looking at the date of the last post is also a good clue.

Long story but the developer ended up passing away and in the middle of it all the automatic turnover based on time passed. It certainly wasn’t the smoothest of transitions but we’re working through it all.

John