Removeing developer while he owns lots

Started by GlenM4 • 8 replies • 761 views

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GlenM4 (Tennessee)
Posts: 141

Posted:

Hello,

so no idea how normal this is, but wanted to see what others thought.

The HOA was turned over to the community, the developer still owns 2 lots. He said he was going to hold onto those 2 lots cause in the future he wanted to buy the property behind it, and use those 2 lots as an access point to a new phase of houses which would become part of our community.

I started to think that we should remove all the references to the developer in our CCRs, Cause if they do decide to build , I would think the developer would then be back "in charge" and do what ever he wanted to do with the HOA as he would control 99% of the votes.

As of now, there is no house on those lots, he don't pay fees for those lots. (unsure if he should or not). Also when we vote or change things we don't notify him. (unsure if we are suppose to)

Suggestions? or anyone ever dealt with something like this?

SheliaH (Indiana)
Posts: 6,964

Posted:

If you have paperwork showing the association is now being run by the homeowners, they should be able to dictate what happens next, and when it comes to updating the documents, it would be a good idea to delete references to the developer since it isn't running things anymore (less confusing to current and new owners, I think).

I would think the developer would be considered an association member although there isn't anything built on the lots yet - meaning he/she/they should be paying assessments and getting notification of meetings.

If you haven't already done so, you need to start with reading your documents to see what it says regarding who or what is considered an association member and what the members' rights are. Any questions, talk to an attorney - if this ends up becoming a legal issue, the board needs to know what it can and can't do, along with pros and cons of legal action.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

DouglasK1 (Florida)
Posts: 2,046

Posted:

I agree with Sheila. Most governing docs specify when turnover should occur, often once the developer falls below a certain percentage of ownership or on a given date. I am not aware that any CCRs provide for a return to developer control if the developer acquires/creates more lots. Your CCRs should also explain how dues are assessed and who owes them.

Escaped former treasurer and director of a self managed association.

GlenM4 (Tennessee)
Posts: 141

Posted:

The Community has 100% been turned over, but the developer still owns 2 lots, which he is saving for future. The CCRs have alot of items like no amendment to the CCR can be done if the developer still has any lots.

So i guess the question is , is he still considered the "developer" after turning over the HOA.

GlenM4 (Tennessee)
Posts: 141

Posted:

This is pretty much all i can find about the turn over

Assignment. Any or all of the right, powers, titles, easements and estates reserved or given to the developer in this declaration may be assigned to anyone or more persons or entities, who shall agree to assume said rights, powers, duties and obligations. any such assignment shall be made in writing by an appropriate instrument, which the assignee shall join for the purpose of the evidencing its acceptance of such rights, powers, obligations and duties. upon such assignment, the developer shall thereafter be released form all obligations and duties pursuant to this declaration.

So once its turned over to us, he is no longer considered developer?

thanks?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Glenn

I would be concerned about the developer holding on to two lots with the stated purpose of punching a road thru them to get access to another potential development.

GlenM4 (Tennessee)
Posts: 141

Posted:

That so much does not bother me, as the new development would be an add on to what we currently have. But I dont want it to "reset" back to developer if he does that.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By GlenM4 on 06/13/2018 12:19 PM
That so much does not bother me, as the new development would be an add on to what we currently have. But I dont want it to "reset" back to developer if he does that.

I do not playing lawyer, but once turned over I do not see how it could revert but best you get a legal opinion if your concerned.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Glenn most of your answers will be found in your CCR’s ... because TN does not have in essence HOA statutes as noted here:

https://hoa-usa.com/statelaws/tn.aspx

For some issues especially regarding developer you might look at your Tennessee Real Estate Statute of Frauds under your State Statutes.

My main question regarding your CCR’s would be did the Developer “reserve” the right to add more property to your HOA ... OR ... Do your CCR’s note how many LOTS / Units your HOA will contain in your CCR’s.

Many states such as mine will require the developer to declare how many units the HOA is to contain and if will be more to declare and disclose such information to buyers and their secured creditors.

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