Start up of HOA that never was active

Started by DeniseE1 • 5 replies • 821 views

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DeniseE1 (Louisiana)
Posts: 1

Posted:

I have 3 questions and THANK YOU ALL for your knowledge. I have never lived where there was an HOA, so I, as well as most of my neighbors are totally lost. Here you go?

1. Some neighbors want to take over the HOA from the developer who established it 30 years ago. No one knew there was one. BUT: Developer of neighboring community says he will give HOA $100,000 for the HOA to pay someone to fix the drainage issues that he will cause. (WE DON"T KNOW what the are) The County has not really been involved. But if we don't use the $100,000 within 2 years, he gets the money back.

2. Can just a few people make the decision to reestablish the HOA if all or most have not been notified?

2. Can 2 associations be merged? One has 200 homes, the other just 9. The one with 9 was built by another builder and has the exact by-laws, etc. Only difference says "filing 5" and others have other filings.

THANK YOU!
Denise

PaaN
Posts: 219

Posted:

Attorney versed in HOA / contract law (not real estate).

NOW

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By DeniseE1 on 09/09/2018 1:04 PM
I have 3 questions and THANK YOU ALL for your knowledge. I have never lived where there was an HOA, so I, as well as most of my neighbors are totally lost. Here you go?

1. Some neighbors want to take over the HOA from the developer who established it 30 years ago.

From this question, I expect the developer is still in control of the Association.
If this is the case, you need to read your governing documents and see if the developer is willing to (or should have) transfer control to the membership. If they are, the developer can likely simply appoint individuals to the Board and you are off and running to organize your first election.

If the developer is not willing, then you will need to consult an attorney and obtain a court ruling forcing the transfer.

Quote:

Posted By DeniseE1 on 09/09/2018 1:04 PM

2. Can just a few people make the decision to reestablish the HOA if all or most have not been notified?

If under declarant control, yes (see above)

If not under declarant control, the correct procedure would be to:

gather signatures to call a general membership meeting for the purpose of electing a board. Once enough signatures are collected, then send out notice requirements required by governing documents and applicable laws (property and corporate). Hold the meeting. If a quorum is present, hold elections.

OR

Petition the court to appoint a receiver to hold elections (nobody will like you if this is done).

Quote:

Posted By DeniseE1 on 09/09/2018 1:04 PM

3. Can 2 associations be merged? One has 200 homes, the other just 9. The one with 9 was built by another builder and has the exact by-laws, etc. Only difference says "filing 5" and others have other filings.

Yes. Consult an attorney as governing documents of both Assocaitions will need to be amended (if the votes are there).

MarekP (iowa)
Posts: 3

Posted:

TimB4 answered thus:

"From this question, I expect the developer is still in control of the Association.
If this is the case, you need to read your governing documents and see if the developer is willing to (or should have) transfer control to the membership. If they are, the developer can likely simply appoint individuals to the Board and you are off and running to organize your first election.

If the developer is not willing, then you will need to consult an attorney and obtain a court ruling forcing the transfer"

My followup question is this:

How does the developer officially transfer control? Does it need to be a signed document saying so? We recently submitted bylaws revisions reflecting language granting decisions be made by the HOA rather than the declarant, which declarant was the developer. The current bylaws gave declarant complete control over appointment of hoa board members and status as the "sole owner" of the HOA. The amendments struck these passages and provisions and replaced them with control by the HOA members and board (of which the developer still holds 6 of the 22 properties in the association).

Asked to sign a document signifying acceptance of the changes, to go along with their verbal words that the developer has no objection to the transfer, the developer has declined, saying that signing is not necessary.

My thought is that if the developer had no objection, it would have no objecting to signing a document that we present to the department of state that registers corporations, where the HOA is registered now. Seems to me that any such change of governance and control must be filed with the state to be legally effective.

Can anyone say whether it is true that "signing" is not necessary, as the developer has said?

JeffT2 (Iowa)
Posts: 880

Posted:

Quote:

Posted By MarekP on 11/03/2018 1:17 PM
TimB4 answered thus:

"From this question, I expect the developer is still in control of the Association.
If this is the case, you need to read your governing documents and see if the developer is willing to (or should have) transfer control to the membership. If they are, the developer can likely simply appoint individuals to the Board and you are off and running to organize your first election.

If the developer is not willing, then you will need to consult an attorney and obtain a court ruling forcing the transfer"

My followup question is this:

How does the developer officially transfer control? Does it need to be a signed document saying so? We recently submitted bylaws revisions reflecting language granting decisions be made by the HOA rather than the declarant, which declarant was the developer. The current bylaws gave declarant complete control over appointment of hoa board members and status as the "sole owner" of the HOA. The amendments struck these passages and provisions and replaced them with control by the HOA members and board (of which the developer still holds 6 of the 22 properties in the association).

Asked to sign a document signifying acceptance of the changes, to go along with their verbal words that the developer has no objection to the transfer, the developer has declined, saying that signing is not necessary.

My thought is that if the developer had no objection, it would have no objecting to signing a document that we present to the department of state that registers corporations, where the HOA is registered now. Seems to me that any such change of governance and control must be filed with the state to be legally effective.

Can anyone say whether it is true that "signing" is not necessary, as the developer has said?

Short answer: Iowa does not have any specific HOA laws, other than real estate covenants and corporate law. So my understanding is that the terms for turnover would come down to the conditions stated in your original documents. I don't have experience with turnovers, so this is just background information.

The only thing that is usually filed with the Secretary of State (sos) is the Articles of Incorporation. These usually refer to the bylaws for all the details. You can go to the sos website to look up your corporation's Articles to see if anything needs to be changed, but my guess is that the Articles will only have general statements. Bylaws and letters do not usually need to be filed with sos.

You can see and change the corporation officers and registered agent at the sos website.

Changes to CCRs (covenants, deed restrictions) are usually recorded at the county Recorder, not the state. Bylaws are sometimes recorded at the Recorder. Where were the bylaws "submitted"? If the developer was willing, I think a letter could be recorded at the county Recorder.

A lawyer prepared the bylaw amendments and had them recorded? Were there amendments to the CCRs?

SueW6 (Michigan)
Posts: 814

Posted:

The "WE" you talk about should be very careful here. Exactly WHAT are you taking charge of?

Why would a developer pass up getting money to fix a "little" problem?

This developer should be talking about this financial arrangement, not the "we."

Force the developer to become active in his own development OR take the steps for a turnover to an association, which will file its own corporate papers. But be careful, you don't know whqt you are getting - (thanks for the puppy!)

(This reminds me of a situation in our town. An absentee developer didn't finish his complex and basically ignored his own residents. The residents established their own association without a turnover and began collecting dues and fixing up things. Developer then sold the entire complex to a very naive person whose lawyer didn't do his job. This new owner now wants to finish the complex and has billed the residents for dues. The association has filed suit against the new developer who is suing the previous developer. It's a tangled mess.)

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