Builder Turnover - Sketchy Financials

Started by CourtneyH2 • 8 replies • 658 views

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CourtneyH2 (Georgia)
Posts: 3

Posted:

I've requested the "financial statements" from the current HOA property management company.

They show a $151,000 loan from the current Declarant. When I've asked repeatedly for a copy of said loan documents, I'm told they do not have to provide them. To the point that they've actually lawyered up and had the lawyer try to bully me into backing down.

My belief is that any financial liability of the HOA is within my right to review as a current homeowner.

What's the authority on this?

Located in GA.

RoyalpitA
Posts: 195

Posted:

What does YOUR lawyer say ?

CourtneyH2 (Georgia)
Posts: 3

Posted:

Currently unrepresented, hence my question here to see if anyone had been through something similar.

BarbaraT1 (Texas)
Posts: 821

Posted:

Quote:

Posted By CourtneyH2 on 10/15/2018 1:05 PM
I've requested the "financial statements" from the current HOA property management company.

They show a $151,000 loan from the current Declarant. When I've asked repeatedly for a copy of said loan documents, I'm told they do not have to provide them. To the point that they've actually lawyered up and had the lawyer try to bully me into backing down.

My belief is that any financial liability of the HOA is within my right to review as a current homeowner.

What's the authority on this?

Located in GA.

Check the governing documents. Sometimes they will contain a provision that any shortfall contributions from the declarant are loans to the Association. They don't usually expect repayment - it's a bargaining chip. Typically the declarant will "forgive" the loan if the HOA agrees not to pursue any claims against them for anything that happened during their reign, amenities that were promised but not built, etc.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Was the loan taken out under the HOA's name or the Developer? If it's under the HOA's name, then the HOA may inherit the loan. If it's under the Declarant, then I say none of your business. It's not under the HOA's name.

Former HOA President

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

You could simply look up the loan info at the registry of deeds if it was a loan from a bank. They would have filed it.

CourtneyH2 (Georgia)
Posts: 3

Posted:

That's what I can't figure out, the statement just says "Loan From Builder" and then the amount.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I don't think they need to provide this information. The PM works for the builder/developer. They aren't the HOA's MC yet till the turnover. Plus once the HOA is turned over to the owners, the ledgers should be too.

Guess your concern is inheriting this debt at turn over? Otherwise, don't know why be so concerned because it's not owned by you the owners yet.

Former HOA President

SueW6 (Michigan)
Posts: 814

Posted:

I agree with Melissa.

You will get everything, including the debts. Warts and all.

You will be able to track the "benefit" of the loan or how it was used for the HOA when you go over the financials. For example, maybe the pool was paid for with this loan.

It would be no different than a bank loan to do the parking lot that has to be paid.

Of course you will have an accountant versed in HOA financial matters go over everything.

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