Disclosure vs. Reality

Tammi, first, I would ask the developer to explain why he/she believes the outparcel is not part of the subdivision. Second, what you call "disclosure" appears to be "covenants." Please confirm that you quoted these statements from a document titled "Declaration of Covenants" or similar. Third, can you review your Declaration and the plats carefully and see if this outparcel is in fact not part of the subdivision and also not subject to the covenants? The plats should be on record at the County Clerk's, or they may possibly be a part of the Declaration. The latter is a matter of title. If the Declaration and plats are unclear, a day or so of research at the county clerk's may be needed.

If you want to post your subdivision's Declaration (or whatever the source of the statements you quoted was), then this may help readers here to help you.

Augustin,

The board received a 'copy' of the recorded 'Well Agreement' document and the paragraph stating 'granted ownership' was cropped out. A trip to the county was required before we had the full document. Not sure I value or trust the developer's input at this point.

I've double checked, and I quoted the Disclosure (although you had me running to be sure!!) ... The Disclosure is 12 pages, the CCRs are 5 pages, (if there is any importance to that fact).

I'm struggling to find an accepted format for submitting redacted documents. lol, apparently .jpeg is not an accepted format! I've got a .pdf of the front of the Disclosure. If this is successful, I'll redact and scan additional for review.

Augustin,

-- The "DEVELOPER'S DISCLOSURE STATEMENT" was recorded at the county. I had forgotten that I requested a copy in January! I've got it in hand. It's dated March 22, 2000. Everything reads the same as originally posted, BUT .. there is also a MEMORANDUM dated 5/8/2000 from the New Mexico State Engineer Office that states in part: "The subdivider proposes that water for the subdivision be provided by utilizing individual domestic 72-12-1 wells." Note: **June 19, 2000 is the signature date on the CCRs, Articles & Bylaws.

-- The declarant/developer (recorded the) release of control in 2007, deeding the private roads to the association and directors (other than developer) to the board.

-- The subdivision has 144 lots. 1 lot = 1 vote. My husband and I are both considered 'members', although we only have 1 lot and 1 vote.

-- INTERESTING, the percentage is 75% to 'amend' the Covenants. BUT .. when I was looking at my copy (I don't have the recorded copy), I find it interesting that it's signed on **June 19th, 2000, but the '75%' vote to change the CCRs is an 'Amendment'??!! How/why does one amend an original document prior to it's being initially recorded? - I hadn't noticed this before. hmmm Also note: The developer holds 49 properties. 30 never sold. 18 repossessed. 1 they use personally. Members cannot achieve 75% of the vote. I'm not convinced that the developer could make such an amendment prior to release of control, under NM statutes.

It has been the board's experience that some 'cut & paste' and 'cropping' has occurred with previously requested documents. When the 'Well Agreement' was originally forwarded, the paragraph citing 'granted ownership' had been 'cut' from the document. A trip to the county (3 hours round trip) was required to secure the original, full copy. I begin to suspect my copy of the CCRs .. and another trip to the county may be warranted. Good grief .. everywhere ... rabbit holes!!

HOA attorney. For 'straightening out'? What 'damages' are there to the association? I can't wrap my head around this ... what has the association got to gain, other than clarity? If chicanery has been at play, could the board make its decisions and wait for the developer to bring suit? Would they want this in a court room? All the 'cut and paste' activity is documented. Ridiculous replies & explanations from the developer are documented. The developer had been underpaying assessments (12% yearly loss to the association) for years. Estimated losses around $7000 due to previous board of directors 'non compliance' in enforcing our docs. 2 previous (long time) directors have written: 'That's the way we did it for years, and they are our friends', and this is also documented. The (2) previous directors allowed this chicanery. Anyone who questioned it was run off the board. For years!

Hit me with your best shot!! Thanks much!
Tammy

First, to get clarification on the legal position of the 'developer's disclosure' vis-a-vis covenants, I checked New Mexico case law. Only two NM Supreme Court cases come up, but they helped me a lot:

https://law.justia.com/cases/new-mexico/supreme-court/2003/9adc.html

https://law.justia.com/cases/new-mexico/supreme-court/1979/12444-0.html

Six NM Appeals Court decisions came up. To see them, google on:
{developer disclosure site:https://law.justia.com/cases/new-mexico/court-of-appeals}

Reviewing these cases may help a bit.

Second, New Mexico Statute NMSA 47-6-17 requires the disclosure statement. At this point, my take is that the Disclosure is on roughly equal legal footing with the covenants. To view the statute, see https://codes.findlaw.com/nm/chapter-47-property-law/nm-st-sect-47-6-17.html .

Third, your comments leave me with the impression that you are dug into a certain point of view but do want a sort of reality check from the hoatalk[dot]com. I do hear your frustration as well. I know I would be battling to decipher all the recorded docs and their reasoning. (I already am battling, and I read such docs a lot.) What I am posting here is my reality check on your position, for what this layperson's reality check is worth.

Fourth, you, and I suppose your board, are averse to using an attorney. So sure, the board could try to impose its interpretation of the docs on the developer. Then see if the developer starts making threats of taking your HOA to court. At the first threat, the HOA has to inform its insurer. If the dispute goes to court, then under New Mexico law, the HOA is required by law to use an attorney.

Alternatively, the Board could sit down with the developer and explain its concerns, and try to reach a legal agreement with the developer that would be properly recorded. A professional licensed mediator (who typically are attorneys) should be considered. It's way cheaper than hiring an attorney.

But because of all the documents the developer has recorded, both way back when and more recently, I think the HOA's best choice is turning all documents and all questions over to an attorney and having this attorney discuss this with the developer's attorney, maybe with both parties present.

I've read the two NM SC cases, and I'll need to read them again. I had a difficult time locating the appeals cases, but it was well worth it! (pun!)

Section 47-6-17 looks & reads like a template that was used for our docs. I'll be cross referencing tomorrow!

I appreciate a reality check! Better to be checked sooner than later! I'm so much dug in as I am stuck. I'm speaking as the majority on the board spoke. I championed "Attorney" being on the agenda for two of our last three meetings and it is a hard sell. Monsoons are coming. We'll have $road $issues. We have bylaw issues. We have well issues. We have contentious out-of-state director issues.

OKAY! We need an attorney!

The association doesn't carry insurance. That was on the Agenda too. Twice! I can't find any law that requires it. I'd love to bring it back up, if you're able to find something.

Neither an attorney or insurance would ever have made it on any of our agendas if it weren't for forums like this one. I've got some perspective, and case law, that I can bring to the table. It'll be on the Agenda again in about a week. It's all I can do at this point. It sure could take a load off our minds, and our backs.

-- Yes. Our Articles state: 'under NM Non-profit organization act'.

-- Governing documents dictate there is an option to carry insurance.

-- Yes. I also believe the HOA is subject to NMSA 47-16. No insurance requirement. Affirmation is appreciated. I have questioned the boards responsibility and culpability in allowing 2 directors to continue to serve on the board, given their failure of fiduciary duty over the past decade.

-- Yes. Governed by nonprofit corporation too. No insurance requirement. Affirmation again.

-- Confusing to me too!! The developer forwarded many newly recorded docs to the long time friend/director in January, and that director forwarded them to the board. The amended well agreement was among them. I just pulled the Well Agreement to quote it .. and the first paragraph speaks to the developer's claim that the out parcel is not part of the subdivision:

WELL AGREEMENT March 2007:

Developer, LLC Owner of 2.08 Acre Out Parcel of XYZ Subdivision, XX County, located at corner of County Road X-XXX and Animal Trail, XYZ Subdivision, HEREBY grants ownership and use of the well located on said Out Parcel to the XYZ Landowners' Association, a New Mexico non profit organization with the following provisions: (paraphrasing now):

Lot # 126 shall have perpetual use and shall go with the land
Building on out parcel shall have perpetual use, etc ..
Electrical .... Put the meter/bill in the landowner association name.
Building a.k.a. 'office', shall be metered separately upon full time occupancy.
Repair & Maintenance: the lines going from the well to the out parcel and lot 126 shall be the responsibility of the prospective property owner.
Verbatim: "IN THE EVENT the Landowners' Association deems they no longer require the use of the well. Ownership of the well shall revert back to the owner and assigns of the Out parcel, with no change of rights and use granted to lot 126. At that time, the electrical expenses and maintenance shall be shared 50-50 with the owners of the Out Parcel and lot 126 and a lock shall be
placed on the well barring the use from the other property owners. It will be private ownership and use."

The new Well Agreement January 2019 cites that the LOA has not filed the well at the state level, and grants "use" to the LOA under these conditions: (paraphrasing)

the electric is the full responsibility of the landowners association.

repairs are still 50/50. Caveat: "Outside agreement between owner of Out Parcel and Lot 126 will be by separate agreement.

Verbatim: "IN THE EVENT the Landowners Association by an 80% vote of membership deem they no longer require use of the well, the electrical meter will revert ...."

~~~~~~

You're right, it appears that the developer still has control.

Here are the developers own words via email: "In 2007, after we reached 108 sold as specified on recorded plat, we started paying (developer assessed) dues." - - "We were giving two years for members to become familiar with the board & the duties before reaching the targeted goal of 108 parcels sold. At that point in 2007, we deeded the roads, turned the maintenance of roads to the responsibility to the association & the newly elected board, which was : __ ___ & ____. "

^ That is the response received to another question regarding the "2/3 lots sold" written in the disclosure. Every resident landowner said, and the long time treasurer responded via email, that the association was 'turned over' when 96 (2/3) of the lots were sold (2005). The board pointed out that the target of '96 lots sold' was a false narrative. The release was recorded in 2007 when the statute dictated goal of 75% (108) lots sold was met.

Also note: developers claim of paying "developer assessed dues" (1/5 of the 'normal' rate on unsold properties). The treasurer allowed repossessed properties to return to the 'unsold' rate of 1/5 the normal assessment. Properties that were not even in the 'declarant' name! This has been corrected. Full assessment was received for 2018 & 2019 on all 'sold' properties. (12% increase in income).

This entire journey is predicated on the Treasurers Report at the Annual Meeting in Sept. The Treasurer announced income as: 95 lots at full assessment. Me: 95? Wasn't turnover at 96? (Now I know better) My question at the meeting was: What? How can the associations revenues be lower than their revenues in 2005? And the developer has more voting power? When the 'actual' target is 108, the loss is even greater.

You aren't the only one who is confused.

You have brought up a point raised by a current director and a previous director: The original 2007 recorded agreement is signed by the developer only. In some sick twisted irony designed to further my torture, the current director and previous director have opposing views on the 'ownership' of the well with regard to 'one signature only'. I am interested to know on which side you fall. Do tell.

I also tried to find documentation on 'outparcel'. Our subdivision has two outparcels, A & B. Both A & B are sided by a county maintained road at the corner of our two main entrances. Months ago, the tax assessor explained that outparcels are common in our county's subdivisions and although it is not required, are often deeded to the association after the developer has sold their last property in the subdivision. (The developer has sold 3 properties since release of control in 2007. The developer is also a realtor, licensed in a neighboring state.)

**The developer claimed the outparcel is not part of the 'subdivision'. The HOA's does not collect assessments on the outparcel. Is it possible to be part of the subdivision and not be part of the HOA?

Lot #126 & the outparcel WERE owned by the husband & wife developer team. The developer sold lot #126 last year, "with water" plumbed directly from the well that sits on the developers outparcel (across surveyed boundaries). Regardless of who 'owns' the well, wouldn't a direct line supplied by either the developer or by the association be non-compliant with regard to the disclosure?

I have the 'community outparcel' scanned to pdf, but still can't upload due to file size. Arg! I don't often wish there was still a teenager in the house ... but I could sure use one today!

The referenced well went down yesterday. Let the twisting, squirming and hollering begin. *sips coffee* ... (made with water from our private well, dug in compliance with state law and according to our community docs).

If only you could be here to tell the horse owning landowners who didn't read their community documents that there will be no water for their horses. Or them. And I imagine that the owners of lot #126 will be traveling up my driveway sometime today.

Our treasurer, the developers long time friend, may be inclined to cut a check for those repairs when the developer demands it and without consulting the board. Because, you know, that's the way they've done it for years!

Ah, my humor can cross lines ... let me know. *sips coffee*

I can only remind the treasurer via email that individual landowners and not 'the association' took it upon themselves to assess the condition of the out-parcel well, and the association cannot pay for any repairs without a majority approval by the board. We already have meeting scheduled for this Thursday. Slow and steady with the treasurer, it's uphill all the way.

Lot #126 is still 'moving in' and they are not in the subdivision at this time (word of mouth). The developer indicated that they made a 'separate' agreement with #126 for water access and 'repairs' to the well *see reference above. For all we know, #126 thinks everyone is connected to that well!

Lots of digging in this case - Reported: The pressure tank was floating and the control panel was submerged in the standing water. Assessment: Pipe broke and water ran until it was visible at ground level. It needs to dry out a bit before pipe repair can be made; rain is in our forecast. If it's just the pipe, it will be repaired with a members 'on hand' materials at $0 cost. If the pressure tank or control panel are fouled, there will be an additional chapter ... stay tuned!

-- Re: One signature on any and all versions of the Well Agreement

Previous director's view: The well was never ours, the "association didn't agree to contract". "Contract violates disclosure". -
This seems to follow the KISS theory and I can't say I don't like it! Our association walks away. All questioners can be referred to the disclosure. Questions about the developer's 'promises' can be referred to the developer that made the promise. Is that too simple?

A current director's view: The well belongs to the association. Get survey, record easement, new electric meter for "Well only", cut water lines to #126.
The current director has a non-working private well and has relied on the out-parcel well water for some years. However, his private well repairs are in progress, and we will see if perspective has changed on Thursday.

Thanks and thanks!