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AllanG (New York)
Posts: 1
Posted:
I live on a development that was supposed to originally have 30 properties. 10 of the properties are shore front on a lake. The remaining 20 (combined into 2) properties have no direct water front but there is a water front "common area" property which is supposed to be available to everyone.

All of the deeded properties without waterfront have language in their deeds granting right of way for common area access and the private road. The waterfront owners only have deeded right of way to the road.

Before the original developer declared bankruptcy, only one interior lot was sold before the developer recombined the remaining 19 properties into one large parcel and one "common area" parcel. The state would not let the common area be combined because there was a lot owner with deeded right of access to it.

The new organization that acquired the development rights to the combined properties and the common area are trying to sell it without any plans to develop and nobody has any clue as to who the declarant is. A couple of the owners, a slim minority want nothing to do with an HOA. The remaining owners lead by two owners in particular want to establish an HOA, assume the rights of the declarant, and then sue the the new title holders to force turnover of the common lot to the soon to be established HOA. I am not going to pay to setup the HOA LLC, but some of the owners said I will be absorbed by it anyway. I also do not want to pay what I imagine will be a special assessment to cover any litigation to annex the common area.

Here are some knowns -

1) The people who want to establish the HOA and litigate with the new development owner do not have deeded right of way to the common area.
2) The single interior lot is owned by a waterfront owner who does not want to be in the HOA and does not care about the right of way to the common area.
3) What would have been a 30 property HOA with split costs can only ever end up an 11 member property HOA with a common area.

The CC&R in my deed state that the declarant will setup the HOA, determine the first five board of directors, and hold the first official meeting to establish turnover and elect board members from the community.

What are the chances that the other owners can establish an HOA, litigate to annex the common area, then force a special assessment to cover the costs of both the formation of the HOA and litigation with the developer.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
A HOA isn't typically an LLC. This set up sounds more like a group of neighbors wanting to form a LLC to buy out the developer. Which then they want to turn that into a HOA forcing everyone to join who are lot/homeowners. They want to do this by means of a lawsuit. Which once done, will make the "New HOA" having to foot the bill.

That is basically what I am getting out of your post. A HOA is typically a non-profit (NOT charitable) corporation. So to have a LLC (Limited Liability Corporation) sounds a bit fishy. That's basically a group of people setting themselves up as a private corporation to buy out land to form their own HOA. I'd be either willing to join them in the LLC or suffer the consequences of not joining if they were to succeed. Best be in the driver seat on this deal than be run over by it.

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