Due to the Developer

Started by JeffW6 • 13 replies • 598 views

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JeffW6 (Florida)
Posts: 65

Posted:

We are in Year 13 of a Developer controlled H.O.A. in Florida. In our 2018 financial audit for 4 years in a row our Due to the Developer calculation is growing and it now reflects we owe $502K! Our H.O.A. has paid the cable company less than $678K then they have billed the homeowners for from 1/1/2016 through 4/30/19. The entire $502K is because the H.O.A. is paying the cable company for 100 or more homes (600 homes) less then they are billing us for 700 homes. Our Net Income for the same period WITH the cable revenue and expenses reflects a surplus of $582K. All of the surplus funds is caused by this. Our annual budget is calculated for 822 homes when as of 12/31/18 there were only 685 homes every year. Our Developer also stopped paying their property taxes on the remaining land in the development this year.

Your thoughts?

NpS (Pennsylvania)
Posts: 4,216

Posted:

3 questions:

1. Is the developer still building and selling houses?

2. What are the turnover rules in your CC&Rs? And how close are you to turnover under those rules?

3. Have you seen the contract with the cable company? If so, what does it say about payments to the developer and whether the number of houses can be adjusted? If not, why not?

Sikubali jukumu. Read all posts at your own risk.

JeffW6 (Florida)
Posts: 65

Posted:

LGI is still building homes and they have 105 lots to close on. We are at 719 and we need to hit 855 to reach 90%! However, the last 164 lots have not been platted. LGI is supposedly pulling out when their current lots are closed. The Developer for a year and a half has been trying to find a buyer for the unplanted lots! I have a copy of the cable contract I will read and post that info later.

JeffW6 (Florida)
Posts: 65

Posted:

Also, the Developer in May 2017 Amended the CCRs to be able to hand off the development with a recorded notice. I found the Amendment on the recorders website and asked the PM about it. He said they never told him and he rushed out a notice to everyone.

JeffW6 (Florida)
Posts: 65

Posted:

JeffW6 (Florida)
Posts: 65

Posted:

JeffW6 (Florida)
Posts: 65

Posted:

The contract doesn’t say anything about the Developer. The HOA has to inform the cable company of additions in a timely manner.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Thanks for the additional info Jeff. IMO, time to go talk to an experienced lawyer.

As I feared, developer has already given up on completing the project. As soon as he can after he pulls every dime he can out of the project, he's going to file for bankruptcy.

The terms under which he sells the remainder of the plat to another developer might establish less restrictive standards for the new units. There's a risk that the next buildout will be of lower quality homes, lower fee structure, who knows what else.

Cable companies used to pay big bucks for these contracts. I doubt that the document you have is the entire agreement between the cable company and the developer. What happened to that money?

The lawyer should send a letter to the cable company demanding that the fees be retroactively reduced to the actual number of built out units.

Listen very carefully to what your lawyer says your options if you take action before the developer files for bankruptcy.

Tough one. Be sure to let us know what you find out after you speak with your lawyer.

Sikubali jukumu. Read all posts at your own risk.

JeffW6 (Florida)
Posts: 65

Posted:

Thank you!

JeffW6 (Florida)
Posts: 65

Posted:

I just found out that the Developer sold a large tract of land sitting just outside the HOA property expected to be apartments for $2.5M! It does look like they are cleaning up and getting ready to leave soon.

SamE2 (New Jersey)
Posts: 310

Posted:

Does Florida of the HOA require financials to be audited why under developer control? I would ask to see the audits and make sure they jive with what the developer is saying.

JeffW6 (Florida)
Posts: 65

Posted:

I have all of the audits! The PM hadn’t changed the Due to the Developer amount since they changed their financials from the 2016 audit until April 2019. They were trying to hide it. Even the CPA that performed the audits told me we are headed for a legal battle.

JeffW6 (Florida)
Posts: 65

Posted:

The Developer gives us no information. The PM at least has given me almost every document you would receive in a turnover process.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JeffW6 on 06/04/2019 6:41 AM
I just found out that the Developer sold a large tract of land sitting just outside the HOA property expected to be apartments for $2.5M! It does look like they are cleaning up and getting ready to leave soon.

Did he use a different corporation?

Sikubali jukumu. Read all posts at your own risk.

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