HOA vs Builder financial responsibilities

Started by JoeC17 • 3 replies • 647 views

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JoeC17 (Georgia)
Posts: 1

Posted:

Hey all! I have been digging through here for hours trying to find the answers to my questions, but can’t seem to find the right thread. We live in a new community of single family homes in Ga where the builder still controls the HOA. My questions are mostly around what the builder is supposed to be paying for vs the HOA. We are all being charged a monthly HOA fee for common areas, pool, landscaping... We were looking at the financials and some things seem to be pretty outrageous and over budget.
1. Should HOA money be going towards landscaping of new homes that are being built, or just the upkeep of exhausting landscaping?
2. If the Builder has admittedly damaged something (irrigation system) but will not pay for it and says the HOA will pay for it, is that acceptable?
3. It’s a gated community and the gates have been broken at least once every 2 months since being placed. The builder then replaced them with a better design that catches less wind, but used the same openers and have had to be repaired multiple times since then. Should the HOA be paying for these things?

The community has been escalating issues to the HOA and the builder, all of which seem to be related to poor workmanship from the builder, and lack of inspecting repair work by the HOA and we just continue to pump out money for these things.

I hope this does not seem like a rant, or too much, but as a community we don’t know all of the ins and outs and don’t get much help from the HOA.

Thanks in advance!

SheliaH (Indiana)
Posts: 6,964

Posted:

That may depend on the documents you have so far. Unfortunately, until the HOA is turned over to the homeowners and they're running things, the builder is in charge and sometimes, that may mean it will change up some things to benefit them. From what I've seen of some of these new communities, this sort of stuff indicates the building is in financial trouble and there may be a reckoning down the road when it'll go belly up, leaving the homeowners to make needed and expensive repairs (becuase the builder will turn the community over to them and get the hell out).

That's why you may also need to talk to a private attorney and have him or her review your documents and see what your options are. Encourage your neighbors to do the same - in fact, all of you may want to consider getting together and going after this builder as a group.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MarkM19 (Texas)
Posts: 1,459

Posted:

JoeC,
You mentioned several times the Builder or the HOA. Is the Property managed by a Management Company? The HOA is owned by the members of the community but is managed by a Company. Unfortunately until the HOA becomes managed by the Homeowners the Management Companies job is to keep the developer happy and do as they direct.

It is good that you are watching and you seem to be a perfect candidate to run for a Board position when the time comes. If you do have this as your plan you probably need to not be to noisy at this point because they will consider you to be an adversary and when the voting happens and they start having open elections you may not get their Proxy votes which is the only way to get in there and make changes as early as possible.

One of the benefits of being a early buyer in a development is you see the value of homes rise quickly. The downside is the HOA is not truly working for the Homeowners yet. The job of the MC is to make things look pretty and let the builders sell homes.

Here is my take on your questions.

#1 You have to read the CC&Rs and find out what areas the HOA maintains. Do they cut the grass in front of everyone's homes?

#2 The MC should go after the contractor who did the damage. IMO the HOA should not pay for poor workmanship of someone else's contractor.

#3 Welcome to a Gated community. Gates are very problematic and you can expect them to fail frequently over your life in that community. Your dues and Reserve funds should have a budget for these repairs.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Think need to understand the relationship between HOA and Builder vs owner owned HOA...

Basically a developer will buy let's say 100 Acres of land. They will break that up into 1 acre lots. They may also be the "builder" or collaborate with a builder to build on those lots. They may also take 1 acre to put on an amenity like a clubhouse/pool. A buyer will purchase the 1 acre and have the builder build the home. Once that happens they become members of the HOA. Which at this point is owned by the Developer. The developer collects dues to cover maintenance costs of the amenities and operational budget. It can be managed by a professional company. (Another cost covered by dues).

During this time the Developer is the owner/manager/HOA. Their money is being made up front when they sell off the acres. The HOA budget is collected by the members to later be self-managed and handle the long term expenses. When the HOA is finally turned over the HOA budget the builder has set up will transfer over to the owners to handle.

So until this happens your pretty much at the Developer's mercy/control. The dues are contributing to operational cost but NOT the "Profit" of the developer. Certain items like the clubhouse/pool or other amenities come out of the Developer's pockets. The care of these items come out of the HOA's.

Former HOA President

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