Georgia HOA State Code Violation

Started by BethM8 • 4 replies • 660 views

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BethM8 (Georgia)
Posts: 1

Posted:

Hello Members, he declarant on our community protective covenants has changed 5 items since made by the original builder who went bankrupt in 2008. The current Declarant sold some of the lots to a builder (Venture Homes) who has built 11 townhomes so date. The original incorporated HOA was administratively disssolved 12/31/2015 by the state. On September 28, 2018 the Declarant filed amendments to change the name of the Association and remove all the old by-laws and replace with new ones. The new incorporated HOA was not formed/registered with the state until 10/2/2018, which violates GA Code 44-3-227 because incorporation must be done prior to conduct business. In addition, the NEW corporation filed with the state lists employees of the latest builder as the CEO, CFO, and Secretary. Venture Homes AS the "current HOA" is trying to collect dues from the original owners that reside in the community. These homeowners are being railroaded.

Besides being in violation of the state code, isn't the current declarant responsible for establishing the HOA, not the current builder? Wouldn't the builder need to be majority owner and declarant in order to establish a new HOA and attempt to collect dues?

We have no board members, no meetings and apparently no rights. Any advice on this issue would be greatly appreciated.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Collect lots of money from your neighbors and hire an HOA attorney to sort it all out.

Sniping at the big boy builders and declarant sounds too hard.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Beth,

What is not known is if the Declarant also sold/transferred their rights (or some of their rights) to the new builder.

What is not known is if the Declarant agrees with these changes and (most likely) has the voting power to make them happen.

If desired, you can try informing the Corporation Commission to see if anything happens. In reality, the most that might happen is the current corporation incurs a monetary penalty. Since the current corporation is the HOA, the members of the HOA will likely pay any monetary penalty.

One thing to keep in mind is that corporate laws and your governing documents are civil (vs. criminal). The State will enforce the criminal violations. It's typical that the parties involved must resolve any civil violations either through compromise or the courts.

I know it's not what you wanted to hear.

Hope it helps.

Tim

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By BethM8 on 01/14/2020 1:46 PM
... The original incorporated HOA was administratively disssolved 12/31/2015 by the state. On September 28, 2018 the Declarant filed amendments to change the name of the Association and remove all the old by-laws and replace with new ones. ...

The first thing I'd ask is whether the corporation was dissolved, or the HOA. It's possible for the HOA to lose its corporate status but remain intact as an HOA. This means that the covenants and restrictions attached to owners' deeds remain in place, but individual owners are jointly, *personally* liable for any common areas owned by the HOA. This means is anyone were injured on the common areas and sued the association, the lawyers would come after the individual homeowners. As you can see, this is bad.

Since you said the Declarant simply amended the name and changed the bylaws, this suggests to me that the original HOA is in fact still intact.

I'm not a lawyer, but I'd say the original members of the HOA would have had to vote to dissolve the HOA. It's possible/likely that the Declarant is still a majority owner and basically can do whatever he wants, but this is the second thing I'd want to know about.

I second George's recommendation: an attorney, stat. You should find one that is well versed in HOA and real estate law, since these are specialized areas. Once I had a lawyer on board and had his blessing, I'd be inclined to notify the new "regime" that any moneys that they claim I owe are being put into escrow pending resolution of legal issues. This could have consequences, but I don't like the idea of handing over money that I may not actually owe.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Beth

While under Declarant control, bend over and grab your ankles.

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