Deed Restrictions but no HOA

Started by GeenaS1 • 32 replies • 1619 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

GeenaS1
Posts: 53

Posted:

Our developer filed restrictions for our subdivision indicating that he was also filing to establish an HOA. He failed to do so and the development period is long over. There was no official turnover because there was no HOA to turnover. Now, a few neighbors have gotten together among themselves without notifying each homeowner and they voted on a board for the non existent HOA. They have also decided to form an HOA and hire an outside company to manage it. All of this being done without the homeowners voting and prior to there even being an HOA here.
Has anyone experienced this before? We’re in Fort Worth, Texas. They have threatened to sue anyone who doesn’t comply.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I'd ask them to provide copies of the legal papers creating the "HOA", specifically citing the language indicating that your home forms part of it. I'd do this whenever they threaten to sue anybody.

HOAs aren't social clubs, they're legal entities - which apparently your neighbors don't understand. Lawyers have to get involved in the creation of one since you need to make sure that all applicable laws have been obeyed. And you can't be put into one unless you sign papers agreeing to it - mostly this happens when people buy a home in an existing HOA and they sign the papers at closing.

Sheesh, just when you think you've seen it all....

GeenaS1
Posts: 53

Posted:

It’s a circus! The fake board knows ZERO about running an HOA. What they’re stuck on is the wording in the restrictions which, had an HOA been established, we’d be bound by it. The developer notified all homeowners that he did not set it up but that we can now that all homes are sold.
So they think we have to create one because the deed restrictions require it lol
It’s unbelievable. We have no common areas or amenities. It’s just 4 busy bodies playing bossy pants. I’m not disputing the restrictions, although they’re pointless without an HOA. The HOA was not established when I closed on my home and my title company confirmed this.
So from what I’ve gleaned from many different sources is that an HOA has to be established prior to closing to bound me by it. Unfortunately, I’m stuck with the restrictions for now but even those are being challenged because they don’t tie to our plat. Thx for your input.

CathyA3 (Ohio)
Posts: 6,299

Posted:

You can have deed restrictions without having an HOA. Restrictions typically "run with the land". If you can find a copy of these restrictions, look for a clause stating that they run with the land. If it's not there, then they don't. Of course without an HOA to enforce them, who knows how many are paying attention to them.

As you know, your developer messed up. He should have filed all legal paperwork before he started building or even advertising. Since the HOA does not legally exist until the necessary papers are recorded, he technically misrepresented his product. At least in Ohio, all buyers must be informed that they are buying into an HOA and they must receive copies of the governing documents. If a developer fails to do this, or sells a home that supposedly is in an HOA but legally is not, then a buyer would have grounds to challenge the purchase contract. (I work for a new home builder, and we have a legal department that makes sure things like this don't happen.)

I think this could be a bigger deal than the developer seems to think it is. For one thing, when he was in control, he could file the necessary documents by himself. Now, at the very least you'd have to have a vote of all affected homeowners agreeing to be in an HOA. And what happens if some don't agree?

I agree that your neighbors are making a mess and are probably letting themselves in for a world of hurt once people start fighting back. This small group of homeowners has no legal authority to act on behalf of the community. And I'm sure they did not work with a lawyer to draft new governing documents, and without those they have nothing. Individual homeowners can't be forced into agreeing to new docs. At best you may end up with a voluntary HOA, where people can join or refuse to join as they see fit.

You and some of your other neighbors may wish to buy a few hours of a lawyer's time to find out where you stand. Specifically I'd want to find out if your community has any recourse to go after the developer for the mess you find yourselves in. It may be too late for that. Also I'd want to know what sort of disclosures would have to be made if someone wanted to sell their home. I wouldn't trust the word of the developer or your new "board" because they clearly don't know what they're doing.

And don't give them any money. :-)

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By GeenaS1 on 02/11/2020 2:29 PM
So they think we have to create one because the deed restrictions require it lol

I could never laugh as you are without first seeing exactly what the deed restrictions say. Can you redact the name of the HOA and post them here? Alternatively, send me a copy at [email protected] , and I can post the pertinent parts.

Quote:

Posted By GeenaS1 on 02/11/2020 2:29 PM
I’m not disputing the restrictions, although they’re pointless without an HOA.

Why do you say this? Typically covenants and restrictions may be enforced neighbor-to-neighbor. The courts are full of such attempts to enforce. Sometimes they are successful. Sometimes not. But it's rare the courts say something like, "There's no mechanism for enforcing the covenants." Instead, its general precedent nationwide that one owner can sue another owner for violating covenants to which they are both subject.

Your posts raise a lot of questions that I would not dare try to answer without more information. I do think you may be jumping the gun.

GeenaS1
Posts: 53

Posted:

I never said I had not read the deed restrictions. I’ve read them numerous times as well as the Texas property code. I’m well aware of what they say and aware that while they may be enforceable, it will only be neighbor to neighbor if a lawsuit arises. They were not filed properly so they may not even be valid. The reason I say they are pointless is because the developer wrote for us to have to get permission from the HOA for things like fencing, barns, etc. There is no legal entity to go to and the “club” currently attempting to be formed will only be a voluntary one. The developer actually breeched the contract by failing to follow through. We have no common areas or amenities and it’s a small development with custom homes.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By GeenaS1 on 02/11/2020 4:31 PM
There is no legal entity to go to and the “club” currently attempting to be formed will only be a voluntary one.

I thought your original post was asking for opinions on this. Maybe not. Do you still have questions?

Quote:

Posted By GeenaS1 on 02/11/2020 4:31 PM
The developer actually breeched the contract by failing to follow through.

If the CC&Rs require a HOA then I am not persuaded that what the developer did is relevant. Whether this group of people are handling things correctly is not clear.

Quote:

Posted By GeenaS1 on 02/11/2020 4:31 PM
We have no common areas or amenities and it’s a small development with custom homes.

Like I said, I would have to see the Declaration or CC&Rs or whatever document you have that states "the deed restrictions require [a HOA]." If you do not want to share these, no big deal.

GeenaS1
Posts: 53

Posted:

I was asking if anyone had ever experienced this situation. I shouldn’t have said “required”. What I meant was that the deed restrictions were written to include and HOA. Developer claimed in the declaration that he filed this that and the other in order to establish it but he didn’t.
Those who want the HOA seen to think they are legally obligated to pick up where the developer left off. I do not believe it can be a mandatory HOA now but this will likely end up in court with a judge deciding.

AugustinD
Posts: 5,144

Posted:

Whether a neighborhood/community/yada is subject to a HOA comes up a lot here.

By my reading, the Texas Residential Property Owners Protection Act (meaning Texas's main HOA statute) does not require that there be common areas or amenities for a HOA to exist. (Some, but not all, states' HOA statutes do have such a requirement.)

Good luck.

GeenaS1
Posts: 53

Posted:

You are correct. I personally don’t see a need for one in my neighborhood and I’m curious to see how it all unfolds. Thanks for your input!

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By GeenaS1 on 02/11/2020 5:02 PM
You are correct. I personally don’t see a need for one in my neighborhood and I’m curious to see how it all unfolds. Thanks for your input!

Something that occurred to me: who owns your streets and other infrastructure such as sewer lines? Does the city/county own them or are they private? If they're private and supposedly owned by the HOA That Isn't, who is going to maintain them? The city will not step in or pay for the work to be done - it will have to be done by homeowners. That's one good reason for having a functioning HOA.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I think people get confused on what a HOA is. The HOA itself is the "Club" of owners that enforce the rules and budgets the money. So you have just CC&R's but not incorporated "club". This doesn't mean you get out of anything. It could mean individual can decide to enforce the rules onto their neighbors via lawsuits. Like a neighbor put up a shed in violation next door. The neighbor can sue them per the restrictions.

Having an actual GROUP of neighbors in an organized form gives all the neighbors/members the ability to run and fund the group altogether. I call it a "club" because you and your fellow neighbors now have a purpose to gather together for meetings, enforcement, and funding your neighborhood. Incorporating it just means you all have the ability to collect funds.

Former HOA President

GeenaS1
Posts: 53

Posted:

Our streets are public and we’re in an unincorporated area with private wells and septic systems.

GeenaS1
Posts: 53

Posted:

Had the developer actually established the HOA prior to selling the first lot then we’d be bound it. He failed to do anything beyond filing very generic restrictions that are also written to include maintenance of common areas which we don’t have. Anyway, my post was to find out if anyone had experienced this situation. Thanks everyone for your input.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By GeenaS1 on 02/12/2020 6:37 AM
Had the developer actually established the HOA prior to selling the first lot then we’d be bound it.

Readers are allowed to post here as they see fit. For the archives (and not the OP), no way will I agree with the above statement until I have had a chance to look at the CC&Rs and come to my own conclusion (which might also include consulting an attorney). This comes from years of experience of reading laypeople's takes on governing documents and finding the laypeople are frequently mistaken.

GeenaS1
Posts: 53

Posted:

That’s very true. I have consulted an attorney versed in HOA law in Texas which is where I got my information from.
This entire issue could have been avoided had the developer consulted an attorney as well. He didn’t and now he has a mess on his hands. Some plan to sue him and want everyone to join in. I opted not to be a part of that. But that’s a whole other topic of conversation. I am gathering that my situation isn’t all that common.

AugustinD
Posts: 5,144

Posted:

Just talking here. One part of this that is interesting to me is that, from my understanding, city land use departments (or municipal ordinances, or city councils) often require developers to legally commit to establishing a HOA. Because for one, cities typically do not want to be (solely?) responsible for enforcing xyz aspect of the proposed subdivision, like say maintenance of required drainage improvements. If the city in the OP's case required a HOA, what kind of wrench will this throw into the legal machinations here? It may be worth checking the plats (for one) to see what commitment the developer made to the city on this point.

GeenaS1
Posts: 53

Posted:

We’re in an unincorporated part of the county and we don’t have many regulations. Like no rules or laws about fencing around our pools, etc. No regulations concerning fireworks.
The county won’t take over the drainage or streets until the developer fixes it to their liking. We don’t have real drainage like they do in the city. There’s no sewer out here. Our development floods the adjacent properties when it rains which is a huge issue. Our development is 3 years old and most have already built their barns and pools and since there wasn’t an ACC to go to, people built how they wanted. Here’s a fun fact: The plat is in the name of our subdivision and the restrictions are in a different name with no mention of the plat or any other legal description.
It will be interesting to see how this plays out and I’ll be sure to update here.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By GeenaS1 on 02/12/2020 11:55 AM
Our development is 3 years old and most have already built their barns and pools and since there wasn’t an ACC to go to, people built how they wanted.

That sounds like another can of worms. I think some case law on this point exists, but I doubt I could resurrect it quickly. Something in the vein of:

-- The covenants said owners had to get approval of the ACC to do xyz to their land.

-- No ACC nor HOA board existed.

-- An owner Smith went ahead and did xyz.

-- Another owner Jones objected and took Smith to court.

-- The court ruled for Jones, on grounds that all agreed to the covenants. In the absence of an ACC and board, Smith was obliged either to get permission of all owners or seek an amendment to the covenants.

Of course, if enough time goes by and enough people do things on their land in violation of a covenant, then the covenant may become legally abandoned.

Just sayin'.

GeenaS1
Posts: 53

Posted:

I’m curious to find out if the restrictions even apply to us because they were improperly filed according to our attorney. We’ll know soon enough. It doesn’t change how I’m living but I am curious. We built our workshop and barn in line with the “rules” though. If they are enforceable then yes, we are obligated to abide by them or risk another homeowner suing.

AugustinD
Posts: 5,144

Posted:

Understood.

Here's chatter about a 2016 Virginia trial court that ruled a HOA was not legally valid because the HOA Declaration lacked a (Virginia) statutorily required statement that the HOA had an "affirmative duty" to maintain the common areas: https://www.corecompass.com/articles/court-determines-hoa-not-legally-valid. Case law resources show no indications of an appeal. Here's the judge's decision: http://themossreport.org/wp-content/uploads/2016/08/George-Evans-et-al-v.-Seven-Springs-Farm-HOA-Culpepper-Cir.-Ct.-2016.pdf. The latter cites a number of Virginia appeals court cases where HOAs were ruled to be legally invalid under Virginia statutes. I do not think much of the specifics would transfer to Texas. But the notion that a court is going to use a strict reading of the statutes and Declaration to determine whether a HOA is legally valid perhaps does transfer. Like you, if there is some lawful requirement that abc has to be done for a proper filing with the County, I get how this could invalidate the HOA (that others allege exist) where you are.

Again just saying.

AugustinD
Posts: 5,144

Posted:

Here are two Texas appeals court decisions where the legal validity of a property owners association was in dispute:

Summers v. Highland Composite Property Owners Association, Inc. 2011, https://law.justia.com/cases/texas/thirteenth-court-of-appeals/2011/19614.html

C.I.A. Hidden Forest Inc. v. Watson and Harris, 2018, https://law.justia.com/cases/texas/ninth-court-of-appeals/2018/09-17-00117-cv.html

Neither of the decisions fit the OP's situation well. The first one seems to have the most commentary that may be relevant to the OP's situation. Both talk about what the deeds said.

GeenaS1
Posts: 53

Posted:

Thank you!

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Gee a,

Doesn’t Texas have statutes wrt mandatory pool fencing?

CD6 (Texas)
Posts: 34

Posted:

Quote:

Posted By GeenaS1 on 02/12/2020 11:55 AM
We’re in an unincorporated part of the county and we don’t have many regulations. Like no rules or laws about fencing around our pools, etc. No regulations concerning fireworks.
The county won’t take over the drainage or streets until the developer fixes it to their liking. We don’t have real drainage like they do in the city. There’s no sewer out here. Our development floods the adjacent properties when it rains which is a huge issue. Our development is 3 years old and most have already built their barns and pools and since there wasn’t an ACC to go to, people built how they wanted. Here’s a fun fact: The plat is in the name of our subdivision and the restrictions are in a different name with no mention of the plat or any other legal description.
It will be interesting to see how this plays out and I’ll be sure to update here.

Hmm, that part about the county refusing to take over the roads and drainage could prove very costly in the future. Without county maintained roads or drainage, who is going to repair either if there is a problem?

BenA2 (Texas)
Posts: 1,273

Posted:

No, there is no state law regulating private pools. That is up to individual jurisdictions and counties are very limited on what they can regulate.

I also live in an unincorporated part of a Texas county. You can build a house and the only permits required are for septic, building in a floodplain, and connecting your driveway to a public road. Electric, plumbing, foundation, and everything else is completely unregulated.

BenA2 (Texas)
Posts: 1,273

Posted:

I would like to find out how this turns out. As you probably know, Texas leans very much to the "free use of land" so my guess is that a court would rule in your favor on both the HOA and the deed restriction issues.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Ben,

I did another quick search, and TX looks to have requirements, as well.

Can you help me with a reference saying otherwise?

RobertT13 (Oklahoma)
Posts: 16

Posted:

I am in a similar situation in Oklahoma. I didn't read every post, but it's unclear to me what your current and legal Covenants actually say about the HOA. Here are my 2 cents;

1. If your current Covenants call for an HOA, then an HOA can be formed by the Owners after the Developer exited without setting up the HOA. Just because the Developer may have done a poor job regarding setting up a "functioning" HOA doesn't mean that an HOA section of the Covenants is invalid. Owners can get together and form a "functioning" HOA by;

- Creating a Texas non profit corp for the HOA
- Obtain an EIN from the IRS so as to open a bank account
- Call for and elect the HOA Board of Directors
- The Board of Directors then adopts a set of Bylaws
- at this point, you have a "functioning" HOA

All of the above is subject to Texas.

2. If your current Covenants don't call for an HOA, then one can still be formed based on Texas law. However, this route most likely is more restrictive since it's not called for in the Covenants, and probably harder to setup. For example, Texas law may require that 100% of the Owners agree before an HOA many be established.

Regards

GeenaS1
Posts: 53

Posted:

They will be taking the streets over eventually. The developer has some things to do first.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Gena

How is the developer still involved?

GeenaS1
Posts: 53

Posted:

Quote:

Posted By BenA2 on 03/26/2020 8:28 PM
I would like to find out how this turns out. As you probably know, Texas leans very much to the "free use of land" so my guess is that a court would rule in your favor on both the HOA and the deed restriction issues.

Yes, our attorneys mentioned that. I will definitely update here once things are resolved.

GeenaS1
Posts: 53

Posted:

Quote:

Posted By JohnC46 on 04/11/2020 9:54 AM
Gena

How is the developer still involved?

He is battling it out with the County over the completion. He put a bandaid on the issues and the County won’t approve it.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here