Developer HOA Turnover Options (Okla)

Started by RobertT13 • 7 replies • 826 views

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RobertT13 (Oklahoma)
Posts: 16

Posted:

Hello all, A developer friend of mine has asked me about his obligations regarding his HOA turnover responsibilities.

The Developer has created a set of Covenants that state "An HOA may be created after 50% of the tracts are sold." That's it, no other specifics in the Covenants about the HOA. The Development consists of 50 tracts in a rural area of Oklahoma. So far 30 tracts have been sold and owners are starting to build homes. Everything is going well.

The Developer is a good guy and and wants to do the right thing, but knows nothing about HOAs... surprise surprise, I Know.

Questions:

1) Is the Developer legally obligated to form an HOA now that the 50% point has been reached? The covenants say an HOA "may" be created if that matters.

2) Does the developer have to form the HOA himself (HOA corp, BOD election, bylaws, etc) and run it until he declares he is finished at which point he would turn the HOA over to the owners?

3) Can the developer turn over the creation of a functioning HOA (HOA corp,BOD election, bylaws, etc.) to the owners after he declares he is finished as the developer? Approx 1 more year of work is needed by the developer on this property.

What are his options as the developer regarding HOA turnover to the owners.

Also, the only real HOA expenses will be maintaining roads... no other common areas.

RobertT13 (Oklahoma)
Posts: 16

Posted:

I forgot to mention... Okla HOA law is very sparse and I don't believe it address when and how the developer actually does the turnover of an HOA to the owners.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Time for your friend to lawyer up.

RobertT13 (Oklahoma)
Posts: 16

Posted:

Can't be that complex.

GenoS (Florida)
Posts: 4,276

Posted:

Is that your professional legal opinion?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

He's got to basically create a corporation. Which if not going to have anything like a golf course, will most likely be a not-for-profit corporation. (NOT a charitable non-profit). All of which takes some paperwork to fill out. I'd recommend he contact a corporate lawyer to help him set up the corporate side of the house.

The reason to form a HOA is to cover the long term maintenance costs that one will incur when owning a large amount of common area. That may mean a front entrance to be mowed/maintained all the way up to a clubhouse/pool/other large amenity. They don't pay for themselves. That is why a HOA is formed to pay for these shared items out of everyone's pocket when turned over. If still developer owned, it helps them with some of these expenses.

Otherwise if he doesn't want a HOA, may still need to go through the process of dissolving that paperwork. Again another legal question for a professional.

Former HOA President

TimB4 (Tennessee)
Posts: 21,062

Posted:

See:

Best Practices - Transition a pdf document from the Foundation for Community Association Research

Transistion Plan an HOA's formalized plan for transition.

Condominium & Homeowner Association Transition from an attorneys website

HOA transition checklist

Subject: Steps to follow in transfer from developer to homeowners An earlier thread on this forum

Hope this helps.

Tim

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Great, helpful stuff, Tim!

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