A Colorado HOA has a neighborhood with a separate budget and extra dues/month. We need to created a Sub-Association

Started by LindaB31 • 9 replies • 409 views

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LindaB31 (Colorado)
Posts: 1

Posted:

Is there a cookbook on how to start a Sub-Association for a group of 85 Villas in a subdivision of 527 homes that pay an extra $145 per month for snow removal, landscaping & common driveway maintenance and repairs? Technically our Sub-Association cannot be formed until our builder formally turns over the 85 Villas to the main HOA. We would like to form a Neighborhood Committee (which is allowed in the main subdivisions C C & R as it will be once it becomes an official Sub-Association. No one knows when the builder will turn our Neighborhood over to the main HOA.

Please guide us to a reference book on how to form a Sub-Association (I assume it has to be registered with the State of Colorado). How are these Sub-Associations organized. What powers does the Sub-Association have versus the main HOA Board? We are not lawyers. These instructions need to be in language we can understand.

Thanks for your guidance.

Linda Berteau
[email protected]
303-679-3025
Broomfield, CO

GenoS (Florida)
Posts: 4,276

Posted:

Bad idea posting all your personal contact info here, Linda. Good luck with your association, though.

BillH10 (Texas)
Posts: 1,217

Posted:

Linda, find an attorney who specializes in HOA matters. I doubt you will find a cook-book telling you how to form a sub-association.

There must be a CAI (Community Associations Institute) Chapter in the Denver area. Contact their office and ask for a list of their attorney members, preferably those near you and not in Aurora or halfway to the Springs

Frankly, this will cost someone several tens of thousands of dollars or more for the attorney, filings, document reproduction, and distribution and other expenses. If you form a sub-association, it is likely all the deeds to the villa properties must be modified, at even more expense. After formation, the sub-association will require management, a Board, and all those other components of a free standing HOA, including an entire set of assessments for administrative expenses separate from those paid to the master association and separate from your snow removal and other expenses.

The association in which we reside in North Texas has 9,000+ homes, some of which are also in sub-associations. We reside in one. Based on your post, I am not certain you need a sub-association. You may, or perhaps not.

Why do you think you need a sub-association?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Linda,

You create one by amending the first set of governing documents and creating a new set of governing documents for the sub association.

Expect push back.

Some will complain that they are paying more.
Others will support hoping that they will pay less.

As others have said, you are going to need an attorney for this.
Expect to spend some money.

KerryL1 (California)
Posts: 14,550

Posted:

Welcome to the Forum Linda. Please follow the rules.

With Bill, why do some of you want a sub-association? How do you think it will serve you?

Our HOA of 200+ high rise condos has a "special benefit area (SBA)" created by the developer for 194 units. The is defined, etc., in our CC&Rs. We pay extra for some things that the non-SBA owners do not pay for because they don't use these things. Because it's so large there always are members of it who're on the Board.

KristinW1 (Colorado)
Posts: 2

Posted:

The Associations Linda is referring to has already been created the builder. The"Community Association" transitioned last November with our 5 member board taking full control. The builder has not been able to transition 2 phases in the neighborhood due to multiple construction defects and code violations with the city. The HOA is involved in a lawsuit with the builder and city officials are working to find resolve with the builder, no lawsuit filed. Phase 6 in the subdivision has a Supplemental Declaration which annexes the land/lots appropriately. The SD declares phase 6 a 'neighborhood' and names that neighborhood. It details all of the special services received in the neighborhood and it holds a map to show the detailed areas and which association is to pay for the area - the 'community' or the 'neighborhood.' The residents in phase 6 pay 2 dues, each the same (the SD for phase 6 details the extra services of landscape maintenance, snow removal services and common drive maintenance) and is made up of 85 homes/with 500 total in the community.

This would be a very small sub-association, one that would not run independently, rather would oversee the management of the SD only - again, only landscape, snow removal and common drive (concrete). The neighborhood is only 2 years old/community is 6.

The builder is still has many areas to complete and many areas are being redone due to improper grading and drainage. The defects that are being found out here are massive and the errors made both by the city and the builder have been coined 'either fraud or complete negligence' by the city legal counsel!

During all this fiasco, the Neighborhood Residents have wanted to insure the development of their phase is not accepted by the master association without their 'input.' Time and time again, the board has refused them and has gone on to make decisions FOR them - without even SEEKING input from the 85 homeowners in the Neighborhood.

In closer review of all the documents, it has come to light that the Neighborhood IS a Sub Association; but the Community Association, our Property Management Company and our Board of Directors (all new in their positions) have missed the Supplemental Declaration! In fact, they have just recently read the SD.

How should the Neighborhood proceed in organizing their sub-association already created by the builder and filed in the CCR's - SD was filed 2017 master association was filed 2015 and the SD will file at time of transition of phase 6 from declarant to Association.

Another question here: "Which" Association will Declarant transition to....the Master or the Sub.

BillH10 (Texas)
Posts: 1,217

Posted:

Kristin

Please do not make the mistake of thinking the sub-association can operate without replicating most HOA administrative functions. Some group must oversee assessment billing, the collection of assessments, receive bills, disburse payments, track and collect past due accounts, etc. Someone must create bids, interview bidders, select contractors, oversee the work being performed, etc.

The overall situation you have described is very complex. There are many experienced posters on this forum; my first reaction to the degree of complexity you described is to do what I suggested in my previous post: contact the local CAI chapter for the names of attorneys in your area, set up interviews, and retain the one you believe will be able to guide your association through what you are dealing with.

KristinW1 (Colorado)
Posts: 2

Posted:

Thanks Bill,
To Clarify,

The Community Association has been set up with a Finance Committee who prepares all the financials for BOTH the neighborhood and the community budgets. There is a professional management company with 2 'staff' professionals/a property manager and a lifestyle director. Community committees are all set up and working toward transitioning the Master Association, made up mostly of Community Members.

As previously mentioned, our Board and PM company was not aware the Supplemental Declaration existed until recently sending all to the HOA legal counsel last Thursday.

We have been operating as a 'sub-association,'without the power and control of 85 homeowners defined our Supplemental Declaration. All decisions have been made by the BOD and Committee members, not the Neighborhood homeowners.

Our BOD signed our snow removal contract for the upcoming year, refusing to even get input from the homeowners in the neighborhood and this new contract does not in alignment with the SD, just as it has not the previous 2 snow seasons.

The 85 homeowners have asked on at least 3 previous occasions to become a separate 'committee' of the Board to deal with the intricacies of the SD, all requests have been turned down.

Now that this sub-association terminology has been uncovered in our governing documents, what do we do to either implement the SD or alleviate it all together? Doesn't seem like it is right to sit in limbo, they have collect $145/month for 2 years, all expenses are to be paid by declarant until transition AND they just moved all of the money they have been collecting from us, to our Reserve account....with a message our dues were increasing 20% next year?

Since Thursday, the finance committee has re-worked the budget to reflect a $15 decrease in these dues next year, however, Declarant is not expected to transition Phase 6 until 2021/2022 and beyone.

What can this neighborhood do to force the implementation of our governing documents?

Would this be classified as "Breach of Duties" by the officers and staff of the HOA?

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By KristinW1 on 09/02/2020 3:45 AM

During all this fiasco, the Neighborhood Residents have wanted to insure the development of their phase is not accepted by the master association without their 'input.' Time and time again, the board has refused them and has gone on to make decisions FOR them - without even SEEKING input from the 85 homeowners in the Neighborhood.

Is there a legal requirement for the board (developer?) to seek input from the 85 homeowners? If not, then consider that (1) this is what you signed up for when you bought into the development; and (2) I think it's likely the only assistance that will benefit you will come from an attorney. Your group will necessarily have to pay a small fortune to this attorney to just begin to help you and your group become educated. You should go into any meeting with an attorney with specific questions, pertaining to your HOA et cetera, about what is legal and what is not.

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