Propposing a HOA Law for the State of Ohio would appreciate comments and suggestions also examples of problems due to no laws in place.

Started by SarahO • 22 replies • 1488 views

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SarahO (Ohio)
Posts: 26

Posted:

The Following is the bill as it was introduced by then Representative Raga before he left office to pursue the Lt. Gov position in the last election. This bill was dropped from the docket and we as members of a messed up HOA would like to see this on the books so we as homeowners would have a legal leg to stand on with our developer. We would appreciate any input for or against this bill and if you would would like to add or delete a portion please state the item and why Thanks. Please only comments from the State of Ohio please.
As Introduced

126th General Assembly
Regular Session
2005-2006
H. B. No. 407

Representative Raga

--------------------------------------------------------------------------------

A BILL
To enact section 5312.01 of the Revised Code to define and establish requirements for residential community association developments.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 5312.01 of the Revised Code be enacted to read as follows:
Sec. 5312.01. (A) As used in this section:
(1) "Common areas and facilities" means all property, facilities, and improvements that homeowners in a residential community association development own or lease in common or that are held in trust or otherwise for the common benefit or use of the residents in the development and for which the homeowners have responsibility to repair, replace, and maintain.
(2) "Developer" means any person who develops real estate as a residential community association development.
(3) "Homeowners association" means an association of homeowners or other designated persons with the authority to assess fees to replace, maintain, and repair the common areas and facilities in a residential community association development.
(4) "Residential community association development" means a grouping of two or more homes developed pursuant to a common plan that provides for common areas and facilities for which the homeowners are responsible due to a covenant in the deed or other condition of ownership. A condominium development, as defined in section 5311.01 of the Revised Code, is not a residential community association development.
(B)(1) No developer, agent, or person associated with a developer shall convey any home or real property in a residential community association development unless the developer has furnished, at a minimum, a two-year warranty covering the full cost of labor and materials for the completion, repair, or replacement of any aspect of the common areas and facilities that the developer represents is included in the development or that the developer otherwise is responsible for providing. The warranty shall cover any completion, repair, or replacement that is necessitated by a defect in material or workmanship, the failure to complete an improvement or facility, or the failure to complete an improvement or facility in a workerlike manner.
(2) The warranty shall be effective for at least two years following the time at which the developer no longer has a controlling interest in the homeowners association and relinquishes the management responsibilities for the common areas and facilities to the homeowners association and for a longer time as needed so that any facility or improvement for which a warranty is required is covered for at least two years following its completion.
(3) The developer shall furnish a bond to accompany the warranty with good and sufficient surety, conditioned on the developer completing construction of the common areas and facilities and making any repairs or replacement as this section requires. The sole beneficiary or obligee of any default payment shall be the homeowners association, which shall use the payment to make necessary completions, repairs, or replacements, or to reimburse the homeowners in proportion to the amount each paid toward the completion, repair, or replacement.
(C) The owner of each platted lot in a residential community association development shall be assessed fees and charges for the development's common areas and facilities in an amount equivalent to the fees and charges assessed to the owner of a lot that contains an occupied residential structure. A developer, as the owner of a platted lot, shall be assessed fees and charges pursuant to this division.

NancyD1 (Florida)
Posts: 447

Posted:

Sarah,

By asking for only Ohio residents to respond to your question will get you only limited responses. I am responding because this bill not only affects OH HOA's but every HOA development in the country.

First, are you sure that this bill is not addressed in your CC&R's? It should be the first documentation you see under definitions. These are common to everyones CC&R's and if your documentation does not address them you do need them as they are worded.

A cursory glance at Ohio laws specifies that if you are under PUD you would follow the Ohio HB 5311. Most of the section that you have cited are provided in that bill. The only codes not answered are 4(B)(1), (2), (3), and (C)and they go with the individual land rights. These should be specicified in your doc's.

SarahO (Ohio)
Posts: 26

Posted:

Thanks for your comments Nancy. Part of our problem at this development is there are not any CC&R's and the few deed restrictions are only related to building codes which the township have chosen to supercede, despite the fact that they are to refer a homeowner to their deed restrictiions first and the townships code second. I will look up HB5311 and try to familiarize myself further with it.
Our particular problem is the developer is trying to turn over common properties to the HOA 50years after the HOA was formed. The HOA was not formed by the developer as it should have been but the homeowners themselves. Its a real mess and everytime we have looked for some sort of legal leg to stand on that the property should be turned over in reasonably usable shape before the HOA takes over rather than dumping a mess on the HOA.
I was asking for Ohio specific comments because our legislatures asked if anyone else has had similar problems and I would like to quote specific developments. Thanks again.

SarahO (Ohio)
Posts: 26

Posted:

Sorry forgot to add to previous reply that ORC5311 refers to condominiums only. I am speaking of a single family home subdivision that has common properties.
I would still like to hear from fellow Ohioan who live in a similar situation.

NancyD1 (Florida)
Posts: 447

Posted:

Sarah,

The 5311 bill would be the only reference point for homeowners in Ohio because your legislature has not chosen to enact bills that specify HOA's.

It thought you had not looked at your docs when you asked what we thought about the proposed bill. Now I understand. The developer has had control for over 50 years!! (is this really the original developer, is he still in business)Your community should be entered into the hall of fame for HOA turnovers. This is a new one. Since he his trying to dump the garbage all on your HOA, why don't you just say no. What's another 20 years or so, until you get this mess straighten out? LOL It is common custom that the suggested bill, in a similar format, is provided in every HOA covenants. If not, they would be in your position. This bill should definitely be approved but HB 5311 addresses most of these items.

From your comment that your HOA does not have any CC&R's, all would have to assume that you have no documentation that even tells you when, how and if any amendments could be made. If this is the case:

Before your HOA makes any commitments to the developer, I think you need some legal guidance with this one. The HOA has to protect itself and it doesn't seem that you have any documentation to provide that.

Good luck to you!

NancyD1 (Florida)
Posts: 447

Posted:

SarahO (Ohio)
Posts: 26

Posted:

This is the son of the original developer. He inherited a holding company that was started almost 100 years ago. Yes,these folks know how to hang on to things. Yes the developer/holding co. does retain ownership of several odds and ends pieces of lands including what has been used as common properties all these years. We are seeking legal council but this guy is so good at stonewalling and the property involved includes a dam/lake that has failed and caused the lake to dry up in this past summers drought. This whole situation has been a drain on our patience and property values. We will not accept the turnover of property until all is brought up to snuff, but again we need some sort of leverage with both the developer and homeowners who don't feel they need to pay HOA dues to maintain the common areas that they enjoy. Unfortunately the laws that are on the books have not been enforced and the developer is willing to just let things ride. We are of the thinking that this needs to end and the property needs to be preserved for future generations as well as our old age.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Sarah,

I would advice you strongly to listen and understand what Nancy is posting. Advice like this is hard to sort out in a sea of responses,

I agree you really need to get some solid ground under your association.
Legal help here could be invaluable. When you start beating on the doors of the Legislatures, you want all the support you can get and you want to present your issues with a personal interest and also demonstrating your association is acvtive in not only fixing their problems but the problems in the state. You have valid reasons now for your state to be involved in associations business and in the near future it will becoma a steamroller in a lot of negligent states, Lead the band.

NancyD1 (Florida)
Posts: 447

Posted:

Sarah,

The proposed bill is great in content and explanation, but, even if it were enacted it would not help you in your situation. If it was to be enacted your HOA would not be a consideration because you do not have any documentation from the developer about the land. There are no CC&R's, so you can't even pledge any changes. If and when you figure out who does what, IMO your HOA will have to file all new CC&R, By-Laws and any other documents that will concern your community.

How are you incorporated? Do you have a 501C status and file either IRS 1120 or 1120H forms? Have you run as a HOA? and if so what laws did you follow? I have a million questions...

This situation is intriguiging to me. The longest I have ever heard of a developer turnover is 9 years. This was a huge project and the developer decided to keep all the land himself and not sell the remaining off to individuals or other developers. What is most unique is that it is the same builder, in form. If they had gone out of business from losses or liens your HOA would have had an associated problem. They, in theory, still own it and it could have been in an auction.

Where would you begin. Since the common elements are so old IMO the HOA has to come to some sort of agreement with the developer. Did the HOA salt away anything in reserves for these common elements? Has the HOA replaced and repaired any of these items. If this case would go to court, and the HOA has made any adjustments to the common elements, you may lose on that basis because of eminent domain. Did the developer make any monetary considerations over the years to the HOA? I honestly can't see the developer funding anything after 50 years. Contributing a small amount maybe, just to get released, but I think it will eventually come down to the HOA making the concessions. The burden was on both of you to change over many years ago.

Please keep us informed on what develops with your situation. Interesting! Interesting!

SarahO (Ohio)
Posts: 26

Posted:

Robert I guess that is part of our problem we are trying to lead the band. Unfortunately when the developer and his family lived in the community everything was done with a handshake and if the HOA wanted something done that concerned these properties it was usually the developer who paid for it and the HOA seeing that whatever was done. When the family left about 30 years ago this arrangement no longer existed. Remember the HOA was originally formed by homeowners for homeowners and although the developer and family may have participated in events they did not initiate the HOA. The dues had always been voluntary but it was always incorporated and tax forms etc were filed. Unfortunately everything was run on a shoe string and as people moved in and out and the original family members died off or were pushed out by the current owner there was less and less participation. For the most part the Welcoming committee could never reach new homeowners to introduce themselves and just ended up leaving a newletter &/or directory on the new person doorstep. Some people joined on others ignored that they were living in a planned development.
About the only thing the developer did was pay taxes and other related fees. The HOA mowed grass, put chemicals and sterile white amurs into the lake to keep the weeds down,continued to pay for electricity to pay for lighting at the park and aereators for the lake. Since the dam for this lake is so old it has started to fail,that along with some damage that was documented but never repaired over 30 years ago for whatever reason has caused the lake to dry up and now people are noticing! Don't you just love human nature!!
We are hoping to find some sort of something to negotiate with this developer that he cannot just cut and run and leave all for the HOA to take care of when we are not prepared for the expense. We have found most folks would be willing to build a reserve for future maintenance and pay a highr dues to maintain the properties if they are turned over in working and not decrepit order.
The only thing we have heard from the developer is he will just let it go...big suprise since that is what has been happening for the past 50 years. We would like to resolve this situation once and for all and for the betterment of the community and all the property owners involved.
We were told by the legislators to see who else in our state may be having similar problems with their developer and that the propposed bill or even a revision of this bill would benefit not only our development but others as well. I would still like to hear from those folks since I have not been able to uncover any in my research and thought this would be a good place to start. I appreciate the comments I have received so far but believe me we are trying to get as many people on our side as possible so its not just an annoying lawsuit but that this cannot happen again on any level.So I guess our original intention waas to lead the band after all.

SarahO (Ohio)
Posts: 26

Posted:

PS For documents all we have are incorporation papers as a non profit, by-laws and a few deed restrictions. Nothing tying the developer to the HOA. What we would like to see is that it is mandatory to tie the HOA to any community that has or will have common property to maintain even if its just an entry sign...which we also put up and maintain.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Sarah,
Have you been to court house, checked business filing in your state to see if you are registered. You might luck out and find the company that did your initial survey and see it they have any information. Your tax records should be looked at in court house. Sometime if you happens to run into a deed office employee that has some gray hair they may recall something. Check anylawyers involved aat time of initial development.

I reallt hing it will end up taking Nabcy's advice and just redo the whole mess and start from your own page one if possible and get everyone else involved out of the picture.

NancyD1 (Florida)
Posts: 447

Posted:

< We were told by the legislators to see who else in our state may be having similar problems with their developer and that the propposed bill or even a revision of this bill would benefit not only our development but others as well. I would still like to hear from those folks since I have not been able to uncover any in my research and thought this would be a good place to start. I appreciate the comments I have received so far but believe me we are trying to get as many people on our side as possible so its not just an annoying lawsuit but that this cannot happen again on any level.So I guess our original intention waas to lead the band after all.

Do your government body think that there are a lot of HOA's that have not had a developer turnover in 50 years? This goes to show you have far out of reality our "chosen ones" are. What an excuse for not instituting a bill which would benefit all HOA's in Ohio.

Your attorney will advise you best, but before you go to court, the HOA should review all the documentation to determine if you really have a case. It will be a hard and expensive road without any precedents.

Your HOA could look to other state or government entities to assume the lake problems. The HOA and the builder may have to gift the state but it will take the burden of maintenance off of the HOA and you may still benefit by it.

SarahO (Ohio)
Posts: 26

Posted:

We have traced all the documents back to Methuzala and that is what we have. When we find the ol' gray haired folks who should know they just say well that's how it was back then although we have found other developments had the sense to do things properly way back then.
As far as letting the state take over this is a state that can't even have a bridge painted properly!!!! Do I really want them in charge of a ClassII Dam???!!
Also it would have to have public access and that really isn't possible without causing more problems. I thank you both for all your fine suggestions but that is why I am here we have been there and done that and still can't make headway. Did find out a new development is not happy with this guy too in a nearby community perhaps that will be some leverage for us here?

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Sarah O,
I imagine you have tried the county council and see if the can help, They will probably resist getting involved, but they might listen to a short public presentation at one of their meetings. The press is usually there and this developer names gets put in the limelight. Also the council members, especially in your district might want to have a word with this family and suggest this thing get resolved. Nothing wrong in playing politics.
Also, I don't believe I have mentioned it, but did you go to Zoning and developement county/city office and look at the master plane for your area.
I strongly feel there is a paper trail some where. Certainly contact this other HOA and try and solve your problems jointly. The developer may not have any interest in pleasing one association but might bend with two dogs barking at his heels. I would not suggest you break any laws, but multiple calls to his office might get his attention. Have you paid a visit to the legal aid office?
Use your research evidence to prove to anyone, you are serious and willing to work hard to make a difference. Have you talked to the Opinion page editor of your local paper.

All this is probably redundant, but don't give up, keep working on getting more and more names in your corner.

NancyD1 (Florida)
Posts: 447

Posted:

Sarah, I vote for you hiring RobertR. He has got some great suggestions.

SarahO (Ohio)
Posts: 26

Posted:

Unfortunately the township and the county have been pointing fingers at each other for 50 years over the bridge and road over the dam. No one wants to claim responsibility even though we came up with their own as well as our own documentation of the road being dedicated. We were told by the county prosecutor that "well dedicated doesn't always mean dedicated" and could get no further explanation than a shrug of the shoulders in response!!! So as I said before thee local yokels are not much help. Also I didn't think you could get approval for a subdivision unless all of the plats were approved and recorded well I had another thought comming. For some reason the first plat is on file with the Tax office but it is not on file with the recorders office, tell me how do you get away with that?? I was told that "Oh yeah, that happens sometimes the developer is supposed to go to 2-3 offices to record all this and sometimes they skip one just to avoid the added fee"!!! So the developers are now walked from office to office to make sure all is kosher!!
My thoughts exactly on contacting the other development to join forces I am sure it can't hurt any. Also found out today there is a HB220 that has been proposed that defines what a planned development is and just regurgitates what any decent set of by laws should include but there doesn't seem to be anything there that would help this situation. I do need to read it more carefully that was just a quick look see observation.
I would be more than happy to hire the gentleman with all the helpful suggestions, Sorry is it Roger or Robert? I should have written it down insteaad of depending on my fading memory. R U Up for it??

JosephW (Michigan)
Posts: 882

Posted:

I hate to be the one to bring this up, but have you run it by the state builder's association? Since its going to affect all developers, if they don't agree with it, it will probably never get out of committee( which may be the reason this has already happened). Their lobbyist(s) will have a lot more to say about where this proposal goes than you may want to believe, and if necessary, the National Association of Home Builders will throw their weight against it also. If it looks like they won't support it, you may want to look into special legislation that just fixes your problem, at least for right now.

To be honest, requiring a two year warranty, a bond and assessing them for all platted (but unsold, undeveloped) lots, isn't going to win them over. You're going to need the bar association, mortgage bankers, realtors and CAI on your side to possibly overcome the weight the builders can throw around.

Joe

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RobertR1 (South Carolina)
Posts: 5,164

Posted:

All to true Joe,
Plus a few special interests groups that we don't know about. It's a bleak picture.

But, you know, every once in a while a small group or even a large group just seem to be able to push the right button in the proper sequence and things get done. It may be luck, but some rich man said (maybe Buffet), "The harder I work, the luckier I get."

Nothing gets done without a begining (RobertR1 said that), and the need is constant for those that can show the way. The HOA picture is changing fast and people mean votes which can be more important than money sometime.
I can't say forget all these people you mentioned, but I can say get your focus on what you are after and that is change. I applaud their concern and resolve, as I am sure most do. And I surely don't want anyone to think I am critical of what you relayed as sound advice.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

I'm too old and cantankerous but I am flattered easily. Roger could probably get this all sorted out in a long weekend around about the time some wild owner has threatened to dump him in that great looking pool they have.

GlenL (Ohio)
Posts: 5,491

Posted:

SarahO, A few years ago 5311 was amended and I would recommend a few of those changes. While they may not apply to your Association per se, I think they would be valuable tools for other Associations with up to date CC&R's. You can view all the changes with an attorney's opinion on how they apply at: http://www.caiohiovalley.org/Community-Associations-Institute-Chapter~21158~10391.htm look under Legislation

5311.08(A)(3)
The Association, through the Board, must adopt and amend budgets for revenues, expenditures, and reserves in an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments. The amount set aside annually for reserves must not be less than ten percent (10%) of the budget for that year unless the reserve requirement is waived annually by the owners exercising at least a majority of the voting power of the Association.

5311.18 (B)(3)
In a foreclosure action, an owner cannot assert as a defense, set-off, counterclaim, or cross-claim that the Association has failed to provide him with any service, goods, work, or material or failed in any other duty.

5311.18(B)(6)
Not only owners, but also the Association, must comply with the Declaration, By-Laws, and Rules. Violations are grounds for the owner or the Association to be sued. An award of court costs and reasonable attorney's fees can be made in both types of action.

Studies show that 5 out of 4 people have problems with fractions

SarahO (Ohio)
Posts: 26

Posted:

Thanks for bringing up all the new points and citing the legislation that exists, but where we are finding that we do not seem to have leverage is with the fact that even though this was a planned development in theory it never made it passed the theory part. For example other than ta few deed restrictions the developer nor the HOA did not create a CC&R document and the HOA was never tied to anyones deed so that the common properties would be financed for years to come. Now we not only have to go back to the developer to bring the common areas up to snuff, but we need to convince the remaining 125 non dues paying residents that it is truly in their best interest to pony up some revenue and the BIGGIE tie this to their deed so the future is insured and we can release ourselves from this albatross once and for all.
Has anyone led a successful campaign to recruit apathetic homeowners into a HOA??
How did you go about it??

RobertR1 (South Carolina)
Posts: 5,164

Posted:

SarahO,

Sarah.....................O!

To begin this whole thing, you will need to go to county court house Zoning and development Master Plan. They may let you purchase a copy of this plan as it pertains to your area. Be sweet and they can be a great help in finding out what your HOA (?) property is. Likely, it will be zoned a PUD (Planned Unit Development) This will carry it's on set of documents.

In any event, from what I understand here, this whole property will have to be searched and clarified by a legal firm. Then, maybe you can make some plans.

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