Is this declarant just a builder?

Started by BrS • 14 replies • 318 views

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BrS (Texas)
Posts: 47

Posted:

If a developer (Joe Schmo person) sells all the land he owns in a platted subdivision to multiple builders including to himself (JSP Homes), is he then no longer the declarant?

If he ceases to be the declarant upon selling the plats, would the development period technically be over as far as his being in charge of it?

AugustinD
Posts: 3,698

Posted:

BrS, the Declaration of CC&Rs is normally the authority on when the Declarant/Developer must turn control of the HOA over to the HOA members. Can you quote here exactly what the Declaration says on this subject?

BrS (Texas)
Posts: 47

Posted:

Quote:

Posted By AugustinD on 12/29/2021 5:44 AM
BrS, the Declaration of CC&Rs is normally the authority on when the Declarant/Developer must turn control of the HOA over to the HOA members. Can you quote here exactly what the Declaration says on this subject?

He never formed an HOA and the CC&R’s were not filed properly. A whole other can of worms.

“Declarant” means (insert LLC created for this subdivision) and any successor that acquires all unimproved lots owned by declarant for the purpose of development and is named a successor in a recorded document.

“Development period” means the period beginning on the date of this declaration and ending on the date the declarant has no lots.

BrS (Texas)
Posts: 47

Posted:

Here’s the other verbiage in the document. None of this actually took place while the developer or builders owned the lots. There were no bylaws, no formation certificate and no board members appointed by anyone.

BrS (Texas)
Posts: 47

Posted:

My attachments won’t upload.

AugustinD
Posts: 3,698

Posted:

BrS, convert your documents to pdfs. Each pdf must be smaller than 200 kilobytes. Then try attaching them to a post here.

If you describe the particular concern you have, people here can probably give better suggestions to help you. In other words, why do you want to know whether the (original) Declarant legally still has control? Or are you just curious?

BrS (Texas)
Posts: 47

Posted:

I’m curious to know when the declarant ceased to be in control. Keep in mind that he did not establish an hoa, bylaws or have a board of any sort. All the lots were sold immediately after he created the plat to several different builders.

Association
1.
Establishment and Govemance. The Association is established by the filing of
a certificate of formation and is govemed by the certificate,this Declaration,and the Bylaws.
The Association has the powers of a nonprofit corporation and the property owners association
for the Subdivision under the Texas Business Organizations Code,the Texas Property Code,
and the Governing Documents.
2.
The Association shall be governed by a Board of Directors,as
provided in the Governing Documents,consisting of three (3) members. During the Development Period, the Declarant will appoint all members of the Board, and any
members selected to fill a vacancy during an unexpired term, with the remaining members
selected as provided in the Bylaws. During this period, the Declarant will also have the
right to remove any Board member for the grounds for removal set out in the Bylaws.
Thereafter, the Board will be selected and Board members replaced or removed as provided
in the Bylaws.

TimB4 (Tennessee)
Posts: 21,062

Posted:

BrS,

When an Association is under declarant control, it's highly possible that the declarant will utilize their own company as the HOA and board until it has to.

If he sold lots to builders, it doesn't mean they gave up declarant rights. It's also possible that the declarant rights can transfer to the builder who then gives their proxy to the developer. It's all in the details. Unfortunately, it's likely you won't gain access to those details.

Do you pay assessments?
If you do, is the check made out to the declarant directly or to a corporation?
(keep in mind the posting rules and don't mention names).

BenA2 (Texas)
Posts: 1,273

Posted:

I think you have a strong argument for the development period being over but, according to our attorney, there is no clear definition of when the development period ends in Texas unless it is stated in your governing documents.

Is the declarant just a builder? If he owns land then he retains all the rights of an owner/member.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By BrS on 12/29/2021 6:13 AM

He never formed an HOA and the CC&R’s were not filed properly. A whole other can of worms.

That the CC&Rs do not apply is possible. It depends on the meaning of "not filed properly."

BrS (Texas)
Posts: 47

Posted:

Quote:

Posted By AugustinD on 12/29/2021 9:05 AM

Posted By BrS on 12/29/2021 6:13 AM

He never formed an HOA and the CC&R’s were not filed properly. A whole other can of worms.

That the CC&Rs do not apply is possible. It depends on the meaning of "not filed properly."

He filed CC&R’s with no reference to the subdivision. There’s no property description or plat # or anything to associate them to any property. In Texas, they must contain a legal property description to be valid from what I have gathered.

I’m not questioning whether or not the development period is over. I’m wanting to know if his control ends upon selling the lots. I think Ben answered my question with that. Thank you.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By BrS on 12/29/2021 9:58 AM
He filed CC&R’s with no reference to the subdivision. There’s no property description or plat # or anything to associate them to any property. In Texas, they must contain a legal property description to be valid from what I have gathered.

-- You might want to check the Texas Secretary of State site, corporations division, and see if this "HOA" is listed there. If so, you should ask the Texas SoS for a copy of the Articles of Incorporation.

-- If the covenants have a material defect (like the one you suggest), then the issue of the Declarant having control is moot. Covenants not recorded so as to satisfy legal requirements could translate to the Declaration and Bylaws being not applicable. In other words, it's possible the so-called Declarant has no say over anything.

-- Chances are good that the land on which the homes site has earlier, properly recorded covenants associated with it. But these earlier covenants are likely quite general.

BenA2 (Texas)
Posts: 1,273

Posted:

With all the questions, it would be worth hiring an attorney. If the CC&Rs for the individual properties are legal, then it is probably nothing that cannot be fixed. An HOA does not have to be set up by the developer and an HOA is not required to enforce the covenants.

BrS (Texas)
Posts: 47

Posted:

Quote:

Posted By BenA2 on 12/29/2021 1:01 PM
With all the questions, it would be worth hiring an attorney. If the CC&Rs for the individual properties are legal, then it is probably nothing that cannot be fixed. An HOA does not have to be set up by the developer and an HOA is not required to enforce the covenants.

You are correct. If the CC&R’s were valid however, the declarant was the one who is indicated as having already established an hoa. He chose not to and he’s long gone. I’m not questioning his control in the present time. I was trying to determine if he ever had the right to file anything at all, incorrectly or not since he sold all the lots in the very beginning.
There is an hoa now formed, years after the fact and by a couple of self appointed homeowners. No bylaws, no elections, nothing above board. I do have an attorney but it’s free to ask questions here so I figured it wouldn’t hurt. Thank you all for your input.

BrS (Texas)
Posts: 47

Posted:

Thank you!

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