ACC committee thretening litigation for approved application (30 day approval review process lapped)

All... am back once again, and once again thank you for you most valuable thought and input.

So to preface, our new development as some 50 lots, and there are 11 homes built. of the 50 lots, about 60% are owned. Therefore the Developer, who is acting President of the HOA is still in charge and has not transitioned formerly to the HOA. The development is now 18 years old. Lots are secluded, heavily wooded and are between 1.25 and 3 acres. Some residents own more than one lot, and the developer still owns the majority, some 20+ lots, not including a proposed second phase. Each lot counts as a vote, so he has 20+ votes, while others have 1 or more. So he is a majority. Having said that, many of the homes are second homes with seasonal occupancy and most homes are $600k and up, so the owners are respectful and maintain properties.

Our governing docs are poorly constructed and 18 years old. Everything falls under Bilaws and there is not a Declaration section for CC&Rs.

There are 3 people on the ACC Committee, and one was appointed by the president, the others were nominated by each other. Per our bilaws, until the development is transitioned to the HOA, the Developer is part of the ACC committee. The three are focused on law enforcement and routinely access properties unannounced, driving golf carts or atvs, looking for violations and if they can't find one they go to the county and township and look for violations to cite. Construction improvements such as decks or structures are met with the three searching for land use and building permits from the township and county. Overreach in my opinion, and some residents have been threatened with sanctions and fines, even though the permits are in-flight and have not yet been posted on the county websites.

There are no provisions in the bilaws for terms, so once appointed, it is pretty much like a supreme court justice. I do think the developer may be able to remove people. But there are no provisions for voting, as the development has not transitioned.

So my situation and question and sorry for the long intro.

A young couple just completed construction and moved in. Per the bilaws, only specific colors are approved. White is not approved nor is it allowed on any outside portion of the home, except for trim. When they purchased the lot, they were never given a copy of the bilaws, and never signed ( still legally binding, but did not know all retrictions) They were assisted by a neighbor and told that their architectural plans must be submitted to the ACC committee for approval. The Committee has final say in the construction down to the 'subjective' detail of roof pitches and style. Most homes are log style or rustic, however the new homes are more current in architecture.

The provisions in the bilaws state that 2 sets of plans must be submitted and approved by the committee, by a majority vote, of 2 people. it is also clear that the review and approval process must be completed in 30 days time. If not, the application is considered valid and approved.

The home is beautiful and certainly adds to the home values of the community. it is a dark slate blue color, popular now, but has a small build out section that is white. That section is not visible from the street, unless you are on the property and slightly visible in the dead of winter, were you can veiw about a 4 ft section through bare trees. Still not allowed per HOA.

The plans were submitted, and no was action taken, past 30 days. So the request was deemed as approved and the owners built. The committee admitted in the meeting (ducumented in notes) that they never reviewed the plans, but are now in the process of implementing fines, followed by litigation to force the owners to replace the white siding. As you can imagine they are a young couple, new to HOAs and this is not a welcome process for them. The Developer signed, independent of the committee, a letter stating that it was approved, as the as per the bilwas, because the committee did not meet the 30 day deadline. He has also been threatened with litigation as well.

So I know you are not legal counsel but have seen a lot My questions are.

Can the committee after not meeting the deadline go back after the couple? Per the documents, it is approved.

Can the committee use HOA funds to sue, without a vote from members?

What changes could be made for people to be removed without the ability to vote?

again thank you in advance.

Verbiage in the bilaws

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

ARTICLE VI DEVELOPMENT/CONSTRUCTION

1.2. Except as otherwise provided herein, a majority of the members of the Committee shall have the power to act on behalf of the Committee without the necessity of a meeting and without the necessity of consulting the remaining members of the Committee. The Committee may act only by written instrument setting forth the action taken and signed by the members of the Committee consenting to such action, provided further, however, that the Developer's consent shall be required for all Committee action, until such time as the Developer elects not to serve on the Committee.

2.2 If at any time a lot owner shall have submitted to the Committee plans and specifications in accordance with this section for a structure or alteration, and the Committee has neither approved such plans and specifications within thirty (30) days from the date of submission nor notified the lot owner of its objection with such 30-day period, then such plans and specifications shall be deemed to have been approved by the Committee. In the event that a lot owner shall file revised plans and specifications for a structure or alteration with the Committee after receiving objections from the Committee with respect to original plans and specifications, and the Committee has neither approved them nor notified the lot owner of further objections within thirty (30) days from the date of submission, then such revised plans and specifications shall be deemed to have been approved by the Committee.

If the young couple has an approval letter signed by the President, which I assume is approval from the board, it sounds like they're golden.

As Sheila noted, committees seldom have any independent authority and they report to the board. The board may remove committee members with or without cause, and the board may override a committee decision. If fact, the board has a duty to crack down on committees that are running amok, which in this case it sounds like they are. The committee is putting the HOA at risk of legal action - for example, because of the trespassing.

If I were part of the couple, I may follow up on the approval letter: thank the President, point out to the board the risk they're running by not supervising the committee properly, note that a lawsuit would negatively impact sales, and maybe suggest replacing the current committee members with some who understand the nature of the job.

Of course, the couple may find themselves "volunteered" for committee membership, but that's a risk you take when you point out problems in HOAs.

Remind us what state this is in, please. The state's nonprofit corporation codes will say a fair amount about "committees." Generally, the Board votes to appoint members and the Board can vote to get rid of members.

Scott wrote "Our governing docs are poorly constructed ...Everything falls under Bilaws [sic] and there is not a Declaration section for CC&Rs." I don't understand these words. Many ppl refer to the CC&Rs as "the declaration" or "the covenants." So....are you saying there are NO CC&Rs? Or are you saying something else??

Your Article VI, Sect. 2.2 says that the couple's plans were approved b/c the committee didn't respond in 30 days. Imo no-legal opinion, the ARC or Board cannot force them to change th white part IF it was in thier submission. I disagree that the president's written opinion of approval is golden because of Art. VI, Sect. 1.2. But it's good to have this in the couple's file.

With Tim, no the Committee has no authority to contact the attorney. The Board must approve this with their vote at a Board meetings.

I think some of you questions now & previously, Scott can be answered by your state's non-profit corporations codes.

"Detrimental reliance is a legal concept in contract law that occurs when a party is harmed or loses something because they relied on the promises or representations of another party".

"Promissory estoppel is a legal doctrine that allows a plaintiff to recover damages from a defendant even if there is no actual contract. This happens when the defendant makes a promise that the plaintiff reasonably relies on to their detriment. The doctrine's purpose is to avoid injustice by fulfilling the promise when it's the only way to do so"

OK, gotta snark a bit here.

If these ACC folks want to be in charge, the first order of business is figuring out the difference between condominiums and single family home HOAs.(*) Among other things, an ACC committee is unnecessary in many condo communities, because owners can't modify the exterior of the buildings with a few exceptions. Whoever drafted this document seems to be confused, to put it mildly.

Just out of curiosity, have your CC&Rs been recorded in your county?

(* Except in California, where they have their own ideas...) :-)

I know it's odd, Cathy, but Scott's HOA is a condominium.

Doesn't, Scott, the Mich. non-profit corp codes say that you must ( assuming you're a corp.) have a board of directors??

Scott wrote: "There is not a board of directors. ...There are positions of Developer/President, VP - who is on the ACC, secretary and treasurer." If there is NO Board, of what body is the developer "the president?" Of what body is there a secretary and a treasurer? These are officers of a board of directors. So it seems that your association DOES have a board of directors??? Is the sec'y & treasurer also on the ARC, by chance??

Scott also wrote: "it is also clear that the review and approval process must be completed in 30 days time. If not, the application is considered valid and approved." Maybe you need to cite this exactly from your docs--Bylaws? I so, from what you've written, the couple does not have to change their ARC changes. You're written elsewhere, I think, that you've been sort of helping them.

Now this ARC says it has the authority to implement "litigation??" Only a Board has that authority. But if the ARC dealing with a sleazebag lawyer, who'll take their $ , this is a big deal. The reason is all owners will pay for the ARC's ridiculous lawsuit!

I believe I and others have asked in the past to see your Articles of Incorporation, but. I don't recall that we have seen them.

Thanks KerryL

In my experience, if the ARC is submitted and not approved within 30 days, on the 31st day it's an automatic approval. In order to fine, the violations must be brought to the Board at a board meeting and the Board will vote yes or no whether to send to the Fine Committee. Fine Committee would meet with the owners & discuss the violations/solution and/or fine at that time.

I repeat my earlier post.

The couple should have an attorney write a letter to the Association on their behalf.

Thanks CathyA3

My brain hurts always these days...

Not sure... This development sits on some 800 acres of woods. There is a primary ridge 1,100 ft above sea level and miles of common areas that were at one time logging trails. There are common areas that have breath taking views of Lake Michigan and surrounding inland lakes.. Those are marked as common elements and are available for owner access for hiking, biking, snowmobiles and off road activities. The developer maintains those trails, removing fallen trees and mowing certain portions.

The roads are private and maintained by the developer, not the county. even mail delivery stops at the mailboxes at the entrance of the development and will not be delivered to any homes. Each unit or lot is assigned an equal percentage of value, so one lot = 1 vote, 2 lots = 2 votes. the developer has, I believe, 16-20 votes and there are still plans to expand the development making more lots available.

it is an amazing place and until the current committee took over, it has been a wonderful place to live per a few long time residents who have been here for 18 years. The developer only makes a few lots available every year, so many are just not for sale, different than a traditional development like our previous, where there were 3 builders and all 900 lots we sold and built as quickly as possible

so not sure the condominium designation and the developer's father created the area then passed it to his son. so not sure why it was designated condominium.. I asked that question when we purchased? no answer

It's possible the developer's father did plan to create condos and the developer had different ideas. The description of the area, though, sure sounds to me like the community should be an HOA with single family homes on privately owned lots. Condominiums are often attached homes (although they don't have to be) - the structure of the buildings determines the legal structure of the association.

Whatever. I agree with Tim that the owners of the home in question should have a lawyer write a letter for them. It doesn't sound like anyone or anything will force the ACC to back off. (They need to back off. They're putting the association at risk of a lawsuit, which can discourage buyers, affect their ability to obtain mortgages, affect insurance premiums, and have other unintended consequences. Not sure if pointing this out to the developer would do any good, since he seems to be taking a pretty casual approach to finishing the community. A serious new home builder usually wants to complete a new community as quickly as possible and move on to the next project - he'd listen to someone who talks money.)

'Tis a puzzle.

I did post...

Articles of incorporation in an above comment

Sorry If I have not responded with all of the information you had requested. I did post the articles of incorporation.

It is getting interesting.

The board sent out a letter to all owners, calling out the couple directly. They stated that they are doing everything in their power to resolve the issue.

They are also calling out the Developer/President for his incompetence. The couple has engaged legal counsel.

The letter is one sided and does not include the fact that the ACC was negligent in meeting the approval deadlines and the fact the per the Bylwas the Developer, as part of the ACC must approve all requests.

The letter is one sided, malicious and defamatory. They are moving forward with litigation against the owners and the ACC member's wife manages the HOA reserves, so there is concern there.. a majority of lot owners are remote and have no day to day experience.

I think it will resolve itself through personal litigation against the committee.

I will update and as always thank you for your knowledge