forming a new hoa

I moved into a new development 13 months ago in Maryland. Phase 1 is to be 144 cluster homes. 48 are built, 38 of which are sold. Three weeks ago, the developer called a meeting of all the owners and wants a significant amount of money for 2008 HOA fees. Several friends have told me that 50% of a development has to be finshed before an HoA has to share the expenses. Is this correct. Right now, we are at 24% sold. Also, we got 5 volunteeers to form the a new HOA. My next question is, if we have to form the HOA now, what are the proceedures. Thanks, Charleso

Charles,

Developers will collect assessments or dues from homeowners long before there is a turnover. That is normal and as Gerald stated, there are fees and expenses from day one once the houses start to get sold. Your documents somewhere will have a statement as to when the Developer plans on "turnover" The 50% that your friends may have told needed for a turnover is not what you need to listen to. Every developer has different goals for his turnover.

The Developer will appoint the first Board so I would say that you need to slow things down and find out what you are allowed to do according to your State and read your documents. Many answers are in there and I think that your people are just jumping the gun. You really don't want to form a HOA on your own. It will cost you almost as much as what your assessment was.

Instead of trying to form a new HOA maybe you should establish a finance committee to make sure all expenses are correctly documented. In our case there was no clear distinction between our HOA and the HOA of the rental mobil home park owned by the developer (comingling of funds)......
In 2005 we formed such a committee that found a special assessment for a shortfall in 2004 could not be supported by HOA documents. It was rescinded by the developer.
As a follow-up that body also found a overcharge of a over $85,000.00 budgeted for the following year, resulting in NO increase in maintenance fees for 2005 and 2006.
In 2001 we also incorporated a Residents Group with voluntary membership.
We have monthly meetings, run a website, and recently started a newsletter to keep all residents, computer literate or not, informed about issues the concern us all, something the HOA has not done in the 10 years of our existence.

Magda,
Now what you are doing is going to set the tone of the management for years to come. Your actions are imaginative, reasonable, productive and I am sure is sending a clear message to the developer he better mind his P's and Q's at turn over time. You have no idea the number of people in associations that think they are powerless and have no vision of what can be done.

You all get the Gold Star Award.