HOA BOARD NOT FILING LIENS ON BUILDER

I may have confused people in an earlier message. I will try again. Our community has not yet been completely built out. By law, in Florida, the developer controls the HOA. In fact the developer is the President of the HOA and by law has a majority votes and the HOA Board makes decisions regarding steps to be taken to recover delinquint assessments. The developer is also one of 3 principles of the home BUILBER entity. Florida law exempts parcels owned by the DEVELOPER and common property from assessments or annual HOA dues. All other owners of parcels are subject to the assessments.

Several years ago the DEVELOPER sold the BUILDER lots. Once the lots were tranferred from the DEVEOPER to the BUILDER, assessments were levied for each lot. The HOA President(also the DEVEOPER and BUILDER) agrees that the BUILDER owes the money. The BUILDER at this time owes for all of 2007 and the first half of 2008. The HOA President has a brief letter from the BUILDER that back assessments will be paid when the lots are sold to a individual homeowner. It is our contention that the letter has little or no meaning.

Some of us homeowers have asked that liens be put on the BUILDER lots as a legal means for recovering the monies owned. The HOA Board has not honored the request. Yet liens have been filed against indiviual homeowners using the proper legal procedures. To be clear - if the HOA President files liens against the BUILDER, he is filing liens against himself.

OK - What course of action can we, individual homeowers, take to get liens filed against the BUILDER.

JohnG

Hi Donna,

OK - my opinion.

The Developer cannot make changes to the covenants, bylaws, etc. AFTER the transition of the HOA to the homeowners. The developer cannot prohibit the HOA from suing the developer. And finally, the developer has only one vote per lot that the developer still owns after the transition. Before the transition the developer has a majority vote.

What does this mean? The HOA can sue the developer. However the HOA Board of Directors must vote to file suit. The Board of Directors at this time is the Developer, the Developer's Director of Operations and a financial backer of both the Developer and the Builder, which are one in the same. So it would seem highly unlikely that the HOA Board would vote to take any legal action against the builder because they are one in the same.

Oh, Donna - one other thing - even though Florida law allows a HOA to sue the developer, the same law says the HOA must pay for all legal costs, including the developer's.

So, what's your opinion?

And thanks for the reply. You obviously did some research.

John

You are correct Mary. The developer is in control.

Putting a lien on the property will guarantee you will get your money when the property changes hands but it will cost you attorney fees and costs to file the liens. If its a mandatory association you will get your money at the closing anyway. (New laws passed to F.S.720 on July 1, 2007)

Of course if you wait you don't have the right to foreclose.

Sometimes the builders and developers put lots more money into the subdivision than they are credited for because they can't sell properties in a crappy looking subdivision and often subsidize the landscaping and flowers, etc.

Kathy,

All cost associated with a lien are recovered when the lien is cleared. One just needs to have funds up front to bear the cost. We can also, by law and our covenants, charge interest on unpaid balances.

The DEVELOPER has put a lot of money into landscaping etc. The assumption is that he will recover those costs in the price of a lot just as he will recover the cost of the infrastructure, e.g., roads, sewer, water, etc. It is the BUILDER that owes the money. It just so happens the the DEVELOPER and BUILDER and the same guy.

John

But, Donna, how can the board place a lien on the builder/developer who is still in control of the assn.? Remember, this guy is also the board Pres. John stated previously that turn over has not yet been accomplished. I think the board needs to realize they erred in preparing the budget and really forget about getting this money as long as the builder/developer is in control. If, after he transitions the assn to the members, they feel like they want to go after him for back assessments then they can duke it out in court.

Could you prevent the bonds from being released from the county to the developer/builder? We are in that process now as our transition begins by year end. I have been told by other HOA Board members in other communities this is an effective tool to insure the developer/builder cannot walk away from any unfinished business related to the HOA. In most cases the bond(s) release are worth more to the developer/builder than the threat of a lien. free vs attorney fees?!?!?!

Any thoughts?

MaryA1,

We believe the HOA Board can put a lien on the Builder. It is our position that the HOA President should be acting on behalf of the HOA even if it means putting liens on himself as Builder. The other issue we have is that liens have been placed on homeowners. We are condending that the President of the HOA is putting the HOA in jeopardy for a discrination suit if he doesn't apply the process of placing liens uniformly and the cost of the suit would be borne by the HOA as wells as the HOA Board.

John

John if I'm reading FL 720.035 correctly you can bring suit against the Association and the BOD for failing or refusing to comply with the CC&R's and recover your attorney costs to enforce if you are successful. It doesn't specifically exempt developer controlled BOD's or Associations but that may be in some other section.

Glen,

John stated the builder and the developer are one and the same. He also stated the developer was exempt from paying assessments. This builder may not have been the original developer but he is now so perhaps he really is exempt. I don't know if we have all sides of the picture. It's appears to be a somewhat complicated case. Also a point to remember is that he is still in control of the assn.

Glen,

I agree; John should seriously consider Donna's advice to seek legal counsel. That is if John and his friends are willing to put up the $$$ to pay for it. I don't recall him saying who makes up the BOD. All he said is that a group of interested homeowners think the builder should pay these assessments. This is another reason why I'm thinking we may not be getting all the pertinent info regarding this matter. Not because John doesn't want to tell us everything; but perhaps John doesn't really know the whole story.

Thanks for all of the input. I will try to clarify a few points. The Developer, Builder and HOA are separate incorporated entities. The Developer is exempt from assessments but not the Builder. The Builder verbally agrees the Builder owes the money and gave the HOA a promisory letter. Our position is that only a lien on the Builder will ensure the money will eventually be paid; money recovered at closing when parcels are sold. The 720.305 Statute, I believe, addresses the right of the HOA to take legal steps against owners who are in violaton of the covenants and refuse to make corrections. It is the HOA Board that is responsible to file suit. In the case the HOA Board is comprised of 3 people; the Developer/Builder, the Operations VP of the Developer/Builder and one other financial backer. So I think it is safe to assume the HOA Board is not going to file suit against the Builder.

The Developer has suggested that he doesn't think it is fair that the Builder should pay the full assessment because the Builder does not use the common amenities,e.g., clubhouse and pool. We believe it is against state law for the develper to exemp or lower assessments for some and not all parcel owners. If he attempts to do so, we would challenge the filing.

Oh - I keep referring to we. We are a group of 5 residents that formed a committee soon after the first hosues were built. The purpose was to make sure the Developer fulfilled all obligations to the HOA. Over the passed 5-7 years we have forced him to correct drainage problems, treat the lakes for algae, repaired minor road problems, etc. I would advise any new community HOA to do the same.

Next week the committee is meeting with the HOA President. We try to conduct these meeting in a very business like manner. The HOA President like to keep everything in the 3rd person, e.g., the Developer, the Builder, etc. I guess it's his way of remaining detached. So we do the same thing. It almost makes a case study for political science majors.

Again, I thank everyone for your input. I will let you know the outcome of the meeting. You may be able to use this for future reference.

John

Sounds like you all are on your toes. Congrats! The builder stating they shouldn't pay the full amount because they don't use the ameneties is a bit silly. If that's the case what about all owners in condos, hoas, etc who would refuse to pay their full assessment because they don't use the pool, the tennis courts, or whatever.

These owners benefit by having ameneties for resale and committed to paying the assessments at the time of purchase. The builder ishould be required to pay them too.