Independent counsel for transfer of ownership

I am a member of a developer controlled association which has set up working committees to perform certain functions that the developer will allow, though it could choose to ignore them for the remaining 23 out of 40 years the developer may hold control over the association. For example, it ignored the finance committee recommendations at its last meeting - namely the committee's recommendation for FDIC insurance covering the millions in the association's accounts. This was already covered in another of my topics earlier and remains an unresolved issue.

Today is the commons committee meeting and I will raise the following questions at that meeting. Any comments are appreciated.

Thank you.

Bob

At the annual meeting and subsequently, the developer said that it may transfer to the association, the ownership of certain real estate of the commons before the end of this year or in the first quarter of 2009. Normally, in the purchase of real estate, it is recommended that each party seek its own legal representation to protect its interests such as the need for contingencies and inspections relating to the real estate involved in the purchase contract.

Though the real estate being considered for ownership transfer are "the soccer field, the baseball field, the area around the Pole Barn, etc." as the developer stated, should we still have the proper independent legal counsel? Since some infrastructure like roads, sewer, dam,... may have expensive defects with statute of limitations impacting recourse, setting the precedent for such counsel seems prudent.

If the association, as buyer, is to select its own legal counsel independent from the seller, then who legally represents the association in making that choice since the developer still controls the association? If the association, as buyer, is not allowed to select its own counsel independent from the seller, then are the real estate purchase contract and its associated ownership obligations binding?

Bob,
Are you from the Wash Metro area with their huge HOA's. It sort of soounds like you are with the developer having control to 44 years. I can not fathom any state granting this kind of power to a single Individual. Certainly once the development moves along the value of the homes owned far exceed the developement plans he may have. But I know it happens and I don't know what to say about it other that to put the developer on notice that the Home owners are going to have to be considered and given a vote or you all will make it tough, even if it means going to court. Developers don't like to go to court and they don't like to read their names in the paper,it is bad for the bottom line. But in order to be heard by the developer you must speak with a loud voice, meaning many voices. If you all don't like what is going on, first, sit at the table with him and find some common ground. Don't go in with out a show of power (people) and tell them what you all want precisely. See what he says, thank him and go back and discuss it with your group, then set the stage.

We are a Virginia association and the POA laws don't seem to limit the time a developer can maintain control. Our declaration gives control for 40 years or 90% of lots sold whichever is first. We used about 18 years so far and have about 250 - 300 lots to reach the 90% trigger (sales rate now about 5 lots/yr). But when market picks up in 3 years or more then it may only take another 5 years or so to gain control. If it goes the full 40 years then it will have taken two retirement lifetimes before the community gains control.

Perhaps we should try to change the laws to give homeowners control after so many years or when their investment exceeds that of the developer by a certain factor. This would motivate developers to get in and out.

On a related topic, the funds of the association locked into one bank as a condition for a developer loan (not for association) look like they may have unlimited FDIC insurance if the developer structures the accounts to meet the specific requirements of the FDIC's temporary liquidity program. Not knowing whether the millions in our accounts are insured is just one of the many issues we deal with under developer control. No one here wants to repay the annual assessments 2 or more times to replenish the accounts if lost by the developer's misuse of our funds.

Bob