Developer has shut down

This sounds like a CP Morgan situation that we will learn more about in the next couple of weeks according to news reports. Keep checking media websites for updates. It is not yet clear if the developer has or will file for bankruptcy status.

Unfortunately, Indiana along with many other states do not have statutes that are controlling in such situations. And in bankruptcy (should that be the case) control of the homeowners association by the developer can be considered an asset that can be sold to other developers/builders.

If you have an independent (non-declarant controlled association) then the association should consult its legal counsel. If the association is declarant controlled, then it would be advisable to see about organizing current homeowners to group together for the purpose of obtaining legal counsel. Owners in communities with promised, but as yet unbuilt amenities may be out of luck.

"In a news release, the company said warranties on its homes would be honored by a residential warranty company as outlined in each homeowner's warranty manual.

The company also said all the homes under its control have been completed. A handful of homes still need grading and landscaping, but money has been set aside to finish that work, according to David Sease, a company spokesman."

"David Sease, an Indianapolis public relations executive hired to handle C.P.Morgan's closing, said the company told him it will release more information this week to people who bought its homes or were in line to buy them."

There are too many "ifs" right now for anyone to express a informed opinion here (although I am sure you will get a number of uninformed opinions).

I'm not sure if the Florida Law is the same as in any other state, but Florida Statutes state that a bankrupt corporation can not do any business other than winding down the business. So, if the authority of administration of the CC&Rs had not been turned over to the HOA, then there would have to be a voluntary association. You may want to talk with a lawyer, but after we spoke with a lawyer regarding a lawsuit, the case was dismissed because the HOA never had the authority of the administration of the CC&Rs turned over to them before the developer (declarant) went bankrupt and it cannot be done after the fact.

If you will read below, you will see that what I stated is not misleading or wrong. We have already had a judge rule on a problem in our association because the developer went bankrupt before he turned over the administration of the CC&RS to the HOA. Our association has not power since the administration was never turned over property prior to his bankruptcy and the corporation was dissolved.

A bankrupt corporation (after completed) cannot conduct any other business so as to turn over the adminitration of the CC&Rs to the HOA.

Here are copies of the 2 laws from the Florida Statutes. Please read thoroughly:

720.303 Association powers and duties; meetings of board; official records; budgets; financial reporting; association funds; recalls.--

(1) POWERS AND DUTIES.--An association which operates a community as defined in s. 720.301, must be operated by an association that is a Florida corporation. After October 1, 1995, the association must be incorporated and the initial governing documents must be recorded in the official records of the county in which the community is located. An association may operate more than one community. The officers and directors of an association have a fiduciary relationship to the members who are served by the association. The powers and duties of an association include those set forth in this chapter and, except as expressly limited or restricted in this chapter, those set forth in the governing documents. After control of the association is obtained by members other than the developer, the association may institute, maintain, settle, or appeal actions or hearings in its name on behalf of all members concerning matters of common interest to the members, including, but not limited to, the common areas; roof or structural components of a building, or other improvements for which the association is responsible; mechanical, electrical, or plumbing elements serving an improvement or building for which the association is responsible; representations of the developer pertaining to any existing or proposed commonly used facility; and protesting ad valorem taxes on commonly used facilities......etc., etc., etc.,

617.1405 Effect of dissolution.--

(1) A dissolved corporation continues its corporate existence but may not conduct its affairs except to the extent appropriate to wind up and liquidate its affairs, including:

(a) Collecting its assets;

(b) Disposing of its properties that will not be distributed in kind pursuant to the plan of distribution of assets adopted under s. 617.1406;

(c) Discharging or making provision for discharging its liabilities;

(d) Distributing its remaining property in accordance with the plan of distribution of assets adopted under s. 617.1406; and

(e) Doing every other act necessary to wind up and liquidate its affairs.

(2) Dissolution of a corporation does not:

(a) Transfer title to the corporation's property;

(b) Subject its directors or officers to standards of conduct different from those which applied prior to dissolution;

(c) Change quorum or voting requirements for its board of directors or members, change provisions for selection, resignation, or removal of its directors or officers or both, or change provisions for amending its bylaws;

(d) Prevent commencement of a proceeding by or against the corporation in its corporate name;

(e) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or

(f) Terminate the authority of the registered agent of the corporation.

(3) The directors, officers, and agents of a corporation dissolved pursuant to s. 617.1403 shall not incur any personal liability thereby by reason of their status as directors, officers, and agents of a dissolved corporation, as distinguished from a corporation which is not dissolved.

(4) The name of a dissolved corporation shall not be available for assumption or use by another corporation until after 120 days after the effective date of dissolution.

I understand what you are saying about a dissolved corporation, but the corporation was dissolved due to bankruptcy.

My point is, that IN FLORIDA, the HOA should ensure that the ADMINISTRATION of the CC&RS is properly turned over, according to the Florida Statutes, BEFORE the Developer goes bankrupt and is dissolved.

I was in no way saying that the HOA is dissolved or bankrupt. Here's the quote from the lawsuit:

>> *Dismissal is that the purported assignment of the developers rights to enforce the current deed restrictions running with the property owned by defendants is ineffective because that assignment was executed by a dissolved corporation. A bankrupt corporation cannot assign authority after it has been dissolved.
>> Judgement by W. Lowell Bray, Jr.

George, you seem very knowledgeable about HOA's. We have been trying to avoid a lawsuit in our HOA for sometime because as you know, it's really our money. I have another posting on this board regarding our yearly fees and expenses. So maybe you can help.....

Our BOD continues to operate as though the judgement was never made by Judge Bray. They try to bully neighbors into changing what they feel are CC&R restrictions and make new ones at their leisure. No bad enough, our CC&Rs have expired due to MRTA since 2006 on almost all 86 properties. Many homeowners feel that they don't want to get involved, so they just go along with the fraud until it affects their homes.

The problem is, as stated in a previous board posting, they want to return any check that was sent in with Donation written in the Memo Portion of the check (again this has been done for over 30 years). This seems childish and a waste of money again using the member's money.

What's your thoughts on this? Thanks for ANY insight you can provide.