Developer still has title to common areas

Started by DanZ1 • 3 replies • 3161 views

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DanZ1 (Arizona)
Posts: 1

Posted:

Our HOA took over management from the developer about 18 month ago. He still has not transferred the title of the common areas to us. He also has not paid the property taxes for the last three years. (He is in financial difficulty like most developers but is not bankrupt to my knowledge.) Any ideas on how to force the issue? Is the developer responsible for the back taxes or will that obligation fall to the HOA once the title is transferred? If we do nothing and let the developer keep the property in his name what is the worst that can happen? As far as I'm concerned he can keep accumulating the taxes in his name.

I am a board member.

Thanks for any info.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

What do your docs state as to the time and procedures for transfer?

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By DanZ1 on 03/22/2009 8:18 AM

Our HOA took over management from the developer about 18 month ago. He still has not transferred the title of the common areas to us. He also has not paid the property taxes for the last three years. (He is in financial difficulty like most developers but is not bankrupt to my knowledge.) Any ideas on how to force the issue? Is the developer responsible for the back taxes or will that obligation fall to the HOA once the title is transferred? If we do nothing and let the developer keep the property in his name what is the worst that can happen? As far as I'm concerned he can keep accumulating the taxes in his name.

I am a board member.

Thanks for any info.

Dan,

Sadly there is not a state law addressing this issue. When you say the HOA took over mgmt 18 mos ago,do you mean a BOD made up of the h/o's was elected? If so, I would suggest the BOD have an attorney send a letter to the developer asking that he title the common areas to the HOA and to turn over any records he may still have in his possession. As for the property taxes (which should be very nominal) the HOA should just go ahead and pay them once they receive the deeds. AZ passed a law a number of years ago whereby the prop taxes on common areas is extremely low. Check out ARS 42-13402, 13403 & 13404.

I'm curious to know why the BOD didn't jump on this right after turnover. I can't imagine what they are waiting for!!

Where in AZ are you located and who is the developer? I'm in N. Glendale at Arrowhead Ranch.

DrewW (South Carolina)
Posts: 4

Posted:

We in SC are in a similar situation, however we just recently took over management of the HOA....the developer has mismanaged it since inception in 2004 and had not formed the HOA. We formed it just this past January as we learned he was failing financially. Now we have everything set up except the common areas had not been formally transferred even though the covenants state they are assigned to the HOA immediately following the first lot sale. The bigger problem is that the three lots the parking lot, pool and clubhouse are on now are included in a Mortgage that 59 other lots are attached to that is going into foreclosure. We now are having trouble getting title but had no means to do so beforehand as the developer would not reliquish any control prior to 2009. Other than the covenants and Map Plat pre-date the mortgage, we hope the bank will work this out equitably but they can't do anything until the foreclosure happens and the developer is supposedly not allowed to sign over anything.

My recommendation is to get it done sooner before foreclosure/ abnkrupty occur.

Below is an excerpt from our covenants regarding the transfer:
Section 8. "Common Area" shall mean and refer to all Real Property shown and designated on the Plat as "Common Area" for the Subdivision, including but not limited to, any real property or easements owned by the Association for the common use and enjoyment of the Owners. The Common Area shall be owned by the Association for the common use and benefit of the Owners, subject to the easements, terms, conditions and restrictions described in this Declaration. Responsibility for the maintenance of the Common Areas, including any paved, landscaped, lighted or other improved areas located within the Common Area shall be the responsibility of the Association.

Section 4. Declarant's Covenant to Convey Title to Common Area. Declarant hereby covenants for itself, its successors and assigns, that it will convey fee simple title to its designated herein as Common Area to the Association at such time as it conveys the first Lot to some person other than Declarant. The Common Area shall be free from any monetary liens but subject to easements of record, including any easements established by this Declaration. Similarly. Declarant will convey to the Association such additional common Area as is annexed in the future, immediately following its annexation pursuant to this Declaration. The Association shall accept the conveyance of all such Common Area pursuant to this Section.

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