IMPROPER BILLING & FEES COLLECTION

Our Georgia HOA was established in 1987 and the Protective Covenants were to run for 10 years. They expired in September of 1997, and the BOD at that time had the covenants renewed with some updating, which included stating that, "only those who submit to the Third Declaration of Protective Covenants(dated 1997) were considered members" and that the operational budget was to be equally divided between the "members who had signed". It was stated in the cover letter from the attorneys who prepared the documents, that fees could not be assessed to non members at that time. The existing Board at that time disregarded that statement. The association had about 68 signed consenting members at that time and about 20 owners who did not sign to consent for one reason or another.

However, for the past ten years, those non members have been sent fees notices with reminders and threats that all homeowner/members are required to pay. They, not understanding that they were not actually "members", paid to avoid trouble with the Board. The Board has threatened with attorneys, collection agencies and even placed liens on non member properties.

This past year, I discovered this and reported to the Board. The association's attorney advised that the Board needed to get consent forms on all the other (approx.20) homes, if at all possible. Those owners were then told by members of the Board, at that time, that they were going to be billed anyway, so they may as well sign so that they would have use of the pool area and the right to vote, which they could had had all these years anyway due to the stupidity of sitting Boards. Many of them are older couples, however, and have never used the community pool or understand our lenghty and legally prepared doucuments. So, when they were told by a neighbor to sign, they did.

So, we now have three holdouts who did not sign. One of them has a current lien on her property and the other (14) were coerced into signing.

They have been paying fees, been harassed and threatened for ten years, paid their fees, sometimes been late and paid fines and even had liens placed on their property, eventhough, it is in black and white that they were not members and, as such, should never have been billed.

I am a Realtor, extremely familiar with all the association documents and serve as the ACC Chairman. I have also handled all the correspondence with the association attorney for the past year. Can document that his opinion was that only "members" were responsible. My wife is on the Board. However, we are not listened to in regard to this. We believe that our docs should followed to the letter, while 3 of the 5 Board members seem to control and do whatever they wish, since they hold the majority vote.

My wife has considered resigning due to the stress and we have ask if I could take her place. I was told by the Chairman of the Board that I was not wanted on the Board and that those three would block any nomination to the Board. It is very hard to get people who are willing to serve on our voluntary Board. But, they will block me. Does this sound fair??

Would love to hear everyone's thoughts on this.

Sorry - I meant covenants instead of bylaws.

BTW, how did a BOARD "update" the CCRS?

Thanks Susan,

Remember that the original covenants expired in 1997 and had to be renewed. Changes were made by the same
attorneys who drafted the original covenants. At this point, don't cross the BY-Laws with the covenants. The wording in the By-Laws was also amended to limit membership to those who signed the consent form in 1997.

So, I agree that the offering made the association voluntary and that never should have happened. The drafting attorneys did warn the association board at that time, that they could have a difficult time collecting fees from non members, but the Board naively felt that all would sign, accept and join, but they did not.

They did not show anyone the copy of the cover letter that came with the new covenants. So, they just kept everybody think that by law, they were members and they demanded payment of fees in direct conflict with everytning in writing. And, every board up to now has done the same thing. What we have here is multiple board members who never either read the documents they were supposed to enforce or they did not understand them. Based on what I have seen in dealing with these different Boards, my guess is they never really read them.

I really got into all the docs when I was working on the update and amending our architectural design. rules & regs. this past year.

You just would not believe how poorly these boards have performed over the years in proper administration of the recorded association documents. I have now been fighting to get things done correctly for five years and have been called every name in the book for trying to do what is right. Also, remember that the current Chairman has said they will not allow me to serve on the Board. They do not mind if I am the "bad" guy, but they do not want to be. Remember that my wife is only one voice on the board and is seriously out numbered.

More thoughts, please.

Jim,

One question, please. You said the board "had" the covenants amended changing the assn from mandatory to voluntary. When you say "had" do you mean they went through the proper process which required the members to vote on the amendment? If so, surely the members read the amendment and knew what they were voting on. I really can't understand how anyone who did not sign the agreement to be a member of the now-voluntary assn would submit to paying assessments. However, it appears they did and now you think this should be corrected. No, from what you say, the BOD had no right to bill non-members and definitely were out of bounds in threatening to lien them. Yes, an apology and complete restitution is certainly in order for those who continue to choose not to be a member.

Incidentally, were the property deeds of those who chose not to be members of the HOA changed to remove the deed restrictions or are they still bound by them? If they were not changed, then these members can be given violation notices by the BOD for any CCR violations even if they are not members of the HOA. There was such a case out here in Sun City, AZ. The assn went so far as to take the violator to court and won. Any member has a right to bring suit against a property owner who violates the covenants, whether that person is a member of the HOA or not. The board, acting on behalf of the assn members, can issue these violation notices to any non-member the same as they can issue them to a member of the assn.

Just go to the county's registry of deeds and pull the deeds of the people not paying to see if the HOA is on the deed. Its not a 100% solution, but at least its a start to see if they are in the HOA or not.

Steve,

I don't know that the deed will indicate whether or not there is an HOA, only that there are deed restrictions. The fact that there are deed restrictions does not mean there is an HOA. I've lived in 5 homes and owned undeveloped property, all with deed restrictions, but only 2 with an HOA.

Like I said, the idea of membership in this corporation lies in the land (plats of the HOA) not the people. They can say they aren't members, but the deed may say different.

Shame on those past board members who let people
opt out" of their obligations to support the HOA. They did not have the right to do that. (The original corporation would have had to dissolve and then some people could have started up another association.)

First, I want to thank all of you for your feedback !! More please !!

Secondly, this situation has continued through at least 10 different Boards over a 10 year period and I was the only one to discover the problem and try to deal with it.

Please remember if I did not make it clear enough, the original protective covenants expired on Sept. 9, 1997. The new, amended version of the Declaration was prepared by the same attorney's office who prepared all the original documents. It created what was referred to as "Class A" members of those who signed and submitted to the new, Declaration of Covenants. So, since I was not present when the documents were prepared, I have to assume that on their face, that the attorneys properly prepared them. Apparently, for some unknown reason, the documents were prepared allowing for the change from mandatory(which created "Class A" memberships for all who signed and consented to the new Declaration) to voluntary (if you did not wish to sign) as stated in the document. Remember the cover letter to the Board, at that time, expressing the attorney's concern over trying to assess non-members was withheld from the owners and was not a part of the document presented to the owners. They were given a copy of the Declaration and a consent form. You can bet that most of them never read what they signed!!

And, since I was not living in the subdivision in 1997, I had moved away due to job relocation and had to lease my home. I only discover that this had been done when I started as ACC Chairman this past year, while working with the Board.

I, along with several other very responsible members of the community I have spoken with, did not receive notice of the new Declaration and did not sign to consent at that time. I do not know how many of the other lot owners received the package, or might have been overlooked because some owners, of that time, have moved away.

I am not personally concerned about the return of fees, but I do feel that the older couples in our community, who were not members for that ten year period, are entitled to a refund and an apology from the Board.

Most of them, with exception of three holdout owners, have now signed and have become members. I feel that they are now "Class A members" and should share the responsibilty of fees(starting this year), even if they did not have a full explanation when they signed.

They were told, at signing, that they were going to be assessed anyway, which was improper and coercion in my opinion, but they should have read and understood what they signed more carefully.

Thanks Michael.

Not sure where you are getting the Section 3 info you are quoting, but the initial Declaration of Covenants were created by the developer and were set to expire in ten years(Sept.9, 1997) with no automatic renewal for any period.

The attorneys who wrote and handled the original Declaration, wrote and handled the 1997 amended Declaration, which had to be accepted by consent form. This new covenant Declaration stated that only those who consented to the new Declaration were "Class A" members and that only the Class A members were responsible for the equally divided cost of operation of the association, that only Class A Members (ingood standing,dues paid)had use of commomn area rights and voting rights.

The associations new attorney recognized that only these owners who had consented to the New Declaration were liable for fees. Thus, he made it clear that the current Board needed to get signed consent forms from all other owners, which would then creat a "mandatory" HOA.

The problem is that the "cover letter" explaining that the HOA would not be mandatory as setforth, and that the HOA Board could have future problems with assessing non members.

The Board, at that time, did not give a copy of this letter to the owners when this new Declaration was presented for signing. Thus, they withheld vauable information, and continued to bill the non members.

Jim:

I was only providing our clause as an example.

Sometimes people misread or misinterpret or just simply stop reading after the word "expires" and don't pick up on the remainder of the clause (if one exists).

I was just seeking clarification on the exact wording of the 1997 expiration in your declarations.

Or maybe, the founders of the association (developer) only intended for the association to run for 10 years, then be dissolved and the home owners are now free to enjoy their property they paid for without restrictions.

If the association has no common property, it sounds pretty simple to dissolve it. If there is common property like a park, etc, sell it and spread the proceeds to the members.

Thanks Robert.

I formed a group of other homeowners five years ago, and after applying pressure to provide documents and communication with the members, they all eventually stepped down. Of course, the association was broke by that time. That Board had to ask for a special assessment just to pay the contract for lawncare !! All of our reserve was "gone with the wind".