Overturning Class B member

Howie, the bad news is your Board can make any resolution and the owners can "pass" any amendments they want, but the efforts would be fruitless since the developer can simply override anything moved, resolved, voted, or amended with his Class B votes.

If he has the ability to veto the budgets, then I can't imagine anything that could pass that he would recognize and by which he would abide.

I'm a little surprised that the board even exists or that any turnover has occurred since the development is only 40% built-out/sold.

Is there a management company involved?

I hate to say it, but you may well have to take the developer to court, which will end up costing, I'm aware, but it appears that no matter what you and the others do, you are going to be pouring more and more money into protecting your investment.

Is there any local zoning agency or board to which you can turn this developer over to for failing to comply with certain binding elements?

What you will need to do is to organize apart from the HOA to start the action against the developer.

I thought I made several points clear. 1st, yes there is a management company. They have mounds of credentials and agree that we must somehow resort to some form of self help.
There exists no budget and never has in the 8 year history. Ther ewas never even an appointed board for 6 years! We pay an arbitrary monthly assessment established by the developer when the 1st unit was sold- that is why we are 5000 monthly short at this time. For several years he made up the shortfall (when sales were ongoing) but decided last year he would no longer do so. This developer has twice used bankruptcy in the past and I assume will do so again. As I said, he had 3 appointed boards who could accomplish nothing. He couldn't find any more volunteers for an appointed board so he allowed a general election of the Class A members. We have passed 3 budgets which he has vetoed. We have asked for an attorney which he has vetoed. We have negotiated with him beyond belief. He has, LITERALLY, never read the CC&Rs nor By-Laws and when confronted, claims they are just guidlines and in his terms "don't mean nuthin." He is an uneducated, bumpkin builder who had the documents created to satisfy the agencies involved. He will abide by absolutely nothing, listen to no reason whatsoever and if we don't resort to self help, our development will fall apart and our homes lose incredible value - they range from the low 400s to the 600s. We have unpainted fences, dead trees, dead shrubs, potholed roads (gated community) tons of derferred maintenance, etc. I believe he doesn't care because the balance of the property he owns here will either go into foreclosure or bankruptcy. Meanwhile, we let it fall apart abiding by the Declaration and allowing him to veto evreything or we say heck with it, we're taking over - let him try to stop or sue us. As I said - we're beyond broke so can't seek legal help. No choices we can see. If he has to pay as the Class B member but refuses to do so, we believe he gives up that right.

The CC&Rs provide that at each closing an amount equal to 4 months assessments (which were arbitrarily established by the developer, as is customary) be collected and placed into Capital Reserve. There are specific guidelines as to how that can be spent and it does not include day to day operations. Those are the reserves we are burning.
A group of homeowners has sued. The court ordered that an annual budget be established, the total amount to be divided by the total number of Units (specifically defined in the CC&Rs as platted lots, whether developed or undeveloped) and that becomes each Units assessment. The developer does not have to pay on his Units so long as Class B exists but must make up the shortfall. He has vetoed 3 proposed budgets, passed by the board, since the court order and he refuses to pay the shortfall. The owners who sued have spent over $30,000 from their own pockets and have no way to recover any legal fees and cannot afford to proceed. Attorney's estimate is another ten thousand to force compliance.
The list of non compliance is astronomically long. For the first 5 years, there was no board at all. There has never been a financial statement provided (7 years)until the recently elected board took office. He has co-mingled funds between his companies and our non-profit corporation without any proper accounting. He paid $10,000 into the association in 2005 to pay bills, then wrote a check back to himself for the $10,000 when 2006 dues were collected and now claims it was a loan. He has arbitrarily charged varying amounts at closing to different people ,i.e $750 shown on HUD I as "insurance". There was no insurance charge. Some were charged a $650 "start up fee". Others were chared entirely different amounts of advance assessments. On and on.
Anyhow, we are proceeding to the Secretary of State with charges of corporate malfeasance.
As to the Class B issue, we are proceeding as if it doesn't exist. He can sue us. We are assured by our management company (through their attorney) that we are acting in the best interest of the association and our indemnification and director's and officer's policy should cover us if he were to prevail. Truth is, it would become prohibitively costly for him to sue, plus it would go into the same district court whose orders he won't obey (small town).
This is probably but one of many stories of unscrupulous developers whose true colors begin to show in difficult economic times.
I spoke to a friend who bought into an 80 unit complex. Only 15 current owners and the developer has gone belly up. All 15 will go broke if they try to maintain the property. It's a sad state of the times - bad enough because of the economy but terribly compounded with dishonest and crooked developers.