Half Developed Land -- Turnover suggested??

KennethN (Illinois)
Posts: 36

Posted:

Our builder has "voluntarily" elected to turn the business affairs of the Assocaiation over to the BOD.

We have 150 lots sold and maybe close to that many still undeveloped. Many difficult situations. But to stay on point, isn't the turnover a good thing? We had a neighbor say it's not, and talking to the neighbors, but from what I can tell, passing over the decision making is a great thing.

At that point the BOD will have a tough go figuring out what to do, but reading through this message board I am worried about a few things.

Mainly: Mortgage/Titles/taxes of the common areas, clubhouse, pool? The association should have been paying all of this already right? Even if it's in the developers name? By electing a BOD this would not add financial responsibility to the association? If there is no easy answer, can you at least tell me where to look? Paperwork/covenant when we moved in? Should I request information from the builder/association?

I appreciate your patience with a newbie, and will look forward to any input you are willing to provide.

Ken

MicheleD (Kentucky)
Posts: 4,491

Posted:

Kenneth:

Our HOA was fortunate (?) enough to have an early turnover from our developer.

To be more specific, the developer turned over all business matters of the HOA, EXCEPT FOR the architectural approval of NEW HOMES. We had arch control over any and all items except for new homes.

Yes, the developer should/would still have been paying most those things, however, we, for example, do not pay taxes on our common areas.

However we do pay things like common area maintenance, street lights, etc.

The only real issue is this: Does your assessment collection balance equal or surpass what the outlay is annually for those items?

If the developer is still on "control" of them, he would most likely be responsible for making up the difference/shortfall, if there is one.

In our case, the first few years of the turnover were extremely lean because of that.

For one thing, he was exempt from paying assessments, per the CC&Rs, so we could not have collected any money on the unsold/undeveloped lots.

However, the developer still had the bond on the streets and drainage, and he did pay for the road paving and any changes/modifications that were needed to the drainage before the bonds were released, when the build-out in the development got to the appropriate stage for that.

He also agreed to maintain all the vacant lots so we would not have to do that.

So, once again, my official answer is: "It Depends."

If your developer is easy to work with and will meet you half way on things, then it could be a good thing. You guys can "get your sea legs" and still have the developer there for guidance and "mentoring." On the other hand, if he's a jerk, that could be an issue.

I would like to make one statement on behalf of developers. They get a bad rap for the most part. Some of it is deserved, but they do still have a somewhat vested interest in your development maintaining a high standard of living because they use that development in their "resume" of "successful" developments.

One that keeps its property levels high and is well-run looks good in their overall portfolio.

At least around here, anyway.