HOA

Started by HamidV • 5 replies • 1084 views

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HamidV (Georgia)
Posts: 1

Posted:

We are a small community consisted of 14 lots. Eight (8) houses are built with six of them occupied and two vacant plus 6 lot not built. The developer went bankrupted and he asked us to take over the association from July 1st. Homeowners had a meeting last week and elected a board to deal with the situation. The developer claims that he has no money in the account. What we need to do in order to transfer the account from developer to us and what can we do in order to get him to finish the unfinished asphalt and remaining erosion responsibilities since he has several properties in town.Also I talked to bank which took over but they are saying that they are still not the owner and they are in process of foreclosing the property.
Any idea will help.

Thanks

KarenT (Washington)
Posts: 250

Posted:

We had almost the exact same experience in our subdivision with 12 houses/lots. Our builder/developer did not finish our subdivision, houses/vacant lots and road when he filed for bankruptcy, got sick and subsequently passed away. Once the Bank took over it was months and months until an investor purchased the unfinished houses/lots and finished the subdivision. In the meantime, we had unfinished houses, a gate with no controls, piles of dirt in the roadways, water lines that were broken, dead grass, etc... We were very, very, very lucky to get it finished. Short of suing (which will not guarantee anything) I'd bet there is nothing you can do to make him finish.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Hamid,

Sorry, but I cannot give you any advice regarding the bankrupt developer. But I can tell you what I think you should do regarding the HOA. The board needs to contact the developer and ask him to turn over all the records of the assn; invoices paid, members' account info, financial statements, tax returns filed (if any), etc., etc. Then a bank account should be opened in the name of the HOA. Start collecting assessments from all the members; develop a budget based upon the info from the builder; pay the bills as they come in and go from there.

DarleneL1 (Florida)
Posts: 97

Posted:

You might want to check the laws in your state. In Florida, a bankrupt corporation MAY NOT turn over the authorization of enforcing the CC&Rs to a HOA. In order to conduct business in Florida, a corporation must be an active corporation. Our HOA filed a lawsuit against a homeowner and we lost because the judge ruled that a bankrupt corporation may not legally turn over to the HOA the documents legally as they do not exist. We have CC&Rs that an individual homeowner may enforce, but not the HOA.

SusanW1 (Michigan)
Posts: 5,202

Posted:

You are really in limbo, since everything is on "hold."

I'd get a lawyer (well versed in HOA laws) to file a claim against the developer AND/or whomever becomes the "owner." Something tells me you are going to be one of many in line.

The main thing is to see if you can even set up another HOA and perform work or make decisions about property that is not even technicially yours.

What a mess!

MaryA1 (Arizona)
Posts: 7,043

Posted:

My earlier response was made considering the fact that Hamil stated the bank has told him they are not the owners. So, while everything is in limbo, there IS an incorporated HOA that needs to be managed. Is the developer's loan being foreclosed or has the developer filed bankruptcy. Even if he has filed bankruptcy, I don't think that doesn't necessarily means the HOA is going bankrupt. The developer's corp doesn't own the HOA; the HOA is a separate corp owned by the members.

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