Builder/Declarant/Property Manager

Started by DonnaC5 • 8 replies • 2808 views

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DonnaC5 (South Carolina)
Posts: 2

Posted:

I recently discovered by way of investigation that the Property Manager in our Greenville SC Towne Home community was also the Declarant/Builder. According to the bylaws when the community is 80 percent completed then the Declarant must turn the community over to the association. This Builder/Declarant/ Property Manager has total control over our Board. He keeps the books, pays the bills. He even has total control over the HOA's checkbook. This is a fairly new development and it looks terrible. We pay 110 a monthly, and all his company does is mow and blow. Is not this a violation of the restrictive covenants? I am very concerned!!!. Please Help!

RobertR1 (South Carolina)
Posts: 5,164

Posted:

DonnaC5,
Extend your investigation by reading some of the posts here about Developers/Declarant/Property Manager. Use the search feature.

Second, please include a short history of your association, and what your present mangement situation is.

If there has not been a turn over, do you have a board with owners on it? I suspect this is where you are at but any advice I would give would depend on you answering some of the questions above.

Also, read your post, tell us where you are in the process.

Your declarant/developer will have control until turnover. That does nto mean he can act illegally, unjust, unfair or harmful, can waste your money or does not have to respond to your concerns. If he don't respond to the Board, get a homeowners group together.
Also, ask yourselves why you all have not been involved, and pay attention to that answer.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Donna,

The fact that the declarant is also the PM is the same as an HOA being self-managed by the BOD. This is not a violation of the covenants (CCRs). Until the declarant turns control of the assn over to the members (called transition) he, practically speaking, is the BOD! Generally he will appoint staff members, family and/or friends to the BOD, so for all practical purposes he controls the board. This is not uncommon and it is not against the law or the covenants. If the members have concerns over the operation of the assn they should have a meeting with the declarant. How close to the 80% threshold are you? If the building is expected to go on for years b/4 turnover the declarant may choose to appoint 1 or 2 h/o's to the board, but he will still have control. However, he may not be obligated to do this -- check your gov docs. IMO, it's best to stay on the good side of the declarant, especially while he's in control but not just for that reason. Remember he built your home and if you detect some problems that need to be corrected he will be resp. for doing just that. You can get a lot more with sugar than vinegar. I'm not saying you should just bite your tongue if you have serious issues, just that you should be careful how you present yourself.

GloriaM (North Carolina)
Posts: 829

Posted:

Donna:

So is the association 80% built out? If so its time to hold your first election and elect a board.

DonnaC5 (South Carolina)
Posts: 2

Posted:

I live in a small community of 56 Townehomes. I closed on the last home constructed in Jan 08. We held our first association meeting since the Declarant supposedly turned it over to the association in Nov 08. But, here is the problem, I have recently discovered through investigation that the "Property Manager" was also the Builder. When I and other homeowners purchased our homes, we were led to believe that we were purchasing from a major homebuilder whom I will not mention. We were never informed that our present "property manager" would also be the Declarant. This action seems to be a little deceptive.

The major homebuilder and the "Declarant/Property Manager has been very hush hush about this situation. I found out by going to the county offices to look at plans and permits. According to the bylaws the Declarant shall enter into a contract with a management company or manager for the purposes of providing all elements of the operation, care supervision, maintenance, and management of the Property. Declarant contemplates that the initial manager may be the Declarant or a firm affiliated with the Declarant. No such management contract shall be binding upon the association except through express adoption or ratification of the terms and conditions of such contract. Any such contract or lease entered into by the Declarant or by the Association while Declarant is in control thereoff shall contain a provision allowing the Association to terminate such contract, without justification or penalty, upon 90 days notice after transfer of management by Declarant to the Association.

Our present board is made up of a very passive nonconfrontational Board President. Believe it or not, he is a nonlitigating attorney. The Declarant/Property Manager totally dominates the board. He maintains the property, keeps the books, pays the bills, and controls the checkbook, etc. This guy simply has too many functions with no system of checks and balances. This man acts as a landscaping and property management company. He owns both companies. He has total control of everything. The property looks terrible, and according to him there is no money to do anything. I have asked him repeatedly to justify his work for the monies received, and still no response. Please Help!!

RobertR1 (South Carolina)
Posts: 5,164

Posted:

DonnaC,
There are so many obvious questions that have to be answered that I am sure you don't want us all to start out playing guessing games.
You have to know if your association is actually a association.
Don't you have a set of documents that you all operate under?
If the declarant has had turnover, why are you concerned what the declarant does?
Did you all elect your present Board?
Do you hold meetings, who conducts them?
Who says your property manager, whoever they are have to even attend a meeting of homeowners?
Or a Board meeting for that manner?
Is it written in your documents?

This is just the tip of the ice berg as far as questions are concerned.

In your area, are there other associations? Pay them a visit.
Are you a townhouse condominium or an HOA.
I suspect you have a five member board, is that right?

DonnaC, Nothing is going to help you all unless you all help yourself. You don't need and won't get 56 owners to respond. If you can not go to your Board as an individual and get answers to how your association is structured, etc, etc, and walk away comfortable you need some support to force the Board to be responsive. I am not suggesting who is to blame, but I am suggesting the question has to be resolved.
If you get five or six members acting in unison you will get answers and find answers. It's that simple and that straightforward.
You must start and approach your Board for accountability. Go as a job, do not go to argue, go to get answers, record the meeting, ask for a written response to your questions that should be presented in written form. Don't damn the Board, even if all the member were non-productive, they have been no more non-productive than your fellow owners. I can not stress enough to read your documents. Read the part very carefully about owners responsibility. Understand what you sign up for, understand about the power the owners have.

Also, with five or six interested owners it is not so difficult to hire a good HOA lawyer to give you all a primer of SC Law. There is one listed on the left of this page in the highlighted yellow section. I have no knowledge of this firm and not making anything other than a suggestion that there are firms that deal in HOA law. Don't contract until you know more and you all need to know a lot more and you need to understand what you have signed up for, and if you have to pay someone to tell you, It is money well spent.

Sorry for all the negative material but that is the way it is and a place to start.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Donna,

OK, so now we know your assn is no longer under the control of the declarant. Since SC law states a contract negotiated by the builder shall contain a termination clause. But if termination occurred in Jan '08 the provisions of this law may have already expired. In fact, the contract may have been renewed already, in which case you will have to look at the termination provision of the contract to determine if and when termination can happen.

Regarding the mindset of the Pres, I must say that he is only one member of the board. Just because he doesn't want to do anything about the PM, that doesn't mean the other members of the board can't. If you have other members who agree with you it might be helpful to put together a petition asking the board to terminate the contract of the PM and state the reasons why. Check your gov docs and state laws regarding petitions. If both are silent then I would suggest trying to get a majority of the h/o's to sign. Present the petition to the board and go from there. Also it would be beneficial to check your gov docs and state laws to see if there are any requirements for providing financial info to the members.

LincolnB (Washington)
Posts: 5

Posted:

Hello,

There are many property management companies whose staff work with the declarant and the declarant's staff to facilitate the process start to finish. They are experienced professional staff will work directly with you, the builder, and the declarant, home-sales personnel, title companies, and new owners in the community.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Lincoln,

Welcome to the forum.

It's best not to reactivate old threads as laws change.
This means that what may have been good advice in 2009 is bad advice in 2017

Tim

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