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JoeS4 (Kentucky)
Posts: 77
Posted:
We have just formed our Homeowners and please read on I'll try to give the details as brief as possible. Our developer stopped work after 48 of 52 townhomes were finished and 9 homes out of 78 residential homes were to be included of the 130 total members. We formed a tempory committee and collected volunteered money as needed, now newly formed were getting ready to do the budget and work out some of the problems. However, the lender has taken back the remaining unsold lots and clubhouse, pool, and exercise room and closed the facilities. The lender did allow the developer to deed the association the common areas and tennis court before he deeded them their property. The lender has 68 votes out of the total 130 and sent word to our first ever meeting that we could appoint someone to represent them or they would control the meeting, so we elected 3 townhome owners and 4 residential owners as the bylaws called for and then immediately appointed a special v.p. for them which is one of their attorneys as well as a property owner in the development. I might add we can all get along with him and he knows he has a confict so he is there as far as we know to look out for them. However in good faith when we talked about fees the lender says they don't want to pay monthly fees and they will take care of their own property, ie mowing, etc. We have found already that this isn't the case as well as the clubhouse, pool, and exercise room is at the entrance and we have been taking care of the outside while being locked out of the inside. We are meeting now to start budget concerns as well as planning for the future. We need help in what steps to take............ with the lender, with the developer who is out of money and rumored to be a bankruptcy's door....with homeowners who are already breaking or have broken the simple rules in our restrictions and at the same time we are suppose to approve as a board all foundations, floorplans, and roof pitches on new construction to which the lender has rumored to be talking with several builders to speed up the process. Lastly, the lender offered the remaining property to the association but at their asking price it will be impossible to get a 2/3 majority of the homeowners excluding the lender to buy it as well as they have offered to sell the h.o.a. the clubhouse, pool, and exercise room to which the orginal owners were to already be given with the common areas. We need any and all advice other than hire an attorney were working on that now, but without funds at the present that will take a short time.

Please give any and all advice.
GeraldT1 (<Not Specified>)
Posts: 519
Posted:
Joe,

Oh my goodness. In good faith, you and the owners/volunteers are taking on responsibilities for the betterment of your investments. However, don’t take on more than you are required to chew. IMO, the lender can’t have it both ways, all the glory and none of the guts. IMO, whether they like it or not, they have assumed the debt of the developer, and therefore the responsibility to contribute maintenance and taxes for all lots not sold as if the community was at full occupancy, AND finish the work the developer started to satisfy your public offering statement. I’m sure someone on HOATalk can substantiate (or refute) my opinions with facts.

First things first, how many units are sold and occupied out of the 130, your post has me a bit confused.

The money you collected cannot be considered ā€œvolunteerā€. It would be a requirement, and failure of the owners, developer, developer assigns, and lender to contribute as such is stealing.

As for the board approving all foundations, floorplans, roof plans, etc. DO NOT APPROVE ANY SUCH THING!!!!!! Typically, all plans for construction should be detailed on the site plans submitted by the developer with your borough engineer and code department. Those plans including all infrastructure improvements are to conform to all local, state, and federal building codes. This is WAY over the heads of the owners and volunteers; I do not mean that in any way disrespectful.

Stop, get an experienced attorney to represent the owners. I know you are doing this but I cannot stress it enough in your circumstance. That attorney should be asked about notifying the town of what’s going on. Your purchase in the community was based upon the developer fulfilling the construction of property and improvements (roadways, infrastructure, clubhouse, pool, townhouse, single-family homes) to be covered by the purchase price and funded by the collection of monthly maintenance.

Best of success!!
GeraldT1
NNJ
RogerB (Colorado)
Posts: 5,067
Posted:
Joe, do you have a Declaration of CC&Rs? Does it specify a manditory assessment? You need an attorney who will determine the legal responsibilities of the Lender as well as the financial status as well as the legal status of the Developer. Your problems are too serious for this forum to provide much help IMO.
GeraldT1 (<Not Specified>)
Posts: 519
Posted:
[....with homeowners who are already breaking or have broken the simple rules in our restrictions and at the same time we are suppose to approve as a board all foundations, floorplans, and roof pitches on new construction


RogerB,

Joe's exerpt quoted above seems to indicate the have rules and restrictions. What do you make of the last part of the quote, "we are suppose to approve....". Do you think Joe and the owners may be confusing developer rep. responsibilities as a board, from an owner controlled board?

GeraldT1
NNJ

RogerB (Colorado)
Posts: 5,067
Posted:
Posted By GeraldT1 on 09/13/2006 6:02 PM
[....with homeowners who are already breaking or have broken the simple rules in our restrictions and at the same time we are suppose to approve as a board all foundations, floorplans, and roof pitches on new construction


RogerB,

Joe's exerpt quoted above seems to indicate the have rules and restrictions. What do you make of the last part of the quote, "we are suppose to approve....". Do you think Joe and the owners may be confusing developer rep. responsibilities as a board, from an owner controlled board?

GeraldT1
NNJ

Gerald, I would presume they have a Declaration. They need to read it very carefully. I agree totally with your post regarding "we are suppose to approve as a board all foundations, floorplans, and roof pitches on new construction to which the lender has rumored to be talking with several builders to speed up the process." I WOULD NOT APPROVE NEW CONSTRUCTION.

JoeS4 (Kentucky)
Posts: 77
Posted:
I tried to be brief but to tell you more we have been left with bylaws and restrictions for the development and association. The townhomes that have been built are fine except for a few flaws that the city inspector has missed and will not respond to. The homes that have been built to date are great all 9 of them, lol, however there are 69 more left to build and unlike most areas all we have is a city inspector and since our development has no square footage restrictions it is left to the board to approve foundation plans, roof pitches, and outside appearence of the new homes. Futuremore, we don't have any attorneys with any type of homeowners experience for associations that have the time to figure out what our recourse or next steps are. We need big time help!!! I have been put in charge of restrictions and enforcement and I need ideas of what kind of fees or penalities should be enforced after the initial written notice is given. Any help would be greatly appreciated. We have plenty of professionals involved in the development, however, none........ I repeat none have encountered anything like this, and I've got over 12 years of real estate experience, but nothing to do with homeowners associations or developers that have dissappeared, or lenders that have become a owner along with having the majority of votes of the association.

Again...........any help is welcome
JoeS4 (Kentucky)
Posts: 77
Posted:
In response to not approving new construction, we have to have some control due to no local building enforcement except the state building codes. There are presently only 57 people who live on site out of a possible 130, 48 of those in townhomes. We have to have more construction in order to afford the basic annual cost to which we will not be able to bill for till in december by the time the budget is approved by the current members.
GeraldT1 (<Not Specified>)
Posts: 519
Posted:
Posted By JoeS4 on 09/13/2006 7:16 PM

The townhomes that have been built are fine except for a few flaws..., The homes that have been built to date are great..., it is left to the board to approve foundation plans, roof pitches, and outside appearence of the new homes...

Again...........any help is welcome


JoeS4,

As for fine procedures, do a search on this site for violation letters. Click on number 4, I particularly like RogerB’s post in that subject heading.

You indicate you are head of what many call the ARC (Architectural Review Committee). Make sure the rules you develop comply with your existing cc&r's (covenants, conditions and restrictions) that run with the land and are binding on each owner. Make sure the cc&r’s and rules you develop do not conflict with state, local, or federal ordinances.

I’m betwixt and between on the responsibilities you and the residents are assuming.
My gut feeling tells me there is liability in owners assuming jobs and oversight of licensed professionals with years of degree experience that you admit none of you possess. IMO, even if you folks did have this trade experience, all that really qualifies you to do is ask the right questions of the professionals, not build the houses and approve construction for god sakes. If self-management, project management, approval of construction, etc. is the way you proceed, be careful and give up your day jobs. As a board member, you can sue, and be sued.

Who is going to be liable if buildings are constructed in violation to state, local, and federal codes? Who is going to be liable if deficiencies in construction occur? Typically, the owners assume control of the board in phases, the last phase of which happens 30 days after the last home is constructed. At that time, the board hires a transition engineer to perform a capital reserve analysis for budgetary funding of the elements. Your governing documents should outline what the HOA or COA is responsible to maintain. The board hires a CPA to perform audits, the board hires an attorney to represent the association(s), then the board re-adjusts the budgets accordingly to pay for these services, and all those the associations are to maintain.

The townhouses and homes are fine according to whom? According to opinion based upon visual inspection, rather than verification that construction complies with an approved set of building plans that are to be signed by a licensed engineer and filed with the inspector/code department official/borough engineer? If future construction isn't revised, than multiply the few flaws you believe exist in the townhouses by whatever is un-constructed, and those flaws you don't know about for the remainder single-family homes.

What you need is a management company (MC), independent attorney and CPA representation, find it, and figure out a way to pay for it immediately.

You may consider organizing a meeting with the owners disclosing enough of the situation in a manner that unites everyone on common ground to achieve a pre-determined end. But I wouldn’t do so without an attorney’s advise.

The pre-determined end is going to take some methodical master planning that involves an attorney of the owners, transition engineer to perform a capital reserve analysis and deficiency report on existing units before future construction takes place, a CPA, the board, a transition committee of owners.

This team, IF spearheaded by the owners must then interact and work with the lender, and the borough to achieve the pre-determined end.

The lender has the votes and the responsibilities they assumed from the developer, whether they like it or not.

Are you and the owners going to set up a sales office to attract buyers? What conflicts of interest exist when residents take on these services?

The boards, or more appropriately a management company (MC) must collect maintenance fees to cover the costs based upon multiple bids from local service providers (insurance, life guards, landscapers, cleaning crews for clubhouse, painters, etc.). I would develop several budgets. 1) An HOA budget formed as if the community is fully developed based upon the master plan for construction of the elements the HOA is to maintain, 2) A COA budget formed as if the community is fully developed based upon the master plan for construction of the elements the COA is to maintain.

It's in no one's best interests to leave homes un-constructed, ESPECIALLY the borough/town because of taxes /ratable on lots. In that way, everyone has a responsibility to his or her investments to get involved AT SOME LEVEL and help see this project through.

On a side note, in theory, the COA (townhouse residents) are part of the HOA (single-family and townhouse) therefore the HOA is all 130 residents. IMO the COA residents should pay two maintenance fees. One fee to cover the costs of the budgets for the COA, and the second fee is to cover the budgets of the HOA. However, I’m not sure what is structured in your governing documents as to a division or creation of two associations. Its benefit is in minimizing the liability that relates to oversight of elements that fall within the jurisdiction or use of single-family and townhouse residents. For example, if you have common sidewalks in your community, and the HOA is responsible to maintain, and someone trips, everyone in the HOA is sued. However, if you have driveways and or sidewalks that are for the exclusive use of townhouse owners as limited or common elements to the townhouse owners than the single-family owners would be excluded from suit.

Best of success!!
GeraldT1
NNJ
JoeS4 (Kentucky)
Posts: 77
Posted:
Thanks for that all of these comments are helpful as well as helping our seven directors think of future actions and planning. I am meeting with the lender and starting to interview attorneys next week, however the local building inspector is lets say less than what we desire for a inspector and we have contacted the state building inspector but then we've hit all of this government against government problem and he is over 2 hours away from our location so he will stop by when he can. I think maybe the attorney when hired will speed that process up as well. As far as what you have said I totally agree, however our state is lacking laws as well as our are having very many inspections required so the homeowners are very interested until were able to afford someone to look over blueprints, which I also might add, is not a requirement in our are.

Again thanks for all of your help.

Joe
JoeS4 (Kentucky)
Posts: 77
Posted:
If anyone has any sample fines for their association, that also would be very helpful, any kind of master list of what is done other than the first, second, and certified letter that is delivered.

We are creating all of our forms right now and any help is greatly appreciated.

Thanks

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