developer hands over a mess

In handing the daily operations over to the first board in 12 years, our developer has left us a mess. The POA By-laws were never given to any member of the POA until this transition. We see that they called for him to have annual meetings, which were never held. He still holds control over the board in any voting matter he choses; otherwise he gives us his proxy. He tells us that he re-paved the roads 6 years ago, long before many of us bought or built our homes, and that he considers this a POA expense, not a developer expense. the roads were re-paved because he put in a sewer system and had existing residents hooked up at their expense(assessment) which tore the roads up, and he didn't want to have a 2nd assessment. Therefore, he has had the POA pay him back all but $72,000 of a $240,000 bill. He says we owe him the 72k and is just now having a note written to this effect. Those that bought lts after the paving feel that their lot prices should have included all infrastructure costs or been given notificaton to the contrary. Therefore they feel they are in effect paying twice. On top of that the builder had a game fence constructed around property and determined that also is a POA expense. All combined he left us with $130k debt and no money in the operating account until January. Members are angry and opposed to assessment until they understand why and developer co-mingled POA money with club operation money until 3 years ago so tracking all this is a nightmare. Do we have any grounds to demand a better accounting of history, or do the members have to take responsibility for not demanding accountability all along and just move forward, accept our debts, and make the new board more transparent?

John,

Where I live in AZ, the developer would have had to submit a public report to the State R.E. Dept outlining all the amenities and stating whether they were to be paid for by the developer or by the HOA. If AL has no such requirements for a developer then I would think the developer can do just as he pleases. With no controls placed on him at the state level he would pretty much have carte blanche to run the assn as he chooses while he is in control.

BTW, once the road was built and paid for by the developer's contruction co it would have become the resp. of the HOA to maintain. Costs incurred to repair the road are maint costs not "infrastructure" costs.

What is POA money and what is club operation money and how were these monies co-mingled. There should be no comingling of assessment income with income of the developer's construction company. All assessment income should have been deposited into the HOA's bank account from the time the first lot was sold and the 1st h/o started paying assessments.

John if there is no money, then you guy's need to pass the hat or hold a bake sale to hire an attorney to represent your interests. What he's trying to charge you with may or may not be valid; it all depends on what's in your documents. I would also check with the County Planning Commission (Zoning Board) to see just what his obligations are. In some places developers are required to post bonds to insure that they do what they're supposed to do and the County can add pressure be refusing to release the bond until all obligations are met. I would also suggest you visit: http://www.communityassociations.net/development_transition.html for information on transitioning from developer to homeowner controlled.

John,
I think the consensus here (roughly) is let him come after you. You then react to his actions.

John, if you want good answers you have to give good answers. The question was who was in control, you answered the developer and gave his reason for saying he was. If he has turned the association over to the members then the members are in control. If they want to pass a restriction on how proxies are counted change you covenants.

You all have made a complete mess of things up to now, don't compound it and speak half truths here. You apparently;y have 7 member board, what is your total membership? Have you all established your documents have been filed and are accurate and on file and registered with the state.

With seven member board you apparently are somewhere in a middle size for associations. How many homes are occupied, how many sold, how many vacant?

You are doing the absolute best thing you can do. Either have the Association hire a lawyer or get a concerned group of HO outside the BOD and get a lawyer.

A strong caution here. If, as I suspect, you all have laid back and waited for someone (developer) to jump on you and only now see trouble your track record is not commendable. SO..........take the time and expend the effort to be absolutely sure you are going to get the best lawyer. Talk to other associations, talk to legal aid, your state representative, your county administrator and keep hammering until you are confident you have the best. Try for contingency fees, don't commit for long term, expect and demand he be responsive, be sure about fees. And if you all don't have a clue, you have a large enough association to ask the question at large with a Town Hall meeting. Keep all you meetings open and do not let this guy or anyone else run your show, if it is indeed your show now, and that is your first question to your Lawyer. "Where do we stand?"

John,

You stated the developer turned over day-to-operations to the BOD and now you say he stil maintains control of the 7-member board by having 4 votes. Do you mean that 3 of his votes are individuals he has appointed to the board and the remaining 3 members were elected by the h/o's? First of all you should check your documents and/or state law to determine if proxy votes are allowed for board members. In many states they are not! Secondly, exactly what board members are meeting to conduct the business of the assn.? Remember, a quorum of a 7-member board is 4 meaning at least one of the developers "votes" must attend the meetings. And, lastly, since he is still in control of the board that means transition has NOT occurred. The 3 h/o's who are on the board are only "figure-heads". If they are doing all the work of the BOD, they need to have a serious conversation with the developer. I would not stand for doing all the work but not having any control!

No question Kirk, they will need an attorney. Don't know about the Audit part.

We are still trying to determine where they are at this point in time. I would suggest they haven't been too smart up to now. I also point out this is not uncommon about turnovers and a lot of times, if this site is any indication, some folks are just glad to get shed of the developer and move on.

But here I don't know what is going on or has gone on. Usually the lawyer would be apt to ask you when you sit down to talk, the question: "What do you want me to do for you?" That's a hard one to answer unless you have some idea of where you stand. So, the more you know the better your relationship with an attorney will be the better the chances for something productive.