Special Assessments for lawsuit against developer?

Started by ChadK • 7 replies • 2567 views

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ChadK (North Carolina)
Posts: 43

Posted:

I live in a 35 home development that is sueing the developer to have the pond dredged and weeds removed.

The POA hired a real expensive law firm that has charged $40K in legal bills. The POA periodically issues "special assessments" for $100, $200, ...etc. My total that I have paid in the last 2 years is $1400. If someone doesn't pay, they threaten to lien the property.

My question is can they special assess to fund the lawsuit?
(CCR's state that regular and special assessments are to be levied for the maintainence and improvement of the common element)

A secondary concern of mine is that I own a 1.25 acre lot that is adjacent to my residential lot. the 1.25 acre lot was bought as a peice of a farm that was beside of me. The lot has no restrictions. They asked me to restrict the lot..I was about to do so in the interest of being a good neighbor, but with all the expense and turmoil, I am reluctant to subject more of my property to the whim of the board. They are threatening to sue me for not restricting the lot. I don't think they can,else they would have done so already. The lot is not in plats and plans, and no covenants recorded on the deed. Have any of you heard of this type situation concerning unrestricted lots beside of a restricted community. What were the outcomes? I live in NC.
I have revued the state laws, and there is no guidance that I can find concerning this issue.

Thanks,
Chad

BradP (Kansas)
Posts: 2,640

Posted:

Chad:

A better question is how can they do a special assessment without owner approval? Most places will only allow a small increase in yearly dues without owner consent.

DJ1 (Ontario)
Posts: 798

Posted:

Make a long story short, Have we ever heard of unrestricted lots 'adjacent' to restricted HOA. Well due to an apparent 'oversight' by our developer, he 'forgot' to register the CCR's on 34 of our 114 homes in a subdivision that he apparently intended to make a HOA. Some who were asked to have the CCR's registered on their titles did, we and I believe 10-14 others did not and we will not ever subject our property to the CCR's just because of the backlash and response by some of the homeowners in the HOA when we voiced our concerns (during the time we were led to believe we were all bound to the ccrs until our lawyer found out their 'error')

RogerB (Colorado)
Posts: 5,067

Posted:

Chad, is the pond a common element in the POA and if so, why is it the responsibility of the Developer to have the pond dredged and weeds removed? With only 35 owners I hope this lawsuit was carefully considered at a members meeting. If an attorney told the POA they believe the POA has an excellent case then the POA should have asked the attorney to take the case on a contingency basis. Then no special assessment would be required. Concerning special assessments the members should have had a vote but perhaps your Declaration and By-laws allowed the Board to decide. Funds for a lawsuit can be included in a special assessment.

The POA has no jurisdiction over property not in the POA. Anyone can sue but would lose unless there is a problem on the 1.25 acre tract which is violating exist city, township, county, state, or federal restrictions.

ChadK (North Carolina)
Posts: 43

Posted:

The pond is shown on the plats and plans as common element (community property), however the deed and the tax bill for that property still belongs to the developer. The HOA refused to accept ownership until the problems were fixed.
The HOA is suing under the agument that the developer let it fall into disrepair, and had promised to fix the problems during the time that he sold lots in the development (in this developement, the developer just sold the lots. The owner chooses their own builder and builds the house complying with the CCR's).

The HOA board issues "special assessments" without the vote of the members. They get a huge legal bill, then they mail out the assessments to pay the lawyer.

A bit of trivia.....I was told that the developer spnt $4000 to defend the suit whereas we paid over $40,000 to sue him.
I could have rented a back hoe and fixed the pond for around $2,000. The weeds could have been killed with $600 in chemicals from the local feed store. I tell them these things at the meetings and it falls on deaf ears. I get the deer in the head lights look. The homes here are somewhat large and expensive, especially for this area. I get the feeling that the people here are elitist,uncompromising, and must have there way or impose their will on others (me cheif/you indian concept). I have learned a lesson. Life is difficult enough, with a POA it adds yet more difficulty. I will never live in another POA.

RogerB (Colorado)
Posts: 5,067

Posted:

Chad, your's is an excellent example of what I often see from homeowners who's first action is to consult with an attorney. Often people think the first solution is to sue. I've also seen Board members with an ego problem spend tens of thousands of dollars rather than spend a few hundred to correct a problem. Their rational argument is "it is the principle involved" or "a bad presedent would be established." When they lose at trial court or later at apeallate court and I ask what greater harm could have been done?

What is the POA's chance of winning this suit or should it be dropped after spending $40,000? I would not continue unless the POA has unquestionable written proof of exactly what the Developer agreed to do. Otherwise the POA could be out a lot more plus the developer's legal costs. I doubt the POA has written evidence or else they should have presented it to the developer prior to contacting an attorney and he would have corrected the problem for less than $4000.

JosephW (Michigan)
Posts: 882

Posted:

Generally, the board has the power to assess for common expenses, in this case legal costs being one of them. You'll have to check the specific wording of your documents regarding the board's responsibilities and their powers to increase assessments or assess additional charges. In some documents there will need to be a vote of the owners, but in many documents, that vote is only required for capital improvements to the property. In this case, the documents will have the final word, at least on their authority, Roger addressed the other major issue.

Joe

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ChadK (North Carolina)
Posts: 43

Posted:

The documents don't address lawsuits againt the developer.
This is not surprising to me because the developer was the "declarant" (the one who drew up and filed the documents). No developer in thier right mind will include a clause that lets the homeowners sue him collectively.
Now, just because it isn't in the documents doesn't mean you can't sue. The laws of the state dictate that. It is unclear to me however, can they assess me to fund the lawsuit? My lawyer is even uncertain about this.

The lawsuits are winding down. We have a mediated settlement agreement with the developer and a few legal bills are comming in to finish it up, and I expect that I will pay a few hundred more dollars on top of the $1400 I have spent. I have resolved to "cut and run" since it will no doubt cost several thousand dollars 5k maybe? to get back my $1700. Money flushed down the drain.
Here again....I will never live in another HOA.

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