StaceyQ (Tennessee)
Posts: 3
Posts: 3
Posted:
What a mess..where do I start?
A little background......I have live in a developer controlled HOA. This developer is in serious financial trouble all around. He has had two other developments that have been foreclosed upon and there are rumors of a possible personal bankruptcy filing. There are also rumors of a criminal investigation for skimming money from development partners.
Our property management company was recently fired and a letter was sent to all homeowners saying that a meeting would need to be held to discuss the "financial condition" of the HOA. I can definitely read between the lines on that and I'm sure you can too. After reviewing the financial statement for the year-end 2008, our reserves have been depleted to pay everyday expenses. They spent double than what was brought in. However, some homeowners have speculated that some invoices paid out of the association money went toward developer expenses, not our common areas.
Today, I discovered a secret covenant amendment he filed last year. Homeowners were never given any notice of this before or after filing. Our covenants are very clear that any amendment MUST be approved by 2/3 of the owners. In the amendment, the developer stated that the original covenants gave him the exclusive power of amendment so long as he owned 2 lots in any section of the neighborhood. That is a total lie!!! It doesn't say that anywhere! The amendment he made established a "working capital and initiation fee" of $200.00 for the NEWEST section of our neighborhood upon closing. He's been charging that since the first home was purchased in 2004!!!! I work in the legal field and am quite surprised that an attorney allowed this document to be recorded with his name on it.
I spoke to an attorney who basically said he would have to review the original covenants and amendment to see if the amendment is valid. He advised that I get some other homeowners to chip in the $250.00 it would cost for him to review. Sounds reasonable but many homeowners out here just don't want to rock the boat. There are approximately 115 homeowners right now. For the record, the board is still developer controlled.
There's also a paragraph in our original covenants that states amendments to the covenants requires HUD/VA approval so long as there is a class B membership. What does this mean? There was a class b membership at the time he filed the amendment but that expired in April of this year.
My questions to you all are:
1) Does this amendment sound valid? Do any of you have any similar amendment experience with a developer?
2) Would the homeowners that he charged a capital contribution to before his amendment be entitled to their money back? (The money is probably gone anyway)
3) What does HUD/VA approval for amendments mean?
The ironic thing about all this is, if the developer had allowed us to vote, we probably would have passed his amendment! No need for the secrecy.
A little background......I have live in a developer controlled HOA. This developer is in serious financial trouble all around. He has had two other developments that have been foreclosed upon and there are rumors of a possible personal bankruptcy filing. There are also rumors of a criminal investigation for skimming money from development partners.
Our property management company was recently fired and a letter was sent to all homeowners saying that a meeting would need to be held to discuss the "financial condition" of the HOA. I can definitely read between the lines on that and I'm sure you can too. After reviewing the financial statement for the year-end 2008, our reserves have been depleted to pay everyday expenses. They spent double than what was brought in. However, some homeowners have speculated that some invoices paid out of the association money went toward developer expenses, not our common areas.
Today, I discovered a secret covenant amendment he filed last year. Homeowners were never given any notice of this before or after filing. Our covenants are very clear that any amendment MUST be approved by 2/3 of the owners. In the amendment, the developer stated that the original covenants gave him the exclusive power of amendment so long as he owned 2 lots in any section of the neighborhood. That is a total lie!!! It doesn't say that anywhere! The amendment he made established a "working capital and initiation fee" of $200.00 for the NEWEST section of our neighborhood upon closing. He's been charging that since the first home was purchased in 2004!!!! I work in the legal field and am quite surprised that an attorney allowed this document to be recorded with his name on it.
I spoke to an attorney who basically said he would have to review the original covenants and amendment to see if the amendment is valid. He advised that I get some other homeowners to chip in the $250.00 it would cost for him to review. Sounds reasonable but many homeowners out here just don't want to rock the boat. There are approximately 115 homeowners right now. For the record, the board is still developer controlled.
There's also a paragraph in our original covenants that states amendments to the covenants requires HUD/VA approval so long as there is a class B membership. What does this mean? There was a class b membership at the time he filed the amendment but that expired in April of this year.
My questions to you all are:
1) Does this amendment sound valid? Do any of you have any similar amendment experience with a developer?
2) Would the homeowners that he charged a capital contribution to before his amendment be entitled to their money back? (The money is probably gone anyway)
3) What does HUD/VA approval for amendments mean?
The ironic thing about all this is, if the developer had allowed us to vote, we probably would have passed his amendment! No need for the secrecy.