Fees Developed vs. Non Developed Lots

Started by TedS2 • 3 replies • 2070 views

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TedS2 (Michigan)
Posts: 1

Posted:

I live in a HOA that has 35 lots. All are single home units. Currently only 8 have homes built. The developer has 22 unsold lots and 5 others are owned by other individuals. The way the bylaws are written each lot ownner has 1 vote so the developer has complete control. He is both President and Treasurer of the Association. He has set fees of $550 for lots with homes and $50. for those without. The HOA pays for street maintenance including plowing in Michigan, street light maintenance and electricity, and mowing of common areas (the bulk of what is mowed is the frontage of the undeveloped lots). I have objected and stated at the last annual board meeting that the fee for undeveloped lots be raised to $100. He dismisses this by saying that if he raises the fee people may simply refuse to pay. I feel that $100. on lots selling for $60,000 and up is reasonable and that currently those with homes are subsidizing the developer. Our association has only a $600. balance and we are looking at thousands of dollars in road maintenance soon. I am interested in what others think and how other HOA's assess fees and developed vs undeloped lots.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Well, in our HOA, the governing documents do not allow for lots to carry different assessment amounts. It's in black & white.

But if it's not for your governing documents, and the developer can establish the rates, then there's probably not a lot you can do about it until a turnover or transition occurs.

But I would at least bring it up as a motion at the next meeting to get it in the record (a motion to increase the non-developed lots rate of assessment to $100).

It will likely go down in flames, but at least you will have an historical record for it when $$$ starts going wonky.

GloriaL (Georgia)
Posts: 195

Posted:

Our governing documents also do not distinguish between developed nor undeveloped lots. When the BOD took over from the developer, he had two undevelped lots, which to date remain undeveloped. He didn't pay his assessment for several years. We liened him, threatened foreclosure, and he paid up in full, and remains current.

If the developer is still in charge, it seems that you have very little authority to do almost anything.

IMHO, trying to put different assessments based on the status of the Lots, could open up a huge can of worms.

And most HOA have enough worms already without creating more.

Gloria

DeeS1 (Michigan)
Posts: 223

Posted:

Hi Ted:

I'm also in Michigan in a small 50+ community with single family homes (but we are zoned site condo). Our Master Deed and bylaws do not make a distinqtion between developed and undeveloped, but they do make a distinqtion between developer-owned.

The developer is responsible 1/52 of all actual expenses of maintenance, operation, etc for each lot he owns. This includes management fees, snow removal, lawncare, audit fees, etc. He is not responsible for special assessments, reserve spending etc. We invoiced him monthly for years and he never paid. However, just this year, we received a check to clear title when the lots were sold to a new builder. I'm not how it works when the HOs are not in charge, though.

For us, the lots that are owned by another builder, not the developer, are charged full dues because the title of the property transfered from the developer. You'll have to really read your governing documents to see what it says, but I'm sure there is something in there that spells it out. FYI -- the new builder is happy to pay his $400 dues so we don't put a lien on his lots and foreclose -- typically there's now mortgage company note on the lots so we are usually the primary lien holder.

Also check ... I can't remember if it's in our docs or Michigan Condo Act, but the Dev might be responsible for the cost of maintenace of common areas (especially any connected to a model home) until the community is a certain percent complete. Ours had the common area irrigation and lights connected to the model/sales office. We were not responsible for those costs as long as they were connected to his sales office.

Check your governing docs ... they should spell it all out. Also, if you paid a "capital contribution" fee when you closed, I believe that money is intended to help offset these costs until the community is more complete.

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