can BOD waive assessments

Gloria,

I doubt the CCRs allow the board to waive assessments for anyone, for any reason. The CCRs should also state whether undeveloped lots are subject to assessments. The BOD must adhere to what is stated in the CCRs. If that means no waivers and owners of undeveloped lots are subject to payment of assessments, so be it. What happened in the past is in the past and should not be repeated if it was in violation of the CCRs. Let this new owner know what the CCRs say and also let them know that if they do not pay the delinquent assessments in full then the board will take all the steps in place for collection which may result in foreclosure on the lot.

The new owner won't pay the dues if the lot is unbuildable Seriously can you blame him? If the association can be held liable in any way for not having that information available for the new owner, then I think your getting off cheap waiving the dues.

The lot may not have been sold by the association but it is a part of the asssociation An association that is actively trying to collect dues on it. Is it resonable for someone to assume that when they buy a lot in an HOA that it is buildable? The government has now declared this unit uninhabitable. Is it resonable for the HOA to try to collect dues on an uninhabitable unit?

Another point to add:

The para was asked to place a lien for delinquent 2010 Dues to the new owner of the Lot. The BOD was told that since he was liened for the 2005-2008 dues (remember he didn't own the Lot then), we could not put another lien for 2010. The lien would cover all monies owed to the HOA. The total $ owed would be calculated at the time the lien is satisfied.

My thinking then is, why give the new owner a letter of absolution for 2005-2008? When/if the lien comes to be satisfied, can't we just calculate from 2010 going forward? By doing that (again in my fuzzy thinking), we are not holding him to the debt which occurred before he took title yet we are also not granting a written waiver of back assessments.

I am against putting in writing something for which I believe the BOD has no authority to do (waiver). I believe that is what got us into this situation in the first place.

Gloria

Please cnfirm your terms: first you say unbuildable then you say uninhabitable.

Unbuildbable may mean that he can't build what HE wants, but something else CAN be built there. Like a smaller footprint of the house.

The Lot is approximately 1.25 acres with streams crisscrossing and dissecting it. Now that the buffer zones have been increased from 25' to 75', the land available for the house footprint, septic fields and reserve septic fields shrinks dramatically.

The CCRs require 3,000 sq ft, 3 car side entry garage and cement driveway. The new owner was able to accomplish these requirements by placing the house in the back extreme corner of the Lot, against the side and rear setbacks, just 20 feet from the Lot line. The BOD did not oppose placement because our CCRs are silent. The side and rear setbacks are city requirements. No matter what the size of the house, the only placement is in that same extreme corner and would still require multiple stream buffer encroachment variances.

The HOA has not changed any requirements for construction from when this Lot was originally platted and buildable. The city has.

Gloria,
Do you know if the current owner is contesting the set back lines? If there is a court case pending or an appeal, you might be able to enter into that issue as an interested party.........if that helps...any of the parties. It could be if this is contested the judge makes a ruling and this may be to the HOA's interest and maybe something can be done. Also, has the tax assessment been changed on this lot?

Mary,
You may be right, the new owner is not liable to back arrears. But I wonder if when the property was sold there was an effort to clear the title and if there was a lien or notice of indebtedness against the old, filed or on record somewhere. I suppose it is possible the old owner and the new owner made some kind of agreement to assign those debts in order to clear the property and get the deal done. I don't know if this could happen or not, I have heard of stranger things. If so, at this point, unless that sort of thing can be verified, the HOA should stick with what they can get and forget it. It does appear this is a mess and getting worse and now the HOA and the city/town have interests in the property.
What happens to property if it does become unbuildable (no buildings at all). Is all property under control (dues assessed at equal amount)only include building lots? I would think that would be done when Master Plat was laid out, and any other property would come under HOA's. What would happen if the developer that holds commercial property decides he doesn't want to use it for commercial?
I suppose he could apply to county for variance to change it to residential but that would require public hearing and all kinds of problems. I suppose he could give it to the HOA or sell it to anyone as commercial. Do you know.

I am not certain whether the new owner is contesting the new stream buffer setbacks. But, IMO, since the same Board of Zoning Appeals this past week granted several variances for encroachment into the stream buffer zones for the Board of Ed to build a new high school, our new owner certainly has cause for a lawsuit. This is the same encroachment variance from which the new owner sought relief.

Gloria,

Here is my take:


The Board should have never done this and there is certainly some legal questions that should be answered by an attorney. However, who was at fault - The Association (represented by the BOD at the time) or the home owner? I would suspect that the Association was at fault and not the member.


The previous owner should have notified the Association. However, the Association became aware of the sale, so that point is mute. Per the agreement with the HOA (based on your posting), the lot incured no assessments until it was sold. Thus there was no back assessments to pay.


Good. The new owner recognized the obligation and duly paid the Assessments he owed. As I understand it, any new owner is only responsible for the assessments from the time the sale was finalized forward (simplified as I know that there are certain circumstances that would make this understanding incorrect).


OK. Good information to know. However, it is not a concern of the Association. The owner submitted plans to the the HOA. HOA approved them but permits, etc are still required. City/County refused to grant permits on existing design. Homeowner now has to submit a new design. They should get it approved by the city/county first and use the previous disapproval as arguments before the HOA for Association approval for the new design.

Bottom line. This is not an issue for the Association. It is an issue between the City and the owner of the lot.


The member is certainly allowed to argue this in court (if it goes that far). The ability to have the design approved by the city is not an issue fot the Association.

You should treat this member as any other member who failed to pay assessments. Follow your enforcement procedures and if need be, foreclose. Hopefully it will neve get to that.


Previously answered. Does the current Board wish to sue the old board (and any board who served between the original agreement and now) for negligence or just move forward.

Personally, based on this posting, if I was on the jury I would assign some of the blame to the Association for entering into such an agreement and only require the previous homeowner to pay some (not all) of the past assessment.


Why would the current board want to do something that is probably illegal?

Based on what was posted, I do not see where the Association would be responsible for the new owners failure to have a good survey done that would have shown those issues. The Association is also not responsible for any disclosure about the lot. That is the Sellers responsibility. The Seller failed to notify the Association about the sale. The seller failed to request a disclosure package before the sale. The buyer failed to insist on these documents prior to purchase.

The Association is not responsible for the buyers in ability to build.

The Association should not even consider entering into such an agreement. Since litigation was threatened by the current owner, the Board should cease any discussion about pending litigation with the member and turn everything over to the Associations attorney.

The only future conversation should be about covenant infractions and assessments.

John, LOL, that's funny, I hope I can remember it.

okay so who missed the part about the HOA collects $9,000 per year and it will take $3,000 in attorney fees to forclose on a worthless piece of land that will NEVER PRODUCE AN INCOME and will become an expense (propertly taxes) That's 30% of the yearly income. Why becausae the CCR'S do not say anything about lots that become unbuildable Not everything is going to be in the instruction book. Sometime the BOD just has to use some common sense.

The issue would seem to be and most of what has been suggested is how does the Board protect the association.

Helen,

The point about our tiny dues is a huge consideration to foreclosing on the property that would still owe taxes to our city. We just don't have the money.

After getting some insight here, I think I am going to present to the BOD the following:
1. Direct the attorney to extinguish the existing lien on the new owner for the back dues 2005/6/7/8.
He did not own the property at that time.
There was no lien for those delinquent dues because of the notarized agreement so a title search would have come back empty.

2. Direct the attorney to send a demand letter and initiate a lien for delinquent 2010 dues.
The new owner paid 2009 but not 2010.
He says if the Lot is unbuildable, he won't pay. Out CCRs don't distinguish.
His fight is with the city since their stricter stream buffers made a legally platted, buildable Lot now unbuidable.

3. Do not write a letter to the new owner absolving him or responsibility for the back dues. By extinguishing the lien, that is done without engaging in a procedure for which I believe the BOD does not have the authority...granting waivers.

4. Direct the attorney to send a demand letter and initiate a lien for delinquent 2010 dues to the former owners on their present residence.
They had been current on all dues for their residence, except for this year.
If they sell this current residence, their would be a lien in place to collect back dues...

5. Decide whether to forget about the $1,500 the former owners owe on the back dues on the Lot they no longer own. Chalk that up to a lesson learned about the authority the BOD has or does not have.
Our attorneys have estimated it would begin at $1,000 to initiate a lawsuit in small claims court. IMO, not worth the money or effort.

I'd like to see what you all think about the above points. Let it fly!

Our Dues are $330 per year per Lot "uniformly".
The new owners are delinquent for $2010 only, $330 + 10% late penalty + 10% interest.

I do not agree that the notarized document with the former owner was ambiguous for him to believe he did not owe those back dues. He knew when he transferred title of that Lot, the agreement brought those dues forward to be paid. I believe he also knows that our resources prohibit the HOA from chasing after the funds. We cannot lien the property because he no longer owns it. It was a personal guarantee between the former owner and the BOD...not a good position for the BOD to be in. The $1500 is the total owed for the multiple years of back dues by the former owner. My position = chalk it up to a valuable lesson learned the hard way.

I am not certain what the fellow Board Members(3) fear from a lawsuit if initiated between the new owners and the city. I THINK it may be the $$$ which would quickly mount up if the HOA is named in the lawsuit (lawyers tend to name everyone in sight in lawsuits) and the BOD would have to defend its position. I believe the HOA has no responsibility in the Lot becoming unbuildable, however, if named, the HOA would still need to defend its position. Thus the $$$$ which we just don't have.

I believe entering into a hold harmless agreement, thinking it may protect HOA against possible fees from a potential lawsuit if one is inititated and if the HOA is named, still does not justify writing something for which the BOD has no authority. Maybe that lesson has not been learned by all y

We are only 28 Lots, 8 years old (took over from developer in 2004), not much experience, so here is where we are.

It's ambiguous for someone else to believe that there is the possibility he did not owe anything. At least the way you wrote it. Anyway let that go. I didn't realize the hoa was so new it didn't take long for things to get messed up. Anyway so he owes about $400 Our attorney charges that much just to write a letter and file the lien. Before that we send out notices from the hoa a 30 day and a 10 day final stating that if the account is not brought current then it will be turned over to attorney and attorney fees will be added At this point the big issue is still the fact that the lot is unbuildable. I really don't think a $4oo waiver is going to make a difference but that doesn't mean that you have to actively have to pursue collections at this point either. If it does go to court I think the last thing you need is the owner to show that the hoa's attitude on this is "too bad for you,it's your problem not ours and we just want our money" There are still a lot of issues here concerning the lot. You said that when the hoa was formed all lots were buildable. Therefore it was an hoa of buildable lots. The ccr's do not distinguish between buildable and unbuildable because they were all buildable at that time. Now a lot has become unbuildable. The ccr's forgot to mention what to do if that happens. This lot no longer meets the criteria it needs to be in an hoa of buildable lots.Next there is the issue of why the hoa was formed at all. I imagine there are roads and such that need to be maintained. There is also the issue of hoa requirements about what can be built on the lots. For what reason? The protection of property values. If someone put a single wide mobile home on a lot it would detract from everyone elses property values. So therefore it could be concluded that the hoa is responsible for protecting the property values of lot owners.From there a good attorney could possibly make it just a hop, skip and a jump to the hoa is responsible for protecting the property values of all lots and since this lot is in the hoa the hoa is responsible for protecting it's value and therefore responsible for fighting with the city on the setbacks Now I'm no attorney but it's feasable that this could happen or at least be sued for. If it does happen then you're in big trouble and the hoa dues really become trivial This is the big issue here. What to do about the fact that this lot has become unbuildable?

Gloria,
In my opinion it means your lawyer has made a determination that the Board can waive fees at their discretion (discretionary powers.) I would suspect most HOA documents state something like this. It does not say the Board can do anything, it says the Board has the authority to make a decision and act on it. Does this mean the Board is right in any decision it may make. No, these decisions are subject to challenge and if taken to court some law office or officer will make the ruling. The Board can not act in bad faith, the board can not act in such a manner that would make bad business sense. I suppose the better question for the lawyer should have been: "{Given the reasons as the Board presentsd them is it wise to waive assessments for those reasons." There could be valid reason to waive assessments but it is a single call subject to challenge. So now you have to decide, it it worth pursuing the issue or eating the loss. That's my opinion, nothing else.

If that is all the lawyer stated, and you paid him, go back and ask for your monie's worth, he should have been more forthcoming.

I agree with Mary. I do not believe assessments can be waived. Perhaps the attorney was misquoted. For example, the Board may have the power to write off as bad debt but not to waive.

Glorial I have several thoughts on your situation. I am in an HOA in Florida and our board does have sole authority and power to waive a dues or interest and penalties as stated in our CC&R's. I see Georgia is not like Florida in this respect. Even though our CC&R's say after the lots are sold the owners are then required to pay dues. In our case the developer sold off all his lots to several at least five other builders with the same rights as the original developer. These new builders then in effect becomes the Declarant and are not billed for dues until those lots are sold off and built on and have there CO. Now as in your case it seems the new buyer has a problem, but I don't think its with the HOA. He may have a case against the prior owner if the prior owner new about the restrictions with the set backs now required by the city. If the prior owner new about them and did not inform the new buyer then he did not disclose a condition affecting the lot then he could be sued for recovery of his cost for the lot purchase plus attorney fees. Also the new owner should have obtained title insurance which should give notice of any covenants, restrictions, or easements of record. Did the new owner obtain title insurance? If he obtained title insurance and the title company did not indicate these restrictions in their search of the public records then he could have a claim against the title company or did the title company give exceptions to easements, or restrictions in their policy of insurance also with an exception clause for what a survey would reveal. Did the new owner get a proper survey or did he buy the lot without a survey as manny foolish people do just to save a few bucks. If the surveyor was given the information of a good title search with all the easements and restrictions noted then the buyer may have a claim against the surveyor for the lack of indicating these restrictive setbacks in his survey otherwise he could threaten to sue the city with an inverse condemination suit for relief if they do not grant him a variance for his building and claim a loss of use of his lot. He could also demand a reduction in his tax because of loss of use. I also wonder if he could fit his building on the lot with what space he has left but run his outfall to his septic tank towards the street with the drainfield in the front of his property. This is quite common in Florida. If he is able to fit his home on the useable area left and the city grants him a tax relief for his loss of use then he may come out all right after all. My last comment if all else fells you no the old saying is buyer beware. JerrellC

The old Lot owner used the Lot as collateral for a loan with a finance company. The new Lot owner IS the finance company. We do not know what transpired other than the transfer of title.

No title insurance search on the Lot by the new owner would have turned up any liens. Remember, the agreement to delay payment of annual dues was just a notarized agreement between the old Lot owner and the BOD, no lien was placed.

The new Lot owner told me he didn't even come to physically view the Lot, didn't check for any setbacks, and certainly didn't contact the HOA for CCRs or anything outstanding on the Lot. He "assumed" he was getting a Lot valued at $125,000 to satisfy an outstanding loan of $50,000. I believe he thought he was getting a steal. He did not due diligence or he would have learned about the stricter stream buffer setbacks and the dramatic impact they imposed on building on the Lot. The HOA only discovered the transfer of title months after it occurred. It was by the HOA's searching the city's Zoning calendar of Meetings for other items, and not the new owner coming forth with anything.

Gloria,
If your symopsis is correct and if your documents reguire (as mine does) that any change in the property assignment has to be reported to the HOA, then I suspect the BOD of directors should go after this new owner as he has the responsibility to provide correct records to the association, and if that doesn't seem important now, then he should be reminded he is not without obligation to the Board.

Roger,

This is exactly the point that I am having a hard time with. Our CCRs do not state anything about the BOD having the power to waive assessments. It does not state that the BOD can waive anything.

Yet, our attorney's office (I must clarify that this respond came from the contact in the collection dept, not the attorney themselves) sent that one terse sentence saying it is the BOD's discretionary authority. IMO, that just is not specific enough.

My fellow BOD Members believe otherwise.