HOA Dues

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DennisJ (Georgia)
Posts: 17

Posted:

We are a new subdivision and our developer is still in control of the HOA responsibilities until we form an association as required by our covenants. The covenants also state there are annual dues to be paid. The developer has never sent a bill for the dues for the last three or four years. Some residents say they do not owe back dues because he never sent a bill. Is there any precedent on this? The developer has also never enforced any of the covenants.
Thanks

Baldy

MaryA1 (Arizona)
Posts: 7,043

Posted:

Dennis,

Even though there are covenants which state assessments shall be charged, they probably have not been charged because the HOA has not been formed yet. If there is no HOA, who would the assessments be paid to? Usually the developer forms the assn at the time he starts building and as each lot is sold assessments are charged to the property owners. These assessments are used for payment of expenses incurred to run the HOA. Sounds to me like the developer just bore the expenses and didn't bother forming the HOA. IMO, back dues are not owed by the members, not because they didn't receive a bill, but because there was no HOA. Same goes for enforcing the covenants. Although he could still have done this w/o an HOA he probably just chose not to. I would suggest getting a group of concerned members together and meet with the developer to ask him to form the HOA now. I guess he hasn't drafted bylaws either -- articles of inc would be drafted when the HOA is incorporated. It would be so much easier on the board of directors elected by the members (at turnover) if all these governing documents were in place together with the HOA.

DennisJ (Georgia)
Posts: 17

Posted:

Yes, I Understand. In order to be brief I excluded some facts. The developer has collected an initiation fee at every closing. He has issued checks DBA a HOA from the escrowe account as I have a copy of the check.For that reason it would appear he is the interim HOA until we form the association.

Baldy

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Dennis...Baldy.........one in the same?

I think you should forget being brief and worry about being concise and accurate. We really need some more info. How much is this back arrears (for want of a better name). Explain this initiation fee, how much was that?
When is turn-over, are you all ready? The suggestion of forming a separate entity of homeowners outside the Developers control could serve you all well.

Just don't get in conflict by naming you group the same as the association if that is the name the developer has registered.

Try and formulate specific questions, but this is very difficult as nothing about an HOA is simple, and if it is simple we humans will make it complicated. Do you have Home owners on the Board now....that is common, they are just not elected.

DennisJ (Georgia)
Posts: 17

Posted:

Dennis/Baldy one in the same!

Ok here goes. The fee is $200 at closing There are 83 homes and we are now built out. The covenants require a HOA be formed and take over from the developer. However, the developer has not yet met the county compliance to assume responsibility for the ownership of our roads. We have formed a HOA transition team to begin the process of transitioning from him to a HOA. We are now registered in the state as a HOA on paper but have not finished the by-laws and formed a BOD. We have made it clear to the developer we will not act any further until the roads are transferred because the covenants state we are responsible for all common areas maintenance costs. We have been guided by an attorney whom we fired for incompetence and lack of communications. In 18 months he has not completed the By-Laws. All he has done is registered our HOA name with the state and didn't do that completely either. According to any attorney we have talked to, the developer has a fudiciary rsponsibility for the covenants and all other aspects until we have an official HOA/BOD/By-Laws. His covenants are very skewed to his control even after we form an HOA and we will have to negotiate his release of those articles.

I have only asked about the dues out of curiousity as we are a loooong way from having an acting HOA to enforce the covenants. Our team is very busy ironing out all these speed bumps. Now we are delayed while we find a competent HOA attorney.

I could go on for hours but I think you get the gist of what we are dealing with.
Thanks for your interest and reply.

Baldy

MaryA1 (Arizona)
Posts: 7,043

Posted:

Dennis,

Thanks for giving us more info. As Robert has indicated, the more you can tell us the better able we'll be to help you out. We've had some poster come on here and give us a few facts then once we start asking questions we get a whole different story. It's amazing.

I can see that you are somewhat confused, which is understandable. HOAs can be very confusing, to say the least.

It appears the HOA has been formed; set up as a nonprofit corp I would imagine. When the developer feels it's time to transition to the members, they won't have to form an HOA, that's already been done. It would be a good thing if you could get him to finalize the bylaws. Depending upon how they're written it may take a vote of the membership although in some cases the BOD can approve them.

Now, when transition does occur, the developer should send a letter to all members asking for volunteers to run for the BOD. Then after he gets a slate of candidates together he should send a notice to every member informing them of a meeting to elect the BOD. Once the BOD is elected the developer is no longer in control of anything. It's not uncommon for the developer to have certain things written into the CCRs for his protection; however those articles usually state that it applies only as long as the HOA is under declarant control. If the articles you're concerned about don't specify that then all that needs to be done is to prepare an amendment to the CCRs to delete those particular clauses. Usually it takes a high % of members to vote to approve any amendment to the CCRs.

The $200 fee that everyone is required to pay at closing is not uncommon; however that type fee is usually used to set up a reserve fund. Since the developer hasn't been charging assessments I would imagine he's using the $200 fee to manage the HOA. Once the BOD is elected they will have to inform the members that assessments will be charged. Some assn's pay monthly, others quarterly or yearly. It's usually at the discretion of the BOD to determine this. The BOD will also be required to prepare a budget and from that they will determine how much the yearly assessment shall be. If the developer isn't keeping accurate records, it's going to be a real hit and miss for the first year. Perhaps the transition team can ask the developer to provide them with a financial statement when he turns over the assn. Sometimes the developer doesn't have separate insurance coverage for the HOA, instead he uses the blanket policy for his corp. This is one thing the transition team should check out because it's very important for the HOA to carry certain types of insurance.

Your transition team is wise to not want to transition until the roads have been turned over to the county. Maintaining roads is a very costly endeavor which results in much higher assessments.

I hope some of what I've said has been helpful to you. Please feel free to ask as many questions as you like.

DennisJ (Georgia)
Posts: 17

Posted:

Thanks,
Many of the things you mention are in motion. We are also going to ask for an independant audit of his books concerning the HOA money. He is making no effort to set up the HOA as the covenants require that of the residents. Wev are also going to ask him for a legally binding release of all authority over the covenants as he no longer owns any empty lots. He has a history of using this type of control for financial gains in the future even after the HOA is formed. He has unilaterally enforced covenants outside the BOD and HOA to place leins on property in order to foreclose and resell.Too bad people learn this stuff after the fact. At least this time there are a few of us who understand risk abatement and how to read covenants. We have been establishing by-laws,a preliminary budget and all necessary forms based on benchmarking other similar local HOA's in preparation for the transition. Hopefully, once we get the roads taken care of we can have an election for a board and they will have a start up model and clean slate.

Baldy

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Dennis/Mary,
I'll go out on a limb and say this thread could be very helpful to all that post here. Usually we get in on this stuff when the developer has done his thing, and that can be good or bad for every one's sake, mostly it is bad for homeowners.

But if Dennis is willing to keep posting we all would be able to peak in as this thing progresses. Dennis, it sounds as if you and your cohorts have done some homework, got your act together, and are not without the smarts necessary to get this done right..........or as right as possible, because things don't work that way in HOA's. We have some pretty good people who post here and they seem always willing to help. If necessary several of us will go to private e-mail if we think it will help. Of course, as our disclaimer says we do not offer professional or legal advice. You did right by canning your legal help that don't fit your concerns. You are doing the right thing by looking over local HOA documents and I am sure can tell the well run associations without too much trouble.
I harp on this all the time but I think it is critical that all the owner participants acknowledge that all you do and should do is only for the good of the association. Keep that constantly in from of you. I feel I am preaching to the choir at little here, but it sure won't hurt. Of course you have heard from Mary and no doubt she typifies the character of many of the folks posting here. But, we have detractors and they are also welcome to post here, up to you all to pick up what you can use and toss out what don't fit. Keep them coming Dennis.

DennisJ (Georgia)
Posts: 17

Posted:

I will dole this out in dribs and drabs only because I don't have time to write a book all at once. The most noise in the channel is from a few residents who have adopted a strategy of disrupt the team of volunteers doing the work and delay forming an Assn so they don't have to pay their assn dues. They are few but the most distracting. They never state their hidden agenda yet we know it and who.

We have developed a great rapport with the county here as part of our strategy. The county has been bending over backward to assist us in the roads issue. They actually agreed to do the final road work and bill us with deferred payment until we could collect from the developer. What stopped us was the roads are still private and they cannot work on private property without permission. Their price was exceptional for the work at cost with no mark up. Our next move is to attempt to get a waiver from the developer to allow us to contract out the work and pay for it. Once we get the waiver we will contract the county if we can. We still can rebill the developer. Wether he pays or not will be an issue later. He is legally responsible but it would be cheaper to have the work done than take him to court. Simple business decision! That way we can get the HOA formed and have a formal legal structure and entity to take him on. You can bet none of this advice came from our terminated attorney.

We are having a meeting in a few weeks with the residents to present all this and try to get buy in. As we are not a formal HOA their vote is purely a indicator of their wishes as the developer still has the control.

Not only is the developer not enforcing his covenants he is not enforcing them on one of his contractors who provides our water service via community wells. He gave him exclusive rights as a water provider. Now we are trying to get this contractor to build his newest building within the restrictions of the covenants with no support from the developer. We also have had water clarity issues and have been stalemated by the contractor's lawyer in reply to our "past"lawyers letters. Sent us packing to study the state water laws. Bad move on his part as we will and come back with a new attorney and a vengance.

In the mean time we are tableing all that menusha until we get the roads issue solved and the association in place. What we are doing is giving all the contact information to all 86 residents and telling them to contact the water people the EPA and developer individally. Hope the annoyance is enough to want the developer to get it over with and cooperate on the roads.

This has been a challenge enough without the interference of the contracted water people violating covenants and causing residents grief with dirty water. Took us off track for a few weeks but we are now back on track.

I really appreciate your comments and any additional ideas you may have to get this scoundrel back in the bag and form the HOA soon. We have been at this for two years now!

Baldy

MicheleD (Kentucky)
Posts: 4,491

Posted:

Dennis:

As Mary stated, it appears your group is a day late and a dollar short on "forming" the HOA.

It's pretty clear from what you say that it is already formed. The residents are only required to at some point take over management of the HOA.

Aslo, regardless of what the covenants say, the developer, while he is in control (and he still is, apparently) can pretty much do as he wants, because his "votes" will outnumber any member votes.

Your obligation to the assessments is tied to the deed restrictions that were filed with your title and that run with the land, not dependent on an HOA there to either enforce the covenants or collect the assessments.

He can do that under his DBA as the HOA. He does not need any members to be on his board, and that's just pretty much the way it is.

GlenL (Ohio)
Posts: 5,491

Posted:

Dennis, I cannot urge you strongly enough to find an attorney versed in HOA law to guide you through the transition. Google Georgia HOA attorneys or contact other HOA's to see who they use but get an attorney. The devil is in the details and what you and your group might think a phrase or clause means could be 180 degrees from what it actually calls for. You can bet the Developer has an attorney trying to get the best deal for him and you guys trying it on your own is like bringing a knife to a gunfight. Even if each homeowner has to pony up a $100 or so GET AN ATTORNEY.

Studies show that 5 out of 4 people have problems with fractions

RobertR1 (South Carolina)
Posts: 5,164

Posted:

ABSOLUTELY,

And what a great opportunity for us on this site to follow the action. Dennis and his group really are working hard in the right direction and all Glen say is sound reasoning from a lot of his vast knowledge.
Glen could help a lot Dennis, he can find out anything thatg has ever been written and filed anhyuwhere.

DennisJ (Georgia)
Posts: 17

Posted:

Glen,
Thanks for the advice. We don't plan on taking any action without an attorney. As you recommended, I have already met with other HOA in the area and have a list of attorneys they recommended. I will be intervireing them in the very near future. Too bad we wasted time with the first one even though he was a realestate attorney and represented 5 other HOAs he was of minimal value and not willing to put any effort ot priority on our issues. Eighteen months and no By-Laws says it all. Especially when we provided him samples from other HOA. He was just plain lazy.

On the positive note, the developer has paid the invoices from our attorney (aftger our approval of charges) out of the HOA escrow account.

Back to the drawing board.

Baldy

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Yikes Dennis,
How is this escrow fund administered? How much is in it and what is it used for. Not important you tell us but just asking the question.

From your previous I don't get the idea this developer is going to play softball. Hope I am wrong and he is the rarest of rare. I know you guys are capable people and have done way more than most when faced with transition but you will hear plenty of "watch outs" from here as this progresses.
If you have some deep pockets you might consider widening your search area as you look for HOA attorneys. If you are a small place and there is a big place down the road that is teeming with HOA's, maybe that is also a place to look for attorney.

I just hope a bunch of people follow this thread. Real time means a lot.

DennisJ (Georgia)
Posts: 17

Posted:

At present the fund is totally controlled by the developer. One advantage is that he is quite old and not well. He has expressed an interest in getting this done yet is not prone to spending the money to finish the roads to county specs. I think all the other issues with him and the covenant control will come in place easier than the roads. Not easy, but easier than the roads.

Baldy

MaryA1 (Arizona)
Posts: 7,043

Posted:

Dennis,

I don't understand why you keep saying the members will have to form the HOA when you have indicated that the developer registered the HOA with the state. Do you understand that the members do not have to be in control for there to be an HOA? Actually, the proper procedure is for the developer (declarant) to form the HOA and appoint a BOD to manage it. When a certain % of the lots have been sold, as outlined in the CCRs, transition occurs. At that time a meeting of the members takes place to elect a BOD comprised of members only. The developer is no longer in control although he may still own a few lots that are under construction. The HOA should be in place at the time the first lot is sold and assessments are usually collected starting with the first home to be sold.

Monies collected from the members (assessments) are not put into an escrow account but rather into a checking account to be used to pay the expenses of running the HOA. If the $200 fee collected at closing is being put into escrow that leads me to believe it is what some call a "preservation" fee -- monies put into a reserve fund for future maint of capital assets. If this is the case, then the developer is using his corp funds to run the assn since you say assessments are not being collected. I find this very unusual. Some CCRs do require the developer to make up any shortfalls, but I've never heard of a requirement for him to pay all the costs while in control. Perhaps you can enlighten us on what your CCRs say about assessments and this $200 fee.

DennisJ (Georgia)
Posts: 17

Posted:

Here is our confusion. Our attorney (good,bad or otherwise)went ahead and registered us with the state under a name other than that called out in the covenants. Now we are looking for another attorney to advise us if we are OK with that or what the covenants actually require inder our state laws governing Covenants and/or Home Owners Associations. If I take this liteally as written our other attorney should not have created a new HOA and name. Yet, he was the attorney and acted accordingly (I suspect without ever reading the covenants we gave him!)Here is the section of the covenants (HOA Name deleted) that covers forming the Assn. and the fees. See below:

I really think we cannot make any decisions until a good experienced HOA attorney takes a careful look at ALL the covenants. That is why we are re-grouping.

Thank you for all htis great input and consideration. In return I will keep everybody updated on the attornety findings (ad -nauseaum).

HOMEOWNERS ASSOCIATION REQUIREMENTS
22. All grantees/vendees, upon The conveyance by deed of their respective lots or execution of their land contracts, shall automatically become members of an ad hoc non-profit general partnership, to be known as the XXXXXXXXXX Owners Association and XXXXXXXXXXX Owners Association (hereinafter, the “Association”), and shall remain so for as long as they are the owner or purchaser of a lot within the Subdivision. The Association shall exist for the exclusive and limited purpose of managing, maintaining, and administering all matter pertaining to the common interests, expenses, and obligations of the grantees/vendees as owners and purchasers of lots within the subdivision, including enforcement of the above covenants and restrictions, maintenance of any common entrance area after it is conveyed by the Owner to the Association, and eventual succession to the administrative responsibilities of the Owner hereunder (as described in Section 24- below).
a. From and after the formation of the XXXXXXXXX Owners Association it shall have responsibility for the enforcement of these covenants and restrictions for both XXXXXXX and XXXXXXXXX so far as they benefit grantee/vendees and — after any initial construction by Owner of any common entrance and conveyance of the same to the Association --it shall have responsibility for the continued maintenance (the continuation of seeding liming, and grassing, mowing), repair and rebuilding of all shoulders and for the general upkeep of other common amenities and pursuit of common neighborhood concerns within the Subdivision (such as planting trees along the roads and right-of-way, removing debris from their any vacant lots within the Subdivision,, weed, pest, and insect control, etc.).
b. Decision-making authority for the Association shall be vested in a Management Committee comprised of an elected President, Vice President, and Secretary/Treasurer. Votes will be comprised of one (1) vote for one (1) authorized representative for each of the lots that has been conveyed by deed or contract. Like-wise the owner shall be entitled to two (2) votes for each lot owned by the owner/developer as shown on any current recorded subdivision plat or plats.
c. The Management Committee shall meet at least once a year or more often upon written notice from any member. A quorum shall consist of 50% representation of all the members of the Committee. All decisions as to necessary expenses for any maintenance, repair and rebuilding of any common entrance to XXXXXXXXXXX the roads, and rights-of-way, etc. and the enforcement of the grantees/vendees’ interest under these covenants and restrictions (including the cost of abating any violation of these covenants and restrictions and attorneys fees) shall be made by a majority vote of the quorum of the Management Committee: and by a like vote the Management Committee shall have the right to levy equal assessments against the respective grantees/vendees in the amount deemed necessary to cover the cost of any such necessary expenses, but not to exceed more than ONE HUNDRED AND TWENTY ($120.00)dollars a year per lot unless such an assessment is ratified by a vote of at least fifty one percent (51%) of the actual membership of association. The association dues will begin with a two hundred dollar ($200.00) origination fee plus their pro-rata share of the one hundred and twenty (S 120.00) association dues at the time of original closing for each home in Pine Ridge end Pine Branch and ‘Will be added to the closing cost and be payable to XXXXXXXXXXX association and deposited into their specific account. The home owners will be responsible for diligently paying each year’s association dues at the end of each fiscal quarter (fiscal year will be January to December).

Baldy

GlenL (Ohio)
Posts: 5,491

Posted:

In the immortal words of Fuji the houseboy (McHale's Navy 1962): Oy Vey.

Studies show that 5 out of 4 people have problems with fractions

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Dennis,
I can't wait till you get your new lawyer to look at this. I have no idea what he has done and I don't know if he registered this with the state and please if you can find out what a "ad hoc non profit general partner is," be sure and post here.

As you know better than I you all are just spinning your wheels until you get back on track, good time to get all your records filed and correct for what comes next. I admire all of you for getting together and making a sincere effort to do what is right and protect EVERYONE.

I am still shaking my head about this post.........I have no idea what this means but I have a sneaking suspecion the answer is not much. You all created it, you all can get rid of it.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By RobertR1 on 04/30/2010 12:34 PM

I am still shaking my head about this post.........I have no idea what this means but I have a sneaking suspecion the answer is not much. You all created it, you all can get rid of it.

There's probably nothing wrong with their creating a non-profit "association," but if the developer had already created it (which it sounds like he did in the DBA comment) then the "association" that the members created is not bound by the covenants, but it's just a common non-profit organization.

They would have no powers, it would seem to me, over any of the covenants, other than what they are individually granted through the covenants as members of the association (created by the developer).

So it would appear, and I could be wrong, that you have two parallel entities, with only one, the one created by the developer, binding in the covenants.

You might as well consider the second HOA a sort of "social" organization. It would not have any powers, again, outside of what individual members are granted.

DennisJ (Georgia)
Posts: 17

Posted:

Unfortunately I agree with MicheleD about our newly created association. The developer created the covenants and named the Association. Our ??Lawyer?? seems to have ingnored that and created a duplicate worthless one. The Covenants are the controlling documents and controlled by the developer unless we can get a waiver of his rights to do so. The entire document is written as the sample I posted and totally skewed to the developers control.

More to come.

Baldy

MaryA1 (Arizona)
Posts: 7,043

Posted:

Dennis,

The excerpt from your CCRs that you posted does not contain anything unusual. I don't see where it is "skewed" to the developer's benefit.

I thought you had said the developer formed an HOA, but now I see you said he registered the HOA with the state. I presume you mean he filed an annual report which is normally required by all states. This report lists the names of the members of the board of directors and names the assn's statutory agent. There may be a nominal fee; in AZ it's only $10 for a nonprofit corp. But, this report does not have to be filed until a corp is formed so I guess that's where the confusion came from. Can you let us know exactly what it means when you say "our attorney went ahead and registered us with the state". Does this mean a nonprofit corp was formed, or does it mean something else?

Note that subsection c of the excerpt you posted states that a yearly assessment, not to exceed $120 shall be levied upon each lot. A pro-rated share should have been charged at closing and the developer should have been collecting this assessment each year. For example, considering the fiscal year of the HOA is to be the calendar year, if you closed on your home on July 1, you should have been charged $60 for that year's assessments, plus the origination fee of $200. Are you sure a pro-rated share wasn't charged at closing together with the one-time $200 origination fee? How long has the builder been building -- more than one year?

DennisJ (Georgia)
Posts: 17

Posted:

The developer as far as I can determine has not filed an annual report for the HOA with the state or set up the HOA as a non-profit corp. I have tried to search the state records and find no record using the name he has stated in the covenants. My guess is he never incorporated! This needs more investigation. Our attorney did set us up as non-profit corp.with the state but did nothing else.

I can't specifically say how each closing was administered. I can say that in my closing the origination fee of $200 was collected and no proration was done of the dues. The developer has never collected any additional fees and this subdivision has been in existance for about 4 years now. That means he has not collected any annual dues since the first house was sold. I also know from the original amount he told us he had in the HOA account that he has not spent much if anything out of that account except for our recent attorney fees. (Waste of money there!)

Lots of good questions and confusion around my use of terms to define things. Remember, if I were an expert at this I wouldn't be in this mess. I use the best terms I can think of, sorry for any confusion.

I am interviewing a new attorney next Wednesday and hope I find this one to be a good one. He was highly recommended by a president of a nearby subdivision HOA that also is the president of a large land development company here. Here is hoping we find a winner and he can sort out the mess from our original guy!

Thanks

Baldy

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Michele,
I hope you didn't think I am suggesting there was anything WRONG with creating it. I confessed I didn't know what it was. I still would like to know about that ad hoc partnership. All I suggested that I could not see the worth of it. but don't worry about it, they created it they could dissolve it.

Who registered what in the state is still in doubt. Did the developer register the corporation and have a license issued by the state, is that necessary in that state. Have all the documents that were filed originally in the courthouse been discovered and were any amendments made, by whom, when, ???? Is there anything about this ad hoc corporation binding, and is it registered as a corporation and what are the assets. I have no idea, it seems to be cloudy on all fronts. What's the developers reaction to all this. if any?

I think they understand this is complicated, they seem to be well represented with some homeowner concern, I want to give them a chance to get this all back on the track. Just my opinion and think they are doing a pretty good job. Not that my opinions counts, their opinion and actions counts.

DennisJ (Georgia)
Posts: 17

Posted:

One more thing, the two votes for the developer to our one is skewed in his favor. I did not print the whole covenants but there are several articles where he supercedes the HOA BOD and has final decision making authority. Including giving waivers to covenants to individual residents. He has basically structured the covenants to use the BOD as an administrative support function with little authority and lots of responsibility. When we did due diligence on other projects he has done we found this to be a real problem with the residents. We found a real string of unethical issues. That was what raised our antennas to begin with. From there on it was one issue after another. He has consistantly lied to us about issues and sent us off on snipe hunts.

His reputation is to wear down residents to a point where they just give in to get it settled. Hopefully it won't happen here. I must admit, there have been times!!!!!!!!!!!!!

Baldy

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By RobertR1 on 04/30/2010 4:51 PM
Michele,
I hope you didn't think I am suggesting there was anything WRONG with creating it. I confessed I didn't know what it was. I still would like to know about that ad hoc partnership. All I suggested that I could not see the worth of it. but don't worry about it, they created it they could dissolve it.

Oh, gosh, not at all. I was just fish-tailing off your comments that it may be a valid non-profit organization, but, as you stated, it really isn't worth much in terms of the administration of the HOA as per the governing documents. And yes, they created it, and can easily dissolve it, if they want to. They may not want to and may want to keep it as a social organization, but it appears likely it will have any authority of function as the "official" HOA per the governing documents.

We are totally on the same page, I think.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By DennisJ on 04/30/2010 4:58 PM
One more thing, the two votes for the developer to our one is skewed in his favor. I did not print the whole covenants but there are several articles where he supercedes the HOA BOD and has final decision making authority. Including giving waivers to covenants to individual residents. He has basically structured the covenants to use the BOD as an administrative support function with little authority and lots of responsibility. When we did due diligence on other projects he has done we found this to be a real problem with the residents. We found a real string of unethical issues. That was what raised our antennas to begin with. From there on it was one issue after another. He has consistantly lied to us about issues and sent us off on snipe hunts.

His reputation is to wear down residents to a point where they just give in to get it settled. Hopefully it won't happen here. I must admit, there have been times!!!!!!!!!!!!!

Dennis, that is completely standard operating procedure for developments and developers. Of COURSE the documents are "skewed" to his favor throughout the build-out of the development. He is the one putting his resources at risk by creating the development to begin with. He has a vested interest to protect his resources throughout the process, and, frankly, that is the way it should be. If it weren't, then it would be extremely rare of developers to develop subdivisions to begin with.

And in many states or localities, the "covenants" are fairly standard and may are boilerplates. Many locales require certain minimum covenants through the zoning office in order for a development to be vetted and approved. Things like the amount of green space, the curb appeal, frontages, etc etc etc.

No, if I were investing huge sums of money into the infrastructure of a subdivision development, I would most certainly skew the control and votes in my favor through the build-out period.

DennisJ (Georgia)
Posts: 17

Posted:

RobertR1

I agree with you and will certainly clarify this with the new attorney. I see no reason to have a "social" club HOA. I am the only one on our team with a corporate contracts background and this is complicated because the developer is such a scoundrel. The ambiguity in the Covenants is overwhelming. See my other recent comments.
Thanks everyone, for your compliments and support.

Baldy

DennisJ (Georgia)
Posts: 17

Posted:

MicheleD,
Yes I understand SOP in the covenants. Don't see much boiler plate here as we have compared these to other subdivision covenants. I guess had he not had such a bad reputation from other projects we wouldn't have had such a critical eye. I also agree with you about the developer's needs to make it worth while and protect his interest. It is to the degree he has taken it that concerns us. That and the fact he has continuously been caught telling us lies about what he has done. In 100% of thoise cases we have followed up and found he did not act. It literally took us three months and tons of negotating with the county to correct a zoning problem that would have cost every resident $250 in fees to correct because he didn't file the paperwork during the development phases. Sure lots of folks should have caught it, but the didn't, we brought it to the surface when we examined the planning commision documents on this project. He said he did it. Yea right! We finally convinced the county to do a one time mass rezoning at no cost, because they didn't catch it. Trust me this is the tip of the ice berg.

Like I said earlier. I could write a book on this mess!

Baldy

MicheleD (Kentucky)
Posts: 4,491

Posted:

Dennis, no doubt your complaints are valid.

But unless your comparing the covenant language to other developments that the developer has completed, the boiler plates can be completely different.

Our own development has 10 phases.

Each phase has its own set of covenants. The HOA is expected to enforce against each phase's documents.

In some cases, the language is very similar (because the developer just copy and pasted from other developments he had in the works over the years), and others are so different, it almost doesn't appear to have come from the same developer!

No, the developer's core business is not writing CC&Rs or bylaws or whatever. He pays sometimes come-and-go attorneys to do that.

But, sure, I can appreciate your concerns and I'm confident that you and some of the other residents are on the right track.

So many developments here in my state and across the river in Indiana have issues as a result of the economy tanking the last 2 years. Some are left with barely started subdivisions that developers just walked away from. And the residents hands are tied because they cannot wrest control of an absentee developer.

It's a mess in some places. We were lucky, I guess.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Corrected this sentence:

And the residents hands are tied because they cannot wrest control FROM* an absentee developer.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Dennis,
Glen and I like to post little truisms, well I do, I didn't ask Glen, but he posts little asides.

After all is said and done, more is said than done.

You are begining to sense this with your position, Lord get me out of this Mess.

When the face to face comes and you sit down to the table all your hard work will give you comfort and confidence. But reality and reason steps in and you are going to end up compromising, (if what we read on this site is an indicator). But at crunch time when you have done your homework you can look the principal in the eye and know, finally you got him. How much you got him depends on how well you all are prepared. But.....all that is great.....you will still end up compromising, maybe you won't want to, but you know you are not acting for you, you will compromise for the association............now, don't you feel noble? Well don't, because then the hard work starts.

DennisJ (Georgia)
Posts: 17

Posted:

Thanks Robert,

Baldy

MaryA1 (Arizona)
Posts: 7,043

Posted:

Dennis,

Your CCRs state each member has one vote and the developer has two votes. This is quite typical, in fact my CCRs give the developer 3 votes. The reason for this is so the developer will have complete control of the HOA while he is building. Once the % is reached for turnover he will no longer have the majority vote. This is for his protection while he is building the s/d.

As I said earlier, I'm really dumbfounded as to why he hasn't charged any assessments during the 4 years and hasn't even used any of the origination fees collected, except to pay for your attorney. Frankly, I'm surprised he even did that! Perhaps it has something to do with the fact that he hasn't bothered to establish an HOA -- since you now clarify that he hasn't formed a corp. IMO, the members have no authority to form an HOA as long as the developer is still in control. Of course, I'm not an attorney and could be wrong about this. All I can say is that some developers certainly do cause problems for the people who buy their homes. Hopefully your new attorney can give you some good guidance.

BTW, I sure hope he builds a quality house!!

DennisJ (Georgia)
Posts: 17

Posted:

Fortunately the developer is not the builder. There were two builders who had exclusive rights to build here. Both were excellent builders. This is a rural subdivision of modest homes with a minimum lot sise of 1.5 acres. The reason I bought there is for a retirement home. I have had 4 prior new homes built and have a background in construction as a construction buyer for a large corporation. These are really well built homes and the quality of workmanship is excellent along with a modest price. If not for the lousy developer there would be little to worry about.

Baldy

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