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RobynO (Michigan)
Posts: 2
Posted:
Per our bylaws/master deed, we have reached the point in our subdivision where the Developer should hold the "initial meeting" for the Home Owners Association and the residents should elect a Board of Directors. Having dealt with the developer for a number of years, we have no reason to believe this will happen as prescribed by the documents. Our question relates to what happens now? Does the association automatically become ours based on the documents? Or is there something we could/should do to make it happen?

Mixed in with trying to figure this out is question of whether we want to take over the association. We do understand that without it, the residents have no recourse for other co-owners "breaking" the association rules, but the bigger threat as perceived by my neighbors is that the Developer change specifications on the unsold lots unless we control the Association. Having read his documents, I have my doubts ownership of the HOA would make any difference there one way or the other. In addition to the standard "unilateral amendments by developer" as long as it doesn't "materially alter the rights of any co-owner" language - there is also a clause that states:
"The Developer may also make a material amendment unilaterally without the consent of any Co-owner or mortgagee for the specific purposes reserved to the Developer in this Master Deed. Until the completion of sale of all Units as described in Article 1.0, such rights reserved may not be further amended except with written consent from the Developer or its successors or assigns."

I'm not a lawyer and I may not understand all the nuances (or if there are legal limitations to this claim)- but to read this, it appears that he can do anything he wants until the sub is complete regardless what we do. Am I correct on that or not?

My neighbors further seem to think we could stop any changes after we are notified as residents that the Developer wants to change the Master Deed. But it sounds to me like, provided the changes are within the city ordinances, we'll have very little recourse. Or am I interpreting that incorrectly?

Any guidance would be greatly appreciated.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Robyn,

While the assn is under the control of the declarant, he has the majority vote on issues voted on by the membership and also the majority board vote because he most likely has appointed friends, relatives, business assoc that vote the way he wants them to. This all changes when transition occurs. But it doesn't change merely because the members are taking over control of the assn, it changes because the number of votes the declarant has changes. Usually the declarant has more than one vote per unsold lot. As transition nears, the number of unsold lots diminishes and so does the declarants control. Transition occurs when the declarant's votes are no greater than a majority of the homeowners' votes. Therefore even if the declarant does not turn over control to the members when he should, he should not have sufficient votes to amend the gov docs w/o a vote of the members. So, if that's your only problem with him not transitioning when he should, don't worry as it shouldn't be a problem. For more info check out the article in the CCRs on membership. Class A and Class B membership should be defined and also defined should be when transition takes place.
GlenL (Ohio)
Posts: 5,491
Posted:
Robyn, I would suggest you visit:http://www.communityassociations.net/hoatalk_welcome.html and look at transitions under the Development tab for some valuable guides for transitioning. As to what the Declarant can do after transition is a question for the HOA's attorney to answer.

Studies show that 5 out of 4 people have problems with fractions
MargoT (Georgia)
Posts: 80
Posted:
We are at the transition phase; please explain Class A and Class B membership to be defined. I would appreciate your response.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Margo,

Most assn CCRs define membership as Class A and Class B and also state the number of votes each class has. Class A are the members who have 1 vote for each property owned. Class B is the declarant who usually has more than 1 vote for each unsold lot. My CCRs give the declarant 3 votes. The reason he has more than one vote is to ensure that he will have the majority votes until transition occurs. After transition the declarant will have only 1 vote for each unsold lot. All of this should be outlined under the article titled "Association Membership; Voting Rights" (or something to that effect) in your CCRs.

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