Purchase of Neighboring Foreclosed Property

Our Association is comtemplating purchasing neighboring property which is currently being foreclosed on. We are a lakeshore community and this property would double the amount of lakeshore we currently have, plus we could convert one of the structures into a clubhouse. However, our association is small (18 units) and many of our owners are upset that they may be assessed around $10,000 just for the purchase. This does not include additional taxes, legal fees, tearing off the cabin and converting the existing garage into a clubhouse. So, $10,000 would probably be just the start of it. At this point our President is pushing this issue to happen and tonight she is calling a Board Meeting to ask for approval to enter into a purchase agreement on the property with a contingency that the association be 67% in favor of the purchase. After that, we would have to have a ballot vote for this to pass. My concern is for the people who are strongly opposed to this project. Several say they do not have the money to move ahead. Can they be forced to enter into this if the majority passes it?

I have been told by several real estate experts that the purchase will not increase value. What they list our unit at today would be the same after the purchase.

My other concern is the President and another neighbor have been "politicking". They have been contacting members encouraging a "yes" vote and have not been presenting all the facts. Should the President be involved in this type of activity?

I am the Board Secretary and am being faced with a meeting tonight. Would I be off-base to suggest that the vote happen before possibly wasting time by entering into an agreement? What is my personal liability if they ask me to sign the PA?

Advice appreciated.

Marti,

Has the BOD researched the CCRs to determine if they have the authority to annex other properties to the declaration? My CCRs only give this authority to the Declarant or "others he has permitted to add land thereto". The article is titled "Subjecting additional lands to the declaration".

Something else you may not have thought of....... Your neighbors on the lake, the abutters, could rally against you changing the home into a clubhouse and persuade the town to vote down your zoning or use change. Now what?

We did something similar about 10 years ago. Our swimming pool was formed as a separate entity which supported itself with membership fees, rental fees and miscellaneous minor items. By the mid-'90s, it had fallen on hard times. Membership had declined and the other revenue was insufficient to continue operations. We amended our Declaration to provide the pool with a subsidy funded by assessments. I was president at the time and our former president sued me and the rest of the Board to stop the subsidy. The trial court found against the plaintiff so he appealed. The appeals court found against him, too. Total costs were over $55,000. Luckily our D & O insurance covered it but our deductible doubled and the annual premium increased by about 20%.

Thank you all for your excellent advice. As I am the Secretary I made sure to record my opposing vote. The outcome of our meeting was that I and our Association President have been authorized to enter into a Purchase Agreement on the property with a contingency that 67% of the members must vote in favor of purchase if our offer is accepted. After talking with an Attorney friend, I was advised Not to sign the PA. I plan to assist the President with the documents but that is it. It is unfortunate that 3 of our 5 board members refuse to see that the majority of the association is against this project. It seems a waste of time to go through the process when it will most likely get voted down. However, I can't help but think there may be some planning going on privately - such as paying members shares in order for a yes vote.....