Our subdivision developer was foreclosed on 54 lots....is the Bank now responsible?

Started by DannyL1 • 8 replies • 2210 views

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DannyL1 (Georgia)
Posts: 5

Posted:

Recently, our developer was foreclosed on....approx 54 lots. A local Bank now owns the lots. We are meeting with them tomorrow to discuss their responsibilities?

I have read through the Homeowners Association Decalarations that were filed and recorded in 2007, and they state very clearly that the "successor", which is the Bank, takes over all responsiblities that the developer once had. I am not really sure that the Bank is going to agree with us...that they are now responsible?

We have approx 20 homes completed in our approx 85 home subdivision. We of course never formed an HOA, because the developer was still developing and our subdv is very new. In the declarations, it states that the developer is a "Class B" member of the Homeowners Association and the only real voting member....so he can make all of the decisions. The homeowners are "Class A" members and can only vote on specified items in the declaration.

It states clearly that if the successors do not want to truly be the successors, then in writing, they can sign over the responsiblities for the homeowners to form an HOA. Our present HOA assessments are $500 per year per lot....so if the Bank allows us to form an HOA, then it states clearly that the Bank then becomes "Class A" members just like the other homeowners....they will then be immediately responsible for paying $500 per lot x 54 lots. I do not think that they will agree with this, but everything that I have read shows that this document is in force and states the above.

We are only looking for the Bank to take care of the swimming pool areas, front entrance, insurance etc....we are paying approximately $10,000 per year in assessments....so the Bank will probably only have to pay out a small amount of additional $......so......

Can anyone help with good information before I start listing my questions for the meeting tomorrow?

Thanks

Danny

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

I'm seeing this more and more lately. What a crappy situation. Check other posts.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Danny:

I sure do wish I had some good information for you.

I hate to see this sort of thing happening, but, as was mentioned, it seems to be occurring more and more these days.

I agree that the bank will not want to become responsible for the $500/lot assessments.

It's likely they will retain their "successorship" and attempt to sell the lots to another builder or developer to complete the project.

At least you can hope that is what they will do!

Please keep us posted -- I'm very interested in how this turns out.

DannyL1 (Georgia)
Posts: 5

Posted:

Quote:

Posted By DannyL1 on 05/20/2010 11:50 AM
Recently, our developer was foreclosed on....approx 54 lots. A local Bank now owns the lots.

I have read through the Homeowners Association Decalarations that were filed and recorded in 2007, and they state very clearly that the "successor", which is the Bank, takes over all responsiblities that the developer once had. I am not really sure that the Bank is going to agree with us...that they are now responsible?

We have approx 20 homes completed in our approx 85 home subdivision. We of course never formed an HOA, because the developer was still developing and our subdv is very new. In the declarations, it states that the developer is a "Class B" member of the Homeowners Association and the only real voting member....so he can make all of the decisions. The homeowners are "Class A" members and can only vote on specified items in the declaration.

It states clearly that if the successors do not want to truly be the successors, then in writing, they can sign over the responsiblities for the homeowners to form an HOA. Our present HOA assessments are $500 per year per lot....so if the Bank allows us to form an HOA, then it states clearly that the Bank then becomes "Class A" members just like the other homeowners....they will then be immediately responsible for paying $500 per lot x 54 lots. I do not think that they will agree with this, but everything that I have read shows that this document is in force and states the above.

We are only looking for the Bank to take care of the swimming pool areas, front entrance, insurance etc....we are paying approximately $10,000 per year in assessments....so the Bank will probably only have to pay out a small amount of additional $......so......

Special note.....We met with the Bank and the President would not budge....he said that the responsibility was entirely ours but they would help out if forming an HOA. He further stated that they would not be paying any assessments on their lots and that they would remain a class B member!!

He further stated that his lawyer would be looking into what is stated on the declarations.

Can anyone help with good information
Thanks

Danny

DannyL1 (Georgia)
Posts: 5

Posted:

Quote:

Posted By DannyL1 on 05/23/2010 9:27 PM

Posted By DannyL1 on 05/20/2010 11:50 AM
Recently, our developer was foreclosed on....approx 54 lots. A local Bank now owns the lots.

I have read through the Homeowners Association Decalarations that were filed and recorded in 2007, and they state very clearly that the "successor", which is the Bank, takes over all responsiblities that the developer once had. I am not really sure that the Bank is going to agree with us...that they are now responsible?

We have approx 20 homes completed in our approx 85 home subdivision. We of course never formed an HOA, because the developer was still developing and our subdv is very new. In the declarations, it states that the developer is a "Class B" member of the Homeowners Association and the only real voting member....so he can make all of the decisions. The homeowners are "Class A" members and can only vote on specified items in the declaration.

It states clearly that if the successors do not want to truly be the successors, then in writing, they can sign over the responsiblities for the homeowners to form an HOA. Our present HOA assessments are $500 per year per lot....so if the Bank allows us to form an HOA, then it states clearly that the Bank then becomes "Class A" members just like the other homeowners....they will then be immediately responsible for paying $500 per lot x 54 lots. I do not think that they will agree with this, but everything that I have read shows that this document is in force and states the above.

We are only looking for the Bank to take care of the swimming pool areas, front entrance, insurance etc....we are paying approximately $10,000 per year in assessments....so the Bank will probably only have to pay out a small amount of additional $......so......

Special note.....We met with the Bank and the President would not budge....he said that the responsibility was entirely ours but they would help out in forming an HOA. He further stated that they would not be paying any assessments on their lots and that they would remain a class B member!!

He further stated that his lawyer would be looking into what is stated on the declarations.

Can anyone help with good information
Thanks

Danny

DannyL1 (Georgia)
Posts: 5

Posted:

DannyL1 (Georgia)
Posts: 5

Posted:

Quote:

Posted By DannyL1 on 05/23/2010 9:27 PM

Posted By DannyL1 on 05/20/2010 11:50 AM

GlenL (Ohio)
Posts: 5,491

Posted:

Danny have you checked with the Secretary of States office to see if the HOA exists? The corporation that is the HOA is usually formed at the inception of the project but under the Declarants control until turnover. The 20 of you need to pony up some cash and hire an attorney to represent your rights to the bank. I can't think of a bigger disaster than 20 different people trying to represent everyone's interests. Lastly don't forget about your local officials, either City Council or County Commissioners whichever controls, they work for you and most importantly will want your vote come election time. The phrase, "A squeaky wheel gets the grease", is around for a reason.

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

MaryA1 (Arizona)
Posts: 7,043

Posted:

Danny,

If there is no HOA as you say, then who do you make out your assessment check to? Don't your CCRs refer to a board of directors and to the association? If so, then that means an HOA should be in place. As Glen stated, the HOA should be formed by the declarant. In AZ this is done before any homes are even built. Georgia must be another state that does not have an agency to oversee developers. In AZ it is the Dept of Real Estate and they require a public report. If the public report indicates there will be an HOA then the declarant is resp. for the inc of the HOA as a nonprofit corp. This all done before the public report is filed. The public report also contains pertinent info about the HOA and must be given to each purchaser before they sign the contract to purchase.

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