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RonaldB5 (Arizona)
Posts: 4
Posted:
Our small (< 100) SFR HOA has homes built on 51% of the Lots. The Board fears the economy is pressuring builders who own lots with the intention of building and reselling to target the minimums allowed (e.g., sq footage) in our CC&R's & supplemental Arc Rules and to use the least expensive interpretation they can where the rules aren't real specific. Any experience/opinions about the Board's probable success in expanding/tightening the house quality requirements for the remainder of the Lots (already sold)? Understand any changes that conflict with the Arc rules built into the CC&R's would require following the process for CC&R amendment, but think we have authority to tighten those rules with supplemental ARC Rules as well as add new requirements through expansion of those same supplemental ARC Rules. The existing houses are scattered throughout the community plat so creating a Phase II with its own CC&R's doesn't seem a logical option even if it were legal (builders/investors/future home owners bought the remaining 25 lots under the exisiting CC&R's). Biggest concern is whether we could enforce the expanded (typically more expensive) minimum requirements where the applicant for house design approval can point to precedents in the community that had been built under the original CC&R's and wouldn't meet the new Rules (for example, we would want the new rules to require enclosed soffits but there are several built with open soffits (soffits weren't addressed in the orignal rules and they slipped through the Developer dominated design review committee at that time.
SusanW1 (Michigan)
Posts: 5,202
Posted:
I'd be PO'ed if the board passed some 'rules' that changed/tightened just MY home, not all previously built homes. I'd be looking for all other homes, new and old, to have to make changes, too.

Passing a CCR is another thing. What is the voting threshold for amending your CCRs?

MaryA1 (Arizona)
Posts: 7,043
Posted:
Ronald,

IMO, it would depend upon what is written in the CCRs regarding the architectural committee. My CCRs give the A/C the authority ". . .adopt, amend and repeal rules (the "Architectura Rules"), which shall serve as guidelines to be used when rendering their decisions. If a particular guideline is changed, such as for soffits, those homes already built with open soffits could be grandfathered and the new rule would only apply to subsequent homes being built.

But, if the HOA is only 51% built, does that mean the declarant is still in control? If so, then he most likely still has the majority vote of the board and can do as he wishes. Also, don't the builders who own the unimproved lots have to abide by the A/C guidelines? There shouldn't be any worry that they will build inferior homes.
RonaldB5 (Arizona)
Posts: 4
Posted:
The voting threshold for changing CC&R's is 2/3's approval. Much easier to change/add/delete Arc Rules that the CC&R's allow the Arc Committee to promulgate on its own as long as they are not in conflict with the CC&R's. The developer has sold all but one of the Lots and 51% of the total number of Lots have houses built on them. The HOA has transitioned to home owner control. My biggest concern is that a vacant Lot Owner would challenge additional Arc Rules that make it more expensive for the Lot owner to build a compliant house than it would have cost had they built when they first bought the Lot. The soffit example is but one of many contemplated expanded rules some of which would reflect much greater cost impacts (e.g., garage doors cannot face the street, exterior house walls can run horizontally for no more than 30 feet without an indent or outcrop, second floors should be offset from the vertical plane of the first floor walls by at least 2 feet). Many of the current houses would not be compliant with the new rules, but the expectation is that they would be granfathered. Is anyone familiar with any such situations and what success the HOA had in enforcing the expanded rules on just the homes built after the expanded rules were adopted?

MicheleD (Kentucky)
Posts: 4,491
Posted:
Ronald, I am not understanding your problem. Perhaps I have missed something, which is highly likely.

Your documents already have minimum standard requirements.

They are what they are.

They also are what they were when you moved in, so you and all the other residents were completely aware of the minimum standards.

The minimum standards allow homes to be built to no less than those standards.

What it appears to me that you are trying to do is to subvert allowing those minimum standards to apply.

I don't know how your ACC can, at this point, restrict build outs that are more restrictive than what was originally intended for your development.

I would find it highly unlikely that any HOA can do that and enforce "expanded" rules on just the homes after the expanded rules were "adopted" since they are not actual AMENDMENTS to the governing documents that run with the land.

And, again, I don't know why your group even wants to do that.

If you wanted to live in a higher-standard neighborhood, frankly, you should have bought into that higher-standard neighborhood years ago.

DanielH1 (California)
Posts: 482
Posted:
I think that you CAN enforce the expanded (typically more expensive) minimum requirements. If the developer did not agree, it would be up to them to convince the Board otherwise, vote in a new Board or sue, just like any other homeowner.

Architectural requirements can change over time. If the change was done by the right kind of voting, it applies to new ARC requests and DOES NOT "disapprove" previously approved ARC requests (or the original construction). That's the whole reason that you have these processes.

The existing construction with lower standards might provide the developer with some ammo in a legal fight but the burden of winning a legal fight is on him, not the HOA. If the HOA legitimately voted in changes, the developer must comply.
MicheleD (Kentucky)
Posts: 4,491
Posted:
That's my point, Daniel.

The changes cannot be made just at the ACC level.

IF the covenants have specific minimum standards, they can be used regardless of how the ACC feels about it

To make the minimum standards "higher," they would need to do that through a AMENDMENT change in the documents, and that would require a prescribed percentage of votes of all members eligible to vote, per their documents.

The ACC cannot create standards that are in conflict with the CC&Rs.

At least not until such time as an amendment, properly presented and voted on, is approved by the membership.
DanielH1 (California)
Posts: 482
Posted:
Since you say that the the existing CC&R's and rules aren't real specific, the ACC, not the developer, get to do the interpretation. The ACC can reject applications that don't suit its interpretation, regardless of what the developer believes.

You seem to understand that certain cases may require amending the CC&Rs and you are fine with that. In other cases, as a practical matter, the ACC can probably pretty much do what you intend. If the Board and the ACC generally agree to tighten the soffit rules and there are no existing conflicts, the developer has to comply, even if previous developers didn't. So, yes, you can "upscale" your neighborhood by making new construction conform to requirements that didn't exist for previous construction.
MicheleD (Kentucky)
Posts: 4,491
Posted:
But the he did say that certain things that already exist are specific. It's those as well that he wants to "upgrade."

He wants to prevent the new builders from building to the MINIMUM specs that are already in the covenants.

At least that's how I've understood what he's been saying.

He can make changes in certain areas, but those that are already listed as specific MINIMUMS in the CC&Rs the ACC can't touch, at least until they make the appropriate and legal amendments.
RonaldB5 (Arizona)
Posts: 4
Posted:
Thanks to all for your comments. Let me try to be more clear. Developer began selling Lots in 2005 for around 180K to 210K. Buyers included those who intended to build right away, those who intended to build later (e.g., after retirement), investors who hoped to flip the Lots, some builders who built spec homes, and some builders who hoped to build for a to-be-acquired custom home buyer. Those who built in 2005, 2006, and early 2007 built higher end homes (Lot and house combos running in the 450K - 750K range) that typically exceeded the minimums in the CC&R's. When the real estate market and economy collapsed, many of the builders and investors sold off their vacant Lots at big losses or let them go back to the banks. Those who then bought the now bargain priced Lots wanted to put up minimalist houses on them so they could sell the lot and house combo's at prices that still had an active RE market (250K - 350K) while making a nice profit at the same time. We are trying to add ARC Rules that don't conflict with the CC&R embedded rules so that at least if the builder puts up a minimum sq footage house as defined in the CC&R's, the house will still impress people driving through the community as being of high quality. My question to you all is if you think someone who bought a Lot before the Arc Rules were expanded could successfully challenge those expansions as being applicable to him or her because they were counting on being able to build to the the lesser requirements that existed when they bought? Thanks again for your thoughts and experiences. P.S., the now home owner controlled Board and Arc committee were not in force when the minimalist houses were approved by the then in control developer who was also wanting to sell the few Lots they still owned.
MicheleD (Kentucky)
Posts: 4,491
Posted:
Ronald, if you are taking anything away from this conversation it is this: What the ACC can affect (and change), as long as it has that authority in the documents, it can. What it cannot affect (or change) without a homeowner vote on an amendment, it should not.

Whatever changes are made, through the ACC rules (IF it has the authority to make those changes) or through the amendments, then the only homes for which those changes can be enforced are the new homes being built and not the already built homes.

Anything constructed prior to the changes should be grandfathered.

That doesn't mean people who have empty lots now won't get mad when/if ACC changes are made. They likely will. But since they agreed to the controlling documents when they purchased their lots, and the controlling documents have an avenue for changes, they likely have no legal complaint -- again, as long as those changes are made properly.

I find it highly suspect, however, that things like minimum square footage of the home is not in the CC&Rs and instead is left to the ACC to make a call on.

We have 10 separate "phases" of our development. Each one has its own set of CC&Rs. While MOST of the specific covenants are similar or the same, things like minimum square footage, minimum size of attached garage, etc, ARE in the CC&Rs. So, for example, while most of our phases require an attached 2-car garage, one section requires only an attached 1-car garage. Whether our ACC would like to change that or not doesn't matter. It's in the covenants, so to increase the minimum in that section to a 2-car garage, we would need to do it through an amendment and cannot do it through an ACC rule or guideline.

RonaldB5 (Arizona)
Posts: 4
Posted:
Thanks, Michele. That's a pretty clear analysis you wrote. I hadn't thought about the fact that the Lot buyers agreed to the CC&R rules that allow the Arc Committee to promulgate Arc Rules (not in conflict with CC&R's) without community approval. P.S., I guess I need to take a remedial course in clear writing. The minimum square footage is in the CC&R's and I doubt we would be successful getting 2/3 of Lot owners to agree to increasing it (too many builders/investors own vacant lots). We would just be adding rules that are more detailed and quality of design/construction focused. Again, nothing that conflicts with rules in the CC&R's. Thanks again.

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