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Subject: Bankrupt Developer - Receiver Run HOA - PLEASE HELP!!!

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KevinK8
(Ohio)

Posts:3

10/06/2008 12:21 PM
I have some questions and need some assistance or opinions. I live in a nice subdivision in Ohio and the developer has gone bankrupt about a year ago. The development is under management by a court appointed receiver because of this. From my understanding the development is not foreclosed. Currently the HOA is run by the bank / receiver since the development is far from completion. The receiver unfortunately is lacking in his responsibilities in managing the development. Basically we assume the receiver has authority. However he has limited funds to operate and greatly lacks integrity. In addition dues are not being collected or deed restrictions enforced. We have tried to push the receiver with limited results. The homeowners tried to take control of the HOA however without success. This was due to the bank / receiver having the majority vote based on owned lots. (The voting rights of the receiver seems to possibility be in question.) The majority of homeowners want to maintain the development and invest in it however we don't have the authority. The receiver has the authority however lacks the interest. Quite frustrating. One of the largest issues is the undeveloped bank owned and builder owned empty lots. They are not being mowed which makes the development look quite shaggy. The homeowners would like to gain control of the HOA to maintain our neighborhood. What can we do?? Any assistance would be greatly appreciated. I can definitely elaborate if needed. Thank you in advance!!

MaryA1
(Arizona)

Posts:2489

10/06/2008 12:25 PM
Kevin, I would recommend getting an attorney. The members may have to go to court to seek receivership and proceed to form an HOA (if it hasn't already been formed) and go from there. The attorney should be able to tell you what effect the bank and developer owned lots will have on the assn -- how many votes they would have, etc.

SusanW1
(Michigan)

Posts:2316

10/06/2008 1:18 PM
Petition the court to appoint a different receiver. This one sounds like he/she does not know HOA dynamics.

KevinK8
(Ohio)

Posts:3

10/06/2008 1:42 PM
Thanks for the response. How would we seek receivership? An attorney has been involved. However we are at the point where a group of us are basically out of money fighting this. The HOA was never officially formed since the subdivision never met the completion criteria where the developer would hand the HOA over. It was recommended that we proceed to form the HOA by a majority vote and to adopt the bylaws, elect officers etc. The formation of the HOA was voted down. This was due mostly because the receiver / bank owns over 50% of the lots. We just don't know what authority we have or the receiver and the bank has. This is my understanding of the situation so far. I can get with some info from the other homeowners to clarify this more.

SusanW1
(Michigan)

Posts:2316

10/06/2008 1:51 PM
Kevin - this is getting confusing. If I understand your post: 1) The property is ALREADY under receivership.(court ordered) So YOU do not have any rights or power right now. 2) The homeowners are having difficulty dealing with this particular appointed receivership agent. I am suggesting that you go back to the court that appointed the receivership agent and ask for a NEW one, since things are out of control and he/she is not working with the homeowners. But don't be surprised if the judge says to just work it out.

SusanW1
(Michigan)

Posts:2316

10/06/2008 1:51 PM
George, where are you???

GeorgerwilliamsW
(Indiana)

Posts:768

10/06/2008 2:33 PM
I think Mary has this covered. There is nothing I can add to her recommendations. Let me just restate what she has posted: You need a bankruptcy attorney to represent you to file a request for for the court to direct the receiver to do what you need to have done. In particular turn the association over to the homeowners.

KevinK8
(Ohio)

Posts:3

10/06/2008 5:30 PM
Thanks for all the suggestions. We will give that a try.

KirkW1
(Texas)

Posts:1190

10/07/2008 8:04 PM
I would add something here that hasn't been mentioned. Everyone in the neighborhood has authority to enforce the covenants. While it is true that you can't fine people, you can file actions in a court to enforce covenants. I would recommend that you start a voluntary association while you try to get the HOA up and running. Getting a lawyer costs money. The voluntary association can help with sharing the cost of such. It always amazes me that number of people who assume that others don't want the covenants enforced. In talking with many of my neighbors I believe that most people in my neighborhood do want them enforced. They don't want insane enforcement, but they do want enforcement to keep the place looking good.

MaryA1
(Arizona)

Posts:2489

10/08/2008 9:21 AM
Posted By KirkW1 on 10/07/2008 8:04 PM I would add something here that hasn't been mentioned. Everyone in the neighborhood has authority to enforce the covenants. While it is true that you can't fine people, you can file actions in a court to enforce covenants. I would recommend that you start a voluntary association while you try to get the HOA up and running. Getting a lawyer costs money. The voluntary association can help with sharing the cost of such. It always amazes me that number of people who assume that others don't want the covenants enforced. In talking with many of my neighbors I believe that most people in my neighborhood do want them enforced. They don't want insane enforcement, but they do want enforcement to keep the place looking good. Kirk, I don't know that a voluntary assn would have any legal standing if a mandatory assn has already been formed. Also, suggesting the members have the authority to enforce the covenants by filing a court action may not be quite what the CCRs say. In many instances a member can only enforce the covenants after appealing to the board and the board fails to do so. I agree that most members do want the covenants enforced. It's mostly those who violate the covenants that don't want enforcement. They are generally the minority but oftentimes have the loudest voices!

SusanW1
(Michigan)

Posts:2316

10/08/2008 9:32 AM
FACTS: The subdivions is far from being completed and is in court-ordered receivership. THAT is not going to change - and no judge is going to turn all that over to a small group of homeowners who do not own the majority of the property in dispute. This particular receivership agent is the problem. The best this group can do is to petition the court to appoint a DIFFERENT agent who has more experience or is more interested. This group should be able to PROVE that the present agent is not doing his/her part and community welfare, assets and property values are suffering as a result. That will be the only thing that will get the attention of the judge.

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