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MaryM2
(Delaware)
Posts:11
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| 08/08/2006 7:56 AM |
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Roger has been advising me because of are complicated newly established HOA not to take control of our HOA until a transitional audit has been complete. What is a transition audit? i've read the posts about it, but I'm still a bit confused. We the 4 appointed board members from the dev/builder (one in the same) received legal papers from his attorney appointing us on the board. We are suppose to be conducting our general first meeting in a few weeks to nominate officers for the Jan-Dec term. In reading all these posts it seems like we have done this totally backwards. We've been "the board" for the past few months, and implimented the brand new HOA like the by-laws state. Are all states manadator to have a transition audit. I've read your checklist for transition from developer to homeowner and your list contains 21 items. We were notified by certified mail from the developers atty. 5 lot owners received appointements to be on the board, and the dev/builder signed his power away. They included to us:
1. letter advising that we 5 have been appointed to the BOD for the non-stock corporation.
2. Declaration of Restrictions and 5 amendments to said declaration
3. a copy of the certificate of incorporation
4. By-laws for the HOA, Inc.
5 a copy of the Minutes of the first (and only, to date) meeting of the BOD for the HOA, INC., wherein each of you were appointed to the BOD of the corporation. (Waiver of Notice of Special eeting of the BOD of HOA, INC.) That is what the letter is titled. (we were not invited, nor knew about this said meeting)
And that is it. We never met with the builder/developer for a meeting ever!!!! They never met w/ the community transfering power. We've been on our own.
Is this a bogus HOA? Should we resign and demand it differently from the builder, even though it's been since Jan 25, 06 when he signed the papers, BUT with much research on our boards part, found out that roads, retention ponds were not completed, thus we wouldn't accept the transfer till April 06 when completed, which we did then.
We've already implemented the assessment and have carried out some of the duties, mowing common area, etc....
I started coming to this forum becuase of the vague declaration restrictions, and much to my suprise, have found out we possibly are doing this all wrong. We do NOT have an attorney at this time as we don't have the funds just yet. How can we justify using the members assessment to fight to see if we have an HOA or not.
HELP!!!!!!!!!!!! what should we do? |
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RogerB
(Colorado)
Posts:3725
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| 08/08/2006 8:57 AM |
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Mary, I have tried to impress through several posts that the time of transition from the Developer to the Homeowners is critical.
The Developer usually has done everything possible to maximize his profit and protect his investment. They will do the minimum (or less) than what they offered when the controlling authority approved the developement. Often reserve funds are insufficient because the Developer is not interested in replacement of capital investments after they leave nor paying anymore than they are required for vacant lots during development. When the Developer is ready to move on to their next project they will try to DUMP the association onto unsuspecting, inexperienced homeowners.
Mary, it appears your Developer is trying to dump your Association without completing their requirements. Some homeowners, like you, are willing to serve but few have had experience and almost none are knowledgeable in HOA operations. Therefore, it is important to seak help from an experienced Managing Agent and Attorney. If you don't have the money right now then ask the questions "Can we afford not to hire professional help? How can we raise money? How can we keep costs to a minimum?"
Your Board should respond to the Developer regarding the attorney's letter. Advise them with copy to their attorney as to the following:
a) whether or not you accept appointment to the Board (probably a mute point since you are already functioning as such);
b) you will accept the resignation of the Developer's Board subject to completion of a satisfactory financial audit;
c) you will be doing an audit of the Development in regards to the Developer's commitments and will advise on improvements not yet satisfactorily completed.
Perhaps you have owners experienced in accounting that can review the financial records. Check that the Developer has paid all required assessments on undeveloped lots they owned and has not used HOA funds to pay bogus or unreasonable invoices. All funds need to be analyzed; and the longer the HOA was under the control of the Developer the more difficult will be the financial audit.
A transition audit is not required by law to my knowledge. The purpose of the audit is to assure the Developer has performed all required duties and the financial records are in proper order prior to the homeowners Board accepting responsibility. Your investigation which resulted in completion of the roads and retention ponds is an excellent example of a duties the Developer needed to do prior to acceptance. Make sure there are not drainage problems; if it is a gated community with private roads make sure road construction complies with required standards; in other words look at the big ticket expense items carefully.
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Roger Borcherding
Official HOATalk.com Sponsor
DARCO Property Management (Colorado)
(303) 925-0150 
*See legal notice below (end of page) or go to www.hoatalk.com/legal |
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GeraldT1
Posts:0
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| 08/08/2006 2:19 PM |
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MaryM2
Scroll up to the top of the page and click on the HOA Discussion Forum tab. Then scroll to the bottom and click on page 3. There is a discussion topic posted Subject: Detailed Transition Info Request. Read both RogerB and my posts. For the most part we concur, it's just that I'm insistent that before the Developer walks away, the owners should perform a Transition Engineering and Capital Reserve Study. In my HOA, the owners were gradually elected to the boards as the developement was complete. The Developer got antsy, sensed we were getting savvy, but on many items we triumphed and documented the deficiencies in advance of the Developer moving off site. Your Developer, for whatever reason, has relinquished control it seems a bit abruptly. However, after careful research, buried within my gov. docs. and Developer's Agreement, I realized that there really is nothing to force the Developer to officially notify the boards (owners) in writing of the handover. Where I believe you erred is in accepting the roads, retention ponds, etc. WITHOUT AN ATTORNEY!!!!! Please listen to RogerB and myself when we say you must get one.
Just because you were appointed by the Developer does not mean you can't resign. However, you are probably the most qualified because you at least asked for help!
Best of success!!
GeraldT1 |
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