Declarant not funding and continuing board control

Has anyone run into a declarant deciding to stop funding completely before turnover yet still refusing to relinquish board control. We have been to hoa atty who validated declarant right to refuse to pay but knew of no cases where board control was retained. In our case the unbuilt lots were sold to a non developer llc who just bought at firesale. Atty thought we may have legal argument but expensive case to establish case law.

Bill:

If you would like to post the exact wording regarding the declarant from your governing documents, then maybe one of us might see something which could help you in the situation.

Hi Bill:

You might pull up the Warranty Deed where the new non developer purchased the lots on your county records website, and see if it mentions transfer of any declarant control. I know in my state said control is supposed to be legally transferred to a new declarant.

When you state “I don’t know statutes in other states”, are you looking for said statutes? That potentially would not help in your situation as other state statutes would not necessarily apply in FL. I do not know off hand any case law regarding your situation, but if I run across anything I will keep you in mind. I am not an attorney, but I periodically review various cases mostly out of curiosity and also for my HOA.

If the declarant rights were transferred then the new entity would potentially have control of the board. What do they say regarding the issue?

Hi Bill:

Actually many developers in FL choose that route, because they do not have to pay any operating expenses (Per below noted statute). Potentially there is no case law because of the below statute anyone who thought of filing a case would in essence know up front they would probably lose big time.

I read an article a while back in which a FL developer had in the documents where he could amend anything and had control for 15 years. Just before the 15 year period he amended the documents to allow that he controlled until such time as he chose to no longer control. If I remember it was maybe because he was getting a fee for managing the 55+ community, and wanted to continue with ability. Until people ban together to get legislation changed, then in FL a developer in essence pretty much has total control unless potentially limited in the governing documents with turning over control after X number of units sold and if they have not reserved a right to change absolutely everything if desired.  

720.308 Assessments and charges.—

 (b)While the developer is in control of the homeowners’ association, it may be excused from payment of its share of the operating expenses and assessments related to its parcels for any period of time for which the developer has, in the declaration, obligated itself to pay any operating expenses incurred that exceed the assessments receivable from other members and other income of the association.

Many states in which their statutes are based on the Uniform Common Interest Ownership Act do put limitations on the developer. Potentially this may have come into play because too many developers were leaving the HOA after development with no money in which to operate and without proper reserves. Many of these states have the following wording in their statutes:

The declaration, except a declaration for a large planned community, may provide for a period of declarant control of the association, during which period a declarant, or persons designated by such declarant, may appoint and remove the officers and members of the executive board. Regardless of the period of declarant control provided in the declaration, a period of declarant control terminates no later than the earlier of sixty days after conveyance of seventy-five percent of the units that may be created to unit owners other than a declarant, two years after the last conveyance of a unit by the declarant in the ordinary course of business, or two years after any right to add new units was last exercised.

We are living in a development with exactly that same set of circumstances. Would be very interested in an update from you.