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Subject: Builder/Developer failed to disclose full CC&Rs at escrow?
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VicjosS
(California)

Posts:7


11/14/2017 9:11 PM  
Is it common for builders of HOA communities in California to not disclose full facts of the community?
Despite the fact that the David Sterlings act requires the full CC&Rs be disclosed upon escrow.
Though in our community while we received full copies of the bylaws, design guidelines, Agreement, Rules and regulations, and other facts about the house we are buying. Both in a binder full of paper as well as on CD and USB. I was surprised to find that non of these documents we received included the CC&Rs at least the full copy of it.
It wasn't until we received violation notices of CC&Rs which was not mentioned in the documents we did receive and did our homework on. We noticed that we received only amendments to the CC&Rs on paper and the electronic copies did not include them at all. It appears the builder was playing games with buyers in the community as there are many other neighbors on the same boat.

Knowing the CC&Rs are crucially important to buying in an HOA neighborhood as it outlines pretty much the "constitution" of the community, your rights/duties as a homeowner in the association. The procedures the association must take to contact homeowners in the event of changes big and small in the community. So we can keep track at whether the association is following the rules and respecting the rights of homeowners. CC&Rs also contain community rules that are much harder to change than if its just part of the rules and regulations.

In this case do homeowners have any rights against the builder for their willful failure to disclose? What are the consequences for failure to disclose for a developer in CA. We had been having a lot of issue with the association under builder control. As they seems to not care much about following the civil code (i.e giving 30 days notice for changing rules and fifteen days notice if rules passes a vote) and their own CC&Rs when conducting their business. Our CC&Rs the part they failed to give us require mail notice to each individual home. They also seem to be indifferent to issues addressed by homeowners the past two years. Once in a meeting they were even disrepectful enough to say that the meeting is not meant for homeowner commenting. This really got the homeowners made as they never got the 30 day commenting period in the first place, new rule proposals just came as a surprise in that meeting.
MelissaP1
(Alabama)

Posts:6788


11/14/2017 9:34 PM  
It is looked upon as your responsibility to be informed. Some states the seller is to provide the documents. Otherwise, the CC&R's and Articles of Incorporation are PUBLIC documents. They are available at your local courthouse or online at the state.

Former HOA President
KerryL1
(California)

Posts:4381


11/15/2017 8:18 AM  
IN CA and many other states, Melissa, as you've been informed previously, HOA sellers must provide the documents well before the close of escrow so the prospective buyer has time to read them.

Your developer still controls your HOA, right, Vicjos? So far as I know whether the Owners control or the developer does, the 30 notice to amend a rule must be followed. You & others who feel they've been wronged should continue to attend board meetings, which must be open to you and ask the hard questions. They also must include an open forum when Owners can ask questions, etc.

Beyond verbal and written complaints, maybe Richard can help.

Your post is hard to read, Vicjos. It would help if you make them much shorter an stick to your question so I & maybe others don't have to struggle to grasp your main points. Do not the legislation is the Davis-Stirling Act. There's an excellent website that might help you called Davis-stirling.com.
VicjosS
(California)

Posts:7


11/15/2017 10:00 AM  
Thank you for your response. It appears from the facts I receive the builder is clearly legally wrong in this practice. And it seems willful as there are so many versions of documents(paper, CD, USB) given to the buyers yet all doesn't include that very important document.Its totally unacceptable threaten to fine someone of a CC&R violation they were not disclosed off before buying and not included in any other documents they received. It appears the builder was focused on getting homes sold quickly rather than disclosing the material truth to buyers.

Though what I want to know is what should homeowners do to address the situation? The community is near completion and is going to be turned over to homeowners soon. We don't want the potential liability to be shifted to the homeowners after the handover. The management company and the builder majority board with just two homeowner board members had been operating on a veil of secrecy with many shady practices all two years. The management company seem to act like they are the masters rather than the servants of the association and its board.
And CC&Rs unlike rules and regulations are considerably more difficult to amend even if more than 50% of members disagree with it and put it to a vote.
KerryL1
(California)

Posts:4381


11/15/2017 10:27 AM  
It sounds like you, Vicjos, and several others who think the developer is in the wrong, should pool your funds and meet with an HOA attorney to get legal advice.

Meantime, what is the text of CC&R that concerns you? Is this all about car-towing??

What is the text of the "missing" CC&Rs? I still have trouble following you.

The developer's management company often does exactly what the developer wants because the developer has a majority on the Board till turnover. In other words, the developer hires the MC in the first place.

Just what are these "shady practices" you're referring to?
RichardP13
(California)

Posts:2050


11/15/2017 11:19 AM  
In California, if a builder/realtor does not provide full disclosure during a transaction involving a new development, the buyer can walk away, no harm, no foul. This happened to me in 2008 when buying into a new development. The realtor failed to disclose there was a Mello Roos on the property.
KerryL1
(California)

Posts:4381


11/15/2017 1:10 PM  
But recourse do owners in CA have AFTER escrow closes, Richard?
PaininyourA
(South Carolina)

Posts:119


11/15/2017 2:16 PM  
for all PRACTICAL purposes - NONE


CAVEAT EMPTOR
KerryL1
(California)

Posts:4381


11/15/2017 3:41 PM  
It seems to m that since CA sellers are required to provide many such docs prior to the close of escrow, and complete CC&Rs certainly is one of them, there must be some recourse if sellers do not (whether they're the developer or not).

Failure to disclose, or some such?
KerryL1
(California)

Posts:4381


11/15/2017 3:42 PM  
It seems to m that since CA sellers are required to provide many such docs prior to the close of escrow, and complete CC&Rs certainly is one of them, there must be some recourse if sellers do not (whether they're the developer or not).

Failure to disclose, or some such?
JohnC46
(South Carolina)

Posts:7010


11/15/2017 3:50 PM  
Posted By KerryL1 on 11/15/2017 3:41 PM
It seems to m that since CA sellers are required to provide many such docs prior to the close of escrow, and complete CC&Rs certainly is one of them, there must be some recourse if sellers do not (whether they're the developer or not).

Failure to disclose, or some such?




My initial reaction is any smart developer is not going to just ignore the requirement. Obfuscate maybe, but not ignore. I am going for obfuscation in this case. As in they are there but the OP does not know where.
KerryL1
(California)

Posts:4381


11/15/2017 4:44 PM  
You might be right, John. I just can't tell from the OP's rambling posts.
KerryL1
(California)

Posts:4381


11/15/2017 4:44 PM  
You might be right, John. I just can't tell from the OP's rambling posts.
JanetB2
(Colorado)

Posts:3642


11/15/2017 10:35 PM  
If it has been two years since you purchased ... you potentially may have waited too long regarding failing to disclose anything when you purchased. Now you need to learn your CCR's and other documents well and also learn your State Statutes which in some instances can supercede your CCR's.

Here is info regarding your State Statute for Amendments:
https://www.davis-stirling.com/Main-Index/CC-R-Amendments

This describes the statute with regards to various allowed voting classes for owners and developer:
https://www.davis-stirling.com/Main-Index/Membership-Classes

If soon to be transferring from developer ... do you meet or exceed this section?:

Class B Membership. Class B membership is reserved to the developer, who is given three votes for each unit/lot held by the developer. Class B membership is tied to the developer's ownership of separate interests that are subject to assessments. Class B votes may be used on any issue presented to the membership for a vote. As provided for in 10 Cal Code Regs §2792.32(c), Class B membership automatically converts to Class A when one of the following occurs:
When 75% of the authorized residential interests transfer to homebuyers;


That would be good because then the Developer can no longer claim they get more votes regarding any changes to the CCR's.

Here is a link regarding transfer from Developer:
https://www.davis-stirling.com/Main-Index/Transfer-of-Power

Here is a link for the Developer Menu section regarding various areas including some already noted:
https://www.davis-stirling.com/Main-Index/Developer-Menu

If you have questions you can put them into the search on the top right side of the above noted web pages and you will have information at your fingertips.
VicjosS
(California)

Posts:7


11/16/2017 4:52 PM  
Great answers. The builder still controls most aspects of the community or about 75% or more, but the transfer process has begin. The builder expects to pull out by the middle of next year. Obviously we want to get them to be accountable while we can so this won't bite us in the future.

The issues we are facing during the last year and half includes: The management and board not giving us 30 days disclosure prior to changing a number of rules since we moved in i.e car washing, toy vehicles, etc. Our CC&Rs which we did not receive require all notices be delivered to each address via US mail including what is required by the civil code and elsewhere. fyi one proposed rule, The toy vehicle ban was rescinded after homeowners reminded they didn't get notice as required and the manager tried to quiet them when they spoke out in the meeting. Our CC&Rs which we only learned later about require we be notified by US mail to our addresses for such situations.

Also the CC&Rs which they neglected to give us has provisions prohibiting driveway parking except under limited circumstances. Our community is a wide open single family home community with own driveways and wide open streets, and no fire lanes. Though in practice they are very selective in enforcing it and seem to only target those who's cars appear junky or commercial to them or residents who have parked too many cars on them based on their subjective view ie three cars instead. Even though is no particularly visible rule on this not even in the CC&Rs. Though when owners complained about it by mail or in meetings the management and their lawyer just told them while its possible to change it they will face a uphill battle to get it changed because its part of the CC&Rs.

Another issue is that under the documents we did receive and review on escrow that we are supposed to use all available garage spaces for parking. And we did get notice from HOA to do so shortly upon move in, and we did as this is what we agreed upon. To clear the garage we bought some storage cabinets to place in an inconspicuous area on the side yard. While we carefully checked our documents we received at escrow but found no restrictions on them. However we received a violation notice from the HOA two months later regarding a CC&R provision violation due to its presence. How are we supposed to know if its never disclosed upfront? Its sketchy that they will overlook delivering CC&Rs all three methods of document delivery CDs, USBs, and paper for so prespective owners.
Also practice the HOA seems to be very selective in enforcing this provision throughout the neighborhood. Both the storage cabinet as well as the ban on blocking garage with storage.
MelissaP1
(Alabama)

Posts:6788


11/16/2017 5:15 PM  
Our HOA you had to park in the garage if you had one. It's not an unusual rule living in a HOA. It's kind of the purpose of garages is to keep cars out of view. The storage cabinets may be an issue due to fire risk. A neighbor of mine put in a storage shed but insurance told them could NOT be attached to the home. Fireman don't like them there that close to a home considering the flammable items that can be stored there out of sight. Puts them in some danger.

A few years ago was woken out of bed due to hearing explosions coming from up the road. A car parked in the garage had went up in flames. (There was a recall on it for this risk). You could hear all the paint cans and other chemical containers exploding for hours.

You may not realize that sometimes what may seem restrictive and unfair, may be there for your protection and others.

Former HOA President
VicjosS
(California)

Posts:7


11/17/2017 5:10 PM  
The real issue is not what the rules are but the lack of upfront disclosure of the CC&Rs. f they were upfront about "this is a park in the garage community" many would have took that into consideration when planning to buy there. But it appears they were carried away with selling homes, the agents were instructed to refrain to mention any restrictions that comes with ownership unless specifically asked.

While I am ok with residents being required to use the garage normally. One thing that irritates me and others living here is that the management used to allow practical exceptions such as when guests visit, during move in, holidays, or when landscape or other construction projects block garage access if we let the management know promptly. Though somehow a year down the road a fired up group of people quietly formed "a parking committee" with the management we know little about ranted that the CC&Rs don't even allow such exceptions. And the lawyer of the management company agreed with them and therefore the management removed the exceptions without ever giving us a single notice.

In addition if that obscure and subjective CC&R provision on storage cabinets is that important why it is not included in the R&Rs, guidelines, or other documents they did give us? Why hide in a documents that they don't even give to us upfront?
Another thing is that they don't seem to play by their own rules under the CC&Rs it seems as they hid it from us so we won't know to point them out when they break the rules.
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