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Subject: Developer dues
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RebeccaA6
(Arizona)

Posts:31


03/04/2019 7:11 AM  
I am on the board of a small LOA in New Mexico.

Our developer has written into the CC&R's that all unsold lots will pay 1/5 of the annual association dues. Our dues are $50.

They hold a warrenty deed when they sell a property to someone. That way they carry the loan. If the person defaults or gives the property back, is it considered a sold property if there was never a full title recorded?

Part of our HOA decided that they wanted to charge the developer full dues for last year on the so called "repo" properties. They had already been billed in 2018 for the 1/5 cost, then the HOA decided that they wanted more money, so in 2019 they billed the developer again for $40 a lot for 2018.

I feel this is unfair and not exactly ethical, because they already paid the 1/5.

With the down turn in the market it is hard to sell these properties as they are in the middle of nowhere.
AugustinD


Posts:1575


03/04/2019 7:44 AM  
Does a lot become "unsold" if someone defaults or walks away from the loan? I do not think so. It is not like the lot is the same as it was prior to sale. E.g. the lender kept any downpayment and the myriad fees involved in financing. Also the developer can just add a tiny amount to the sale price and recoup the extra $40 (each year? each month?) it pays. I would say that a lot, once sold by the developer, cannot revert to its "unsold" condition.

Still, I hear you. If I were on the board, I think I could go either way in interpreting the CC&R. If push ever came to shove on this issue, what the legally correct answer is might depend on the mood of the judge on any given day in any given court.

For what it's worth, long after the developer has sold all lots and left, banks who provide mortgages and end up foreclosing on HOA properties typically have their bank staff cry a river to the HOA that it should not have to pay the HOA fees until the home is sold again. I say this is nonsense. The banks have been foolish in the last few decades, loaning to people who would never qualify under standards of, say, 1975. They made out like bandits with help from the federal government (read: the taxpayer) during the Great Recession.
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