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Subject: Release of control / amending docs
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TammyC3
(New Mexico)

Posts:24


03/24/2019 6:19 AM  
I'm trying to understand the 'turnover' process for our association. I've noted (online sample template) modifications that completely remove the 'developer' from their doc's language. There must be 'general' provisions that are addressed when the developer releases control. Can anyone recommend a source or guide?

Developer released control at 108 lots sold, (the 'viable' threshold set by statute) in 2007.
At that time, the developer still held 36 lots 'unsold' & receiving the Developer Exception reduced assessment fee rate (1/5 the "normal") from 2007 to present. Is it customary for the developer to continue to pay the reduced rate?

The developer has sold, repossessed and resold properties for 10 years. In 2018 the treasurer reported - 30 'unsold lots' and 19 repossessed lots being held by the developer totaling 49 properties in the developers hands.

1 lot = 1 vote. 49 votes holds a majority during membership meetings. Resident landowners comprise about 30 votes. Non-resident are generally non-participatory. I just realized, even if every single member showed up, the 2/3 majority of membership votes to modify cannot be achieved. Now it's clear why so many longtime residents are frustrated and asked "Why do we have these meetings when we can't change anything?" The BoD is considering what, if anything can be done.

Is there a possibility to modify in favor of landowners using:

53-8-15. Voting.
A. The right of the members, or any class or classes of members, to vote may be limited, enlarged or denied to the extent specified in the articles of incorporation or the bylaws. Unless so limited, enlarged or denied, each member, regardless of class, shall be entitled to one vote on each matter submitted to a vote of members.

Are we out of bounds when considering:

Landowners who live in subdivision 6 months or more = 2 votes?
Would this create a 'class'?

Developer is denied vote on all 'unsold' properties?

Developer is denied vote on all 'repossessed' properties?

Developer gets 1 vote on properties paying full assessment?

A bit off topic: Does each developer lot generally = 1 proxy vote?

Sincerest appreciation for guidance.


JohnC46
(South Carolina)

Posts:8195


03/24/2019 8:56 AM  
Tammy

I would try something along the lines of only owners with developed lots that have been issued a Certificate of Occupancy are eligible to vote.

Get away for owners of vacant lots being eligible to vote.
DouglasK1
(Florida)

Posts:1374


03/24/2019 1:24 PM  
I would think that "classes" would be defined in your CCRs or possibly other governing docs, and can not be created adhoc. I would be surprised if you could change the voting weight without amending the CCRs.

Escaped former treasurer and director of a self managed association.
RoyalP
(South Carolina)

Posts:578


03/25/2019 8:12 AM  
..... the 2/3 majority of membership votes to modify cannot be achieved. .....



Barring a court order (unlikely) you all are S/O/L as your Covenant may NOT be amended / modified w/o said super-majority of 2/3.




next time: CAVEAT EMPTOR
SueW6
(Michigan)

Posts:470


03/28/2019 8:22 AM  
What is the definition of “Member”?

In my Association, “member” means improved lot owner or home member. For voting issues, One vote per member, no matter how many lots or homes they own. This prevents overloading by any one member. This is spelled out in the bylaws.
JohnC46
(South Carolina)

Posts:8195


03/28/2019 9:07 AM  
Posted By SueW6 on 03/28/2019 8:22 AM
What is the definition of “Member”?

In my Association, “member” means improved lot owner or home member. For voting issues, One vote per member, no matter how many lots or homes they own. This prevents overloading by any one member. This is spelled out in the bylaws.




That one vote per member could easily be legally contested by a member owning 2 or more lots. I have never heard of such a By-law.
KerryL1
(California)

Posts:6308


03/28/2019 10:18 AM  
Maybe I read it too fast, Tammy, but is the Section you cited form the CC&Rs? Or bylaws?
TammyC3
(New Mexico)

Posts:24


03/30/2019 7:03 AM  
Kerry,

The Section cited is NM State Statute.

2/3 majority vote required for changes (CCRs).

The developer (husband & wife) currently hold exactly 1/3 of our 144 lots (unsold & repos).

The threshold for 'sold' lots at turnover was 75% 'sold'. That left the developer holding 36 (25%) 'unsold' properties. 36 votes. But with repos, today (over 10 years later) they hold 48 votes (1/3).

The developer recorded the release of control in 2007, but can still control the vote? I'm trying to understand how this happened, and what should/could have been done to prevent this from happening. Or ... is it reasonable & normal?

Do associations amend bylaws at turnover to "limit or deny" the developer's use of votes to maintain 'control'? How?






TammyC3
(New Mexico)

Posts:24


03/30/2019 7:46 AM  
Yes. The CCRs would require amending, and the opportunity for amendment is beyond reach.

144 lots. Developer released control still holding 36 lots. 36 votes= 25% of the vote. At turnover a 2/3 majority vote of landowners could have been had to amend in favor of all landowners. The developer sold/repossessed and now owns 48 lots. 48 votes= 33.33%. To reach a 2/3 vote requires 100% return on ballots in favor. Who gets 100% return?

I'd sure like to know what should or could have been amended at turnover, if anything, to limit the developers 'control'.
2000 Assessment fee amounts don't cover expenses required to maintain our roads in 2019, but here we are, at the mercy of the developers vote before we can change anything. Landowners ask "If the #1 expense obligation (road maintenance) can't be met, why do we have an association?"





TammyC3
(New Mexico)

Posts:24


03/30/2019 8:26 AM  
Hmmm. We're allowed to have an RV while we build. Could the county assessor property tax 'status?' be used? Agriculture vs residential?
TammyC3
(New Mexico)

Posts:24


03/30/2019 9:00 AM  
I agree. We are S/O/L!! On the plus side ... our assessments will never go up!

We cannot achieve the 2/3 majority without the developer. This seems contrary to the intent of 'turnover'.

'super-majority' = 2/3. Got it. Are proxy votes applicable in this instance?






RoyalP
(South Carolina)

Posts:578


03/30/2019 4:33 PM  
..... The developer recorded the release of control in 2007, but can still control the vote? I'm trying to understand how this happened, and what should/could have been done to prevent this from happening. Or ... is it reasonable & normal? .....


YES

NOTHING (as the developer's owned lots = entitled to vote, one lot=one vote)

YES & YES


next time: CAVEAT EMPTOR

the legal principle of: let the buyer beware


JohnC46
(South Carolina)

Posts:8195


03/30/2019 5:19 PM  
Tammy

I would have a lawyer look at your situation. It cannot hurt. Gather like thinkers, donate to the cause, and have a lawyer take a look. I think the angle is "unimproved lots".
RoyalP
(South Carolina)

Posts:578


03/31/2019 6:40 AM  
.... oh yes ....

let's seek an angle to exploit

attorneys love angles

and porsches

TammyC3
(New Mexico)

Posts:24


04/01/2019 6:36 AM  
Et tu Brute?

Due diligence? When shopping for property we requested docs from the treasurer. We received a 'proposed' set. When we closed on the property, we received another (different) set. One would assume* the set at closing was the set before the 'proposed' set. (evidently there were several 'sets' prior to the ones received at closing). None are signed!

The (newer) "proposed" set says things like "All lot owners pay assessments but us" (who the heck is "us"?). & "Payments received before the past due date will be considered past due." (sloppiness). One section of the 'proposed' set states developer turnover at '2/3 lots sold' and another section says '108 lots sold' (which is 75% and is state statute and "108 lots sold" is also on the plat map!). The 'original' docs state 2/3 lots sold (in violation of statute). Interestingly enough, the CCRs also changed in the 'new' docs. There was no conversation and no 'vote' for CCR changes and we can't track Bylaw changes because the past (out of state) president now claims all paperwork in her possession is 'personal'.

Seriously, how would I have known that a lot (owned by and previously lived in by the developer) is tied directly to the 'community well'? Our docs state: no water available ... dig your own well. The developer just sold that lot! There is now a lot with a direct line to a community well. Tell me RoyalP, how would I have known this? Now I'm on the board & now I know this. Should we continue with business as usual? (Making me a party to the deceit). The developer said they will collect and hold 'repair' amounts (for the well) from the new owner. It's NOT the developers well! They wrote a contract and negotiated on behalf of the association without the association knowing a thing about it! I'll bet the new owner is in the dark about all of this!

Due to an erroneous voting structure, the developer was able to 'vote' the president into position year after year in violation of bylaws. Attempts to correct the voting in accordance with bylaws were met with a 'cease and desist' letter! Yet, here we are ... the election of officers was done correctly and the president was removed.

Chicanery is at play here. Chicanery has been at play since the developer recorded the original docs and then changed them before delivering them to purchasers!! Ignorance & friendship allowed it to thrive.

An attorney could be hired, but at this point, the board could take it's chances on amending and wait for the developer to bring suit. THEN, we can bring our spreadsheet, the well connection and the loss of revenues to court and the developer, past president and treasurer can explain how they cheated the association for over a decade! The BoDs recent questions had the developer driving 8 hours one way to a'record' a 'new' disclosure (no association involvement). The BoD's questions had the developer changing the 'ownership' of 19 properties during that visit. The 'well agreement' was revised and re-recorded without the association's knowledge or consent. WHY? Chicanery!! That's why!

My goal is to understand what SHOULD have happened at 'turnover', with bylaw amendments (and with the well). You say 'exploit' and I say 'explain'. I was thrown into the washing machine when it was on 'spin cycle'. I'm simply trying to understand how we lost thousands in revenues, allowed our water to be diverted to an individual lot with NO compensation (while others haul water) and how the developer still controls the vote. It may well be the way it is ... but we're willing to push the envelope and call the developers hand.

Side note: The developer went to an attorney. Then they drove 8 hours to re-record documents. Then they paid the CORRECT assessment amounts. We haven't heard a word from them since. They're the ones with something to hide.

We will challenge every set of unsigned bylaws written by the past president and "good friend" of the developer. If the developer, past president and treasurer want to explain their chicanery in court ... so be it. The proof is in the payment. The proof is in the plat map. The proof is in an excel spreadsheet. The proof is in the erroneous voting procedures.

Let the developer beware.




JohnC46
(South Carolina)

Posts:8195


04/01/2019 7:51 AM  
Tammy

Time to stop talking and take some action as in legal action.
RoyalP
(South Carolina)

Posts:578


04/01/2019 8:10 AM  
..... Due diligence? When shopping for property we requested docs from the treasurer. We received a 'proposed' set. When we closed on the property, we received another (different) set. One would assume* the set at closing was the set before the 'proposed' set. (evidently there were several 'sets' prior to the ones received at closing). None are signed! .....



What documents were actually recorded and referenced by your deed?

When you signed the deed you signed for said covenants.

If you feel said covenant/contract is being violated you have the right to seek redress via the court system.

Now, the corporate bylaws governing the operation of the corporation (as opposed to the recorded deed restrictions/covenant governing YOUR property) may be a different issue.




? What will the attorneys say ? other than specifying the color of their new Porsches
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