Master Association, Sub-association Separation

Started by FredA • 16 replies • 4535 views

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FredA (California)
Posts: 8

Posted:

My California community consists of 164 separate single family homes and 32 townhomes. There is a Master Association in which all home owners are required to be members and pay dues. Also, there is a Sub-Association that includes 32 townhome owners, all of which are required to be members and pay dues. There are significant common areas within both association properties. Townhome owners pay dues to the Master Association as well as to the Sub-Association.

I would like to develop a rationale and path to separate the two associations. The townhome owners don't use, or benefit from, the Master Association common area recreation facilities, their roads, or their land with hiking trails, etc. If separation could be achieved, benefits for those interested townhome owners could be made optional.

I know that legal help will be required to review the Articles of Incorporation, the CC&Rs and the Governing Rules (all on the website), but I would be interested receiving experience and advice from others first before hiring the right attorney.

Thank you in advance . . .

Fred Arbogast

SusanW1 (Michigan)
Posts: 5,202

Posted:

Hire a real estate lawyer AND a parliamentarian to show you how to break away from the corporation and establish your own.

FredA (California)
Posts: 8

Posted:

Thanks . . . of course both associations are corporations. So couldn't the townhome corporation remain intact?

SusanW1 (Michigan)
Posts: 5,202

Posted:

I thought you said all townhome owners were ALSO members of the Master Association. So you are tied to their legal paperwork, and them to yours, right?

What exactly is the connection?

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Fred,
You might look into making the Townhouse into a condominium within the Master HOA. I am sure the Master association would not want to lose the revenue. Then possibly the townhouses could gain more Autonomy.
Complicated question no matter how you change it and only a good HOA Lawyer should do it.

Another suggestion would be to go to county or town offices and tell them your problem and see what they say.

Good luck.

FredA (California)
Posts: 8

Posted:

The project started with a few single family homes and then the townhomes began. As soon as the first townhome was sold, the "declarant", builder-developer, annexed all the townhome lots to the whole project. The master association was incorporated and so was the sub-associationl. All owners found themselves to be members of the master association, but the townhome owners found themselves to be members of both associations, and subject to two dues payments.

FredA (California)
Posts: 8

Posted:

Thanks for your comments.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Fred,
I live on an island that has an HOA of all Homeowners and we have a condo for our buildings and grounds which we own. We receive services from the HOA such as roads, lagoon, bridges, etc, we also have to use them because only owners can come onto island basicly. Just the price you pay and of course our Condo complex is a private residential area for residents only and we have private amenities. One being Ocean Front, and believe me that is not cheap. Our HOA dues is $800/year, our condo is 4K.year just for assessment fees, plus insurance, etc, etc, etc. We have had a special assessment for 7 years and look at another additional one. But we also have a wonderful place to live.

FredA (California)
Posts: 8

Posted:

Robert,

Quality of Life is everything. However, we have to pay attention to cost, right? Our Sub-Association gets $1,900/yr (ugh!) in dues, and the Master Association gets $700/yr! But the tall trees, clean air, and few people are really worth it. However, it would be nice to be free from the Master Association for a lot of reasons.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Fred,
If all that attaches you to the Master is your name, and you all don't share anything common, I imagine you could do it. However when it comes down to the Master losing the Revenue that they get from the Townhouses, that will be a hard sell.

I suppose you have checked all the State listing for businesses and have gone to the courthouse and looked at the original papers that made you part of the Master and how they did it. All this kind of thing the lawyer will do and charge you for it, might help to have those papers.

How do you in the towmhouses manage your common areas? Also, if the single family homes are selectively receiving more and different services from the master, such as snow removal, grounds upkeep, etc. In our Master Deed it identifies our relationship to our Master association. If the single family homes are receiving trash pickup that you have to provide in your townhouses would be another. I expect you have been all through this and have reached the last thing to do. Hire a Lawyer. I sure would not jump into a long term relationship at first meeting, get a feel of what he thinks and spend a little time talking it over with your neighbors.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Fred,
When you go to Lawyer, make sure you also take along a copy of how the townhouses were annexed by the developer, that may be the weakest link.

FredA (California)
Posts: 8

Posted:

Hi Robert . . . Thanks so much for your input.

Our townhouses are separated from the other (Master) part of the community by a road that surrounds us . . . a sort of "moat", if you will. We have 32 units in 8 buildings and about 2.25 acres of common area. The Master Association facilities to which we have access are:

Recreation building with office, meeting room, work-out room with exercise and weight training machines, a sauna. A small adjacent swimming pool. Basketball court, tennis court, barbeque and picnic grounds.

There's about 40 acres of common area that is used for utilities such as propane storage, roads, unbuildable forest land for hiking, and a leachfield for common sewer waste water disbursement (easement to County). The community has 1.8 miles of roads to plow for snow and maintain. The townhome area road (driveway) represents only 6% of the roads.

With the exception of the driveway, all of these facilities are on common areas outside of the townhome "enclave" and controlled by the Master Association (a separate corporation). The townhome common area is controlled by the Sub-Association (a separate corporation).

Few townhome owners use the common facilities, and yet they pay substantial dues to the Master Association. If secession could be achieved, townhome owners who want to use those facilities could pay on an individual basis, making it optional.

Well, I didn't plan to write an epistle, but just wanted to clarify our situation. Again thanks for your thoughts . . . Fred

PatrickH (California)
Posts: 204

Posted:

Hi Fred,

Splitting away from a Master Association is a difficult task. The main reason being that those 164 single family homeowners would have to vote to allow you to do it. They get nothing out of the deal except an increase in dues to cover the income lost by letting your 32 owners walk.

Unless all that property is fenced and locked, it would be impossible for the Master Association to prevent your owners from continuing to use the trails, tennis court, basketball court, etc. after they left the Master Association, so the remaining members would be paying for things that non members use for free.

Until you can come up with some "upside" for the Master Association members, I can't see any reason why they would allow you to leave the Master Association.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Fred,
Your Townhomes DO have access and use to the amenities of the Master Association. Therefore you are financially responsible to cost and use of this common area. Seperation from the Master will be almost impossible as you share some common roads and all of your utility areas. Sorry but I think that you are out of luck.

FredA (California)
Posts: 8

Posted:

Thanks Patrick and Donna.

Your comments are helpful and yes, it seems that it will be difficult to make the separation. To get a favorable vote from all owners one has to ask "what's in it for them"? All they get is lost revenue from the townhome owner's dues. But what if the townhome owners take the position that they don't want anything to do with the Master common areas?

Guess I'll have to put my thinking cap on. Consideration of the validity of the original Declaration of Annexation might be an angle. Also, establishing a formal position that the townhome owners will not use any of the Master common facilities could be done. After all, any outsider who meanders into the complex can use the facilities. Of course this is not permitted but there is no "community police", so to speak, either. And, "guests" are permitted by the CC&Rs.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Fred,
Sometimes you have to be careful what you wish for. Think of what you will have to get redone if indeed you seperate from your Master. The utility area is something that you will have to deal with. The Master could charge you whatever fees they want if indeed you are not under the Master umbrella. If you chose to have all of your own utility services redone, think of that huge expense. And you do have some common access areas. They might just gate you off? Perhaps the Developer did screw up the joint association when he formed it but you have to think beyond that and the Master association dollars that you are unhappy with.

FredA (California)
Posts: 8

Posted:

Thanks Donna,

Yes, there's a lot to consider . . . and yes, we have to be careful what we wish for, as you say, because we might get it, but a lot more of something that we may not want. Your coments are taken very seriously, and thanks again

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