Lien by Homeowner

We have a development platted for 104 homes. Currently, there are 42 homes which have been sold. The developer, who is the Class B association member with power to override any board actions, refuses to pay any dues on his properties even though the CC&R's are very specific as to what he owes. The Declaration gives specific remedy in the form of filing a lien on any property not paying their assessments (dues). This was obviously intended for individual homeowners who fail to pay, but it seems also to give protection for the owners relative to a non paying developer. The developer's properties are titled in his personal name and the appointed board voted to place a lien on his properties. He, of course, used his veto power to override the board's action and the board is powerless. The Declaration also states that the board OR ANY HOMEOWNER can enforce the CC&R's; therefore, my question is whether or not anyone has heard of an individual filing property liens on behalf of the association. The developer has maintained all the financial documents and the board, which he appointed, was not aware of any finacial difficulties until our association was contacted by our landscaping company and told we are over $10,000 in arrears. We are actually some $30,000 in debt and the developer has not paid any dues for over 3 years -per the CC&R's he should have paid over $100,000 during that time period. We have now found that he has previously filed bankruptcy with 2 development companies in recent years and I would like to take quick action before he transfers these properties from his personal name. I don't need admonishment for failure to accomplish due diligence before purchasing as I, along with others, was lied to about the financials and yes, I know a lawyer would be handy BUT, they are expensive and the association is broke and powerless. Thanks

Howie,
I own a property in Tn and after searching the State laws for HOAs, I found none. So your members will have to procede thru legal means---BUT!!!

Have you had a formal turnover from the Developer? Even tho you have a Board, has the developement been turned over to association control?

At 42 homes out of 104, a turnover seems rather premature. Do let us know if you have gotten that far. He has given you financial responsibilities but that isn't a turnover.

The association is still in the developer's name. I am confused as to why there is even a Board.

It sounds like you are in limbo. He is still responsible for his property.

Who signed the landscaper's contract?

I'm a little confused, too, because our CC&Rs, and those of other developments similar to ours, exempt the Developer from association dues.

I've never seen a set of CC&Rs that include the developer as owing assessment fees, since it is generally his money, along with whatever assessments for lots that are sold, that pay the bills. Even after turn-over, any lots he owns are exempt from assessments.

Just curious about the wording that shows he owes.

Any member can sue the association (or developer separately), but you can't act in the name of the association. Only th board or its designated agent, can do that. You might have to go the class action route with the rest (or as many of) the owners as you can find.

Although harder to convince, you can also try the local or state district attorney, if you have reason to believe the assessments were not spent appropriately or found their way into the developer's pockets. The DA's usually say that this is a civil action between "neighbors", but if you, or the board have cause to believe therre mght be crimnal action, then you can approach the state authorities.

You can also petition the local court to have the assocaitin placed into receivership. This is a two-edged sword as it would remove the developer, but the receiver would have a free hand to run the association, and that would include making up any financial shortfalls.

Yeah - you need to start talking to a knowledgeable attorney (not just a real estate attorney), one who has dealt with these issues before.

Joe