assessment contribution by the builder/developer

Started by AndreaW • 12 replies • 2237 views

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AndreaW (North Carolina)
Posts: 57

Posted:

Question 1: If the bylaws and CCR's do not state or specify the exact amount that the developer/builder should be contributing to the HOA, Is there a way to force them to pay the full amount as the existing homeowners? Currently they are probably paying about 1/2 of what the homeowners pay on the lots that are still being devloped or not yet developed. Also, They currently have control but the majority of funds allocated for the existing budget are coming straight from the homeowners and only a small percentage from the builder to "pick up the shortfall".
Question 2: What type of action should I take if i have requested the MC to make available for viewing a copy of their contract as well as Board meeting minutes from the past year, and they have not responded? It has been over a week since the request was made and still no reply. The representative from the MC says she generally only responds or crresponds via email with Board members and not homeowners, or the replies would take up her work day. Is this an acceptable reply from a MC? What do i do now?
Question 3: Is there a difference between how a MC contract is written when the board is controlled by the builder versus the HOA (homeowners? If so can you please email me examples of good contracts for HOA's (homeowners) and MC's? email to [email protected] Your help is greatly appreciated.

RogerB (Colorado)
Posts: 5,067

Posted:

Andrea, what state? Your Declaration of CC&Rs should address the assessment requirements for each lot. Normally, each lot pays the same amount, if so each lot owned by the Developer pays the same amount as you. Thus they are cheating the Association.

You probably have a state law which requires access to most of the Association's records. There can be a charge for cost of copies made and cost of time for the records Monitor. Seach your state statutes for regualtions for a Non-Profit Corporation if incorporated or look for a "sunshine law". Then submit a written request to the Registered Agent if incorporated. This person's name and address can be found by searching the internet for the url of the Secretary of State. Then on that site search for your HOA by name.

The only difference between MC Agreements is what the two parties, the management company and the HOA, agree to. I'll email you a copy of our basic Agreement.

AndreaW (North Carolina)
Posts: 57

Posted:

The State is North Carolina. I thought there would be some provision for this but have looked over the CCR"s & Bylaws and cannot locate where it specifies a specific amount. Not even for the homeowners. Currently the homeowners pay $450 annually, with an initial $500. due at closing on the new properties/homes. I was told by the 2 HOA board residents that the builder only puts in 1/2 for each unfinished/unsold lot. Where would i be able to find NC laws with regrds to controlling the amount they need to put in? Thanks for the email I appreciate your assistance. I love this forum, and think you are doing a great justice to the numerous homeowners like myself who are trying to educate themselves so as not to be taken advantage of.

RogerB (Colorado)
Posts: 5,067

Posted:

Andrea, the specific dollar amount of the assessment is not specified in the Declaration. Following is an example from a Declaration. Pay particular attention to 5.1(b) when the Lot Owner is the Developer.

---------------------------------
ARTICLE FIVE: ASSESSMENTS

5.1 Creation of the Lien and Personal Obligation of the
Assessment. The Declarant for each Lot owned, within The Planned Community, hereby covenants, and each Owner, other than the Declarant, of any Lot by acceptance of a deed therefor, whether or not it shall be so expressed in such deed, is deemed to covenant and agree to pay to the Association certain assessments to be fixed, levied and collected from time to time as herein provided. All assessments created and defined in this Declaration, together with late fees, costs, and reasonable attorneys fees shall be:

(a) a charge on the Lot and shall be a continuing lien upon the property against which each such assessment was levied, which lien shall attach as of the date the assessment was levied and shall continue until such assessment, together with any late fees, costs of collection, and attorneys fees are paid; and

(b) a personal obligation of the person who was the Owner of such Lot or of the persons jointly and severally, who were the Owners of such Lot at the time when the assessment was levied. The personal obligation for delinquent assessments shall not pass to successors in title unless expressly assumed by them and such Owner's personal obligation shall survive the sale or foreclosure of such Owner's Lot.

AndreaW (North Carolina)
Posts: 57

Posted:

Roger, I desparately need for you to translate into layman's terms what exactly this sect of our bylaws means:
sect8.2 Declarant's Obligation for Assessments
"During the Class "B" Control Period, Declarant (builder) may annually elect to pay the assessments which otherwise would be levied on its unsold Units pursuant to Section 8.8 or pay the difference between the amount of actual expenditures by the Association during the fiscal year; provided, regardless of the Declarant's election, the Declarant's Units shall be considered in computing the General Assessment rate under sect 8.3. Unless the Declarant otherwise notifies the Board in writing at least 60 days before the beginning of the fiscal year, the Declarant shall be deemed to have elected to continue paying on the same basis as during the immediately preceding fisacl year. The Declarant's obligations hereunder may be satisfied in the form of cash or by "in kind" contributions of services or materials, or by a combination of these. After termination of the Class "B" control period, the Declarant shall pay assessments on it's unsold Units in the same manner as any other Owner in accordance with the applicable rate of assessment under sect 8.8." Please help me to understand all of this dialogue and what it means in terms of what they are actually supposed to be paying. If you need me to email the other sects let me know. Thanks for the help!

AndreaW (North Carolina)
Posts: 57

Posted:

Sorry not the bylaws, my typo, but rather the CCR's

RogerB (Colorado)
Posts: 5,067

Posted:

Andrea, as a layman I interpret your Declarant's Obligation for Assessments to be:
(GREAT FOR THE DECLARANT BUT NOT FOR THE HOMEOWNER)

1) Before turnover while the developer controls the Board they can chose options (a) or (b) and can use to their advantage:
(a)elect to pay on each unsold unit as per Section 8.8 (I assume that is the homeowners assessment) OR
(b) chose to make up for expenses which are above income fromm the owners (if any). AND they can pay this difference in services rather than cash.

They will chose option (b) when it to their advantage. For example if the total income from howeowner assessments is $60,000 and total expenses are $65,000, the difference is $5,000. They can make up the difference of $5,000 either in services rendered, cash, or a combination of both. Don't be surprised if those services come at a premium cost if necessary. And if expenses are less than $60,000 they owe nothing.

They will chose option (a) when the cost per unit owned by the developer is greater than the homeowners annual assessment. This can happen near the end of the developer's control. For example if expenses are $120,000, income from homeowners is $100,00, and there are 20 unsold units. Then $20,000/20 = $1,000 per unit. Assuming the homeowners annual assessment is $600, the developer can chose to pay $600 rather than $1000 per unit.

2) After the owners take control of the Board: if any units are still owned by the developer, they will pay the same assessment as the other homeowners.

AndreaW (North Carolina)
Posts: 57

Posted:

OK, Understood, thanks for the clarification. A couple of more questions:
Regarding your pt 2. Since our upcoming election in July will make the Homeowners hold 3 seats and the builder only 2 seats, does this constitute the homeowners as taking control of the board? If so, then since there are a remainder of houses yet to be built, will this now require the builder to the same assessment as the homeowners on those remaining lots/homes?
When you stated they can provide services in place of monetary contribution, what type of services if we are already paying and have in our budget lines to provide for all the keeping of the common areas? Does this mean if we wanted them to erect a structure on the common areas, that they might agree, such as additional amenities like sport courts or playgrounds, etc.?

RogerB (Colorado)
Posts: 5,067

Posted:

Andrea, perhaps I should have said turnover control to the homeowners. Do the homeowners now maintain the records, do the billing, pay the bills, enforce the covenant restrictions, and approve modifications to each Lot as well as being 3/5 of the Board?

The developers services may already included in the expenses. You would have to look at the financials to try to determine how the developer is managing the association's funds. I wouldn't expect them to do any more than required.

AndreaW (North Carolina)
Posts: 57

Posted:

I believe I have some homework to do: Currently as far as i know the MC keeps the records, pays the bills, collects the assesssments, enforce the violations at the direction of the 2 resident board members as well as the all homeowner Architectural Review Committee. This committeee is totally responsible for the approval or denial of architectural modifications to those existing homes. Additionally as i had told you the keeping & care of the Common areas as far as i know are paid by the MC since there are specific budget items allocated for such purposes and services.

AndreaW (North Carolina)
Posts: 57

Posted:

Roger, Should the homeowners be taking care of this at this point or right after the July election when we have 3 to the builder's 2 people on the Board? Right now it is the MC and they clearly work for the Builder. I have emailed several times requesting information from them, including a copy of the existing MC contract but the MC rep emailed me that she typically only emails with Board members and she would reply by mail to me. Well it has been a little over 2 weeks and the Ponies are not that slow! Is there a higher authority than the board, perhaps state jurisdiction that have control over MC companies? and their practices? We are in NC. Where can I find info on this? Thanks for all of your help

RogerB (Colorado)
Posts: 5,067

Posted:

Andrea, the Association through its Board has control over the MC as determined by the Management Agreement.

AndreaW (North Carolina)
Posts: 57

Posted:

I understand that, however currently the Board majority is the builder and the 2 homeowner members don't get straight forward answers to questions other homeowners have posed. Also without obtaining a copy of the MC agreement we are not even sure when our contract expires or what it includes. That is why I had asked for a copy, but to no avail. I am still waiting. That is why I am looking for another avenue to try to obtain the info since the builder and the MC are not giving their full cooperation. It appears they will share only some but not all information and as they feel necessary. I will check with our city/county offices and see if these can be obtained another way. Should the homeowners try to compile a list of questions to ask the Board at the annual meeting. Would it be wrong to organize an informal discussion meeting of homeowners? with or without the 2 homeowner board members present? I was thinking it may be best if some of us take notes and present it to them rather than have them attend, because we would not want them to feel like they were being attacked from all sides. I am aware that there are many homwoners who have questions they would like answers to, and some may be very passionate about the issues which may cause the 2 Board Liaisons to feel that thay are kind of being ganged up on. Since they will both be remaining on the Board for at least another year we would not want to cause any ill feelings. Please advise your thoughts on this matter.

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