Texas - When does the Developer/Declarant lose Control?

Started by MarleneS • 6 replies • 6127 views

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MarleneS (Texas)
Posts: 7

Posted:

I thought I read somewhere that the Declarant/Developer loses control over the subdivision if he owns 20% or less of the lots in a subdivision. I have been pouring through the Texas Property Codes and can't find that. Did I dream this up? If anyone has information on this I would greatly appreciate it.

Thank you!

DonnaS (Tennessee)
Posts: 5,671

Posted:

Marlene,
Each Developer will write into the CC&Rs, at which point he will do the Turnover. It varies from each Developer. I have usually advised to not be in a huge hurry to go into the turnover until you are sure that the Developer has fulfilled all of his obligations to the County and membership, including an engineering study of the infrastructure. Also to include that all of the documents areworkable. The Developer can write and rewrite anything into the CC&Rs as he pleases so if there is something that you really want removed, this is the easiest time to have it done.

MarleneS (Texas)
Posts: 7

Posted:

Donna,

Thank you for the quick reply! I'm a newly elected board member and have inherited a mess.

According to the CCR's the Developer will have controlling votes (4 votes for every lot he sells) until he no longer owns a lot in the neighoborhood. The County has not released bonds for three (3) of his four (4) sections since he has not gone through his one year maintenance period (even though it's been three-four years.) He recently billed the association a special assessment for the roads even though he is in the maintenance period by the county and the bonds haven't been released for those sections. Is this even legal?

Three of his appointees are on the board vs two that are actual residents. The two elected members (which includes me and another resident) are concerned that money is being intertwined with his development business. Both accounts are under one (1) bank account, yet two (2) sep. accts. I've looked over the financials and it looks like he is either pocketing some of the road use deposits b/c none have been deposited into the HOA account.

The elected two board members aren't allowed to have contact with the HOA attorney per since the President (Developer) has appointed himself point of contact. So we're stuck in between a rock and a hard place when we have questions and have to rely on the President/Developer's word.

Per the Articles the President cannot hold the position of Treasurer and President yet he does. What can be done about this? Should I consult an outside attorney?

What a mess.

SharonL4 (Texas)
Posts: 7

Posted:

We are having exactly the same situation in our HOA. 850 properties. Declarant has 2,773 votes. No written info on when the Declarant gives up the POA in any of our governing documents.

In fact, the 'Declarant' was foreclosed on and now the financial business that foreclosed on them has decided that it is the Declarant. But, our Bylaws say:
"Section 2.09 Declarant. 'Declarant' shall mean Dunrich Holding Company, L.P., a Texas limited partnership, and its duly authorized representatives or their successors or assigns; provided that any assignment of the rights of Declarant must be expressly set forth in writing and the mere conveyance of a portion of the Property without written assignment of the rights of Declarant shall not be sufficient to constitute an assignment of the rights of the Declarant hereunder."

The residents have never been privvy to any of the development transfer documents. So, how can we find out if there the Declarant voting and other rights were 'expressly set forth in writing'? They are refusing to share any information.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi Marlene:

It is potentially in the Condominium section:

Sec. 82.103. BOARD MEMBERS AND OFFICERS.

And which makes a statement in (c) to the effect of:

Regardless of the period provided by the declaration, a period of declarant control terminates not later than the 120th day after conveyance of 75 percent of the units that may be created to unit owners other than a declarant.

Sorry, I could not find anything similar in POA … only item found was:

Sec. 204.004. PROPERTY OWNERS' ASSOCIATION.

(c) The association's board of directors or trustees must be elected or appointed in accordance with the applicable provisions of the restrictions and the association's articles of incorporation or bylaws.

You might see about having an accounting individual look at the financial items and see what they state or recommend.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi Sharon:

You might pull up any Warranty Deeds or other foreclosure documents to see if rights were transfered. I know when my subdivision changed in the past from one developer to another, the right transfered was noted in the Warranty Deed.

SharonL4 (Texas)
Posts: 7

Posted:

I did pull up those deeds and was able to talk to a lawyer for a free consultation session yesterday. This is one that deals with HOA matters all the time. He said that in the state of Texas, (this property is in TX), the laws are so ambiguous that the language may not have to be 'specific' in order to pass along those rights. Many states do not allow a foreclosure institution to exercise and special Declarant rights. But, I guess Texas does, unless the wording used is SOOO specific that they cannot ignore it.

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