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Proper Administrative Turnover to HOA BOD

Started by DarleneL1 • 13 replies • 1441 views

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DarleneL1 (Florida)
Posts: 97
Posted:
The Developer of our association went bankrupt before he could turnover the administration of the CC&RS to our Association. In a legal battle, a judge ruled that the HOA had no authority to govern the association because the developer was not a corporation filed in Florida and it was too late for the developer to turn the administration over after they were bankrupt.

The BOD of the association never informed anyone of this decision or the legal battle and is once again trying to enforce the CC&Rs. If the association was never turned over properly, is there another way for this BOD to have filed this without telling the community? Can they legally run the community and enforce the CC&Rs?

Any insight to this problem would be great!
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Darlene,
I feel pretty confident that whatI know about this stands about an 80 % change, of being 80% right.

First you are in a rough spot, no doubt about it. You and your fellow owners need to estabish am information storage bank. Start anywhere and just keep adding to your file. Note anythng anyone that will tak to you about the History of the Development. Really scratch the bottm of the barrel. Get any papers, news item from papers, any old brochures, or adverts. Got to couret house and downloan every bit of stuff they have on file about the developer and the bamkruptsy. Go to city zoning and building permit offices, go to state offices and check anyting they have about developement. Now at some point you are probably going to have to form or re=open your lisence as a HOA or whatever and a non profit. With enough of this information a story will start to ppear and from that you will find directions. Remember, the more stuff you cn document the less the lawyer will need to. If you have any of the old BOD there I would approach them cauiously, they may have some skeltons in the closet.

If you are suggesting this BOD is or has done something wrong, don't jump to conclusions they are at fault. If you find they are just doing the best they can, cut them some slack and offer to help. All these HOA Condo/POA stuff is simply a means that neighbors can help neighbors. We as people get it all screwed up and drive it down the wrong track.
KirkW1 (Texas)
Posts: 1,665
Posted:
I would like to ask a question about this. Are you against the BOD having this authority? My first guess would be yes, but hate to assume this to be the case.

But here is my observation for what it is worth. Normally anyone who has a stake can enforce the CC&Rs. But short of a proper HOA, the enforcement is limited to court action. I don't know if there is a way for the association to get the authority to impose fines. I would think there would be, but don't know for sure. At any rate you need to be prepared to go to court should you decide they don't have authority. To protect yourself you need to be quick on the gun to assert their lack of authority.
DarleneL1 (Florida)
Posts: 97
Posted:
You are making a correct assumption. Several BOD members have selectively enforced the CC&Rs through the years and done it with no regard for the Florida Statutes. When the original judge's decision was made, the neighborhood was never informed of the judgement. They wanted it to be kept completely secret. Now that they are involved in another legal battle, some of the neighbors involved have researched the public records and found the documents on the judgement which stated that the BOD never had the right to enforce the CC&Rs because the developer never turned over the right to the BOD before going bankrupt and the judge found for the neighbor who showed this documentation. The judget said that since the developer went under prior to signing over the rights, that it was not a right that could be signed over after the bankruptcy. Very confusing, but it seems that this can never be rectified. Although, it may take another court judgement since the BOD kept the information secret and has since acted like a BOD since then without regard for the judgement.
DarleneL1 (Florida)
Posts: 97
Posted:
You are making a correct assumption. Several BOD members have selectively enforced the CC&Rs through the years and done it with no regard for the Florida Statutes. When the original judge's decision was made, the neighborhood was never informed of the judgement. They wanted it to be kept completely secret. Now that they are involved in another legal battle, some of the neighbors involved have researched the public records and found the documents on the judgement which stated that the BOD never had the right to enforce the CC&Rs because the developer never turned over the right to the BOD before going bankrupt and the judge found for the neighbor who showed this documentation. The judget said that since the developer went under prior to signing over the rights, that it was not a right that could be signed over after the bankruptcy. Very confusing, but it seems that this can never be rectified. Although, it may take another court judgement since the BOD kept the information secret and has since acted like a BOD since then without regard for the judgement.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Darlene and Kirk,
Kirk is telling it straight (as far as he knows) Darlene, and he agreeds you may have a court battle. Keep in mind we respond on what we assume most of the time, we are given bits and pieces of information and the can be or can not be facts.
So I suggest your group get an action plan together and start working on it. Do not draw up battle lines yet. A strong motivating force behind this self government is "what's good for the most owners." Important? Not as much as you and your fellow owners might think. This mandate (if you want to give it that status, plays second fiddle to: "What is good for the association." Don't let you and the other owners get lost. Get together with this "BOD" and put this on the table, and make sure you can hash this out and agree. You get support for think, you can quickly move down the line and solve this apparent mistake of this self appointed Board. You are in no way inferior to this group, even if they may be flying the Banner of the Association. They must have official sanction to run your place and ALL that is demanding by the laws. Don't assume they are a bunch of crooks but make it very clear and strong where you are coming from, prove your mettle with action, just like the shining Knights of old. Let them decide how they want to handle you rather than how you are going to handle them. If you keep your cool, keep your interest, you will start to see cracks appear. One of these cracks can easily be that they, if operating out of bounds, will get nervous and if it is a sinking ship they ride, the rats will jump ship. Not saying the are rats but maybe lack conviction.
But really, approach this first and foremost with that you all are shooting for the same prize, you all can do a better job if you all do it together, no matter the past, you are not judges to decide the quilt or innocent, your eyes are down the road to a productive association. You really have no other viable choice.
KirkW1 (Texas)
Posts: 1,665
Posted:
Keep in mind that (at least in most places) anyone who could potentially be affected can take legal action to enforce CC&Rs. Recently I read where a neighborhood took action to enforce CC&Rs across the main street from their neighborhood. The challenge was their authority to do so. The HOA won because they are/were affected.

Also remember that CC&Rs have a much longer history then HOA/POAs. But there is a major difference in the way I as a private citizen enforce and my HOA enforces the rules. My HOA enforces rules through non-judicial methods, while I would have to file suit and argue the case before a judge. My HOA has an automatic method of recovering costs (As it is in the contract), where I as a private entity have a harder time.

That being said, I would find it hard to believe that because the developer went bankrupt that the HOA would not be able to continue independent of the developer. I would certainly expect my BOD to appeal such a ruling as it would put into question all developer controlled HOAs. All that being said, it is possible that this is now a voluntary association and must file lawsuits the same as an individual homeowner.

Your biggest problem is apathy. I would predict that less then half your neighbors care enough to attend a single meeting. I was collecting signatures regarding a development abutting my neighborhood when our turnover came up. I then took proxies around with me as well. I would say that 70% of the people gladly signed over their proxies. If those swearing that they would be at the meeting I would guess that perhaps half actually were.
SusanW1 (Michigan)
Posts: 5,202
Posted:
Darlene - you said " Now that they are involved in another legal battle, some of the neighbors involved have researched the public records and found the documents on the judgement which stated that the BOD never had the right to enforce the CC&Rs because the developer never turned over the right to the BOD before going bankrupt and the judge found for the neighbor who showed this documentation."

You do realize, that without the HOA, EACH homeowner would be liable indivudually for whatever this lawsuit entails.

My guess is that the HOA acted as one, and has a history, and any judge would account for that to establish validity. (kind of like a common-law marriage - after so many years, it becomes "legal")

If I were you, I would hope that an HOA DOES exist to protect the indivudual property owner.
DarleneL1 (Florida)
Posts: 97
Posted:
I know that this seems easy, but MRTA has also expired our CC&Rs as of 2/2006.

Since the judgement in 1997 by a judge who still makes decisions for our County; any decision going to court would more than likely end up in front of him again. He stated that in Florida, a corporation must be incorporated in the State of Florida to enforce the CC&Rs and the Developer would have had to assign the authority over to the HOA prior to going bankrupt and becoming an unincorporated entity. In which case, he ruled that the HOA did not have the authority to enforce the CC&Rs. This is a Florida Statute.

The BOD continues to operate with selective enforcement and hasn't told anyone about the judgement by this judge in 1998. Many neighbors don't want to spend the money to get involved again, so they just let this same group of members run the neighborhood.

This BOD also believes that the Florida Statutes do not apply to them. They have secretive meetings and they don't post the meetings properly, including the Architectural Committee Meetings (not announced and held during the day so that no one can make the meetings). They also continue to have meetings without a quorum (10% of the community as stated in the original By-Laws of the Community) making decisions which affect everyone, to name just a few of the things they continue to do incorrectly.

Many neighbors would go for a voluntary association to maintain the common areas, but they have made so many members angry by the selective enforcement that no many don't want to get involved. There are only about 90 lots in the community with 10 already written out of the CC&Rs by the original developer. So you can see what a mess this has become.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Darlene,
I am not sure of how much of the advice you have taken from these posts, but time goes on and more and more bits and pieces emerge. Not being critical of your approach and can appreciate where you would have some concerns.

So, let's take another tck. Some of you feel you can't solve your problem in house, maybe this is true, I don't know. But if all you are going to do is spin your wheels, best to change approach. The longer this goes on the deeper you are falling. You need to protect your selve. Get legal advice somewhere that will protect you individually. If all you say is true, this other group is operating outside the Law.
You need a lawyer, or an advisor to get you clear. It will cost you and be upsetting but in the end, if nothing else, you need a record that proves your awareness of trouble and you might be involved. Maybe a sounty represenative, or city official or anyone else......anyone that might point you in the right direction and sever your ties with this whole thing. You tried to help the community, maybe if the community figures you have an answer, they will join you and split the cost.
DarleneL1 (Florida)
Posts: 97
Posted:
Thank you Robert. We are in the process of getting some of the neighbors together to contact a lawyer to help split the costs. Unfortunately, obtaining a lawyer seems like the only answer and that's exactly what our BOD hopes will stop everyone. No many will spend money to eliminate this dictatorship, but thankfully, we have found some who will take the "bull by the horns" to get a legal opinion. I'm sure many neighbors will jump on the "band wagon" once the money has been paid. It really is a shame that lawyers must be hired to find out the truth and still it is only one lawyers opinion against another until another judgement is rendered.

Again, that's why everyone hates association control so much. We're really spending money twice as we are the same people funding the lawyers for the BOD. Sad.....
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Darlene,
Just a word of caution. Don't let all this grow or become a fight of you vs this BOD group. You don't know how a judge is going to read them. Make your "mission" to protect you all as individuals. That is your right. The rest can cause turmoil that secrets the real problems. Stick to self protection, and as that is resolved the rest will either fall into place or when you have this standing you deserve as an individual you can tackle the other problem. Do not sue these people yet, show your unity as a group, try to get to a judge, and get him to ask why are these people coming to me. I still believe a show of strenght will give them pause. Will also cause them to scream and run around threatening to sue, resign, built another bunker to hide in, try and destroy your unity. What ever they scream most about is what the are most afraid of.

Don't be secretive and build another closed door box. No threats or accusations, just plain horse sense. He we are. a group of individuals asking for their rights to protect themselves.........pretty powerful stuff.
DarleneL1 (Florida)
Posts: 97
Posted:
Robert,
Thanks again, that is our plan. We're not trying to cause problems, just resolve the secrecy and selective way in which the current BOD runs. Once a judge rules that it is not a mandatory association, we could probably get a voluntary one going to take care of the necessary expenses and responsibilities.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Darlene,
A critical analysis of your post above, by no means a critical damnation of your efforts. Iam sure you are wise enough to know when you say you are not trying to cause problems, that is exactly how some folks are going to view you. Your problems are the association problems. You may not convince each to your (side) and you don't have to, as long as you know where you are and what you are doing. If you feel the judge is going to rule a certain way for good reason, have your plan already done, and make your case. The more professional, knowledgeable and helpfull your group can be the better for all. I suspect Judges can sense these kinds of things.
In any event you are to be roundly applauded and appreciated, but, two years from now, half the people in your complex won't even be there.

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