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Subject: Developer on BOD and refuses to pay dues

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JenG
(Utah)

Posts:6

08/24/2008 10:19 AM
I live in Utah and our BOD includes the developer, who was elected to the BOD. I asked for documentation that all BOD members were current with dues and was told that since the developer was still maintaining the roads, they weren't paying association fees. But HOA membership is solely based on property ownership, not occupation. And this same BOD member had another property owner barred from a general meeting for non-payment of dues! Several other owners have refused to pay dues until the BOD/developer member pays dues on her privately owned property. And I want her to pay all back dues. What legal recourse can I pursue? The rest of the BOD's are unwilling to challenge the developer and the current treasurer knows that the dues have not been paid for 5 years. Needless to say, many other property owners are in arrears, but nothing is being done to collect their dues either. My inquiries have resulted in the developer "volunteering" to pay dues for 08-09, but there are at least 5 years of back dues that should be paid. I'm afraid if we excuse hers how do we collect from anyone else? Help!

MicheleD
(Kentucky)

Posts:1676

08/24/2008 10:53 AM
"Two wrongs don't make a right." Basically, who does or doesn't pay their dues is no reason for someone to withhold paying theirs. All you manage to do is put your own position in jeopardy, up to and including a lien placed on your home. It might be in your best interest to do a thorough reading of the governing documents to determine a few things, such as the Developer's obligation to pay assessments (in our CC&Rs, our developer is EXEMPT from paying assessments). It makes no distinction whether the developer owns the property "personally" or "professionally." Regardless of what it says or doesn't way, however, it really again boils down to the fact that, fair or not, when it comes to assessments, what other people do or "get away with," has no bearing whatsoever on the risk you take in not paying yours.

TonyM3
(Arizona)

Posts:131

08/24/2008 12:34 PM
Posted By JenG on 08/24/2008 10:19 AM ...and was told that since the developer was still maintaining the roads, they weren't paying association fees. Maybe you should consider what it costs to maintain the roads before you go rattling that cage.

JenG
(Utah)

Posts:6

08/24/2008 12:50 PM
That's why we have the dues. It's not a question of the cost; we can't collect the dues from others who won't pay until the developer does. We don't collect dues on unsold lots, just those that have been recorded as sold. But that would include two lots that the developer bought personally.

JenG
(Utah)

Posts:6

08/24/2008 12:55 PM
I've paid my dues but many others haven't and use the developer's nonpayment as an exucse not to pay theirs. The CCR's only forgive dues on unsold lots, but the developer has bought lots for their own use and have built a home on one. But I would guess that about 50% of property owners are not paying their dues...and we're talking about $150 a year. If we suffer more non-payments, the rest of us will have to make up the difference.

MicheleD
(Kentucky)

Posts:1676

08/24/2008 12:56 PM
Posted By JenG on 08/24/2008 12:50 PM It's not a question of the cost; we can't collect the dues from others who won't pay until the developer does. Yes you can. You most certainly can. But, again, read your docs to be sure that the developer isn't exempt. Ours is regardless of how many lots he owns professionally (not sold and developed) or personally (that he's building his own home on). Even if he/she isn't exempt, that doesn't relieve other owners of their obligation to pay. Refusing to do so will just risk getting a lien and filed against them, along with no telling what other fees and penalties.

MicheleD
(Kentucky)

Posts:1676

08/24/2008 1:02 PM
Seriously, I would go after each and every one. But even if I didn't go after the developer, based on some sort of quasi-agreement, whether in the docs or not, those other owners are just risking their own properties by holding their breath until they turn blue. On another note, when was the turn-over of the HOA from the developer to the residents? Are all the lots sold? Are they all built out? How many homes are completed? How many lots are left to be completed?

JenG
(Utah)

Posts:6

08/24/2008 1:55 PM
As far as lots go, I think about 90% are sold, but not everyone has built. And I'm not sure if some people will ever build; they may just want to hold onto the property as an investment. We are one of the few developments that has water and power; other similar developments are land only and people use their motorhomes and primarily for recreation only. But the HOA was started under the control of the developer about 6-7 years ago, then open elections for BOD followed 2-3 years later. So the HOA has been independent, in name only, for about 3-4 years. This topic has just paralyzed the entire development, but I and 2 others will run for BOD seats in 2 years and hopefully, win, then start enforcing the CCR's fairly.

SusanW1
(Michigan)

Posts:2117

08/24/2008 4:29 PM
There should be some kind of financial record-keeping of the "in-kind" donation that the developer gives to the HOA in exchange for dues. The "value" of the road maintenance needs to be determined, and the dues credited out against that amount. She needs to submit an itemized statement for the record. and there should be a motion in the minutes for the accepting of the amount, in exchange for waiver of dues. Why others aren't paying dues has nothing to do with this road/dues arrangement and I would not entertain discussion about it with any non-paying dues member.

GeorgerwilliamsW
(Indiana)

Posts:705

08/24/2008 10:45 PM
Jen, have you carefully read the covenants that attach to the individual parcels? It is not unusual for the developer to retain dictatorial control and veto power over a board, even if just one lot is still owned, despite transition to a supposedly independent board of directors. In such cases, the developer can do just about whatever is desired, without permission from the board. In some covenants, there are two classes of membership, A and B, one of which is reserved for the developer and controls the association even after it has been "turned over" to owners. Thus, it is likely up to the developer to enforce assessment collection. If he/she/it chooses not to do so (it may look bad to potential purchasers to be heavy handed in collections), there may be little you can do at this point. Check for us before people here go off in the wrong direction with inaccurate advice.

SusanW1
(Michigan)

Posts:2117

08/25/2008 4:46 AM
She said: "I live in Utah and our BOD includes the developer, who was elected to the BOD"

MaryA1
(Arizona)

Posts:2157

08/25/2008 12:25 PM
Jen, Is the community now under the control of the members? The fact that the developer still owns a few lots doesn't necessarily give him the right to control the assn. Thoroughly read your gov. docs to see if the developer retains any rights as long as he owns property. Why is he still maintaining the roads? How much does this cost him each year? Do the gov. docs. require that he continue to maintain the roads? As regards other members being delinquent. It doesn't matter why they aren't paying their dues, what matters is that they are NOT. They should be receiving late notices and late fees. If the assessments and late fees aren't paid then a lien can be recorded. Then, the next step would be foreclosure. This should also apply to the developer if it is determined that he should be paying assessments. If the board does not have a collection policy, once should be adopted immediately. Send it out to the members so they will know what happens if they don't pay their dues on time. The board cannot continue to let other members disregard their assessments because the developer isn't paying his!

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