Maintenance Fee Increase

Our Management Company has 'hinted' to one of recently elected board members that they may be increasing our maintenance fee for 2009. They are reviewing the budget.

The problem is that we are still under Declarant Control and the development which is 40 townhomes is not completed and now with the slow housing market and economy we are not sure when and if it will completed. Right now we have 24 townhomes built, one is the model and one is not finished. The Declarant (builder ownes 8 and rents 6 he ownes the model and the unfinished home). Four more homes are under construction, 2 are sold. Myself and my neighbor are on the Board, the other three members are the Declarant and his appointees.

Only 22 homes are paying monthly maintenance fees. The Declarant is paying the monthly maintenance fees on the homes he ownes and rents but not on the empty lots. The other board member who lives in the development is a financial analyst for a large corporation. He has found many discrepencies and overspending in the budget (Declarant relatives have all the landscaping, snow plowing, etc. contracts).

He has approached the managemnet company regarding putting out bids for contractors, however, the MC says that the contracts will be in place until 2010. I have spoken to many of the residents and they all say they will not pay an increase. My question is this, can we reject the budget even though the Declarant is in control?

Our CC&R's say we get control when 75 percent of the homes are built and sold to someone other than the Declarant or 7 years from when the CCR's were recorded with the state. Both are a long way off.

Should we be consulting an attorney????Any advice you can give me on this would be appreciated.

I realize that we cannot "not pay" our maintenance fees, my question was can we reject an increase? We have asked in the past to meet with the builder but he refuses. We can try again, but I am not optimistic.

I am checking the docs now. In regards to your suggestion about meeting with the Builder (Delclarant) I did come across the following....

Special Meetings...The President shall call a special meeting of the Association is so directed by resolution of the Executive Board or upon a petition signed and presented to the Secretary by Unit Owners entitled to case at least 25% of the votes in the Association.

Does this mean the unit owners can have the President call a special meeting if we get a petition signed by 25% of the unit owners? in our case that would be 10.

If you are under contract, then the management company can only raise the fees in accordance with said contract. I would start by reading that contract.

If you have evidence that the money is being mis-used and or handled in such a way as to give undue benefit to the developer then I would draft a letter explaining to him that you see this evidence. Point out that his fiduciary duty requires him to act in the best interest of the association. Further point out that under state laws he can be held criminally liable as well as civilly liable. And that the D&O policy may not cover intentional violations of his duty, such as giving preferential treatment to his relatives in contracts for the association.