Validity of current HOA

I just joined recently and find this site very informative over the weeks I will have many questions that I hope someone can answer for me. I have read my State RCW'S regarding HOA'S and non profit orginization RCW'S as well as our CC&R's. So to start with this huge mess I will ask a few questions at a time and then continue from there. Thank You to all who respond and for this great website as well.
Patti

We have a 28 home development that was built in 2004. Some were give copies of the CC&R'S other's were not. On August 19th 2005 almost a year after all homes or lots had been sold the developer had a meeting to hand of finacially money and the voting of I guess officers. They were not clear on this at all.

Problem 1#. Our CC&R'S state the following There is hereby created a "Lot Owners Association" composed of all lot owners of the property benifited and burdened by the CC&R's as described in the attached Exhibit. This is the 2nd paragraph in our CC&R's. The 3rd paragraph states the following,
FORM OF LOT OWNERS ASSOCIATION. Initially, the Association shall be an unincorporated association. A majority of the owners may at any time, if deemed advisable, cause such association to be incorporated as a nonprofit corporation under the laws of the State of Washington, in which event the association shall be goverened by the Articles and said Bylaws of said corporation, as well as this declaration. In the event of conflict, the terms and provisions of this declaration shall control said Articles and Bylaws.

With the above paragraph started all of our problems. We were incorporated on August 10th 2005, with no knowledge of this or vote on this by anyone. The developer incorporated us 9 days before they turned all monies and documents over to who ever was suppose to run this show, what a joke. I found out we were incoporated by the fact the person who is suppose to be in charge of this HOA let it slip. I contacted the developer and they sent me a letter stating as of August 10th 2005 they filed with the state of Washington papers stating they no longer had anything to do with us but I went to Olympia to get the Articles of Incorporation and what they actually did on that date was incorporate us. So becuase they violated our own CC&R'S would thsi make our HOA invalid? Since we did not vote on incorporation as well as the HOA was to be turned over to us after 50% of the homes were sold. They did not turn anything over to us until a year later and all homes had been sold in 2004.

Sorry for such a long post but this is just one of the many problems we are facing and any attorney's we have talked to tell us we are basically blue collar workers up here so just put up with it. I am sorry but I disagree it is my right to vote or participate and they took that right away and lied about it amongst many numberous other issues. Who do we turn to?

If anyone has good suggestions I would love to hear them. Don't get me wrong I am not so much against incorporation but against the fact that no one can seem to follow the laws and break them as they see fit.

Thanks again Patti

The first issue is whether the developer had the authority to take the action he did. That is usually found in the documents describing the voting rights of the developer until transition to owner control is accomplished. In many association documents, the developer retains majority voting rights until transition. Look for language along that line. Second, check your state statute regarding regarding developer voting rights and transition. It may have language making this issue more clear.

Then, find out if the majority of owners want to undo it. It would be a moot point if the majority wish to remain incorporated. This should be done formally, with written ballots (might help with legal issues later), not just an informal survey.

If the developer had the right to do that, and if the majority of owners want to undo it, retain a knowledgable attorney to establish the process to do this. If the developer didn't have the right, again, hire an attorney to handle the paperwork of unicorporating you.

No matter what, this is a complicated legal issue that could have a major impact on the owners, so getting good legal advice is a must. I know you won't like the cost, but the cost of repairing additional mistakes might be much more.

Joe

Good evening Joe. Thank you for your post and input. I agree it would be a moot point but that is not the issue at hand. The issue started with the developer incoporating us full well knowing what they were doing when they had no voting power or anything else of that nature.

I went back and read our CC&R'S. Our wording is somewhat vague as it does not make reference to the developer specifically. This is what it states

Each lot, once created shall automatically carry with it one unit of membership in the lot owners association, provided, however, that until sold, the undersigned grantor or his successor shall retain one unit of membership in said lot owners association for every lot owned in the attached Exhibit. I understand about the developer holding onto on unit of voting until such lot was sold. More than 50% of our lots had been sold by the summer of 2004, we asked several times when they were going to get together in regards to an HOA. Never happened.

Here are some of the kickers though. This developer never did anything until summer of 2005 one year after almost everyone had bought their homes. At the time of title everyone was told that they had to pay 300 dollars before they would get their title as this money would breahte life into an HOA. Then they pro-rated the remaing year from when you moved in for so called dues, yet we had not on controlling document that spoke about HOA dues or fees in reagrds to an exact amount. Jan 05 the4y collected another 300 and this supposed current board also collected another 300. Most of these people in a year and a half payed almost 1k into our HOA. Now here is where it gets worse.

The developer in August 05 handed off the supposed HOA, but in doing so said that they were turning over all monies paid to them by the homeowners because nothing wad done and they also had problems. So my question along with the others are if you return this money you are saying there is no HOA would that not make sense, and if you were returning it why would you give it to a group of people that were not even a legal board. Do I make any sense with this?

The only documents we had been given by anyone was our CC&R's, that was it. Not one single other document. It was after I went to on of the first meetings that this woman who interchanges her name let it slip we were incorporated. Not a single one of us knew but she did. I started doing some research and found that we had no by-laws and the articles of incorporation pretty much state nothing other than the purpose of the non profig orinization. So again this is where we went back and said who the heck is our board. We had no documents stating we had to have a board and no documents stating anything about officers. The developer states that we supposedly at a meeting voted for officers yet their is no recorded vote and others voted more than once from each home otherwise 2 people from one house. This is aginst our CC&R'S and state law.

In reading the non-profit orginization RCW'S it states that the initial board shall create the by laws right after incoporation. This so call board we have now came up with by laws as recent as May, none before that.

The hits just keep coming, I even have a letter from the developer after I brought something to their attention in regards to validity and they lied on paper back to me. I have it. They also stated they had nothing more to do with us per their filling on August 8 05 with the Secretary of State but I have what they filed and it is articles of incorporation.

We are suppose to have an election on Saturday, and according to the bylaws that these clowns recently wrote it says that all this will take place one year after the original board of directors stated in the articles of incorporation which would be the developer not these people out where I live. They have not even sent out information on who is running for what position and anything about them. They wrote in bylaws things that have not even been done. For instance it does not tell us what the qualifications and what positons will be available. They go so far as to say that the Board of Directors and Officers are one in the same yet she seperates them out and does not specify what their duties are.

Forgive me for making this so long. I am so frustrated I could scream as no one wants to help those of us who just want to see it made right. We have had so much money spent on items that have been a total waste of money. Yet no one will own up to their mistakes of doing this which the money was not theirs to begin with because the developer gave it back.

I live in Washington State if you have not figured out by now. Anybody out there that could help me would be a god send because the legal problems are just going to keep mounting.

Sorry again Joe for such a long post, I am really upset this evening about all of this and I don't like being told or threatened that I am stupid and No Harm No Foul.

Thanks Patti Marceaux

Hi Joe. Well the meeting went horrible on this last Saturday. Everyone that was on the list for a position which was one person in each slot won.

They added names to a sign in list to make up the the amount needed for the meeting but only 9 people or actually closer to 10 would have been allowed to vote. The other part to this mess is the fact that not everyone's vote would have been counted as they do things to leave out those who could make a difference. For example my next door neighbor owns the largest house here but he uses it just as a summer home, so they just taped a notice of who was running and what date the meeting would be on his front door. Well there is no way he was going to get that notice, yet they do this sort of thing all the time. We have many people who are on private contracts for their homes and they don't even get told about voting rights.

Our CC&R's also state that we the homeowners can determine the qualifications, date, time, how many, etc in regards to voting for people. This was not done as the board determined it all. We were told we could add our names to the voting list, so my neighbor and I both put our names in. We were told it was to late to add them and then I was told I could not run for an office as I was not a homeowner unless I just bought my home?? That is how it was put to me along with a statement for our CC&R'S. Being the smart ass I am, I wrote back and said first of all I am on a private contract to purchase our home which we are, 2nd if that is the case then none of us are homeowners because the bank or a mortgage company actually owns our homes so why was nobody there to run LOL LOL. I also stated that if indeed that were the case it brings back my first and most troublesome question is our HOA valid because if you have to be a homeowner to vote or run for a position that means the developer never had the right to incorporate us or anything else because of the fact they sold all homes by the end of 2004. Of course I did not get a reply.

The other thing that bothers me is the fact that the developer took from everyone 300 at signing to breathe life into an HOA plus they collected dues for a year and a half along with a pro-rated rate in 04. At the meeting in 05 when they supposedly turned everything over to a bogus board, they put in a letter that they were refunding all monies paid by homeowners due to mismangement of an agent within their company. The money was not given back to the homeowners but put into an HOA account, my feeling is if you are giving back all monies that is pretty much saying there is no HOA. What do you think, am I way off with that kind of thinking?

Anyway I wish the attorney you knew was back. This is just getting worse and worse and they think they can get away with it all and laugh at us because we are trying to make it right. My neighbor and I can't even afford to hire an attorney to fight this so we get screwed all around. This is no fun. It's not that I am against HOA'S but against them being run incorrectly and being run for the purpose of hurting others and playing God.

Thanks Patti

Patti, perhaps the meeting did not goes as you wanted because your expectations were contrary to the Boards. Do you qualify as a member under your Declaration? Do your By-laws allow posting to the property as a means of notification? Did your neighbor provide the address to which notices should be mailed?

Regarding your "most troublesome question" your HOA is most certainly valid and the developer did have the right to incorportate the association. After all, they were the owner of every unit (or lot) in the beginning. They appear to have been very generous in the amount of funds they turned over to the association. That is normal procedure when the developer control transitions to the homeowners. It has nothing to do with rather or not there is an HOA. And, no this money should not have been returned to the homeowners. So your thinking is wrong on almost everything.

I suggest you study the controlling documents and learn proper procedures for the conduct of your association. With a positive constructive approach the us vs. them "screw all around" attitude can be changed. I hope you will make a meaningful contribution to your association.