Get 2 months of free community web site hosting from Community123.com!
Friday, October 18, 2019
Get 2 months of free community web site hosting from Community123.com!
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: Who pays maintenance?
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
DavidW5
(North Carolina)

Posts:565


08/16/2006 6:38 PM  
Our HOA is under declarant control (4 of 5 board members are employees of the developer). The Clubhouse title has not been transferred to the Association due to mechanics liens filed by subcontractors. The developer has never issued a written notice (required by the bylaws) making the clubhouse available for use by the members of the association. The bylaws state that once such written notice is given the association becomes responsible for clubhouse operation and maintenance costs. The costs of operation and maintenance of the clubhouse are being paid out of association funds. Do we need to file suit to stop the use of association funds?
GeraldT1


Posts:0


08/17/2006 5:17 AM  
DavidW5,

No, you should not file suit to stop the use of association funds. The developer is required to pay for the taxes and monthly maintenance for each parcel/unit that is not yet closed, the unit owners are required to pay for their proportionate share as well, even though construction is not complete.

How old is your association, how many units will be constructed, how many are now occupied, which state are you located in, have you and the owners been provided any financials of the associations budgets, annual audits, balances in reserve, operating, deferred maintenance, and orking capital accounts?

Is there anything in your by-laws that calls for an election of unit owners to the board once a certain number of units have been closed?

Prior to the owners accepting the clubhouse, or any aspect of the property, it seems to me that the developer should be off the board entirely.

Once the developer is off the board, the association should hire an attorney pronto, get an accountant to perform an audit of the associaiton's funds, and get an independent engineering firm to perform a Transition Study, and Capital Reserve Analysis. The later will evidence all deficiencies in construction, and analyze the developer's budgets for accuracy of the replacement and lifespan of the elements.

GeraldT1
NNJ
CharlesW1
(Georgia)

Posts:826


08/17/2006 5:19 AM  
DavidW5,
I don’t know all that much about HOA’s but, I would think you wouldn’t be responsible for the maintenance of the club house if you as members can’t use it! HMMMM. That doesn’t make any sense to me what-so-ever. You said “the bylaws state that once such written notice is given the association becomes responsible for clubhouse operation and maintenance costs.’ Didn’t that answer your question?

I’m sorry I wasn’t much help. I don’t know that much, when it come to the “legal lingo”
I'm not sure what file suit means. If this is what you need to do to get them from using association money, then I would say YES!

Chuck W.

Charles E. Wafer Jr.
CharlesW1
(Georgia)

Posts:826


08/17/2006 5:27 AM  
Thanks GeraldT1,

OOPS, I didn’t know that. I learn something new everyday from all of you.

Thanks once again
Chuck W

Charles E. Wafer Jr.
DavidW5
(North Carolina)

Posts:565


08/17/2006 9:11 AM  
Here are additional details on our situation:

We are a "55 or better" single family home community in Virginia
There are currently approx. 600 occupied homes of an eventual 800.
The community is over 3 years old and the developer still has full control of the HOA board. Transition to a homeowner elected board is at least two years away.
The Clubhouse opened in May '04 and has been in full use by the residents since then.
The developer board has tried to ignore the association members but we have been very active in demanding that all bylaws and statutes be followed. Attendance at all board and committee meetings has been good.
After checking with the county, we find that most bonded facilities, including the clubhouse and roads are not off bond and are not titled to the HOA. Yet the board has consistently authorized use of HOA funds for operation and maintenance of the clubhouse, snow removal, etc.
Our bylaws state that the HOA will cover the cost of maintaining any facilities not titled to the HOA once the developer notifies the board in writing that the facilities are being made available for members' use. We have requested to see such documents for the past year and the developer has not been able to produce them. Therefore, we believe that the use of HOA funds for maintenance of these facilities is a violation of the bylaws and county regulations.

How do we get the developer board of the HOA to stop using our funds this way?
RogerB
(Colorado)

Posts:5067


08/17/2006 10:59 AM  
David, congrats to you for monitoring the Developer's improper actions. Usually this is not caught until there is a transition audit. And those HOAs that are unaware may never recognize this misuse of funds. Demand in writing that the Board cease and desist from this illegal use of funds and to bill the Developer for the previous improper payments.

If they fail to do so they are personally liable for knowingly being aware of wrongdoing. Make them aware that neither insurance, nor the "corporate shield", nor HOA indemnification will cover their costs plus yours for legal action if required to stop this illegal action.
GeraldT1


Posts:0


08/17/2006 11:30 AM  
DavidW5,

I still fail to see what is illegal here, please someone explain it to me. The owners in your community should be provided financials and accounting of where their monthly maintenance is allocated. However, you would be mistaken if you were under the impression that all the maintenance collected is held in reserve, and that the owners get a free ride until the association is turned over.

Your clubhouse has been in use by the residents, since 2004. So for the owners to turn around and sue the developer for not providing you written approval seems a little unfair, don't you think? Has the developer provided written notice of pool hours, rules and regulations of clubhouse use? If so, this could be considered "written approval".

Elections of unit owners to a board usually occur in phases when units are closed. As an example, New Jersey's Planned Real Estate Developement Act provides that when units are 75% closed, it's time for unit owners to be elected to the board. Therefore, the percentage of developer to unit owner board members is proportionate. Your state laws, or by-laws may have a similar requirement. If so, 600 units out of 800 is 75%. 75% of 5 is 3.75. It's seems time for 2 or 3 unit owners to be added to your board.

GeraldT1
NNJ
DavidW5
(North Carolina)

Posts:565


08/17/2006 2:52 PM  
Unfortunately in Virginia the decision on when to transition to homeowner control is exclusively with the developer. In our case the developer wrote the declarations such that election of homeowners to the board takes place after 10 years or when 100% of the units are settled, which ever comes first. We have one homeowner who was appointed (not elected) to the board who acts as a rubber stamp for the board majority who are all employees of the developer.

One reason why we began looking into this issue with the clubhouse has to do with the problems that have been occurring with the air handling system for the clubhouse and indoor pool. Even though this was new construction two years ago we are experiencing repeated repairs. We got access to the repair invoices. From Jan '05 through March '06 the board has spent over $33,000 on air handling system repairs (over 60 servce calls). We believe that the system was either under designed for the loads or was improperly installed. We think the developer should be paying the cost of these repairs or paying to replace the whole system. There are a number of other issues like this that led us to question why the association is paying these costs.
GeraldT1


Posts:0


08/17/2006 5:37 PM  
DavidW5,

Thank you for the specifics, this sheds light.

You have been successful in documenting an issue and associating a monetary cost prior to the association being transitioned to the owners. Congratulations, good work!!

Yes, the developer should pay the costs of a documented innefficient system that cannot handle the load capacity. This is a deficiency and should be documented as such via return receipt requested certified mail to the developer.

Typcially, it is not in the best interests of the developer to drag out construction for any lenght of time, let alone 10 years because the more that time lapses, the more deficiencies come to light.

A firm, but cooperative contingency of owners should impress upon the developer that is in his best interests to play fair with the association. I speak from experience, don't ever be afraid to ask or demand.

GeraldT1
NNJ

Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Who pays maintenance?



Get 2 months of free community web site hosting from Community123.com!



News Articles Provided by: Community Associations Network
News, articles and blogs about condos/HOA's

Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
HindmanSanchez Legal Notice:  (For messages posted by HindmanSanchez) This message has been prepared by HindmanSanchez for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Members of HOATalk.com should not act on this information without seeking professional counsel. Please do not send us confidential information unless you speak with one of our attorneys and get authorization to send that information to us. If you wish to initiate possible representation, please contact an attorney in our firm. Our attorneys are licensed to practice law in the state of Colorado only.

Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement