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Subject: CC&Rs written for Declarant but not modified after turnover
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BruceH11
(Florida)

Posts:1


12/03/2015 7:57 PM  
I am in Florida and have CC&Rs written by the builder (declarant) that allows special assessments for capital improvements by the board without an official vote. The builder used these to have total control. Now that the Declarant has turned over the development to the board these CC&Rs are being used by the board to build capital improvements without a real vote. They did an email survey and a great number about (35%) of people didn't vote. The CC7Rs talk about the declarant(builder) which means legally the corporation that signed the official documents. There is not a person on the board who is a signature to the documents or a member of the corporation. There is not an amendment to the CC&Rs that acknowledges this after turnover. Is this document legal and should it be a priority of the association to re-write the CC&Rs?
SheliaH
(Indiana)

Posts:1221


12/03/2015 8:36 PM  
Legal questions are best left for an attorney to answer.

That said, it's usually a good idea for the community to consider updating the CCRs because most of the time they're boilerplate versions that favor the developer (as you've found out) - if nothing else, language referring to the builder should be deleted. You may want to speak to the board about consulting an attorney about doing this properly and perhaps set up a committee that can poll homeowners and then draft items that should be added, clarified or deleted altogether. After that, the community can take a formal vote on making the changes valid. Your documents should already have language as to how all this is done, but once again, be sure you work with an attorny so any changes made will stand up in court. Have fun!
TimB4
(Virginia)

Posts:12577


12/04/2015 6:19 AM  
Bruce,

There is no requirement to rewrite any governing document.
When control is passed to the membership, they can rewrite, but are not required to. The sections dealing with the declarant are simply not enforceable.

One option would be to ask if the Board would be willing to start a rewrite committee. The purpose being to review the governing documents against applicable laws and propose amendments for the Board to consider. Remember to volunteer to serve on the committee if you are suggesting this as it shows you are committed to the end product.


However, if your current board isn't willing to entertain a rewrite or amendments, you will need to find individuals willing to serve that does want to do a rewrite and elect them to the Board.

When we did our last rewrite in 1993, it took 3 years to make proposals everyone could agree with and then spend the necessary time to gain support and gather proxies.


NpS
(Pennsylvania)

Posts:2801


12/04/2015 7:20 AM  
Agree with Sheila and Tim. As always, devil is in the details. Depends on your docs. All or some of the delarant's rights and responsibilities may pass on to the HOA board. Sometimes presumed if not stated. Sometimes language just isn't clear.

Current board members don't have to be signers. If you object to non-members becoming board members, that could be part of the revision discussion. Best of luck.


Je publie un degagement de toutes responsabilite. Read all posts at your own risk.
LarryB13
(Arizona)

Posts:3730


12/04/2015 7:27 AM  
Posted By SheliaH on 12/03/2015 8:36 PM
You may want to speak to the board about consulting an attorney about [amending CC&R's] properly and perhaps set up a committee that can poll homeowners and then draft items that should be added, clarified or deleted altogether.


The board does not have any reason to be so cooperative. As things stand now, the board may spend freely and levy special assessments at will to cover the cost. What board member would not like to have those powers and who in their right mind would give that up?


RichardP13
(California)

Posts:1045


12/04/2015 7:32 AM  
Bruce

Your CCRs should have been written in such a manner than would give the developer control ONLY while they were building out the complex. There should be language within the documents spelling out actually what happens while they are in control and what happens AFTER turnover, especially for a regulated state such as Florida.

If you are not able to readily locate that information you might want to have an attorney versed in real estate/developer law review for you.

The BOD should not have the same powers after a turnover such as what you described. But, there may be limits as to their power. For instance, the documents may say the BOD can create a special assessment UP TO same 5% of the annual expenses without membership vote. Anything over the 5% may required approval by the membership.

A thorough review and understanding of your CCRs might be in order, along with state statues.
SheliaH
(Indiana)

Posts:1221


12/04/2015 11:18 AM  
Posted By LarryB13 on 12/04/2015 7:27 AM
Posted By SheliaH on 12/03/2015 8:36 PM
You may want to speak to the board about consulting an attorney about [amending CC&R's] properly and perhaps set up a committee that can poll homeowners and then draft items that should be added, clarified or deleted altogether.


The board does not have any reason to be so cooperative. As things stand now, the board may spend freely and levy special assessments at will to cover the cost. What board member would not like to have those powers and who in their right mind would give that up?






No they don't - and that's why the homeowners need to keep them in check. At the very least, they should be explaining to people why a special assessment is necessary, providing facts and figures. As we all know, some boards are better than others with that sort of thing and that's why most documents will state special assessments have to be approved by a certain percentage of homeowners. If this board can't or is unwilling to explain things, the homeowners need to stand up and vote them out. They will then need to have people willing to come forward and do things properly - and as we all know, there can be issues with THAT - sometimes the choice is between dumb and dumberer
RichardP13
(California)

Posts:1045


12/04/2015 12:04 PM  
Below is from one HOA in Florida as it relates to special assessments for capital improvements.

Section 5. Special Assessments.
1. Special Assessments for Capital Improvements. In addition to the annual assessments authorized above, the Association may
levy, in any assessment year, a special assessment, not exceeding $10,000.00 applicable to that year only. A special assessment for
capital improvements that exceeds $10,000.00 may be approved, provided that any such assessment shall have the same assent of the members as provided in Paragraph 2, Section 4 of this Article.

The Board, again without membership approval, raise monthly or annual assessment UP TO 20%.

So, as this states, Board can create a special assessment within certain limit WITHOUT membership vote. Same applies to California as far as raising within certain limits.
KerryL1
(California)

Posts:2587


12/04/2015 12:43 PM  
I also was wondering if state law gives you any help, Bruce. Richard's quote seems to be a start, but I know that FL has two kinds of statutes for HOAs--one for conos and one not. that's all I know. I believe their numbers are 2 720 & 78, but maybe not.
GenoS
(Florida)

Posts:868


12/04/2015 1:21 PM  
Posted By KerryL1 on 12/04/2015 12:43 PM
I also was wondering if state law gives you any help, Bruce. Richard's quote seems to be a start, but I know that FL has two kinds of statutes for HOAs--one for conos and one not. that's all I know. I believe their numbers are 2 720 & 78, but maybe not.

Florida HOA law is FS 720 and condo law is FS 718. Proposed legislation to be considered next year would combine the two. FS 720 as it exists today is silent on limits to increased assessments. The new language proposed for the 718-720 combo law limits regular assessment increases to 15% (unless the governing documents specify otherwise).

I'm not sure what it says about special assessments, though I recall there is language that addresses them in the proposed changes. I'm not going to knock myself out in an attempt to digest all 400 pages of the new legislation just yet since there's no guarantee it will make it into law.
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