Get 1 year of free community web site hosting from Community123.com!
Sunday, April 05, 2020











HOATalk is a free service of Community123.com:

Get 1 free year community website and email newsletter 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: Your Lake, Your Bill.
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
WilliamS1
(South Carolina)

Posts:113


07/11/2011 10:46 PM  
Your Lake, Your Bill.

Our HOA has several small lakes within it. About 30% of the homes reside on these lakes, however all 100% of the homes within the community are paying uniformly for the maintenance of the lakes. All the lakes are hidden behind homes with no road view. Lake property lot lines typically run to the center of the lakes. According to the CCR, lake access is very limited with only few places to launch a small canoe or kayak. Homeowners can use the water but are not to beach on a yard unless an emergency of course.

A movement within the neighborhood is suggesting lake homes pay more in fees to cover the cost of maintenance. The management company has suggested that it would be impossible to change the covenant, and might even required the individual mortgage companies to be notified and involved. Why would the mortgage companies need to be involved? Has anyone experienced this?
TimB4
(Virginia)

Posts:16704


07/12/2011 3:21 AM  
William,

The process to amend your CC&Rs would be within the CC&Rs. Typically it requires around 2/3 of the membership to agree.

Depending on State laws and your own Governing documents, you may or may not have to contact the mortgage companies. However, that is typically just a courtesy.

What is the language in your CC&Rs about amending them?


Tim
TimB4
(Virginia)

Posts:16704


07/12/2011 3:45 AM  
Posted By WilliamS1 on 07/11/2011 10:46 PM

About 30% of the homes reside on these lakes, however all 100% of the homes within the community are paying uniformly for the maintenance of the lakes.




I just reread your post. As I said, it's certainly possible to change your CC&Rs, however it might be very difficult to get the numbers you need because of the amendment you propose.

Lets say there are 100 lots.

Per your posting 30% live on the lake. It's a safe bet that they will vote against the amendment.
If 2/3 of the membership is needed, you will need 67 votes that are in favor of the amendment.

With the expectation that all of the 30 lots will be voting nay and with 67 yea votes needed, you will need to have 97% of the membership willing to participate. My Association did amend our CC&Rs and we barely got 75% participation. Granted our changes were not as volatile of an issue (which may be in your favor to get the attendance).

I certainly understand your concerns. I will caution you that this idea will most likely cause major division within your community during the debate process. It's also possible that if you succeed, there might be a legal challenge to the amendment (so follow procedures to the letter).

Good luck.

SteveM9
(Massachusetts)

Posts:3599


07/12/2011 4:28 AM  
The management company has suggested that it would be impossible to change the covenant, and might even required the individual mortgage companies to be notified and involved. Why would the mortgage companies need to be involved? Has anyone experienced this?


Legally the mortgage company has an interest in the property. Meaning, they own the property they need to approve any change to the property. If they disagree with this change, they could tell the homeowner to pay the full balance of mortgage in 60 days or so. With dropping home values, this could be disastrous for homeowners and your HOA.

You may even need 100% of people to vote yes. Depends on what your CCR/Bylaws say.

In a nut shell, the developer set up the dues in your community in a certain way. These dues represent shares/votes. Its pretty much impossible to change how this is divided.

PS. If everyone is allowed to use the lake, even from specified areas, you are still equally using it. There may be some things you can do to reduce costs, but changing the structure of the HOA may not be one of them. Doesnt matter how fair you think it is, or isnt.
SusanW1
(Michigan)

Posts:5202


07/12/2011 5:59 AM  
Are you saying that the off-site homes have NO access? No beach? No access to launch boat? No picnic area? Yet everyone has paid the same according to the CCRs from the start?

Seems odd to me.

DonnaS
(Tennessee)

Posts:5671


07/12/2011 6:19 AM  

William,

Who owns the lakes? The association most likely and those are not lakes but water retention ponds which keep the streets in the developement from flooding. They would be called common area.

When the lake lots were purchased by those owners, most likely they paid extra as they are considered "premium lots" but they are part of the entrie plat for the developement. Your documents might say that "all owners pay an equalportion of the maintenance fees" or something like that.

From this----" According to the CCR, lake access is very limited with only few places to launch a small canoe or kayak. Homeowners can use the water but are not to beach on a yard unless an emergency of course. " I would say that no, you may not assess them as having special prvledges to the lake.



MelissaP1
(Alabama)

Posts:9136


07/12/2011 8:49 AM  
The lakes on on Association property correct? Who makes up the association? ALL the owners. So why wouldn't 100% of the owners pay 100% of the cost of ownership despite who may have more access? I am sure those 30% of those homes paid an upfront extra premium to get those lots along the water already. I would say requesting a change of them paying more is unfair and unequal.
It's just a case of the "Grass is greener on the other side" but they don't account for more mosquitos...

Former HOA President
WilliamS1
(South Carolina)

Posts:113


07/12/2011 8:52 AM  
Great responses. Thanks but further questions.

The property lines run into the lake and come together in the center. There would be no change in the property lines itself. The use of the water ways is for the general homeowneship but access is very very limited and only a few go to the water for anything.
Correct they are large man made retention basins connected all over the area and snakes and allegators are present. There is a small shoreline easement for HOA use in maintaning the lakes.

I agree that it could be very difficult and split our neighborhood up. The CCR have been interpreted loosly and some people mostly kids have used the 10ft easement around the lake for general use.

I have two real questions on the issue.

1. What would trigger the mortgage companies needing to get involved in a covenant change if there is not change in the property lines?

2. If someone where to hurt themselves or drown while on or near the lake, would it fall on the HOA or the property owners insurance.

I think what I am driving at is to eliminate the use by all homeowners except those which have lake property. This would be for general safety, liability and security reasons. The lake homes would pay a larger amount to maintain the ponds but in turn they would have the privacy of not have any unknown homeownes or others on the lake or on their property.

What do you think?
MelissaP1
(Alabama)

Posts:9136


07/12/2011 9:09 AM  
I think making the lake exclusive to only to those who have houses on the lake is unfair. Lakes are a selling point to other potential buyers who may want to use of those lakes. It's not fair to the other owners who may on occassion want to make use of their common element. Essentially, why rock the boat if everyone is sitting in it?

The mortgage company being involved is a bit of a stretch on changing the convenants. I would say they aren't a factor unless the mortgage company owns the whole HOA. Otherwise, it's the owner's group majority decision to change the rules.

If an accident occurs at the lakes, ask your insurance company what the response would be. Hopefully, you have signs posted at these general access points stating for HOA members/guest/Swim at your own risk type signs. A good general rule board is always a good idea even if ignored. However, the overall accident in the lake would most likely fall on the HOA's insurance which your HOA should have liability insurance to cover.

Former HOA President
WilliamS1
(South Carolina)

Posts:113


07/12/2011 9:18 AM  
Excellent point Melissa. The selling point for homes is a great point for keeping it as is. I think the board must educate access as well as the rules on the lakes. Thanks for the posts you all have contributed to the course of action on this. HOA talk is a great tool.

Take Care
BruceF1
(Connecticut)

Posts:2535


07/12/2011 9:21 AM  
Posted By WilliamS1 on 07/12/2011 8:52 AM

1. What would trigger the mortgage companies needing to get involved in a covenant change if there is not change in the property lines?


I think the answer to that question is easy. It simply may be a requirement, period. Check the following:
a.) Your mortgage contract. See if there is a requirement in there to notify them of any change.
b.) Check your CCRs. There may be a clause in there that requires mortgage companies to be notified of ANY change.
c.) Check your state laws. There may be a requirement that mortgage companies be notified of ANY change to the CCRs.
DonnaS
(Tennessee)

Posts:5671


07/12/2011 10:41 AM  

William,

Most every set of documents that I have seen where the lender notification is written, is there to mean that the lender wants to know big stuff, really, really big stuff. Like if the association is going to default on it's financial responsibilities, is it going into receivership, going from condo to co-op and items that directly affect the financial cross pollunation between a lender and an owner.

Lenders don't care if you are changing fence allotments, parking boats and pretty much all of the operations of the HOA unless it means that they will be directly affected by some type of amendment change.

IF the HOA is changing property lines, that directly affects the lender because of the boundry lines and that would be something that they would need notification of because they own the land and need to approve changes for the tax records and County map records as well as the lenders records.

Again, I am quite sure that you may not take away the common areas from the membership unless there is a 100% vote from them to do so. The lakes belong to every member as they have the 10 foot easement around the lakes.

1. What would trigger the mortgage companies needing to get involved in a covenant change if there is not change in the property lines?

SteveM9
(Massachusetts)

Posts:3599


07/12/2011 2:02 PM  
1. What would trigger the mortgage companies needing to get involved in a covenant change if there is not change in the property lines?


The fine print that no one reads. I wouldn't risk the largest investment of my life when all I needed to do was print a letter and mail it. Why risk it? Banks are evil.
TimB4
(Virginia)

Posts:16704


07/12/2011 3:16 PM  
Posted By WilliamS1 on 07/12/2011 8:52 AM

1. What would trigger the mortgage companies needing to get involved in a covenant change if there is not change in the property lines?




As others have said, check the riders on the individual mortgages. However, a simple notice to the bank saying if they do not agree that they should reply. You will need to consult the Associations Attorney.

Note: I also believe that the PM stated things the way you posted as a deterrent to keep you from stirring up an issue that they don't want to deal with.



Posted By WilliamS1 on 07/12/2011 8:52 AM

2. If someone where to hurt themselves or drown while on or near the lake, would it fall on the HOA or the property owners insurance.




This would depend on the conditions surrounding the incident. I would expect an attorney to name everyone they can and have the court assign percentage of responsibility.


BruceF1
(Connecticut)

Posts:2535


07/13/2011 5:19 AM  
On the subject of "Do Mortgage Lenders have to be notified of CCR changes?"

Out of curiosity, I went back and checked my documents. Sure enough, they contain those sections you often skip over because they don't appear to apply to you. Here's what I found:

Declaration (CCRs): I found a section titled, "Mortgagee Protection." Kind of lengthy, so I won't try to quote it all here, but I'll try to summarize what the section contains. The Association must notify each mortgagee (lender)of any delinquency in the payment of assessments, any lapse or modification of any insurance policy maintained by the association, any proposed action that would require consent of a specified percentage of mortgagees (more on that later), and any judgement rendered against the association.

The actions that require consent of mortgagees include changes to the Declaration (CCRs) and other documents that affect: voting rights, reserve requirements, responsibility for maintenance and repair, rights to use common elements and limited common elements, unit boundaries, expansion or contraction of the community, insurance, leasing of units, restrictions on a unit owner to sell or transfer his or her unit, establishment of self-management when professional management had been required by any mortgagee, termination of the common interest community, and any provision that benefits mortgage holders, insurers or gurantors.

Other than document changes, mortgagees must be notified if the community is merged with another community, if the association grants any leases or easements (except for utility easements) concerning the common elements, and any action to assign the future income of the association.

The mortgagee protection section also gives mortgagees the right to inspect the books and financial statements of the association upon request, require audits, and send representatives to any association meeting which a unit owner may attend.

Mortgage Contract: My mortage contract contains a "Condominium Rider" which requires the borrower to "perform all obligations under the condominiums project's constituent documents" and to promptly pay, when due, all dues and assessments. The borrower must also take "reasonable actions" to to insure that the association maintains public liability insurance. The borrower also may not agree to change or amend any provision of the constituent documents of the association that would affect any provision that is for the benefit of the lender (such as the "Mortgagee Protection" section of the CCRs, as mentioned above) without the written consent of the lender. Also, if the borrower fails to pay assessments when due, the bank has the right to pay them and thereby make those payments an additional debt owed to the bank. The bank can also declare the borrower in default of the loan if the assessments are not paid.

So, do the banks need to be notified of changes to the association's documents? You will need to carefully read your own documents to find out.
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Your Lake, Your Bill.



Get 1 year 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.







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.
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