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Tuesday, January 28, 2020
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Subject: Builder Rights and Responsibilities
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Author Messages
JoyceS8
(Pennsylvania)

Posts:1


01/11/2020 9:43 AM  
When our 27-unit condo was completed, the builder held back 2 units and rented them.

Builder turned the association over to the HOA years ago.

Builder has paid association fees and assessments as everyone else.

Builder just created a new company solely for the purpose of owning and renting these two units.

HOA considers this as a $0 resale, because it is a new owner.

At time of any resale, HOA requires $100 from the seller to complete all paperwork and $250 from the buyer as a capital investment buy-in fee.

All first-owners of the units paid the capital investment fee to the builder at purchase.

The builder never paid this to the HOA.

Also, at the time of any resale, the HOA uses the opportunity to clean up satellite dish installations, eg, requiring the seller to remove unused dishes and repair any damage, or the HOA will remove the dishes and charge the owner $250 per dish.

Also, these two units are currently and will continue to be rented.

The HOA collects a $100 fee for processing first-time leases (not on renewals) and requires prior lease approval (just to confirm that the lease is for at least one year and that there are no objectionable write-in clauses, such as allowing the tenant to run a business from the unit).

The HOA believes that this conveyance should be treated as any other resale, and hold the builder and new company to all the rules and fees for any resale.

The builder has told us that neither they or the new company are responsible for anything related to the sale and rental of the 2 units, because it is really still the builder's company that will own the units.

Would appreciate any comments or opinions. Thanks.
CathyA3
(Ohio)

Posts:667


01/11/2020 10:51 AM  
I think you need a legal opinion from someone who is familiar with Pennsylvania real estate and HOA law.

I looked at the Declaration for my community, and nowhere does it define "sale" or "change of ownership". The closest it comes is where it defines a "capital contribution" (what you refer to as a "buy-in fee) that is due at closing. The word "closing" is also not defined.

There are cases where a property can change ownership without going through what most buyers think of as a sale and closing - for example, the property is part of an estate and is inherited by an heir, or gifted outright by a parent. Your legal person needs to tell you whether what the builder did when putting the units into the name of an LLC owned by him constitutes a "closing" and thus would require an additional capital contribution. (I believe that he should have paid capital contributions when he developed the two units into rentals, but I'm not a lawyer.)

GeorgeS21
(Florida)

Posts:1877


01/11/2020 11:15 AM  
Did the COA prepare papers, docs, estoppel, etc to support the sale?

This sounds like really small potatoes if the same person still owns and is just transferring into an LLC or something like that.
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