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Subject: Community with a 55+ community within
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DavidG45
(Delaware)

Posts:62


04/23/2021 10:37 AM  
I am the resident board member of an HOA that is still under the control of the developer. Our community is going to be about 650 homes; 200 of which are in a designated 55+ section of the community with its own clubhouse and pool. All residents pay a "core" $85/month HOA fee that pays for landscaping and general M&O. All residents pay an addition $15/month to pay for the main clubhouse and pool. Residents of the 55+ community pay an additional $10/month to pay for the smaller 55+ clubhouse and pool. Residents not within the 55+ community are not allowed to use the 55+ amenities, but those in the 55+ side are allowed to use both clubhouses and pools.

The declarations only created a single HOA. There are a couple of paragraphs that describe what I listed above, but there is no separate charter, contract, or whatever that describes us as two distinct legal entities.

Our property manager has indicated that usually there are two charters: one charter that encompasses the entire community, and one that is only for the 55+ side. They suggested that perhaps the board should look into altering our organization in this manner. I'm curious to hear from others in a similar situation, to see how their HOA is structured.

Personally, I like the idea. But I want to get feedback before presenting it to the developer.
AugustinD


Posts:313


04/23/2021 10:48 AM  
Are you suggesting that the way residents are assessed (with those in the 55+ section paying a different amount compared to those not in this section) is unfair?

Of course, the manager's assertion that "usually there are two charters" intrigues. I have read a lot here at hoatalk and on the net. I have yet to read of a HOA that has two sections, with one designated for 55+ folks and the other for non-55+ folks. Of course, I believe they can exist. But the manager is talking like this is common.

Posted By DavidG45 on 04/23/2021 10:37 AM
Personally, I like the idea. But I want to get feedback before presenting it to the developer.
You like the idea because... ? It sounds like a big expensive legal hassle to me. I think the developer gave a lot of thought to how the subdivision would be set up. Furthermore, the developer assuredly spent a lot of money getting approval from the city and county for the developer's plans.

Suggest away. Expect the developer's answer to be a smile and a "the developer is not interested in repeating the city/county approval process and assessing the current Owners a great deal of money for this."
BarbaraT1
(Texas)

Posts:415


04/23/2021 11:16 AM  
Your manager is talking about a subassociation within a master association, which is extremely common. Subassociations exist when there are portions of a development that are subject to different or additional deed restrictions, and possibly different or additional assessments. For example, if you had a master association that included single family homes and condos, you would need different governing documents and different assessment rates because the condos will have a lot more common maintenance than the SFH and because there are shared common elements, will have more restrictions on things like what can be placed on balconies, porches, roofs, etc. And in most states, the laws regarding the governance of condos are different from those for SFH. So the condos would be a sub association within the master. Or the condo and SFH would both be separate subs in a master.

In your case since there are specific deed restrictions relating to that part of the neighborhood, and specific amenities that only those lots can use, it would make sense to have a subassociation.

But, it is also possible for governing documents to specify specific deed restrictions for specific lots. For example, lots on a lake, corner lots, or in your case - the lots in one particular phase that are age restricted.

An argument against having a master and sub is that each will need their own insurance policies, vendor contracts, management certificates, budgets, bank accounts, etc and maybe it's not worth the extra trouble and expense. An argument for is that the master and sub have different needs that can't be served under the same umbrella.

At the very least, the amenities that are used and funded solely by the 55+ section should have their own reserve account, so the rest of you don't end up paying to fix an amenity you can't use.





DavidG45
(Delaware)

Posts:62


04/23/2021 12:39 PM  
Barbara - thanks! Yes, a sub-association and master-association is the terminology the manager used. Thanks for summarizing the pros and cons. The current governing documents are as you mentioned first - they specify deed restrictions based on specific lots.

The initial advantage I can see with a sub-association right now has to do with COVID restrictions. The property manager has put together re-opening plans for our clubhouses and pools. The problem is, while I believe those on the 55+ side have the ability to pull off the plan, those on the other side do not. If we can't execute the plan for both sides, then neither side will get their amenities. However, if the 55+ was its own association it could open the clubhouse and pool without concern over what happens on the all-ages side.

We have similar issues with landscaping (the HOA provides lawn services), social committee, etc.

So it seems as if our current structure is not an outlier, but neither is the alternative structure. It's a question of whether the advantages are worth the extra trouble. Thanks for the insight.
CathyA3
(Ohio)

Posts:1888


04/23/2021 1:00 PM  
I agree with others who say that have a sub-association within a master association is pretty common. The ones I'm familiar with had a separate Declaration (or charter) since they had their own common areas and services beyond what the rest of the community had.

The thing that jumps out at me is the 55+ designation. Such communities have an exemption from Fair Housing laws in that they're allowed to discriminate based on age. But in exchange for this they have some pretty precise requirements that they must meet, and failure to do so can lead to the loss of that exemption - these requirements even include the language used to advertise the community. This suggests to me that separate governing would be smart even if not necessary, and I suspect they may be necessary.

I'm surprised the developer hasn't done this since they usually have all the legal documents vetted ahead of time by lawyers. I'd be happier if the OP got answers to this from a lawyer, because as is usually the case with Fair Housing issues, getting things wrong can have unpleasant consequences.

MichaelS56
(Minnesota)

Posts:181


04/23/2021 2:30 PM  
David, you are part of the developer keeping the monthly fees way too low to build up the money for future costs. I hope that you do not plan on being there in about 20 years when a lot of the common elements will need to be replaced and or repaired. I hop your roads and your street lights are not privately owned since you already have buildings and pools that will need to be replaced and or repaired. Sounds like you have received some very good responses. A lot to think about and work with.
DavidG45
(Delaware)

Posts:62


04/24/2021 5:46 AM  
Michael - your response confuses me. I have no idea what you're talking about. What makes your think our fees and reserves are too low?
AugustinD


Posts:313


04/24/2021 7:43 AM  
Posted By DavidG45 on 04/23/2021 12:39 PM
The property manager has put together re-opening plans for our clubhouses and pools. The problem is, while I believe those on the 55+ side have the ability to pull off the plan, those on the other side do not. If we can't execute the plan for both sides, then neither side will get their amenities.
-- Why does the 55+ side have the ability to pull off the plan while the other side does not?

-- Why, practically speaking, is the HOA unable to open just the 55+ pool and clubhouse (and not the other side)?

-- The HOA's Declaration undoubtedly gives the Board to create "reasonable rules" for the common areas. I do not see why there cannot be a rule on pool usage for the 55+ side and a different rule on pool usage for the other side.

-- Does the Declaration say anything about having different rules for one pool (or one side) vs. the other, other than the obvious main FHA rule that 80% of the homes on the 55+ side must have at least one occupant who is 55+?

-- I do not think there is an age discrimination problem by having different rules for different pools. Partly because, as CathyA3 has indicated, the allowable age discrimination here is "built in" to the fact that the one side is a 55+ community. But I admit I am not 100% sure. And again, I have yet to see a HOA set up with two different age-based sections (one 55+; the other not). Granted they may exist beyond the OP's example.

-- How would an FHA complaint by the younger side go? Young-ish family Owners: "The HOA is allowing the 55+ side to use their pool. Meanwhile, our family has two kids, and the HOA is prohibiting our family from using the HOA's pool." But the pandemic has created extraordinary times. Lots of Bylaws are being violated to accommodate the reality and risk of the pandemic. Law firms nationwide are saying, "Do the best you can." Conventional wisdom here is to choose the lesser of the two evils: "Break the bylaws (on say the annual in-person meeting requirement), or help stop the death and disability the pandemic is causing."

-- By the time an FHA complaint made its way through the mighty cogs and gears of HUD, the HOA may have decided things were safe enough to open both pools.

-- If a master-sub association arrangement were adopted (at some expense), then the sub-association could adopt rules to the extent the sub-association's rules do not conflict with the master association's Bylaws and Declaration. It appears the rules of the sub may lawfully conflict with the rules of the master.


For the archives: "Charter" refers to "articles of incorporation." Two different charters implies two different corporations. If the 55+ side and the other side share roads, for one, then I agree two different charters does not make good sense.
KellyM3
(North Carolina)

Posts:1695


04/24/2021 8:09 AM  
Hi David,

This forum will certainly dive into a deep debate over your situation because it's what we do.

First things first, have you simply had a conversation regarding why the developer established the HOA charter in such a manner? I bet there is precedent for your organization's structure.

In my experience, I'd prefer to have single HOA board oversee all pool and clubhouse amenities so that the responsibility for maintenance and fee-setting can reside under a single leadership board. Your current HOA board simply manages two pools and clubhouse. Ignore the fact that one facility is 55+ only. It is fine to bill 55+ owners for the exclusivity of their own pool facility. In fact, I bet it's popular.

If you split your HOA board, I guarantee that the new board, that only oversees the 55+ section, will underfund its 55+ pool facilities and ultimately leave the "old board" with a problem in future years as you'd still be one community and the community would be affected by a shuttered or under-maintained clubhouse and pool.

Keep control under one HOA board of directors and thank us in 10 years.
AugustinD


Posts:313


04/24/2021 8:26 AM  
Posted By MichaelS56 on 04/23/2021 2:30 PM
David, you are part of the developer keeping the monthly fees way too low to build up the money for future costs.
Can you share your math to back up this contention?
Each year:

$100 per month per home * 12 months * 650 homes
+
extra $10 per month per 55+ home * 12 months * 200 homes
= $804,000 of assessment income each year

Landscaping may very well cost on the order of $300,000 to $500,000 per year.

Management may run $200,000 or so per year.

Nothing leaps out at me as necessarily indicating the developer has set the assessment too low.
BarbaraT1
(Texas)

Posts:415


04/24/2021 8:28 AM  
This thread has taken a bizarre turn, and I’m not sure why people are bringing up underfunded reserves and roads when neither of those things were mentioned by the OP and there’s no reason to assume that they are relevant.

David - you’re still under declarant control. Are you part of an advisory committee or on some hybrid developer/homeowner board?

I am also curious as to why you think only the 55+ side can pull off the requirements to open the pool and it would be helpful to find out more of that story.

Creating a sub association is sometimes necessary, trouble and expense aside, but “so we can open the pool this summer” doesn’t strike me as a good reason. You’d be making an expensive change that would be difficult to undo to solve a temporary problem.

On the other hand, it would be exponentially easier to do while you’re under developer control so...

Let’s tackle one thing at a time. What’s up with the pool? Why can’t the non 55+ side do what needs to be done to keep it open?

DavidG45
(Delaware)

Posts:62


04/27/2021 1:37 PM  
Barbara

Thanks. The reason the 55+ side could "pull it off" is that we will either need a large number of volunteers who are taking reservations and checking people in to make sure we don't go over the state's COVID capacity restrictions, as well as clean all high-touch areas every two hours, or it will require a 3rd-party to provide those services at considerable costs. The 55+ residents currently do all of the volunteer work in the community, and would almost certainly have no trouble finding enough volunteers to execute that plan -- the All Ages side would almost certainly not be able to do it. Also, the 55+ would almost certainly agree to a special assessment of $100 each to get our pool open, but the All Ages side would never pass something like that.

As I've dug deeper into this, it does appear that the Board could present those options, and if only the 55+ does what is needed we could open just the 55+ side. I just know the howling from the other side would be loud.

Other reasons include the Social Committee. Currently the All Ages committee is strongly opposed to sponsoring events for 55+ members only, using the 55+ clubhouse. So all of a sudden a group of people who thought they were joining an "active adults" community are being told by others that they can't have active adult events. Which naturally is not going over well. Our 55+ members of the facilities committee would like to hold fundraising events to install a "beer garden" type area by our clubhouse, along with other improvements; but the other side doesn't want to do anything like that. It's just one thing after another where the 55+ folks are not able to do things for themselves.

Bottom line - your first post gave me the background I needed to understand our situation regarding the HOA organization. Thanks. I believe I am simply going to try to form separate committees - one for each side of the community - so they can all do things the way their side of the community wants to do them.


BarbaraT1
(Texas)

Posts:415


04/27/2021 2:32 PM  
Posted By DavidG45 on 04/27/2021 1:37 PM
Barbara

Thanks. The reason the 55+ side could "pull it off" is that we will either need a large number of volunteers who are taking reservations and checking people in to make sure we don't go over the state's COVID capacity restrictions, as well as clean all high-touch areas every two hours, or it will require a 3rd-party to provide those services at considerable costs. The 55+ residents currently do all of the volunteer work in the community, and would almost certainly have no trouble finding enough volunteers to execute that plan -- the All Ages side would almost certainly not be able to do it. Also, the 55+ would almost certainly agree to a special assessment of $100 each to get our pool open, but the All Ages side would never pass something like that.

As I've dug deeper into this, it does appear that the Board could present those options, and if only the 55+ does what is needed we could open just the 55+ side. I just know the howling from the other side would be loud.

Other reasons include the Social Committee. Currently the All Ages committee is strongly opposed to sponsoring events for 55+ members only, using the 55+ clubhouse. So all of a sudden a group of people who thought they were joining an "active adults" community are being told by others that they can't have active adult events. Which naturally is not going over well. Our 55+ members of the facilities committee would like to hold fundraising events to install a "beer garden" type area by our clubhouse, along with other improvements; but the other side doesn't want to do anything like that. It's just one thing after another where the 55+ folks are not able to do things for themselves.

Bottom line - your first post gave me the background I needed to understand our situation regarding the HOA organization. Thanks. I believe I am simply going to try to form separate committees - one for each side of the community - so they can all do things the way their side of the community wants to do them.






Let them howl!

I would tell your All Ages side - hey, here's the deal. If you want the pool open, we need volunteers or we need money. Step up, pay up, or shut up.

There should absolutely be two separate social committees if there will be events only the 55+ side can attend. Separate committees and separate social budgets.

For the beer garden and other improvements, I would call in your developer. Do they want a beer garden installed?
AugustinD


Posts:313


04/27/2021 2:33 PM  
Posted By DavidG45 on 04/27/2021 1:37 PM
Other reasons include the Social Committee. Currently the All Ages committee is strongly opposed to sponsoring events for 55+ members only, using the 55+ clubhouse. So all of a sudden a group of people who thought they were joining an "active adults" community are being told by others that they can't have active adult events. Which naturally is not going over well. Our 55+ members of the facilities committee would like to hold fundraising events to install a "beer garden" type area by our clubhouse, along with other improvements; but the other side doesn't want to do anything like that. It's just one thing after another where the 55+ folks are not able to do things for themselves.

Bottom line - your first post gave me the background I needed to understand our situation regarding the HOA organization. Thanks. I believe I am simply going to try to form separate committees - one for each side of the community - so they can all do things the way their side of the community wants to do them.
DavidG45, I would like to interject a bit on the subject of "social committees." "Social committees" come up a lot here. The first questions on the subject from the veteran posters at hoatalk usually include: "What do the HOA Declaration/Covenants say about a Social Committee?" "Do the Declaration/Covenants authorize spending money on what the social committee requests? If yes, please quote exactly what the covenants say."

In my opinion, if the Declaration/covenants are silent on the subject of a "social committee," then an HOA should not sponsor in any way a "social committee." If people want organized social events, then they can plan them without input from the Board; using their own money or donations they collect, independent of the HOA; and conforming with the official rules for use of the HOA's common areas.

There's a lot that can be said about alcohol events for family HOAs, and the serious legal hazards of the HOA sponsoring events with booze. Do ask and I am sure many will answer.
AugustinD


Posts:313


04/27/2021 2:35 PM  
Posted By BarbaraT1 on 04/27/2021 2:32 PM
For the beer garden and other improvements, I would call in your developer. Do they want a beer garden installed?
Developer: What am I, Santa Claus? No, no beer garden.

I agree about ignoring the howling. RHIP (rank, via age, hath its privilege. Just ask HUD.)
DavidG45
(Delaware)

Posts:62


04/27/2021 2:42 PM  
The declarations say the Board President can create committees as he sees fit. The Social Committee was one of the first ones created, and one of the ones most enthusiastically received. I believe they have too large of a budget, but that's a separate issue. This is an Active Adult community, and Social Committee is a given.
DavidG45
(Delaware)

Posts:62


04/27/2021 2:45 PM  
Yes, I think letting them howl is my best option. On the other hand, they outnumber the 55+ side two to one so they can always vote me off the board, even if their opinion is irrational.

As for the beer garden, bad choice of terms. It would look like a beer garden but function as a picnic area - where we can gather, eat meals when food trucks are in the neighborhood, play corn hole, etc. The Developer is fine with it - he just doesn't want to pay for it.

JohnC46
(South Carolina)

Posts:10952


04/27/2021 3:01 PM  
David

Good that you are stepping up but the bottom line is the developer controls things, not the BOD.

Clarify something for me. The young pay an additional $15 per month. Do the old pay $10 more per month only or $10 per month in addition to the $15 for a $25 per month total.

For sake of clarification let us call them the young and the old.

It is not uncommon to have an association within an association and the dues to be different. I know of one situation where each association pays a specific amount but the old pay more as they have an additional set of amenities. Old get to use the young amenities as they pay the same dues as the young but the young do not get to use the old amenities as the old pay more to have those amenities.

If if read it correctly, in your situation old get the use of the the young clubhouse and their pool. The young do not get the use of the old clubhouse nor their pool. This is a common occurrence based on a number of factors, 55+ not being the only one. I know of one master association where the amenities run deeper between associations such boat docks, tennis courts, pool, etc. Of course the additional dues run to $hundreds per month difference.
BarbaraT1
(Texas)

Posts:415


04/27/2021 3:38 PM  
Posted By DavidG45 on 04/27/2021 2:45 PM
Yes, I think letting them howl is my best option. On the other hand, they outnumber the 55+ side two to one so they can always vote me off the board, even if their opinion is irrational.

As for the beer garden, bad choice of terms. It would look like a beer garden but function as a picnic area - where we can gather, eat meals when food trucks are in the neighborhood, play corn hole, etc. The Developer is fine with it - he just doesn't want to pay for it.






They can’t vote you off unless they are willing to replace you and the loudest complainers are often the first to scatter when it’s time to volunteer. Worst case scenario is that you lose your unpaid, thankless job and your replacement finds out how hard it is.

It sounds like you have a hybrid developer/homeowner board?
AugustinD


Posts:313


04/27/2021 4:51 PM  
Posted By DavidG45 on 04/27/2021 2:42 PM
This is an Active Adult community, and Social Committee is a given.
I get that the Declaration says that the President may create committees. But does the Declaration say whether the committees are to be funded by money from the HOA? That Declaration is a contract between the HOA corporation and the Owners. Using the money only as the contract directs is important. Two cents.
MaxB4
(Maine)

Posts:214


04/27/2021 5:37 PM  
Augustin

I think your new mission in life should be identifying all social committees in all HOA's and Condos and and have th membership of each file a joint class action derivative lawsuit applying Augie's Law of Contracts.
DavidG45
(Delaware)

Posts:62


04/28/2021 5:58 AM  
Barbara - lol, you are correct. This loudest complainers do not work whatsoever for the community - they simply complain. We have a large retention pond that is developing a large geese population, with about 50 homeowners now finding tons of goose poop in their backyards. There was quite an outpouring on the community Facebook page, so I invested and found there were two genuine options - an expensive option of paying a 3rd party, for which there was no room in our budget. Or an inexpensive option that would involve about a dozen volunteers.

I reached out to the community telling them I wanted to form an ad-hoc committee to find potential solutions, and exactly one person volunteered. And that was an elderly lady in the 55+ who lives nowhere near the pond.

At that point I figure, well, I guess they don't mind goose poop bad enough to do anything about it!

BTW, yes, the developer holds two seats on the board, and the residents hold one.
BarbaraT1
(Texas)

Posts:415


04/28/2021 7:47 AM  
Posted By DavidG45 on 04/28/2021 5:58 AM
Barbara - lol, you are correct. This loudest complainers do not work whatsoever for the community - they simply complain. We have a large retention pond that is developing a large geese population, with about 50 homeowners now finding tons of goose poop in their backyards. There was quite an outpouring on the community Facebook page, so I invested and found there were two genuine options - an expensive option of paying a 3rd party, for which there was no room in our budget. Or an inexpensive option that would involve about a dozen volunteers.

I reached out to the community telling them I wanted to form an ad-hoc committee to find potential solutions, and exactly one person volunteered. And that was an elderly lady in the 55+ who lives nowhere near the pond.

At that point I figure, well, I guess they don't mind goose poop bad enough to do anything about it!

BTW, yes, the developer holds two seats on the board, and the residents hold one.




Unsolicited advice: you are in a difficult position right now. The developer board members are not interested in the day to day problems of the association, or in making things easier for you once they leave. This isn't a knock on them, it's just the nature of community development. But, a lot of the issues you are trying to address really shouldn't be left to one person to decide. If it is not something that MUST be resolved now, it's perfectly reasonable to say "that's something for the full homeowner board to consider, once transition occurs."

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