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Subject: Nonrecorded HOA documents
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SharonH9


Posts:0


01/07/2013 2:35 PM  
My husband and I live in a rural Iowa development of 25 homes with several vacant lots. The community was developed in the early 70’s. The developer went bankrupt then the community was organized by a nonprofit corporation according to the nonprofit corporation laws in Iowa at that time. That corporation went out of business (not sure of the particulars as to why) and was taken over by a new nonprofit in the 80’s. Our deed restrictions came from the original developer. The nonprofit corporation BOD states that they are not an HOA but they collect dues and fees for common areas and the community owned lagoon sanitary sewer system. They have a sign at the entrance to the development that membership is required before building can begin. (This is clearly a land-use restriction.) This sign was just recently erected by the BOD president. Their articles of incorporation refer to the CC&R’s original to the initial developer.

We contend that they are an HOA that did not properly record any documents and therefore cannot collect dues and fees for the common areas and the lagoon system. The bylaws tie membership to the nonprofit by charging 3 times more for sewer service to nonmembers than to members. So it is a confusing situation. Without going into the details, the nonprofit sued my husband and me for accessing the lagoon system as nonmembers. After spending thousands of dollars on attorney’s fees from both sides, a settlement was reached in 2011. We do not wish to remain members in this organization and do not believe the BOD can collect any more money from us. We base this conclusion on the recent Iowa Court of Appeals case in Chipman vs. Carney. The court ruled against the HOA because it did not properly preserve its assessments rights. We contend that our HOA or nonprofit whatever you want to call it failed to record anything.Its not that we don't believe in paying our fair share but the dues structure does not support a fair share system of collection nor does the BOD collect the same amount from everyone. It seems to be a discretionary amount depending on who you are in the neigborhood.

Any opinions on this situation would be appreciated.
SteveM9
(Massachusetts)

Posts:3599


01/07/2013 2:42 PM  
You said you reached a settlement. Opinions are un-necessary at this point. Its a done deal.
SharonH9


Posts:0


01/07/2013 2:53 PM  
The settlement was for access fees. They also want to collect yearly maintenance fees for the common areas and the maintenance of the lagoon.
JohnC46
(South Carolina)

Posts:9579


01/07/2013 4:06 PM  
Sharon

So are you saying you want access to some of what they offer (the lagoon) but not all as in pay for all?

SharonH9


Posts:0


01/07/2013 4:22 PM  
What I'm saying is the fees structure is not equal and proportional. Some homes pay less than others. Some don't pay anything at all and never have. We believe that we should pay a fair and proportional share of the expenses but so should everyone else. We have already given the BOD thousands of dollars which is way more than most people living here and paying dues and fees for 30 years has paid.
SteveM9
(Massachusetts)

Posts:3599


01/07/2013 5:36 PM  
Posted By SharonH9 on 01/07/2013 4:22 PM
What I'm saying is the fees structure is not equal and proportional. Some homes pay less than others. Some don't pay anything at all and never have. We believe that we should pay a fair and proportional share of the expenses but so should everyone else. We have already given the BOD thousands of dollars which is way more than most people living here and paying dues and fees for 30 years has paid.




There is really too little info to make any informed opinion.

From what I've heard so far, some properties may have a legal obligation to pay dues, some may not. Some people may voluntarily pay dues, just to access the lagoon, but have no legal claim to the property. And some want to access the lagoon, but not help pay the expenses to maintain/repair the very thing they want to enjoy. My guess is they would not enjoy it as much if it was not maintained or repaired.

I really dont know..... hehe.
LarryB13
(Arizona)

Posts:4099


01/07/2013 6:50 PM  
You have a mess. It sounds like the non-profit operation has a dubious claim to being successor to the dissolved HOA.

Your alternatives boil down to just two: spend years researching and litigating or draft new CC&R's.

With only 25 lots, the easiest course of action would be to circulate a new set of covenants to replace the originals entirely. The original declaration should have a section on amendments and typically it requires 2/3 or 3/4 of the owners. If you can get 100% agreement, the amendment would be bullet-proof.

In the amended declaration, create a non-profit to operate the sewer and to maintain the other common elements. Set out a formula by which each member is charged fairly and uniformly.

There are some court cases that have held that those who use certain common facilities, such as a road easement, have a legal obligation to pay a share of maintenance costs. I have never looked for cases regarding sewer systems but American law tends to favor making those who use or benefit from a facility pay for it.
SharonH9


Posts:0


01/08/2013 7:56 AM  
We do have a mess and I have left out certain elements of the story such as sewer access for members is $5,0000 and for nonmembers it's $15,000. Also that we were not informed of it until 8 months after moving into our house, the BOD treasurer called us up to inform us that we had 30 days to pay them $5,000 or the fee goes to $15,000. The going rate for sewer access in the area ranges from 0-$300 and the system is slated for take-over by the County in a few years. The only homeowners required to pay this fee are new people (new homes), the rest only have to pay the annual yearly user fees. So you see it is a complicated tale and was just wondering what comments anyone had to make on the precedenting Iowa case Chipmans vs. Carney. The court ruled against the HOA for not properly preserving their assessments rights in particular the maintenance and upkeep to the common roads in the development.

LarryB13
(Arizona)

Posts:4099


01/08/2013 7:18 PM  
In your state, does this sewer system need to be registered? I really do not know about sewer systems, but in AZ water systems must be registered and inspected. Those that serve the public must file their rates with the corporation commission. Just wondering if there are similar requirements for this system.
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Forums > Homeowner Association > HOA Discussions > Nonrecorded HOA documents



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