legal questions allowed here? [HOA lot ownership]

In My Humble Opinion
1

I have a ‘broke’ HOA board who can’t afford to pursue a claim against the developer. They say that if I can get some opinions that we might win the case, they will spend the $500-1000 it might take.

The developer originally platted our area with 52 lots, one of which having “Home Owners Association” written on it. That plat was approved in 2008 by the County commissioners.

Shortly after construction, when roads and ditches were finished, he erected a sign at the entrance that showed that lot as being “Home Owners Association”.

Six years of lean times for the builder/developer go by, some homes are built and sold, but fewer than half. He brings in a new builder who takes options on all the lots and commences to build houses as quickly as possible, selling like hotcakes.

Our developer takes down the sign at the entrance, and files a change of ownership record with the county, ‘correcting’ the ownership of the lot previously shown as “Home Owners Association”. He sells that lot to the new builder along with all his remaining inventory of lots.

Commisssioners say he was within his rights, as developer, he could take the lot away from the HOA at any time.

Former partner in the development told me that the builder/developer had decided many years ago that the people in the development didn’t really need that lot and that he did, but the plat wasn’t changed, nor the entrance sign removed until many years later.

2

Generally, questions that ask for legal opinions are posted in IMHO …

This sounds like a very localized issue, there may not be any “one size fits all” answer. I suggest getting a copy of the title chain for that particular lot and show it to a local real estate lawyer. Many will provide a one hour free consultation visit and give you a recommendation.

This certainly sounds sleazy, but I wouldn’t be surprised if it’s totally legal …

3

Moderator Action

Legal questions are allowed here, but please put them in the IMHO forum. As the forum name implies, any answers you get are just the opinions of some online folks and should not be considered the equivalent of professional legal advice. As always, consulting a professional is best.

Also, please use more descriptive thread titles. I have edited the title to more clearly indicate the topic.

Moving thread from General Questions to In My Humble Opinion.

4

Start with any documents about the HOA – I mean, the HOA should have copies of their creation papers, right? What do they say? Then, see if there’s anything that promised the first home buyers that there was an HOA that owned the lot (start with the Purchase and Sale agreements, etc.). That’s all stuff someone can look at without paying a lawyer.

5

In most cases, when a new development begins, the builder initially controls the HOA. The HOA is normally not handed over to an elected board of the actual homeowners until the development is near completion.

What was the situation in your neighborhood and HOA? If it followed conventional norms, and the lot was converted from an HOA lot and sold while the builder controlled the HOA, then you’re SOL. It was within his right to do whatever he wanted, as he controlled the HOA at that time.

6

IANAL, but:

HOA’s are one of my favorite whipping boys…

The trick here is the sale of unbuilt lots to a second builder.

The rule in CA, at least was the rule, was that the developer WAS the HOA (in essence, if not law) until 50% of the “units” were built and sold.
If the original builder never developed more that 50% of the units, he was still the HOA - and could sell off the unbuilt lots - including the one one that had been labeled “HOA”.

The second builder may or may not have inherited the “HOA” title - my guess is that the agreement between the first and second builder was probably quite specific as to that lot.
Why didn’t the second builder just invest in the development? Why go to the trouble of buying a “started but never finished” development?

Again, my guess is that the “sale” was quite deliberate as to the HOA.

My guess is that the builder knew more about how to screw up the paperwork more than any $500-1000 legal fee will break.

7

I don’t know anything that could help, but for my own edification what exactly is going on here? By “lot” are we talking about a piece of land that will be sold to an individual so that they can build a single family home? If so, what does it mean for just one of these to be labeled “Home Owners Association”? Does that mean that the entire development is meant to be under an HOA? Or that the lot in question is reserved for HOA use (e.g. a shared facility like a swimming pool, etc.)?

8

Trying to answer some of the questions… After 5 years, the plat and entry sign still said “Home Owners Association” on lot 42, a large, 2.3 acre lot. The builder was scrambling every which way to avoid losing the property to the various banks he had pledged it to. The Covenant allowed the builder to turn the HOA ( he and his two partners were the HOA directors until then) over to the residents. This saved him around $3000 in electrical charges and a few thousand, as well, in landscaping fees per year.

When the HOA was installed, the covenant voting rules were set up such that the developer had 3 votes for each lot he owned, and residents had one vote for the ones they owned. Our annual dues barely covered the electrical, so we had to make a different arrangement with the power company to have each resident pay an extra $6 or so each month for the street lights. As new homes were built, slowly, our financial situation gradually improved.

At the time of the turn over to the residents of the HOA, I asked the main partner whether the time was ripe for us to take the deed to lot 42. He mumbled a reply and expressed surprise that we thought lot 42 was ours. I reminded him that the designation was in the plat approved by the county and on the entry sign. Nothing happened

A year passed, more homes were built, but far short of being able to exert voting control. I asked the question again, this time of the developer’s son, one of the partners. He told me that when the first two or three homes were sold, they asked the new people if they thought the community could support a swim club on lot 42. Those new people said they could not see how it would be economically viable. On that basis, they decided, since the finances of the development were precarious, to put 42 back into sales inventory.

In July, with the new builder being very active, I asked the county commission for their input. They basically said that while the situation might be false advertising, they didn’t see how they could tell the developer that he couldn’t use all the lots any way he chose. I argued that they had approved the original plat, showing lot 42 as belonging to HOA; they replied that HOA on that lot simply referred to the proposed school bus easement on one small corner.

The developer then filed a ‘change of ownership’ plat that removed the HOA designation from the lot and promptly sold it to the new builder.

The commission said the developer was within his rights, that changing the plat didn’t required new approval.

The HOA board said, “We aren’t going to spend lawyer money on your wild goose chase. The developer is God and we can’t do anything about it.”

9

A billboard isn’t a legal document. I’d say you’re SOL.
Sent from my iPhone using Tapatalk

10

One issue that nobody has mentioned yet is : how is Lot 42 defined? …i.e what category of land use is it zoned for?

This may be a totally irrelevant and off-base issue in your jurisdiction.
But in many places, each lot is defined for a specific type of use. You can’t build,say, a swimming pool, or a building designed for commercial business, on a lot designated for a private house.

Is this relevant for you ? On the approved (and legally binding) plat, what does the label “Home Owner’s Association” mean , from a legal point of view?
If lot 42 is significantly larger* than the other lots in the neighborhood, is that relevant to its zoning definition?
And what are there other legal zoning regulations that apply to lot 42? For example: The number of square feet that may be built, the maximum height of the building, the number of parking spaces,the building setbacks (=the distance between the building and the property line)? Are these regulations appropriate for a private house,or for a swim club?

Silly example: suppose the developer/HOA decided to use lot 42 to build a nuclear power plant instead of a swim club. That’s gotta be illegal, right? But exactly why is it illegal? Whichever local ordinances prohibit using the land by a nuclear power company may also apply to your situation in which the land is being used by a new builder.

(and I apologize if all this speculation is irrelevant–I’m just an anonymous monkey on the internet:) )

*(and 2.3 acres is pretty damn big for a private house!)

11

trying to answer two questions…

The zoning is for residences on minimum 1 acre lots. The covenant restricts the size of the homes to 1800 sq. ft and larger (many are around 2800)

I know that the commissioners thought, when the 2008 plat was approved, that the HOA was going to use the lot for a community building, playground, swimming pool or the like. I never thought there was a true question about our taking possession of the lot until first, the developer wouldn’t give me a straight answer about when they intended to turn over title…and second, when they filed a ‘change of ownership’ registery with the county. I questioned the county ‘how can they cnange ownership without acknowledging that someone (in our case, the HOA) was the previous owner?’ They simply said, ‘the developer can do whatever they please once the plat is approved.’ I said that was bullshit. They said the developer had been paying the $500/year taxes on the lot, not the HOA, so the developer owned it.

I know we are SOL. I wish someone here knew how to create a different result, but unless we had a promise in writing, I guess the approved plat was actually meaningless.

12

Net result, my advice to anyone buying a home…get EVERYTHING you think is included in the sale in writing. If a new neighborhood, dealing with the developer…make doubly sure all the promises are detailed.

13

or, as I do:

The first mention of “HOA” means I am gone.

I’ve told several agents that “HOA is a deal-breaker; don’t even bother telling me about it”. Not a one as acted surprised, let alone argue with me.
I’m guessing that means they’ve all encountered that mindset before

Maybe, if the HOA’s facilities (pool, gym, reception area, etc.) had to be built first and the HOA’s legal papers filed, then the development going belly-up would not matter.
As long as the HOA is merely a fiction created by and for the developer, this “Oooops, dropped it - and that poor HOA lot got its name scraped off” crap can continue to work.