Posts Tagged ‘Developer’

Turnover Does Not Have To Lead To Fumbles

September 20, 2012

I’m focusing on HOA turnovers in my training seminars this week and next.  Turnover is when a development comes under the control of an elected board instead of the original Declarant.  Turnover rules are a good thing, but there are few rules in place here in Idaho.  The turnover process is mostly governed by good faith and common sense.  Unfortunately, both of those things are sometimes in short supply.

So, here is a helpful checklist of documents or information to ask for from your Idaho developer at turnover:

  • Corporate Documents
    • Articles of Incorporation
    • Bylaws
    • Meeting Minutes
  • Association Information
    • Original Declaration of CC&Rs
    • Adopted Rules & Regulations
    • Current List of Owners & Mailing Addresses
    • Inventory of Personal Property
  • Construction Information
    • As-built plans
    • Contractors who worked on common areas
    • Warranties
    • Approvals/compliance with development agreements
    • Assignment of Water Rights
  • Financials
    • Bank Account Control or Balance
    • Budget
    • Tax Returns
    • Accounts Receivable/Payable
  • Legal Documents
    • Contracts
    • Insurance Policies
    • HUD certification (if applicable)
    • Ongoing enforcement/collection/other litigation
    • Transfer/ownership of all common area & easements

Some of these are merely intended to be helpful, but Idaho law requires non-profit corporations like HOAs to maintain certain corporate documents on file.  Turnover of those should not be negotiable.

-Jeremy O. Evans

PS, I compiled this list from experience, but I also checked the web for ideas from other jurisdictions.  A few sources that I found helpful were:

http://www.aboutmyhoa.com/fnddev.htm

http://www.floridacommunitylaw.com/lawyer-attorney-1725283.html

http://smallbusiness.chron.com/checklist-development-turnover-36569.html

http://www.hindmansanchez.com/resources/newsletter/five-things-you-need-know-about-transition

http://www.bttransition.com/master-turnover-checklist/

http://www.cktha.org/linked/management%20handbook%202011.pdf

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Grand Theft HOA: Developer Board President Charged

September 12, 2012

Wow, Florida’s getting an unfair share of  juicy HOA news this week.

This story comes from Central Florida, where apparently people live in nice subdivisions on the everglade swamps between Tampa and Orlando.     

This guy, no Mickey Mouse fraud, was the developer of a homeowners’ association that was not finished before the bust in 2008.  Left an unfinished association and a bunch of empty lots, it appears Mr. Meadows decided to make the most of the situation by “financially exploiting” (per the State Attorney) the homeowners that had already bought in.

Mr. Meadows allegedly set up a rigorous and illegal fine schedule, charging as much as $100 per day for minor infractions.  The association’s funds went to contracted companies that Mr. Meadows owned, and occasionally  to pay unrelated bills like his personal mortgage.  He is charged with misappropriating over $500,000.

Fortunately, the State Attorney’s office got wind of it, and, after four years, has thrown the book at Mr. Meadows.

When a developer controls an Association, either here in Idaho or in Florida, many of the democratic processes and checks-and-balances that normally protect Association Members do not function.  However, owners need to be aware that they still have rights, and that the Association must be run according to state law.  Board members, whether they are elected or not, still owe fiduciary duties to their Association.  They must follow conflict of interest rules, make disclosures, and, at the end of the day, might get dragged off to Court.

Without awareness of homeowner association issues, and with no common interest ownership laws, it would be hard for homeowners to get the attention of prosecuting attorneys here in Idaho.  It would be difficult to find someone like Polk County’s Investigator Stephen R. Menge to dig into the nitty gritty.

A Ditch Runs Through It

August 14, 2012

Ok, I admit it, the fly fishing photo is a red herring.  Idaho is well known for its fly fishing, but it ought to be just as well known for its amazing irrigation systems.  These canals, and the institutions that maintain and operate them, allow thousands of us to live and farm in what was once a rocky desert.

In Idaho’s Treasure Valley, the canal system and farmland that it supports is steadily being moved, buried, and reshaped into HOA-governed slices: many what the New York Times called “a quintessential slice of American suburbia.” Some Idaho associations run irrigation or well systems, so irrigation is a central part of their role.  However, for most suburban HOA-dwellers and boards, this engineering marvel is a scenic backdrop, but not much more. This should not always be the case.

When a developer moves in and builds homes where there was once open farmland, the canals are buried, put in pipes, or put into concrete spillways along major roads.  Sometimes the open canals get attention when a child is tragically swept away, but usually they remain in the background for suburban and urban (sic) Idahoans.

But buried or not, canals require maintenance and care.   Often large volumes of water flow through these arteries.  Roots can catch onto debris and block the flow of water.  Clogged canal pipes can flood and damage homes and property.

Idaho code requires the owners of the canals–irrigation companies–to maintain their canals:

42-1204. Prevention of damage to others. The owners or constructors of ditches, canals, works or other aqueducts, and their successors in interest, using and employing the same to convey the waters of any stream or spring, whether the said ditches, canals, works or aqueducts be upon the lands owned or claimed by them, or upon other lands, must carefully keep and maintain the same, and the embankments, flumes or other conduits, by which such waters are or may be conducted, in good repair and condition, so as not to damage or in any way injure the property or premises of others.

Idaho caselaw has interpreted statute to mean that when a landholder puts a canal into a pipe, the landholder becomes responsible only for any increased maintenance costs.  However, these questions are usually not left to statute or courts.  When a developer seeks to move or bury a canal, the easement-holding irrigation company most likely will require a “license agreement.”  These license agreements are recorded documents in which the developer will take responsibility to maintain the now-buried canal.  The developer, in turn, may pass this duty along to the association in the CC&Rs.

If the CC&Rs of your Association require the Association to maintain a buried irrigation pipe, the Board should have a plan in place to regularly perform this maintenance.  Not only could an Association become liable to downstream water users in the event of a disruption of water, but it could find common areas and private lots swamped in the process.

Jeremy

Some History and Background: