Developer fails to follow his own rules

Kay, what can be done when the developer, prior to the HOA taking over, fails to enforce the Declaration of Covenants or go after people who are behind in paying their quarterly fees?O.T., Florida

Dear O.T.: Unfortunately, developers can leave behind a number of problems when the association is turned over to the owners. Your question is one of the most frequent ones, along with those about construction issues.

To understand how the problem is solved, we have to go back to the basics. The developer creates the governing documents. As soon as the declaration and bylaws are recorded, the association is legally established. The developer is the owner of all the lots, and he serves as the initial board of directors.

The Declaration establishes the number of lots in the association and requires that every owner must pay his share of the association’s assessments. Since the developer initially owns all of the lots, he must pay all of the fees. As lots are sold, the developer’s obligation diminishes until the day when the last lot is sold, at which time the developer is no longer obligated.

The developer is also the initial board of directors. He can make up, amend, or eliminate rules at will. He can choose to follow the restrictions himself and see that new owners do the same, or he can choose to do neither. He can raise or lower the assessments, and he can choose to enforce or not to enforce the governing documents.

Here are a few suggestions for your Board to consider:

  • After establishing who is delinquent and how much is owed, the Board can begin collection action. They must make sure they have a collection policy that starts with the first notification to the owner all the way through foreclosure. If there is no policy, the board should approve one and notify all owners prior to starting collection action.
  • The Board should establish a rule enforcement policy, if it doesn’t already exist. It should state what action will be taken for each type of violation. Conduct violations should be stopped immediately. Architectural ones can also be stopped immediately or grandfathered until the unit is sold. Then the seller must restore the property to its original state prior to the sale. Pet and leasing violations can be grandfathered and then stopped when the new owner takes possession.
  • The collection and enforcement policies should be reviewed by an attorney prior to the Board’s enforcement of them. Once enacted, the Board must be sure to consistently enforce both policies.

Kay Senay is the author of “Condo Buying & Ownership Made Simple: Tips To Save Time & Money.” Visit her website at www.condo-condominium.com for free tip sheets. Her book can be purchased from Amazon.

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Fri, 31 Oct 2014 04:24:16 -0400

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