Developer Doesn't Pay Homeowner's Assessment

Q: I belong to a homeowners’ association. The association consists of 18 lots and their owners and it was formed about 20 years ago.
 

The developer turned the association over to the owners about sixteen years ago.

The Articles of Incorporation and Covenants for the association state that the "Developer shall not be obligated for assessments on Lots owned by the Developer." The developer is long gone but his son is a homeowner on one of the lots and was a partner with him in the development. He has continued to own 3 of the lots and believes that he does not have to pay unless he sells the lots to someone else.

Does the developer have the legal right under the Articles of Incorporation and Covenants to not ever pay homeowners’ assessments? This is a friendly homeowners’ association and we are working together with the son to determine his rights and ours.

A: Some states have passed laws that overrule condominium and other association documents. These laws would require the developer to start paying association fees at the time control of the association is turned over to the homeowners.

Generally, as long as a developer is paying certain costs relating to the development of an association, the developer has the right to exempt itself from the payment of association dues. In other cases, where a developer has vacant lots, the developer isn’t required to pay assessments on those vacant lots. But the developer should start to pay assessments on those lots once those lots are developed into homes.

As your question implies, it seems inherently unjust to have an owner of property receive the benefits that the association is required to provide and not have to pay for them.

While it isn’t clear from your letter where your association is located, you can start your search by contacting an attorney that has extensive knowledge relating to condominium and homeowner associations.

If you want to do some of the legwork yourself, you can get a copy of the statute in your state that regulates homeowner associations and condominiums. In most cases there will be a provision in the statute that regulates the turnover mechanism and the developer’s responsibilities.

In doing your research, you will find that developers, in some cases, have done some interesting things in setting up associations to give them the flexibility to keep the properties for a while and not pay association dues. In most cases, however, that right is temporary and lasts only while the initial developer owned the land. That right generally ends when the title to the property is conveyed from the initial developer.

If the initial developer transferred title to the lots from the development company to the son, it’s most likely that the son would have to pay the assessments from that point in time.

Clearly, it is inherently unfair to own the land, build upon it and then claim you get the right to the benefits of the association without any cost. The developer’s son should pay his share of the expenses just like any other owner in the development.

Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website www.thinkglink.com