After a developer transfers control of the homeowners’ association to residents, developers may or may not have to pay HOA dues on property.
Q: The builder of our subdivision has transferred control of the homeowners’ association (HOA) to the residents. Now that we run the HOA, the builder still owns property in the subdivision that they have not paid HOA dues for.
In addition, the builder recently sent the resident-owned HOA a tax bill for lake property that the builder still has title to. Should the HOA pay the tax bill for lake property that we don’t have title to?
Are we within our rights to ask the former builder to pay HOA dues for the other property they have still own?
A: You’d think that a developer should continue to pay taxes and expenses on property the developer owns, even when that developer is part of a homeowners’ association. The true answer is not always.
When a developer transfers control to a homeowners’ association, the developer typically also transfers ownership rights to any land the developer owns to the association. You’d think that the developer no longer wants or needs to own land that is part of an association once the developer no longer controls the association.
You might want to investigate further to determine what the homeowner association documents say about the transfer of control and what it says, if anything, about the lake land still owned by the developer.
The association might have to engage the services of an attorney that has extensive knowledge of setting up community associations and community association law in the state in which you live.
If you find out that the developer still has title to the land, this might be the time to remind them to transfer title to the land to the association. Depending on the size of your association, the developer may also need to give the association an accounting for money the developer might have received during the time the developer collected money from homeowners and the time the developer transferred control of the association to the association.
Getting from point A to point B with some developers is harder than others. Your association documents should reveal who should be the rightful owner of land that the association controls. You should also know that there can always be strange situations where an owner, even a developer, retains ownership of land that is used by the association. In this situation, the association may have an easement to use this land and may even have to pay some of the expenses to use the land, but title to the land remains in someone else’s name.
Depending on the type of association you live in, the developer usually will and should pay dues on developer-owned property once the control of the association is transferred to the association. Again, you need to review your association documents to see what they say about the transfer and you also need to know a bit about your state’s community association law to know what rights the association has to collect dues on developer owned property.
For these reasons, you need to assess what money you have received and determine if you received everything you are entitled to. You also need to talk to an attorney to go over your rights if the developer is not paying dues as required by the association documents or by the laws of the state in which you live.