Today, I’ll travel to Jefferson City to testify before a Senate committee in favor of the Uniform Planned Communities Act, which is Senate Bill 230, sponsored by Sen. Joan Bray.
I have testified in support of the UPCA at two or three times previously. I’m not a lobbyist, and I testify for myself at my own expense, taking off work to do so. Here’s why:
The UPCA is a set of statutes that establish a formal relationship between those who develop real estate and those who purchase real estate that includes with it common elements (such as streets, water systems and sewer systems, detention ponds, clubhouses and pools), for which the lot owners are to be assessed for maintenance, repairs, insurance and replacement. As introduced, the bill would only apply to subdivisions having 12 or more lots. If there are no common elements, then the UPCA would not apply.
The UPCA, like the highly successful Uniform Condominium Act adopted in Missouri in 1983, requires that the developer create a homeowner association (HOA) to be responsible for common elements, with the HOA to be initially controlled by the developer, with control passing from HOA board members appointed by the developer to board members elected by the unit owners as lots are sold. The HOA powers are specified, so that there is a uniform and fair process for approval of budgets and imposition of assessments.
For the past 10 years, I have worked with frustrated developers, lenders, lot purchasers, regulatory agency personnel, and local government officials to attempt to solve problems that the UPCA would have prevented. The problems involve street maintenance, subdivision covenants that leave out important provisions (such as ownership and control of the water system and responsibility for road maintenance or a process for approving a budget or collecting assessments).
In some instances, the developer has failed to create an HOA, even though an HOA is mentioned in the subdivision covenants prepared by the developer, and the homeowners end up in bitter litigation over the rights and obligations with the developer or among themselves relating to the common elements. Such litigation is much less frequent with condominiums, where the Uniform Condominium Act has established and clarified these issues.
Much real estate development in Missouri takes place outside of cities and counties with subdivision regulations, and it is not likely that many counties will adopt subdivision regulations in the near future. To some extent, the UPCA would require that subdivision covenants include provisions regarding common elements that are typically addressed by subdivision regulations.
In the past, the legislators have not been convinced that the UPCA is needed. I can provide many examples of how the UPCA would have provided a mechanism for preventing many problems that are difficult and expensive to solve, without entailing significant expense to developers or homeowners.
I haven’t read this yet, but I have a few suggestions.
There needs to be some mechanism that would define how an HOA can be re-established by lot owners should the HOA become defunct or never instituted by the developer. Right now all of the lot owners in the development (as well as all of the lienholders) would have to individually ratify any restrictions which give the HOA any special powers, such as the ability to levy dues or fees. The re-instituted HOA would then be recognized as the continuing authority for any abandoned or newly created sewer, water, or street improvements.
This ability to create an HOA post-hoc might help to solve problems where the developer cratered the finances and abandoned or lost the project and there were not enough lot owners to support an HOA, or the HOA was never created, and the water and sewer systems are left in limbo or only partially completed and the ownership of infrastructure is in question. This might also be helpful in dealing with the older developments scattered around the state that were developed prior to modern water and sewer regs that now have substandard systems or no systems and have become blighted neighborhoods or ruined land.
What a great site! I’ve really enjoyed the article selection.
I am interested in the Missouri law and where to find answers related to housing developments that have limited common interests (such as a neighborhood road). The developers in this case did not spell out precisely when and how their responsibilities end and how the property owners were to assume these. The developers did not spell out when their interest ends. The Warranty Deed and the CCR’s do not mention this. The developers are now stating that they are disolving their incorporated entity and will no longer be able to help pay for road maintenance. They have suggested verbally that the property owners establish a Home Owners Association (but the Property Owners dont want to do this) . Does anyone know how the Missouri statuets might cover or treat this situation ? Some of the purchase contracts stated the developers responsibilty ended when the final property lot was sold. This is not mentioned in the Deed or CCR’s.
I share your frustration. The Missouri legislature has not created a framework of statutes to govern the relationship of developers and purchasers of lots. As a result, when there’s a downturn in the residential real estate market, many developers are unable to continue construction and maintenance of roads and other elements of infrastructure, and the ability of the lot purchasers to take over is hampered by the owners’ associations having not been formed or allowed to become defunct.
A homeowners’ association (HOA) established after plats and CCRs have been recorded and lots have been sold often does not have the legal power to maintain common areas and to impose assessments.
If you will contact me privately, I will attempt to direct you to a lawyer in your community who may be able to help.
Can you tell me how I can find out if the water and sewer are in the name of the HOA or still in the name of the developers. The name of the subdivsion is Sunshine Estates, in Buffalo, Polk County, Missouri. Thank you for your help.
You can check with the Polk County tax assessor to find who is the owner of the land where the water well and sewer treatment plant are located.
You can call the Missouri Department of Natural Resources to find out who holds the permits for the water well and the sewer treatment system.
You have some of the best information I’ve found about HOA’s ~ but what about the HOA’s that the developers never intended to incorporate in a rural area? Our declaration clearly states that property owners will belong to a ‘non-profit association’ which we view as one step up from a volunteer or social club.
How can an association hold title to the community water supply as a ‘voluntary non-profit unincorporated association’ without ever having organized under Missouri law as an unincorporated nonprofit? More importantly…where do they get the power to mandate membership dues, which are totally separate from water fees, when there are no other common grounds or recorded easements they have authority of? (Recently, according to the DNR, they don’t have the authority for a operating permit either)
How can they force property owners to pay the HOA officers to mow other property owners lots when the HOA doesn’t carry any kind of liability insurance? They only carry insurance to cover the tower and pump for the water supply.
We recently received a letter, and I think our personal homeowner insurance (farm policy) is about to go up because we own undeveloped land in a subdivision governed by a very aggressive unincorporated HOA that has no financial liability protection from the actions done by the association people.
Carol, I appreciate your comment about the quality of the information about HOAs on this blog. The information comes from experience in trying to find solutions.
Missouri law has a hole in it, which prevents some HOAs from ever being able to have the legal authority they need to impose assessments for common property secured by the right to liens and to hold permits for water and sewer treatment facilities. Unless the HOA is formed when the first lot is sold, files an annual report each year, and has powers in the recorded covenants to assess, to impose liens, to control common property, and to hold permits and operate the utility systems, the HOAs will never have those powers without the consent of 100% of the property owners.
Only legislation can change this situation. As mortgage lenders have started scrutinizing HOA finances and the viability of roads and utility systems in subdivisions, I’m hoping that lobbyists for Realtors, lenders, and others will join the Community Associations Institute and others who have supported legislation that would address these problems.
For your own situation, you should consult a real estate lawyer in your community.
We believe that what you do on your own time and expense on behalf of all parties involved in home ownership should be given a lot more than a “Job Well Done” award!
We just want to reaffirm how much we enjoy reading all the articles on your site… your effort and talent does not go unnoticed, it just takes a while for some of us to write on your blog.
Thanks again. Carol
Thanks for the kind words!
Its nice to find rural development information. I found your blog after lots of searching on MSN