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Our HOA which the residents of our townhouse community took over from the builder as required in our bylaws in August just received a bill for interest charges. The charges are for a loan that the builder made to himself (as the HOA) for start up costs, initial bills etc. The HOA(the builder) did make interest payments on the loan as reported on income tax while the builder had it. Unfortunately at our transfer meeting nor at any of our closings were any town house owner made aware of this loan. We are verifying the loan in the records we received from the builder but it appears that the HOA owes the builder about $8000. plus interest of 4 %. What can we do about this problem if anything???????????????
We do need to pay the interest charges for this year by Dec 31,2011.
It sounds like your HOA needs to retain an attorney to help you translate and interpret what is going on. I've never heard of a builder taking a loan from an HOA.
I look forward to learning from this discussion. I have lived in and I advocate HOA's, but the HOA's I "bought" into have always been controlled by the home owners meaning the developer/builder was gone. I have never gone through a transition to the home owners.
I presently live in an HOA that the developer does control and will have to turn it over to the home owners when the last home (all stand alone homes) is sold which is expected in mid-2012.
I am no novice at this. I have served on several HOA BOD's and know my way around them, but the transition is new to me.
All that said, if I was confronted with the issue as presented (especially as a member of the HOA BOD), it is one of the few times I would say lawyer up.
Last edited by accufitgolf; 12-23-2011 at 02:32 PM..
This happened a couple years ago in a HOA development here. The units (high end townhouses, $600K and up) had just started to be sold and they had very little in the way of reserves, the HOA was still controlled by the builder/developer. We got hit by a real nasty set of storms and there was no money to pay for snow removal. The developer loaned the HOA funds to pay for that, and a few other things. Once the HOA transitioned to the owners they found there was a several thousand dollar secured debt on the books, which they are now paying off.
A note: the first couple sections of units sold right before the meltdown, those original units are now being resold in the low $300's with new units going in the mid-$250's and lower.
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