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Long story short: Our HOA, through some very shady dealings, has decided to purchase the clubhouse which is located within our neighborhood (pool, a few tennis courts, a clubhouse building, etc) from the developer (who controls the board; like I said... shady).
In any event, the property appraised at 1.4 million and that is what our HOA is going to pay for the property. I contend the property is not worth anywhere close to that amount as it is a huge liability that could not really be cash positive in its current state.
However, I need market data to show that... not just me screaming "nobody in their right mind would actually pay 1.4 million for this, appraiser be damned"
Is there a place I could search for "comps" when it comes to a property like this? Obviously there are way fewer of these than condos and single family homes to compare, but I was hoping to be able to find what other clubhouses/country clubs etc in my region of the country (southeast, specifically Birmingham, Alabama) have sold for.
Is your neighborhood completely built out? If it's still in construction, it's not unusual for the developer to still control the HOA.
Why is it necessary for your HOA to purchase the clubhouse if it's a neighborhood amenity?
The neighborhood, 20+ years under construction, is on the verge of being fully built out. There are ~9 lots left (out of ~1000) that the developer still controls and therefore still controls the HOA. The developer will not turn over control of the HOA to the homeowners until all her lots are gone. And she won't do anything with those lots until she rids herself of the liability that is the clubhouse. These are her prerogatives. However, the way in which she is getting rid of the clubhouse is, imo, illegal.
Essentially, the developer is holding the homeowners hostage and is trying to force the homeowners into way overpaying for the rotting clubhouse so she can divest herself from the liability. A vote was put to the homeowners to buy the club and the vote failed. The board (remember, an extension of the developer still) changed the bylaws such that a much smaller percentage of homeowners would have to approve the measure so the sale could go through (quorum was reduced from needing the support of 51% of homeowners to as little as 15% (!!!) of homeowners). This was done even after we were assured the quroum would not be altered in order to force this through. A second vote was had and it "passed" (despite fewer homeowners approving than the first time around). And rest assured that if it hadn't, the rules would have changed again for a 3rd vote.
The HOA dues are $400 a year but that does not include access to the club. Access to the club is a separate membership (another $400, for $800 total) because the developer owns the clubhouse separately. The club is in mediocre shape and is hemorrhaging money because nobody wants to pay additional $400 for the pool membership. I believe about 90 out of 1000 homeowners are members of the club at that price.
I believe this situation is illegal and at the very least I'd like to show that similar properties to what we are being forced to pay 1.4 million for are probably worth half that or less... but I don't really know where to go to test that hypothesis so here I am.
I'm 99% sure the process is spelled out in the HOA filing. Developers control until a certain % of lots are owned by others - it's usually much less than 100%. I would imagine transferring ownership of the amenity is also spelled out. And that includes at what price, where that value was derived, etc.
Since the transfer of an amenity within a neighborhood to any entity except the HOA so rarely occurs, I doubt you can find any "comps". You might be able to get your hands on a copy of the appraisal, and find another local appraise to give input - or even engage as homeowners a differrent appraiser ... but the "validity" of anything beyond what is stated in the recorded HOA docs is going to be very low.
Long story short: Our HOA, through some very shady dealings, has decided to purchase the clubhouse which is located within our neighborhood (pool, a few tennis courts, a clubhouse building, etc) from the developer (who controls the board; like I said... shady).
In any event, the property appraised at 1.4 million and that is what our HOA is going to pay for the property. I contend the property is not worth anywhere close to that amount as it is a huge liability that could not really be cash positive in its current state.
However, I need market data to show that... not just me screaming "nobody in their right mind would actually pay 1.4 million for this, appraiser be damned"
Is there a place I could search for "comps" when it comes to a property like this? Obviously there are way fewer of these than condos and single family homes to compare, but I was hoping to be able to find what other clubhouses/country clubs etc in my region of the country (southeast, specifically Birmingham, Alabama) have sold for.
Could anyone perhaps point me where to start?
If it's not profitable, then its value is ZERO or close to ZERO as a business asset. Period.
I'm 99% sure the process is spelled out in the HOA filing. Developers control until a certain % of lots are owned by others - it's usually much less than 100%. I would imagine transferring ownership of the amenity is also spelled out. And that includes at what price, where that value was derived, etc.
Since the transfer of an amenity within a neighborhood to any entity except the HOA so rarely occurs, I doubt you can find any "comps". You might be able to get your hands on a copy of the appraisal, and find another local appraise to give input - or even engage as homeowners a differrent appraiser ... but the "validity" of anything beyond what is stated in the recorded HOA docs is going to be very low.
This is my experience, as well.
Our Charlotte, NC neighborhood transferred to the homeowners well before 100% build out - I think it was right around 50%, but I don't remember.
The deal with the clubhouse sounds super weird, too. Your HOA dues don't cover all the neighborhood amenities? Never heard of such a thing.
As others said, this should be spelled out in the HOA documents. I’d also check into the state laws regarding HOAs as I know in my state, NC it has all the requirements about when control is changed to the homeowners right in the statute.
In Florida, there are statutes about when a condo/development must be turned over the a resident-controlled board. Until then, the developer only has voting 'rights' for the number/percentage of units he/she owns. (In your case, the developer should only have voting rights for the 9-units still owned).
Typically, developers are quite anxious to rid themselves of this HOA responsibility, but, since your development is 20-years old .... and your developer is still holding on, it seems evident you will have to oust her by legal means. I've never heard of a situation where the developer with a minor position, was still holding on and essentially, controlling the HOA board with that.
Do you have resident/owner HOA members on your HOA board?? That would be the place to start. Who would hold ownership of the new proposed clubhouse ... and who will pay for it?? Normally, an HOA board cannot take on that type of purchase or financial responsibility without a majority vote of HOA owner/ residents. (Assuming your HOA rates will increase substantially, or at least by a little over $1.4K per each of 1000 owners.
Having been active in numerous boards, I can't help, but wonder, if you really have the full story about what is going on.
Last edited by jghorton; 05-05-2020 at 12:02 PM..
Reason: .
In Florida, there are statutes about when a condo/development must be turned over the a resident-controlled board. Until then, the developer only has voting 'rights' for the number/percentage of units he/she owns. (In your case, the developer should only have voting rights for the 9-units still owned).
She has voting rights for just her unsold lots, but she has yet to turn over HOA responsibility, and still has full power of appointing board members.
Quote:
Typically, developers are quite anxious to rid themselves of this HOA responsibility, but, since your development is 20-years old .... and your developer is still holding on, it seems evident you will have to oust her by legal means. I've never heard of a situation where the developer with a minor position, was still holding on and essentially, controlling the HOA board with that.
She is doing it as a leverage play. The homeowners obviously want control of the HOA so we can set covenants (and not be forced to buy crappy $600 mailboxes from a shell company that the developer probably owns, etc). Basically, there is value in taking control because she has been terrible. She won't give up control of the HOA before she sells the lots unless we buy the club at her absurdly inflated price.
Quote:
Do you have resident/owner HOA members on your HOA board?? That would be the place to start. Who would hold ownership of the new proposed clubhouse ... and who will pay for it?? Normally, an HOA board cannot take on that type of purchase or financial responsibility without a majority vote of HOA owner/ residents. (Assuming your HOA rates will increase substantially, or at least by a little over $1.4K per each of 1000 owners.
Yes, we have residents on the board. They were all handpicked by the developer because they want to buy the clubhouse and are pretending to represent us, the homeowners, but clearly actually represents the developer.
There was a vote to raise dues from $400 to $800 annually in order to purchase the club. The vote failed. Then, the developer appointed the Yes-men board members, changed the quorum, and held another, less publicized vote and it passed despite approval from less than 30% of the homeowners. But because of the revised quorum, it "passed".
Here is an analogy I posted elsewhere to describe the situation:
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To those of you who continue to defend the results of the 2nd clubhouse vote, I ask you if the following situation came up, do you think the residents should have some recourse?
Let's say instead of buying the clubhouse, the HOA board decided to buy 4 lamborghinis (MSRP $350,000 each) so the board members could have adequate transportation to the annual meeting. A vote was put to the homeowners. During the lead up to this vote, residents were assured that this was it and the quorum would not be altered in order to push an agenda through. The homeowners rejected the proposal to raise dues to purchase the Lamborghinis.
Then, without the consent of the homeowners, the board decides to change the quorum such that only a tiny percentage of homeowners need to agree, and then it is put to a revote. This time, with different rules and less publicity of the vote. The vote passes this time, despite having approval of even fewer homeowners than the first time around.
Oh, and by the way, comparable lamborghinis to ours that have actually been sold were going for half of MSRP.
Now what if I told you that the people who picked the board that "represents the homeowners" actually not only do not represent the homeowners, but actually run the Lamborghini dealership. And what if I told you that Lamborghini dealership had 4 cars sitting on the lot for years that they couldn't sell because they were way overpriced, with comparable cars selling for a mere fraction of MSRP?
You skipped over the post advising you that all of this is most likely spelled out in the hoa docs. If it's not for some reason, then an attorney may be required but that will cost money.
I've been involved in a shady developer/hoa scenario at a vacation condo development I bought a unit at. The developer was supposed to turn over control of the hoa to the homeowner board once 51% of the units were sold. Well he didn't want to do that, so he re-classified all the utility closets and housekeeping closets as unsold inventory, which gave him 1 voting share for each unit. Us homeowners had to hire attorneys and file suit to force him to turn over control.
Good luck.
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