La Bota Ranch homeowners demand representation on the board of directors, full accounting of records, and unspecified financial damages
By Deborah Goonan, Independent American Communities
Industry trade groups for association-governed communities keep telling home buyers and state legislators that homeowners, condominium, and cooperative associations are governed by a group of their neighbors. But that is not always true.
In many cases, HOAs are controlled by the developer (also known as the Declarant, in legal terms) during the years when homes are still under construction in the housing project or subdivision. Depending upon the size and nature of the community and state laws, a developer can retain full control – or at least majority control – of the association for a decade or much longer.
Here at IAC, you can read about many examples of developer-controlled communities. Today’s blog features yet another example: two HOAs in the gated, planned community of La Bota Ranch, Laredo, Texas.
In this case, the Muller family originally owned the land that has become La Bota Ranch, and they have maintained control of both HOAs since 1992.
That’s 25 years.
Homeowners are fed up. They say they are essentially being “taxed” by their HOAs without any representation on the board. In the meantime, they also say they are paying high property taxes to the County, even though their property values have decreased significantly over the past decade.
So five homeowners have teamed up to file a class action lawsuit against their developer board members and both homeowners associations in La Bota Ranch.
Note to readers who might be wondering about the possibility of a derivative lawsuit. Please read the following excerpt from the official legal complaint filed by the attorney for La Bota Ranch homeowners:
Developer control in Texas
According to Texas statute, homeowner representation on a board of directors for an HOA is supposed to begin when 75% of the parcels have been sold to private owners. At that point, at least one-third of the board should be represented by homeowners.
(c) The declaration may provide for a period of declarant control of the association during which a declarant, or persons designated by the declarant, may appoint and remove board members and the officers of the association, other than board members or officers elected by members of the property owners’ association. Regardless of the period of declarant control provided by the declaration, on or before the 120th day after the date 75 percent of the lots that may be created and made subject to the declaration are conveyed to owners other than a declarant or a builder in the business of constructing homes who purchased the lots from the declarant for the purpose of selling completed homes built on the lots, at least one-third of the board members must be elected by owners other than the declarant. If the declaration does not include the number of lots that may be created and made subject to the declaration, at least one-third of the board members must be elected by owners other than the declarant not later than the 10th anniversary of the date the declaration was recorded.
Source: Chapter 209, Texas Residential Property Owners Protection Act, http://www.statutes.legis.state.tx.us/SOTWDocs/PR/htm/PR.209.htm
Legal complaints in class action lawsuit
Plaintiffs in the class action suit contend that since only 13 vacant parcels exist, and since no new homes have been approved for construction since 2006, developer control should have come to an end.
Other claims in the class action lawsuit:
- Association dues have been mismanaged. Annual HOA assessments have increased by more than $1,000 per year, creating a hardship for members, and reducing resale value of properties.
- Despite sharp increases in assessments, maintenance is being deferred, and the overall condition of the common areas is declining.
- Developer-controlled boards have voted to create lucrative self-serving lease agreements for water supply pipelines and the common areas of La Bota Ranch.
- Roughly 50% of the $1 million annual budget is allocated to administrative expenses.
- Homeowners have not been allowed to attend board meetings. They can listen by telephone, but cannot speak. This is in violation of Texas statute.
- Developer-controlled boards have amended and/or restated governing documents without proper notice or a membership vote. In doing so, the Muller family has extended developer control until the year 2050.
- Both La Bota Association boards have engaged in fraudulent acts and have breached their fiduciary duties.
The Plaintiffs seek:
- Actual financial damages, to be determined through discovery and a full accounting of the records.
- Removal of developer appointed board members.
- A legal declaration that the developer control period for La Bota Ranch has ended.
- Exemplary (punitive) damages.
- Attorney fees and court costs.
If a Webb County judge is willing to certify class action, homeowners hope to be able to avoid unnecessary out-of-pocket legal expenses of filing multiple cases for essentially the same issues.
La Bota Ranch has more than 470 homeowners, according to multiple sources.
Homeowners are represented by Doanh T. “Zone” Nguyen of Laredo, TX.
Class Action lawsuit filed against La Bota Ranch
Posted: Mon 6:58 PM, Jul 10, 2017 | Updated: Mon 11:32 PM, Jul 10, 2017
LAREDO, Texas (KGNS) – A class action lawsuit has been filed against La Bota Ranch.
The petition was filed at the end of June against the board members of La Bota Ranch Owners Association.
According to the plaintiff’s petition, there are claims of mismanagement of Homeowner’s Association money.
Read more (Video):
La Bota Ranch Lawsuit, Statement and Organization
By Valerie Gonzalez | Posted: Mon 6:51 PM, Jul 10, 2017 | Updated: Mon 11:32 PM, Jul 10, 2017
Lawsuit filed June 30, 2017. See attachment.
Statement from the Board of Directors La Bota Ranch:
“Under Texas law, a developer can maintain control of a development until the development is finished. La Bota Ranch is still under development; thus, it remains under developer control. The developer understands the concerns of the homeowners. The main reason homeowners have not had representation is because of quorum restraints. The developer has been working diligently with legal representation to lower the quorum requirements so that homeowners will have representation on the board. We anticipate that homeowners will have a member on the board in the near future.
The increase in dues are due in large part to attorney’s fees paid to a law firm to collect delinquencies that resulted from the great recession.
However, we are listening to the concerns of the homeowners very carefully, and we have held several meetings for owners over the last year to discuss reasons for the increase in assessments. The assessments were kept artificially low for 15 years to keep costs as low as possible for homeowners, but now it is time for the community to institute responsible upgrades.
We have installed a variety of community enhancements including: speed bumps, solar lights, recreational equipment and new security software to keep La Bota Ranch safe, secure and a great community to live. We look forward to continuing to work together with our owners to preserve, protect and enhance our property values at La Bota Ranch.”
Read the lawsuit: