FL Developer ordered to turn over control of HOA to homeowners

Benderson Development Company has controlled Kings Gate HOA for nearly 20 years.

 

By Deborah Goonan, Independent American Communities

 

Florida Department of Business and Professional Regulation (DBPR) recently ruled that the developer of Kings Gate subdivision, Victoria Estates Ltd. (Declarant), must hand off control of the homeowners’ association to members.

Victoria Estates Limited is owned by Benderson Development Company.

As previously reported, Kings Gate was established in 1998, and the developer has maintained control of the HOA board ever since. Association members – homeowners in Kings Gate – have never elected their HOA board.

After 19 years, of five members on Kings Gate’s board, three are employees of Benderson and 2 are homeowners that have been appointed by developer.

So that the reader may better understand how rights of property owners in HOAs are affected by developer control, I have included a copy of the April 2018 DBPR ruling.

On page 3 of the Arbitration ruling issued by Florida DBPR, scroll to page 3 to view a typical example of the level of control a developer (Declarant) has over homeowners and residents of the community. On page 5, the developer grants himself “weighted voting” status or 3.6 votes per unsold parcel.

Other association members – the homeowners – get one vote per parcel (lot or home).

On page 8, the developer amended the governing documents to state that control of the HOA would be passed to homeowners at the time one of these three incidents occur, whichever occurs first: a) three months after 90% of lots are conveyed to parties other than the Declarant, b) 15 years from the date of declaration amended in 2006, in other words, in 2021, or c) when the Declarant voluntarily decides to give up control of the HOA to members.

Notice that the expiration date of Declarant control was changed by the developer himself, without any vote of membership, from 2013 (15 years from 1998) to 2021!

But that wasn’t enough assurance for the developer. On page 10, you can see that Benderson amended the governing documents again in 2009, to remove the 15-year expiration date of Declarant control.

So that meant that, the only way the Benderson would turn over control of the HOA would be to sell 90% of parcels.

However, homeowners point out that the developer simply stopped selling homes before reaching the 90% threshold.

But, as it turns out, Benderson did not create perpetual control of Kings Gate HOA after all.

On page 14, DBPR notes that Benderson’s 2006 and 2009 amendments are invalid, because, under state law governing Kings Gate HOA, those amendments would have required a vote of association membership, with 75% of total voting interests agreeing to the amendments.

Of course, no membership votes occurred.

In short, Benderson did not follow proper procedure for amending the governing documents, and therefore, Declarant control expired in 2013.

DBPR has ordered that, according to FL Statute 617 (which governs older associations), and governing documents of Kings Gate, the developer will only be able to elect 2 board members, and is no longer entitled to weighted votes for the parcels he still owns.

An election must be held prior to June 15, 2018.

Stay tuned for future updates on the status of the first homeowner board election in Kings Gate.

 

 

 

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