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Published Sat, Nov 03, 2012 08:00 PM
Modified Fri, Nov 02, 2012 08:59 PM

Residents unaware they were part of homeowner’s association

- ajames@newsobserver.com
New houses are still being added to the Timberlake subdivision, which will now operate two separate groups of landowners-- one group who will have to pay dues to a homeowner's association, and another group who will not. New residents will be expected to pay dues to the HOA.
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- ajames@newsobserver.com

CLAYTON -- More than 50 surprised and angry residents of a subdivision in northeast Clayton gathered Monday night to learn more about homeowners’ association they didn’t even know they were members of.

“We got this letter out of the blue that says we’re meeting with a homeowner’s association that no one knew about,” said Andrew Morris, who moved to the Timberlake subdivision three years ago and lives on Fontana Drive.

The letter residents received October 27 told them a meeting was scheduled with Clayton-based management company Kohn-Ell to take place the following Monday. Regardless of whether they supported or rejected the idea of a homeowner’s association, all residents were surprised by the news of the meeting and the dues.

“We were never asked to be in a HOA,” said Claudia Donolli. Donolli expressed her opinion very clearly at the meeting – she and her husband had never had any interest in an HOA

The Timberlake subdivision was formed in 2006 and originally had 32 homes. The subdivision expanded and now has 62 homes. Prior to the revelation of the HOA, it was nearly impossible to distinguish homeowners in Phase 1 and those in Phase 2.

Now the two groups will be divided. Homeowners in Phase 1 have the choice to opt out of the homeowners association and forego the $200 annual dues. According to Mike Ellis, with Kohn-Ell, those who bought into Phase 2 of the development will be required to pay dues that will pay for upkeep of the entire neighborhood, including common spaces available to all residents in the neighborhood.

Homeowners in the development’s second phase won’t have an option of whether to pay the dues.

Purpose of an HOA

Dues in a homeowner’s association provide for maintenance of the neighborhood, and are intended to help maintain the property values by keeping up lawns, roads, and appearances, including fences, roofing, and even the colors of houses.

Larry Kristoff is a lawyer on the board of directors for the homeowner’s association. He also prepared the covenants, or guidelines, for the second half of homeowners, which includes himself. Kristoff said the purpose of an HOA is not only to regulate upkeep of the neighborhood but also to instate a shared insurance system.

“If someone drowns in that pond, all those homeowners will be sued individually,” Kristoff said. Those who pay into the HOA will not be sued individually, though, because only the HOA will be sued.

Two sets of rules

Before the meeting, homeowners in the development’s first phase were the ones most disturbed by the news of an HOA. The covenants they signed when they bought their homes, which lay out expectations of the homeowner and describes the terms of the homeowner’s association if one exists, did not state that a homeowner’s association existed. The covenant loosley described an “archictectural committee,” consisting of three people.

The first covenant says after the last lot in the neighborhood is sold, the architectural committee will take over responsibility of the neighborhood. The phrase “homeowner’s association” is never used andn dues are not mentioned.

“When the first covenants were formed, the law was not followed,” Kristoff said. According to him, homeowners should have been told in those covenants that an HOA existed.

The residents who were part of the first phase were not the ones who went home bearing the weight of the bad news, however. They were surprised and relieved to find out they have an option to be in the HOA.

“If you don’t want any part of it that’s fine, then you don’t have to be part of it,” Kristoff said. A new covenant would have to be created to make homeowners in Phase 1 part of the HOA. According to Kristoff, 67 percent of the first 32 residents would have to agree to making a new covenant to do that, and judging by their feelings against the HOA at the meeting, that’s not likely.

Surprises common

Jay Barron, a real estate attorney in Raleigh who is unaffiliated with the Timberlake arrangement, says a law passed in 1999 as part of the Planned Community Act states that any planned community with more than 20 homes is required to have an HOA, unless one of the covenants states that it does not have to have an HOA. That law was brought up at the meeting by Ellis, the director of the management company. Ellis cited the law as a way to explain to homeowners that a mistake had been made on the first time around for the original homeowners.

The homeowners who moved into Timberlake as part of Phase 2 were given more warning about an HOA in their neighborhood, according to Kristoff. He drafted the covenant which includes fine print about an HOA.. However, many residents in that faction said at the meeting on Monday that they were not told about the HOA when they met with Kristoff who did a number of closings in the development’s second phase. Kristoff said he did not remember what he had said at each closing, but he expects he would have told them about the HOA because it was in the covenant.

“People are often caught by surprise because they’re not as scrutinizing about responsibilities in a subdivision,” said Barron. He said it is not unheard of to move into a neighborhood that has an HOA and be unaware of it.

In the years since Timberlake was formed, the developer had played the role of an HOA, which is common practice among developers as they build up a community, Barron said. Now the developer is stepping out of that role and it’s up to the residents to play the role of the HOA. The residents will have to pay dues, elect a board of directors, and finish any of the work in the neighborhood that the developer had committed to do.

The residents who showed up to the meeting said they believe the new HOA is intended to protect the developer, not the homeowner. Most residents agreed at the meeting that the first thing to go when they take control of the new HOA is the management company.

“I’ve never had an HOA and I don’t want one,” Bob Donolli, Claudia’s husband, said. “How can they have two sets of rules in Timberlake?”

What happens next

Kristin Hoffman, of Kohn-Ell Management, said the management group will soon send out a mailing to Timberlake residents with answers to questions brought up at Monday night’s meeting. The management group will then schedule another meeting with residents. Whatever the outcome of the next meeting, the developer’s involvement in the neighborhood ends December 31. Starting January 1, the new HOA will be in effect.

James: 919-553-7234

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