Question:
The President of our HOA is also the owner of the development. There are 3 board members, only one of which is a resident.The developer has obtained a legal opinion from the HOA attorney that he can legally use funds in the HOA’s road and well maintenance reserve funds to install perimeter fencing around the next phase of his development. The initial phase of the development was fenced by the former developer at his expense. Since I view this as a capital improvement infrastructure expense, I don’t believe it is fair or even legal to use those reserve funds to build fencing. (Fencing is an issue since we have wild horses roaming free in our area.) We have lived in this development for 17 years and have paid HOA dues for all of those years thinking at least some of the money was going into the reserve funds. I can’t afford to hire an attorney. What can we do?
– Michael
Answer:
Hi Michael,
Has the developer yet to turn over the HOA to the residents? There is a period of declarant control for planned developments in New Mexico. According to Section 47-16-8 of the New Mexico Statutes, “Subject to the provisions of this section, the declaration shall provide for a period of declarant control of the association, during which period a declarant, or persons designated by the declarant, may appoint and remove the officers and members of the board.”
Furthermore, the statute provides that “Not later than the termination of a period of declarant control, the lot owners shall elect a board of at least three members, at least a majority of whom shall be lot owners. The board shall elect the officers. The board members and officers shall take office upon election.”
Refer to your HOA’s governing documents to understand how long your declarant control period is. Following its termination, homeowners can elect board members, which will allow the homeowners to have more control over the association’s finances. If your HOA is still under the period of declarant control, examine your governing documents to see if the HOA is allowed to use the reserves for the purpose you stated (though, you did mention that the HOA attorney provided a legal opinion stating that the developer is legally allowed to do so). In that case, it may be worth consulting an attorney for further advice.
Disclaimer: We are not lawyers. The information provided on this website does not constitute legal advice.
