To: David Lifferth,
Subject: HOA law needed
Date: Sat Jun 11 17:11:45 MDT 2016
June 10, 2016
1361 Medallion Dr.
St. George, Utah 83790
Mr. David Lifferth,
I am writing this letter to you today as I have found myself in a situation merely because of the place I chose to live, which is Sun River, St George. My wife and I moved here three years ago. I will try and explain this in as short of a version as I can.
Upon moving here, I found that a co-worker also lived in Sun River. I looked up his address and walked to his house. I found it was in a section of Sun River called Reflections. It is a gated section with approximately 90 homes. I asked my co-worker about the signs I noticed that read, Reflections Residents Only. He stated they pay extra for the gated fence and separate community center and pool, and in the past some residents walked their dogs in the area and left messes. That caused the signs to be erected to keep out the rest of Sun River Residents. He said most of Reflections residents were not concerned with others walking in this area.
My wife and I like to take long walks and we began walking around the Sun River area that took us out in the desert. On two occasions, my wife fell due to the rocky paths. We thought it better to walk on paved sidewalks and streets. We found that we could get nearly as long as walk as we needed all within our Sun River housing area. We skirt the entire Sun River housing project and found a very nice long walk, at 5 miles. This walk took us through Reflections and it allowed us to walk past my co-workers house. It allowed me to more or less check on his home. One day while walking through Reflections, a resident accosted us, he used very foul language and called me stupid, as I could not read signs. I told my co-worker about this and he could not believe that it happened.
This got me to thinking if I was committing some crime or violating a rule. I talked with others who had similar occurrences where other members were also called out for being in this area. One man told me a woman had called him names and swore at him for jogging and he would not even repeat to me what was said. At a board meeting, my wife asked the board about it and the then board President Mr. Don Stricklan stated to her, "Why would one want to walk where you're not wanted." Mr. Stricklan is a retired judge also a resident of Reflections and to me he should not have commented due to a possible biased opinion.
I began to look into our rules and bylaws to find where I was breaking some rule. At a managers meeting, I was told that the Reflections residents pay extra for their privacy and security. When I asked for the rules about it, the manager would not let me speak of it any longer and made us stay after to talk about it. We stayed after and with the manager and board member, Mr. Nilsson, and discussed the matter and neither was able to show me the rule I was breaking. Mr. Nilsson stated he would bring up the matter to the board. It never was. I sent Mr. Nilsson e-mails asking him the status of him bringing the matter to the board. I only heard back from the manager stating to me that board members were not allowed to communicate to individual members.
I continued to ask the board in person and by e-mail messages to show me the rule, regulation or law I was breaking by walking in Reflections. I asked a series of questions to the board during a meeting and they all just looked at me, and finally I asked if they would answer any of my questions, at which time the president stated, "No." Not to this day have they shown me where I was breaking a rule or where the authorization for placing those signs came from. I continued to be interested in how our association was run as I was not satisfied with how I was being treated and felt stonewalled for at least a couple of years.
In my research I found in 2010 Mr. Richard Brown, a retired attorney noted that there were discrepancies in how our association was being governed. He was elected to the HOA board with the idea of looking into how is we are governed. He informed the board of what he thought was conflicts of interest between the builder, the management company and the actual board. The appointed board member, Mr. Grant Marsh told Mr. Brown to put his in concerns in writing. Mr. Brown then wrote a series of questions he thought were conflicts of interest and submitted them to the board and to the Sun River Residents. For this action the builder, Mr. Darcy Stewart sued Mr. Brown for one million dollars. The case was settled and Mr. Brown left this community. I have contacted Mr. Brown and he agreed to talk with me, that is, until I mentioned I lived in Sun River at which time I have never heard from him again. I still try to communicate with him with negative results. My thought on this, is he must have a gag order regarding the lawsuit. This seems to be a very serious situation as members have warned me of the powers of Mr. Stewart and causing problems for him.
I have read all can find regarding this issue and found Mr. Brown had legitimate concerns. Mr. Stewarts attorney addressed nearly all the concerns with a letter to Sun River residents insisting that not only does Mr. Stewart have the authority of having conflicts of interest, it is inherently writing into Utah law. I have never found this to be in any law I have read regarding Utah and homeowners. Mr. Stewart's attorney quoted a Utah Supreme Court case Davencourt at Pilgrims Landing. This case is in regards to poor workmanship and not a case of conflict of interest.
Our Sun River community began in 1997 and was to take approximately 8 years to complete. The bylaws were written so the builder was to give up his control after one of several conditions were to occur and the last was after 15 years, which was to be in 2013. Prior to 2013 the builder came to the board and wanted an extension. In the board minutes, I found how it was presented to members, "The proposed agreement was crafted to protect the residents of Sun River, ensuring the community's remaining development to be completed in a style and manner the committee feels and fits within the vision of Adult Active Community and works well for all." Another board member stated it this way to the members, "Dale Thompson explained that the Transition is nothing more than moving the community from a Developer controlled Board of Trustees to a Homeowners Association Control Board of Trustees ." This was known as the Transition 1.18 Agreement.
I talked to one member of the transition committee, a Mr. Busenbark. Mr. Busenbark stated to me the agreement was needed because the builder threatened that if it was not passed, that he would pull out and leave the community unfinished. When in reality there was sufficient homes and amenities to sustain itself. I asked Mr. Busenbark if he voted against it and he said he voted for it as it was fruitless to vote against it as there were not enough votes to disapprove the matter because the builder had 1600 or 1700 votes. In the transition agreement it states, #6 Ratification- Pre Condition the board has to recommend the agreement for approval of members and the builder can use his votes per 1.26, 1.28 and 1.29. The latter 3 sections do not mention votes for the builder.
Below I will include the above stated sections;
1 .26. "Limited Common Areas": shall mean and refer to those Common Areas as referred to herein and designated on the plat as reserved for use of a certain Dwelling Unit to the exclusion of the other Dwelling Units which are or may include the driveways, adjacent yard areas, patios, which lead to or are associated with certain units or both. Limited Common Areas are a subcategory of and are included in Common Areas.
1 .28. "Master Plan": The master plan for the development of Sun River St. George approved by the City or St. George or Washington County, Utah, as it may be amended from time to time, which plan includes the property described in Exhibit "A"; and all or a portion of the property described in Exhibit "B" that Declarant may from time to time anticipate subjecting to this First Amended and Restated Declaration. The Master Plan may also include subsequent plans approved by the City of St. George or Washington County, Utah, for the development of all or a portion of the property described in Exhibit "B" which Declarant may from time to time anticipate subjecting to this First Amended and Restated Declaration. Inclusion of property on the Master Plan shall not, under any circumstances, obligate Declarant to subject such property to this First Amended and Restated Declaration, nor shall the exclusion of property to this First Amended and Restated Declaration, nor shall the exclusion of property described in Exhibit ''B" from the Master Plan bar its later annexation.
1 .29. "Maximum Lots": The maximum number of Lots the Declarant reserves the right to create as a part of Sun River St. George, in the area described in Exhibit A, is 2,500; provided, however, that nothing in this First Amended and Restated Declaration shall be construed to require the Declarant or any successor to develop the Maximum Lots. Additional lots may be created on any additional land that Declarant may annex under the provisions of Article VII.
(Please note, there is nothing here regarding votes.)
Sun River Management Company and the HOA board claims to have all of our documents assessable to all members on the Sun River web site. When we moved here in July of 2013 we were given a copy of our bylaws and CC&R's. No one in sales or anyone else mentioned that there were problems with Conflicts of Interest, Transition documents or settlement documents. Nor today can you find these documents on the web site as stated. In 2011, apparently because of the conflict of interest law suit where Mr. Stewart, the builder, sued a board member for bringing forward the conflict of interests, there was a Settlement Agreement and Release of Claims, dated 2-2-4-2011. Here is where I find where the builder gets votes for lots, whether or not ready to sell.
8. Developer Voting Rights. As further consideration for the convents, promises, conditions and/or obligations contained in this Agreement, the Parties herby agree that the Developer shall, pursuant to Section 3.3 of the CC&R's, (see next paragraph for 3.3) be allowed to exercise its voting rights in accordance with the number of lots master planned within Sun River which are owned by the Developer. The Parties agree and acknowledge that pursuant to Section 1.25 of the CC&R's and the Master Plan, the number master -planned lots in Sun River as of the Effective Date is 2,391 (a copy of the Master Plan establishing the 2,391 lots is attached hereto as Exhibit "A". Accordingly, the Developer shall have the right to vote the number of Lots master planned with Sun River (2.391) minus the number of lots owned by third parties (other that the State of Utah School and Institutional Trust Lands Administration "SITLA" in Sun River at the time of my given vote.
(CC&R's) 3.3. Voting. The Association shall have one class of membership composed of all Owners. Each Owner shall have one equal vote for each Lot in which it holds the interest required for membership under Section 3 .2, provided there shall be only one vote per Lot and no vote shall be exercised for any property which is exempt from assessment under Section 8 .13 . The Special Declarant Rights, including the right to approve, or withhold approval of, actions proposed under this First Amended and Restated Declaration, the First Amended and Restated By-Laws and the Articles during the Declarant Board Control Period, are specified in the relevant sections of this First Amended and Restated Declaration, the First Amended and Restated By-Laws, and the Articles. The Declarant may appoint a majority of the members of the Board during the Declarant Board Control Period, as specified in Section 3.3 of the By-Laws.
Members may vote directly or by proxy as provided in the By-Laws. The Board shall determine whether votes shall be cast in person or by mail from time to time. If there is more than one Owner of a particular Lot, a vote cast at any Association meeting by any of such co-Owners, whether in person or by proxy, shall be conclusively presumed to be the vote attributable to the Lot concerned unless written objection is made prior to said meeting, or verbal objection at said meeting, by another co-Owner of the same Lot. In the event objection is made, the vote involved shall not be counted for any purpose except to determine whether a quorum exists.
I am not an attorney, but as I read section 3.3 it states "One class of membership". I would think the builder would be of another class and nowhere in this section does it state the builder has the right to vote on lots he has proposed to build. It is not plain for an owner to know of this.
As with most HOA's there was need for a Management Company and one was formed by a person who left the area. This management company was purchased by the builder, Mr. Stewart. At this point Sun River is governed by the Builder, as he controls the board, the construction and the Management Company. He has complete control. All of this according to the builder is completely within the law. As time goes by Mr. Stewart was to lose control of the board and only be allowed to appoint one board member and the board expanded to 7 members, six of them elected and the one appointed. Here I must add that there was a committee formed to select persons to be elected to the board. These potential board members had to have the permission of the builder.
In the original by-laws the builder was to give up control of the board as per 3.3 below;
3.3. Trustees During Declarant Board Control Period. Subject to the provisions of Section 3.5, the Declarant shall appoint and remove Trustees in its sole and absolute discretion until the Trustees are elected by the Owners. Trustees appointed by the Declarant shall serve at the pleasure of the Declarant until the first to occur of the following:
(a) sixty (60) days after seventy-five percent (75%) of the Maximum Lots the Declarant reserves to create, as set forth in Section 1.29 of the First Amended and Restated Declaration, have been conveyed to Persons other than Builders;
(b) two (2) years after Declarant has ceased to offer Lots for sale in the ordinary course of business;
(c) two (2)years after Declarant last exercised last exercised it unilateral right to subject additional property to the First Amended and Restated Declaration as provided in Section 7 .l of the First
Amended and Restated Declaration;
(d) 15 years after the date the First Amended and Restated Declaration is recorded; or
(e) when, in its discretion, the Declarant so determines.
Notwithstanding the foregoing, if Declarant voluntarily relinquishes its right to appoint and remove officers and Trustees of the Association prior to the termination of the Declarant Board Control Period, Declarant reserves the right to approve or disapprove specified actions of the Association as provided in Section 3.19.
Within thirty (30) days after termination of the Declarant Board Control Period, Declarant shall deliver to the Association all property and other items of the Association.
In the new Transition 1.18 as of 3-2013, 3.3 (above) all were terminated.
In the old 3.3 at least the members had something to look forward to in controlling our own HOA, but as you can see now, members do not gain control until the last lot is sold with no date in sight. None of this was in any documents given to potential buyers or verbally told to us. Per our salesperson, our HOA fees were $134 per month and in fact they would more than likely go down as more and more homes were added. In fact just about two weeks ago, I went to the Management office and asked for the a copy of the updated bylaws and CC&Rs. Neither of the documents above I mention were there.
I find a very real possible conflict of interest when in June of 2011 our HOA board issued a resolution that allows the Manager of our Management Company the authority to write checks on behalf of our Association. The Management Company is owned by the builder, Mr. Darcy Stewart. The manager of the Management Co., Kamarie Naase, has been with Mr. Darcy Stewart since the beginning starting out with him as an office clerk here in Sun River. Also in the past Mr. Stewart has appointed the manager as President of our Association. Two and one half years ago, our area suffered a cold snap and our Association lost hundreds of plants and trees from freezing. The manager of our Association started a private company along with the help of the builder, named SunWest Services. This company replaced the damaged plants. The Association put aside a large sum of money to pay for the damaged plants and at the same time started the Sun West Services. All payment of damaged plants and labor was paid from our funds, to the manager, with profits going to both the builder and manager as owners of the company.
In January of 2014 association decided to replace the pickle ball courts using post tension concrete at a cost of up to $270,000 from reserved funds. The job was awarded to our builder. The finish was to coincide as the Senior Games were to come to our area. Our builder allowed the games to use our facilities as allowed by our governing documents. Our builder completely tore out the old courts and replaced them. During the construction, the builder came to the board and complained that they found underground electrical problems that the first builder did not do properly and asked for an additional $5,000 to pay for that repair. This was in addition to the cost of the job. The association agreed to pay the additional cost. I must say here that the original builder of the courts was our builder. Within weeks of the finished pickle balls courts, there were problems with cracking and shifting. This was pointed out to our board and they began negotiations with the builder. Two years later, they reached an agreement with the builder. The agreement was the builder would tear out the courts completely and return $200,000 to the association. After which the board would find a reputable builder to build new courts. This comes at an estimated cost of $400,000.
In April of this year the board had a special meeting with the members regarding the pickle ball courts. I attended this meeting and the board explained to the members what I stated in the above paragraph. There were many speakers. I was the last speaker and to my amazement, no one had mentioned the builder should be held responsible for his work that was insufficient as I brought up. The president asked me if I meant we should sue for damages and I said, yes. With that, the board president said that was ridiculous. I tried to tell the board something else, but they tired of my talking, called for a question, which cut off debate and an immediate vote was taken to pass the motion to allow the remodel of the courts and I was left standing at the microphone. It all makes sense to me now as I understand that they would not sue the boss.
What I wanted to say to the board was the minute the old courts were removed, then the project became a new project and because the cost was more than the 5% of our common budget, it has to be approved by a vote of the our membership. This has not been addressed as of today.
I find an odd thing is that during the two years of the board negotiating with the builder, the Association stated that because of a 30 year refresh project that our Community Center needed to be remodeled. Mind you the building is but 9 years old. This was a cost of $250,000 and was above the 5% of cost they were allowed to spend as it is also above the common budget. I must say also that myself and everyone I have asked about the job do not like it. It was a place we were proud to take visitors. Today, as many others have said, they do not like what they did. The job was in the budget under small jobs and not listed as a whole. The job in my and others people's opinion was not worth the $250,000 and found a correlation between the sum of $200,000 proposed to return from the builder for the pickle ball courts and the cost of the remodel job.
Some questions I have are; With the close relationship between the builder and the manager of the management company, does it seem right for our board to allow the manager to sign checks for our association, the same person who works for the builder, the same person who is in personal business with the builder called Sunwest Services? Is there a possibly that because jobs are given to the builder there may be a cash bonus? The manger is supposed to answer to the homeowners and does she also answer to her boss, the owner of the Management company overseen by the manager?
Our builder, Mr. Stewart recently purchased another golf course in Bloomington. There he has a large project of remodeling the golf course country club and the building of many condos on the golf course. Our manager has been seen at this new project. It makes one wonder whose is paying her time when she is at the Bloomington project.
I only found the two most important documents listed here, Transition 1.18 and the Mediation Settlement, document through my efforts from another member resident. Nowhere can I find them on our website. Speaking for myself, we were not aware of any of these problems when purchasing our home. I would venture to say that these problems do not come to the attention of new buyers. Our community is for senior citizens of 55 and older. We come to this type of community to retire and get away from the problems of the world. I am sorry to say that a large majority of people do not pay attention to the inner workings of our association. They depend on the honesty of the builder, Association and management company.
In March of this year, 2016, our HOA board brought seven changes to our bylaws for members to vote on. One of them was to change the way our board could fire the Management Company. The builder used not only his votes, but a letter to members in a magazine paid for by our HOA and published by our Management Company, to sway votes not allow a change in the way the board could fire the management company. Six of the changes, the votes were basically 3% against and 95% for, except where the builder used his votes and that vote was 51% against and 49% for. This is an example of how the members votes were neutralized by what I feel are unlawful votes. Definitely a conflict of interest as he owns the management company.
If we cannot depend on the honesty of our entire association, we have to look to law enforcement and lawmakers for protection. In reviewing as many HOA laws as I have seen, there seems to be a need for lawmakers to make our Utah HOA laws uniform when it comes come conflicts of interest. I see a need for each HOA to have their own need for such things as parking, barking dogs, etc. As I see how things happen, is that our Builder wants to start a business like our Sun River. He has an attorney who writes bylaws and CC&R's for the builder. These rules are then taken to the local county court house, filed there, and become the law of the association. There is no legal review unless someone sues. These rules and bylaws should be reviewed by a legal committee at the state level to make sure they conform to a standard of written and approved bylaws and CC&R's heading off most possibilities of problems as occurring in this letter.
Arnold H. Breitenbach