English: Symbol of Georgia State Senate . (Photo credit: Wikipedia)
The Senate Banking and Financial Institutions Committee is poised to consider Georgia Senate Bill 56 and a priority lien for community associations this Friday, February 22, 2013.
Georgia ranks in the top of the nation for the number of foreclosures, and communities across our state continue to feel the devastating economic impact of foreclosures. A priority lien would help community associations by requiring that a foreclosing bank satisfy up to six months worth of homeowners or condominium owners’ association fees that are due at the time of foreclosure.
For more information regarding how to contact your legislators regarding the bill, go to https://www.facebook.com/#!/cai.georgia provided by the legislative action committee of the Georgia chapter of the Community Associations Institute for a more extensive discussion and contact information for the legislators.
Amy Bray and Marian Adeimy have just published a new article for those community associations facing problems relating to banks and holding companies owning un-built lots in subdivisions: “Constructive Advice for Dealing with Banks Holding (Unconstructed) Lots” in the Second Quarter 2012 issue of Georgia Commons, a publication of the Community Associations Institute Georgia Chapter.
If you are interested in a copy of the article or finding out more, please contact us.
ATC partner Amy Bray was quoted extensively in the recent article “Hanging Up the Gloves” by Anna Stolley Persky in the Community Association Institute’s May/June 2012 issue of Common Ground magazine.
The article analyzes and shares information for homeowners and condominium association boards to consider in approaching and resolving disputes. Ms. Bray was consulted not just for her experience in representing associations, but for her experience as a mediator of such disputes. She is registered as a mediator with the Georgia Office of Dispute Resolution, with years of experience both with dealing with all legal aspects of community associations and with mediating lawsuits.
To be honest, I’m not really going to tell you everything about how to form a Homeowners Association (an “HOA”) in Georgia. Much like everything else in the land of things legal, it is both simple and complicated at the same time. To tell you that would be to write a book. . . but I will try to give you some guidance as to the basics.
Before you decide to form a homeowners association, you need to consider why you want (or need) it, what you want it to do, and what’s already in place.
If you said “huh?” to the “what’s already in place,” let me back up.
It is far different, and easier, to put a homeowners association in place in a neighborhood that is in development. There’s typically less owners and lenders involved that need to agree to the necessary documents.
In a situation where you have an already developed neighborhood with a number of owners and lenders, things change. You have lots of varying ideas about what is good for the neighborhood and what those owners will agree to. It is often much, much harder to get in contact with the lenders on the various lots to consent to any necessary documents.
On the plus side, you may already have some of the necessary documents in place that you can work with, such as in a fairly new development where the developer was unable to finish building out the subdivision and it was taken over by the bank. Part of the standard “package” of governing document may already exist and you merely need to take some additional steps, such as incorporating the association or drafting bylaws.
Underlying all is the concern that you must be sure that there is legal authority for the actions that you are taking, so that the documents can really bind the members and be used to govern.
I urge caution in each instance — and not simply as a matter of job protection for myself. I’ve seen enough mis-matched documents to know that you can create a world of problems, despite some very good intentions. At best, there may be ambiguities, redundancies, and omissions. At worst, you find ambiguities, redundancies, and omissions because of a dispute over an election, assessments, or other matter. The confusion makes the situation worse. I’ve seen where attorneys make this mistake too, so it has little to do with whether one is a lawyer or a layman. It has to do with familiarity with how an HOA functions and what it needs to do the job it has been given.
The problem that often arises is that folks don’t understand how the documents fit together. Moving forward with a “this looks good” mentality, they create problems for the future. Other times, there’s genuine mistakes such as confusing by-laws (the document that governs the corporate functions of the association) with the covenants, conditions, and restrictions (a document that creates obligations and rights as part of ownership of a lot in the subdivision). Other issues can be mistakes as to the tax status that the association qualifies for under the IRS tax code. A homeowners association *may* qualify for tax exempt status under 501(c)(4) but it may not. You would need to go to a reputable tax professional to receive guidance on what the association will qualify for.
I know, I have still not answered the question “how to form an HOA in Georgia.”
The bottom line is that you need the governing documents: a declaration of covenants, conditions, and restrictions that creates rights and obligations arising from ownership of a lot, you need articles of incorporation to form the association as a separate, nonprofit corporation, and you need by-laws to set out the rules for how the corporation functions. Each of these documents needs to be written so that it functions with the others. Certain rights and obligations need to be in the document best-suited to provide the authority and/or enforceability to carry forward the intention behind the words.
It sounds easy when I tell you that, but hopefully you see now that there’s more to it. Just as I said above, it is both simple and complicated at the same time. The level of complication rises when you consider whether the homeowners association you form should be subject to the Georgia Property Owners Association Act. Depending upon your situation, the Act can be helpful for the association’s functions. However, in some cases it is not.
If you are contemplating forming a homeowners association, I urge you to get legal advice from an attorney experienced with dealing with this practice area. They can point out common pitfalls and other issues. They may have suggestions, based on experience, about better ways to structure things. If you have budget constraints, discuss them with the attorney up front. I know I always appreciate knowing about such issues and I try to work with my clients to identify costs upfront on projects like this, where at least part of the fees associated with the work can be estimated.
Do you want to use this blog article?
You may, as long as you include this complete bio with it:
Amy H. Bray is a Georgia attorney, focusing her practice in community association and real estate law matters.
Her firm, Andersen, Tate & Carr, P.C., works with all manner of clients in business and personal matters, providing “big firm” sophistication with suburban law firm attention and service.
Copyright © 2012, Amy H. Bray & Andersen, Tate & Carr, P.C.
The Georgia Supreme Court will hopefully look at this issue soon. The 2005 so-called “Tort Reform” has caused more problems than it has solved. Many Plaintiff’s lawyers feel forced to sue everyone who could ever conceivably be held at fault, rather than focusing the claim on the primary culprit(s). I’m defending a case now where the plaintiff has sued a landscaping restrictive covenants committee for failing to enforce covenants to trim bushes. The theory is that the bushes restricted the driver’s view, causing a car wreck. They’ve also sued the owner of the land, some of the companies that developed the business park and the landscaping contractor.
Fulton Daily Report Story
For a time, there was a lot of furor over transfer fees in the community association context it seems. From Federal to state, there were proposals to do *something* about transfer fees. . .
In some states, such bills have passed, but elsewhere the issue seems to have gone to a back burner. Here in Georgia, the proposed bill HB 129 intended to deal with the issues seems to have stalled out. At the Federal level, Rep. Maxine Water’s H.R. 6260 and Rep. Gingrey’s H.R. 6332 were both referred to committee in 2010 and no changes to status for either bill has occurred since.
However, it appears that the proposed rule from the FHA (see earlier articles on this blog) is still moving forward. The latest is a letter from FHA itself November 2011, show that according to FHA there are changes to the rule being considered.
What does this mean? Simply that there are still things to keep an eye on.
Last year the State Bar of Georgia issued a non-binding advisory opinion, providing that a non-lawyer who files a garnishment answer on behalf of a corporate entity in a court of record (State or Superior Court) engages in the unauthorized practice of law. Based upon the relevant provisions in the Official Code of Georgia, the State Bar concluded that garnishments are actual legal proceedings, thereby triggering the requirement that corporations, limited liability companies and other business entities be represented by a licensed Georgia attorney in courts of record.
Despite subsequent challenges by Georgia businesses that previously answered garnishments pro se (without the aid of an attorney), the Georgia Supreme Court agreed with the State Bar’s interpretation of garnishment proceedings and affirmed the advisory opinion on September 12, 2011, in Case No. S11U0028. A full-text version of the State Bar’s advisory opinion and the Supreme Court’s opinion can be found here.
For employers, the decision by the Georgia Supreme Court affects the garnishment process in that now only licensed Georgia attorneys may file a garnishment answer in State or Superior Court on behalf of a corporate entity. Please note that while it is permissible to file a pro se answer to a garnishment pending in Magistrate Court, if a company chooses to proceed without using the services of a licensed attorney, only a full time officer of the company or an employee designated to handle corporate interests in Magistrate Court may answer a garnishment on behalf of the company.
If you would like further information on how these changes affect your particular garnishment procedures or wish to discuss ways in which our firm can assist you in answering garnishments, please contact firm attorney Ryan Worsley at (770) 822-0900 or email@example.com
By: Ryan Worsley
 UPL Advisory Opinion No. 2010-1.
 Eckles v. Atlanta Tech. Group, 267 Ga. 801, 805 (1997).
 In Re: UPL Advisory Opinion No. 2010-1.
Georgia may soon be the newest state to adopt legislation regarding transfer fees that are payable to third parties (such as developers, community associations, and nonprofit foundations). HB 129 has been adopted by the Georgia House of Representatives and has crossed over to the Georgia Senate for consideration.
This particular iteration, as approved by the Georgia House of Representatives, permits transfer fees payable to condominium associations, associations that are subject to the Georgia Property Owners Association Act, and associations formed for the purpose of acting as a property owners’ association (as described in the bill), but otherwise prohibits all other transfer fees.
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On February 1, 2011, the FHFA announced that it had sent a new, revised rule to the Federal Register regarding transfer fees. The new proposed rule addresses comments received in the proposed rule making from this past fall (see previous posts). Judging from the press release itself it appears that FHFA took a serious look at the comments that were submitted.
According to the press release from the FHFA the new rule would exclude payments to community associations and tax-exempt community foundations from the prohibition on transfer fees. However, fees that do not directly benefit the property would be barred.
The proposed rule itself is available here.