1. What were the lawyer fees incurred thus far to develop the new amendment?
In 2022 our actual legal costs were $6,175 out of a budget of $12,000 - approximately $6K under budget. The total legal cost to develop the proposed POA draft amendment and the other two amendments (trash and security) was $2,540. In addition, your Board of Directors regularly communicated our efforts to provide a draft POA amendment/trash/security for the community to vote on. This demonstrates our commitment to work within budget to proactively bring a variety of options to homeowners that could improve the quality of our neighborhood while reducing overall costs.
We budget for legal fees every year and most years are quite under budget. So, the legal fees were budgeted and the POA was just one of the amendments paid for in this budget cycle. The number above also includes the trash amendment and the security amendment that were prepared at the same time.
2. When we voted for the gates and trash pick-up proposals, the two items were separated so that homeowners could vote separately on both items. The lawyer stated that this could have also occurred for this proposal, but the Board chose to cluster all three items into one vote. Can you provide more information on this decision? Can this be revised so that all items go to a separate vote to follow precedents?
The consent form has been revised to allow owners to consent separately on the three different parts: (1) POAA; (2) Trash; (3) Security (4) Notices. The new consent will be emailed to owners and will be hand delivered to each mailbox by a Board member.
3.I received the proxy/voting information in the mail with the voting ballot. When are the ballots to be returned to Carrie Neville? Can they be submitted immediately, or do we wait until the day of the HOA meeting?
The voting document for the POA is not a ballot, it is a consent form. There is no deadline but the consent can be submitted as soon as the new consent form is received via email or delivered to the homeowner mailbox.
4.One of the provisions the lawyer cited as being an advantage to the POA was related to the fact that if a homeowner within the current HOA model voted against an amendment (choosing to vote no to restrictions to leasing homes was her example) then they might not be liable to follow those regulations in a court of law. Though a home homeowner could report that that is how they voted, how would this be proven in a court of law? Does the HOA keep records/keep ballots of how a household voted with previous amendments?
If you did not adopt the POA, but still wanted to add leasing restrictions to the covenants, we would record each of the consent forms from each of the owners in the county land records with the leasing amendment, so we could show exactly which homes voted in favor of the leasing restrictions. This also would signal to investors exactly which homes have no leasing restrictions and would be “up for grabs” to lease indefinitely.
5.It is apparent that the POA gives more power to the Association, but what protections are available for homeowners if there happens to be a Board of Directors that goes rogue? The AJC has had several articles where Boards aggressively pursued foreclosures against property owners if they fell behind on their HOA dues. What protections are available to prevent this from happening?
As you might expect, the AJC article is sensationalized. There was no discussion about the numerous communications sent to the owner, the lawsuit that was required with a judge’s decision to allow a foreclosure, or the requirement that the sheriff handle the sale. If a Board decides to threaten foreclosure and the owner of the property pays their assessments, there is no foreclosure. Foreclosure is a last resort that happens only after an owner fails and refuses to pay their fees and a judge authorizes it. By that time there have been numerous communications and opportunities to address the delinquency. While a Board can be aggressive, there are so many checks and balances along the way (including a full-blown lawsuit) that the foreclosure process takes place only after all these checks and balances and protections have been exhausted and the owner still fails and refuses to pay the past due balance.
The purpose of the POA ("Property Owners" Association) is fundamentally to give more power to property owners as a whole. The bar is intentionally very high to add a use restriction (such as a leasing restriction) because it has to gain consent among at least 2/3 of eligible homeowners. Therefore, under a POA, any elected future Board is only empowered to help implement the wishes of property owners as a whole.
6.With regards to Foreclosure, if a homeowner is paying his mortgage on time, but is foreclosed on by the Association for not paying dues, or paying fines, who then owns the home? Does it go back to the bank, or is the Association now owning the home? Are we then in the business of owning homes in the neighborhood? The AJC articles cited above also mentioned that the rogue board happened to be real estate investors, which is why I ask this question.
If the Association wins a lawsuit that permits a foreclosure and the sheriff handles the foreclosure sale, the person who buys the property at the foreclosure sale is the new owner. The previous (delinquent) owner’s first mortgage remains on the property and the foreclosure buyer takes title to the property with that old loan still active and enforceable. The new owner (the foreclosure purchaser) will resell the property to pay off the previous loan and obtain a profit (if possible) or refinance to pay off the previous loan and obtain a new loan in their own name. The Association will not become the owner of the foreclosed property unless the Association bids on the property at the foreclosure sale and no other potential purchaser makes a higher offer.
The Board is sensitive to concerns about foreclosure and is looking for ways to make this a measure of last resort for future Boards. Watch this space for further updates.
8. What is the current delinquency status of Shiloh Farms?
The current delinquency status within Shiloh Farms is quite low. The delinquency amounts that hurt us (and all homeowners) are the unpaid association fees of $10,040 and unrecovered attorney fees of $15,764. These numbers represent several years. However, although delinquency levels have been very low in the last few years, this was not true in the past when we experienced much higher delinquency rates.
Previous Board member Jason Lillis has offered to speak on this if anyone has further questions, he has been on a Board with larger delinquency issues. This problem can easily return in the future.
" If anyone wants a perspective of past financial delinquency issues from when I was on the board as Treasurer (there has been significant issues in the past), I'd be happy to provide information from my historical point of view."
9. Current rental picture within Shiloh Farms.
Shiloh Farms HOA does not have the capacity to place a rental cap on our neighborhood and because there is no cap, cannot ask if an owner is renting their property. The only way to keep track of this is by off site mailing addresses. Shiloh is currently aware of 3 of these "rental" properties. Rental properties tend to be less well kept than owner properties, they are also frequently the source of delinquent fees. Shiloh Farms has had multiple issues with dog control and property decline with these rental properties.
The POA would allow the Board to place a restriction on the number of homes allowed to be rented in our neighborhood and therefore be able to track these homes. While known rentals may be low currently, there is a trend toward large companies buying homes of our size and renting them. The Board would like to get ahead of this problem and create a restriction within Shiloh for renting properties.
Any future rental restriction would be subject to a future vote and must gain consent of 2/3 of eligible homeowners.
10. We have a question for you or need of clarification regarding the POA. Under the current HOA we could disagree with a change if it was more restrictive than we agreed to and if we voted NO to that change and not be held to this change. EX: Our community currently allows rentals and if under the POA the Board/neighborhood could move to change this to restrict or limit rentals. Under the HOA if I voted NO to this change I then could ignore the new rule because of it being more restrictive from when I moved into the HOA and still rent my home because I personally did not agree/Vote for it. But, under the POA my rights would be hindered and restricted, correct? Code 44-5-60 (I inserted the code below) protects my rights to disagree with HOA and avoid enforcement of a rule I do not agree with and if we become a POA my rights are not protected individually against a more restrictive rule I might not agree with when I moved in. Correct me if I am wrong. Another example could be regarding the trash pick up. If a neighbor decided to not continue paying for using the Trash service because it created a greater restriction to them personally they could do this if they Voted under the HOA. But, if the same scenario under the POA, they would not have that option to opt out? Or the Gate issue. In the POA scenario with 2/3 majority votes or the Board deciding it was a security issue to benefit the whole, it could be forced on everyone with no recourse for those who Voted No and didn't want the Gates. Or any other assessment or improvement?
First, you are correct in your understanding regarding amendments to the covenant that restrict the use or development of your personal property, case law stated that if a restrictive amendment was passed and the property owner did not vote for it then it would not apply to them. However, this applies to only covenants that restrict the use or development of a homeowners personal property. Our understanding is that currently we do not have any covenants considered, by the courts, to be restrictive to the use or development of a homeowners personal property. When we were working on the trash and gate vote last year the lawyers were clear that neither of those amendments were considered "restrictive" as described in the Ga Code Section 44-5-60 cited below.
Second, we wanted to be clear on what the Board can and cannot do when it comes to amending the By-laws and Covenants. The Board does not have the power to amend either the by-laws or covenants without it being voted on by the entire neighborhood. The Board can pose suggested amendments based on concerns from the neighborhood or other issues that arise, but the board cannot implement amendments unilaterally. This would not change under the POA either, we want to ensure that everyone is clear that the board serves the neighborhood and the power resides in the community as a whole.
Thank you again for posing this to us, we hope this helps as you decide which way to vote on each amendment.
