home owner association eminent domain?

Help!!,
I just signed a option contract to buy the remainig land (1.6 acres or so) on an existing condominum complex that will allow me to built eventually arround 50 1-2 bedroom units (4 buildings). The complex was half-built 15 years or so ago and the current owner bought the remaining land and never built.

I am new to commercial property (have only couple of single-family home rentals) so I am not sure what I am getting into in terms of financing/cost and specially in terms of dealing with the existing home owner association. I am trying to decide if exercise teh option to buy or just back off (I have 45 days to do it) .

This is the situation: the HOA association so far is claiming that the land is now theirs in vitue of eminent domain because the owner never took care of the land in 10+ years … the owner claims that he never asked him to do it and he said that his lawyer will take care of it. The question that I have is what type of “legal” documents do I need to get from the HOA or from the owner prior to closing in terms of :

  • will I be protected if I get Title insurace in terms of retaining ownership?
  • do I need to get approval from the HOA to build before I buy the property?
  • Do I need to pay HOA maintenance on the land? - who typically maintain that lot before is built?

Anything else to inspect in terms of the cables and water connection I have in the lots?

I’ll appreciate any help on this. Also how do I calculate roughly the cost of building in a multifamily home? How much per square footage? The land seem to be ready to build.

Thanks!!

Okay, some clarification may be needed.
“The complex was half-built 15 years or so ago and the current owner bought the remaining land and never built.” Does the current owner own the land or both the land and the half built complex?

“specially in terms of dealing with the existing home owner association.” If the land and complex are owned seperatly, the HOA on the complex has no impact on the land.

"the HOA association so far is claiming that the land is now theirs in vitue of eminent domain because the owner never took care of the land in 10+ years "
In this comment, you can be sure that the HOA is mistaken. First of all, eminent domain, is the power and authority used, when the government seizes property, an HOA cannot do it. What it sounds like they are trying to say is Adverse Possession, which is when property is used and worked openly and Notoriously, by someone who is not the owner for a series of years. The time frame differs by state but it is usually about 21 years. You cannot claim adverse possession by someone not improving their land.

“The question that I have is what type of “legal” documents do I need to get from the HOA or from the owner prior to closing” If the HOA belongs to the compex not the land, you need nothing from them.

  • will I be protected if I get Title insurace in terms of retaining ownership?
    yes, but you should probably have a title search done now, to clear up some of these issues.

  • do I need to get approval from the HOA to build before I buy the property?
    Not if they do not own the land.

  • Do I need to pay HOA maintenance on the land? - who typically maintain that lot before is built?
    The owner of the lot is responsible for its upkeep.

Some further food for thought:
Why is the complex only half-built?
How is the lot zoned?
How does the local municipality treat the application for building commercial units in that area?
Is there a survey on record from the original builder?
Is the land in a flood zone or are there any other enviornmental considerations?
If the land is part of the complex and under the jurisdiction of the HOA, do they have a right of first refusal?

IMHO you should have a basic title search done and make some calls to the local zoning board, before pursuing any further talks with the HOA.

Menthz:
Thanks for the reply … below.

[Okay, some clarification may be needed. Does the current owner own the land or both the land and the half built complex?]

The seller owns the land. The half built complex is owned by individuals and they have this HOA. Both, teh complex and the land are inside a common gate. The HOA association is not even replying to the seller 's inquiries after they claim “imminent domain”.

[specially in terms of dealing with the existing home owner association." If the land and complex are owned seperatly, the HOA on the complex has no impact on the land.]

But I don’t have to follow their original archietctural guidelines for teh complex? I have seen HOAs blocking people’s architectural approval .

[What it sounds like they are trying to say is Adverse Possession, which is when property is used and worked openly and Notoriously, by someone who is not the owner for a series of years. The time frame differs by state but it is usually about 21 years. You cannot claim adverse possession by someone not improving their land.]
What about claiming Adverse posession because the land owner did not even mow the land for 10 years and then the HOA did (without the land owner approval) ???

[The question that I have is what type of “legal” documents do I need to get from the HOA or from the owner prior to closing" If the HOA belongs to the compex not the land, you need nothing from them.

[ will I be protected if I get Title insurace in terms of retaining ownership?
yes, but you should probably have a title search done now, to clear up some of these issues.]
As part of the title insurance process, do they request an ok from teh HOA?

[ Do I need to pay HOA maintenance on the land? - who typically maintain that lot before is built?
The owner of the lot is responsible for its upkeep]
I am not clear on what rights I will have on teh common services? an access code gate, 2-3 pools. Will those services belong to the people that pay HOA? Can we form our own “separate HOA” after we build?

Some further food for thought:
[Why is the complex only half-built?]

[How is the lot zoned?]
Legal Desc: BLDGS 1 6 8 & 9 RAVENWOOD SEC 2. Land Use: Comm vacnt lnd - 300

[If the land is part of the complex and under the jurisdiction of the HOA, do they have a right of first refusal?] What do you mean teh right of first refusal? Do I need to get teh HOA bylaws?

How does the local municipality treat the application for building commercial units in that area?
Is there a survey on record from the original builder?
Is the land in a flood zone or are there any other enviornmental considerations?

IMHO you should have a basic title search done and make some calls to the local zoning board, before pursuing any further talks with the HOA.

The seller owns the land. The half built complex is owned by individuals and they have this HOA. Both, teh complex and the land are inside a common gate. The HOA association is not even replying to the seller 's inquiries after they claim “imminent domain”.

If there is a common gate but they are seperate properties, then there is probably an easement or a shared license of use on record for it. The seller should check the paperwork (i.e. deed and closing agreements) from his purchase to see if there were any specific rights granted to the HOA in regards to the land.

But I don’t have to follow their original archietctural guidelines for teh complex? I have seen HOAs blocking people’s architectural approval .

If you have seen the HOA block architectural designs on property that is not theirs then there must be specific restrictions of record guiding what is and is not acceptable in the whole development. These restrictions would probably answer most of your questions and should be found in the documents from the seller’s original purchase of the land.

What about claiming Adverse posession because the land owner did not even mow the land for 10 years and then the HOA did (without the land owner approval)

This property sounds more and more like a PUD (planned unit development). The restrictions on what can and cannot be done are placed on record by the original developer. These restrictions can be very bizzare. Some have have time restrictions and eventually expire. Restrictions against property that is still conveyable as a fee simple interest have to be recorded. You would want to pull copies from the recorder of deeds office in the county of all conveyances occuring on that parcel of land. If your lucky the county will be online, try www.netronline.com.

As part of the title insurance process, do they request an ok from the HOA?
Only if it is required to convey clear title, otherwise it falls to the closing company or realtor, depending where in the country you are.

I am not clear on what rights I will have on teh common services? an access code gate, 2-3 pools. Will those services belong to the people that pay HOA? Can we form our own “separate HOA” after we build?

This will be laid out in the provisions of the land restrictions mentioned.

What do you mean teh right of first refusal? Do I need to get teh HOA bylaws?

Right of First Refusal, is a recorded right that says that the HOA has the first right to purchase the property and has to waive that right before it can be sold to an outside buyer. These are very common with condos.

Hope this helps.

I think you may be in over your head here.

  1. what state is this property located in?
  2. Is there access to the subject property without crossing the current condo’s land? I.e. is there an adjacent street-- even if you cannot get to it now because of a fence, etc.?
    3)Is/was the unbuilt portion included in the original condominium declaration?
    4)The issue of the 15year delay is a real one. What happened that the original guy never finished this project?
  3. Mentzh is certianly right that the issue is not eminent domain but adverse possession. You need to check on what the eminent domain period is in your state.
  4. Are the property taxes current and were they paid by the seller?

I would suggest finding yourself a partner who understands these sorts of issues. Either an attny or an investor who specializes in title deals.