Ginn Employees Off Conservatory Property Owners Association

When the real estate market is flying high, details are sometimes overlooked, but they tend to surface when the market goes bad.

Palm Coast, Florida – October 23, 2008 – Real estate transactions are likely the most complex and costly financial dealings individuals undertake in their lifetime (divorce excepted). Yet the actual time spent reaching the decision to purchase, to review and understanding relevant documents, and close the transaction is often inadequate, especially when the property is in a planned community, with Master Associations and deed restrictions. When everything goes well, who cares? But when the results don’t measure up to expectations, the devil is in the details.
I recently saw an email to property owners in The Conservatory; a Bobby Ginn developed community in Palm Coast, Florida. It was sent by the Board of Directors of the Property Owners Association (POA). The POA had been managed by Ginn Property Management. Until very recently, three Ginn employees sat as Directors. It now consists solely of six property owners.
The Conservatory POA faces some dire issues, but they are not alone. The issues are not Ginn specific. They can be found in many POA, HOA, or Condo Associations throughout the state, especially in today’s depressed real estate market. The main problems today stem from non-payment of association fees by financially distressed property owners, leaving the POA with unpopular options; raise assessments to those who are already paying their fees, enact a special assessment, or cut services.
The Homeowners Association at Palm Coast Plantation, also in Palm Coast, faced a similar problem a few years ago when the developer suddenly relinquished control of the association to owners at mid-year. Owners were surprised to find out that the developer had been subsidizing about 50% of the association’s costs, presumably to spur lot sales by keeping assessments low. Reacting quickly, the association suspended some cost items and levied a special assessment. The next year’s budget resulted in a doubling of the yearly assessment.
The Conservatory POA email raises some potential questions beyond simple cash in and cash out however. Florida statutes are very strict and specific about how associations are to behave. Homeowner and condominium associations are governed by separate but similar statutes. The POA email raises these questions:
  • It states that owners did not become involved in the POA until June 2007. The statutes dictate that the developer must relinquish control (a majority of the board member positions) to owners 90 days after 90% of the lots are sold. More than 90% of all Conservatory lots were sold in 2005.
  • The email raises the question of whether or not previous board meetings were properly documented with minutes or if they were properly "noticed" to members. All property owners are members, thus entitled to attend all board meetings.
  • The Florida statute requires an audited annual financial statement be available to members. Both financial statements and minutes of meetings are to be kept "from the date of inception." It also requires the developer to provide an audited financial statement within 90 days of relinquishing control to owners. The POA email would lead one to question if these actions had been taken.
Speaking to the point of my subtitle, if Conservatory lots had held their value, if property owners were actively constructing homes there, if the economy were still robust, these issues would be moot. The Conservatory POA board has its work cut out for them, but they are better able to deal with the issues than the developer at this time. The Palm Coast Plantation association was successful in turning their situation around. Hopefully, the Conservatory POA will also succeed.
For detailed information on the Florida statute governing Homeowner Associations click on this link (Florida Statutes). The most appropriate sections are 320.303, 320.305, and 320.307.
2 replies
  1. George Meegan
    George Meegan says:

    Did documents for POA ever get filed?

    Since the turnover was not timely,and if the the annual reports were not filed, then perhaps the origional incorporation documents were never filed with the state. Even if the origional documents were filed, the untimely turnover and perhaps never filed annual reports, puts the entire POA on administrative disolution. That means the protection the corporation had as a corporation does not exist. If so, it needs reincorporation followed by timely filed documents by the owners who have been given the POA to run. They need to answer these questions before they proceed to do anything, otherwise they may be acting as individuals and not corporate administrators of the POA.

  2. Leo Harris
    Leo Harris says:

    A small part of the solution….

    ….would be to allow other builders to construct homes in The Conservatory besides the mandated preferred builders. I know of at least three instances of owners who wanted to build and use their own builder, but were rebuffed by Ginn requirements to use the preferred builders and pay an 8% fee to Ginn for building in their community. So they balked.

    The community would be better off served to allow ANY builder, with a reputable background and product, to build, as long as the standards of the home meet the local ARB requirements.

    After all, at least one of the ‘preferred; builders went belly up….so that obviously did not work.

    Its a gorgeous place with lots of potential and the owners should vote to relax the rules on construction or the place will become WEEDS !

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