Deer Ridge - Your Monthly HOA Fee And Special Assessment Are WRONG!

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This gets a little involved but could have MASSIVE consequences to everything happening at Deer Ridge, money wise.

I promise you – this is SO major – it is worth your time to read and understand because of the immediate, huge impact it will have on everything related to Deer Ridge Mountain Resort!

Sometimes, my idea of a good time is reading through legal documents.  I know – kind of weird.

But,  because of my contemplated lawsuit against Deer Ridge Mountain Resort, AKA GGRC and RML, for not providing copies of documents to any and all owners, I started looking at different things – and figured I needed to go back and re-read the Master Deed and the Bylaws that are the governing legal documents for Deer Ridge.

The Yardstick Wasn’t Always 36″

The part about the Bylaws that I was specifically interested in has to do with the way dollars are allocated between unit types…I noticed that there was very little difference between unit types in the new monthly assessments that started in January of this year when the variations between a small 1-1 and a 2-2-Loft was only a range of $270 to $315 per month….about a 17% variance.

Then, I noticed there was a much bigger difference in the amounts charged for the special assessment by unit type….and calculated that the special assessment which varied from $3,400 to $5,500 was apparently based on the square footage of each type and the total number of units of that type, i.e., 1 bedroom, etc.  This was a 62% variance.

Well, that didn’t make a lot of sense.  It seemed that a yardstick should be 36″ long all the time.

Then, I decided to look at what the Master Deed and Bylaws provide for…guess what?

If the Master Deed and Bylaws I received from Joe Thomas when I bought my unit are the most current ones…then, ALL  monthly assessments, ALL special assessments I have paid since I bought here over four years ago, have been miscalculated and misrepresented as the amounts I owe for owning my unit.

Let me see if I can make this simple with little snippets I took from the Master Deed and Bylaws. You can download the whole document here on this blog by clicking Master Deed and Bylaws.

From what we have been told by many owners and even would-be owners, Joe Thomas has to almost be forced to give this document to new buyers – so many of you might not have even gotten this when you purchased your unit.  It should have been one of the due diligence or closing documents you received at that time.

All of this is why we want to make it available at www.DeerRidgeOwners.com.

Firstly, the Master Deed is exactly what it says it is – THE master document for everything that happens at Deer Ridge.  Period.  It’s like the Constitution and the Bylaws are like the laws Congress passes.  They can pass all kinds of laws – as long as they are not unconstitutional.

The Bylaws Say We MUST Pay Our Rightful Percentage

At Deer Ridge, we all have to pay our fair share of all common area expenses and special assessments required to run the property.

According to Article XII of the Bylaws, this is the way it HAS to be done.

The Board of Directors Does NOT Get To Choose Percentage Allocations!

Bottom line:  The Master Deed sets out each Co-Owners’ Percentage Ownership of the Common Area.  And….this is the important part…ALL assessments MUST be based on this Master Deed Co-Owners’ Percentage!

This includes all monthly HOA fees and any and all special assessments.  It also covers the water bill and the cable TV bill.  It covers EVERY bill that comes to the property that is not explicitly tied to your own unit, such as your electric and your private phone line.

Period.

The Board can set the total dollar level for HOA fees and special assessments BUT it does NOT get to choose how they allocate these HOA fees or special assessments or any other costs to the various unit types.

They MUST be made in accordance with the set out Co-Owners’ Percentage Ownership of the Common Area.  There is ZERO ambiguity – and ZERO leeway on this based on the Master Deed.

With me so far?  Good.

So, What ARE These Set Out Percentages?

That’s sends us to the Master Deed, Exhibit 2.

Have you ever been to an Annual Owners’ Meeting when they elect the Board of Directors?

If you have, you probably learned that we all don’t get one unit / one vote.  The 2-2-Lofts get 3 votes, the 2-2 and the 1-1-Loft get 2 votes and the little 1-1 units only get 1 vote.  So, when you add up everything, there are 154 total votes for an 84 unit condo when trying to figure out if there is a quorum – or if someone has enough votes to be on the Board.

This same section of this Exhibit 2 is poured over by the powers that be – to make sure that everything is done right.  Well, part of this Exhibit 2 lays out explicitly what each of us owns of the Common Area AND that same percentage is how much each of us owes for all the monthly HOA fees and any special assessments.  Here’s the legalese:

So, what does all of THAT add up to?

Those are the percentages each type of unit MUST pay for our HOA fees, our special assessments, our share of water and cable TV that gets charged each month by RML.

One More Thing About The Master Deed And These Percentages

So, can the Board or the Owners amend or change these percentages?

Nope.  That is made abundantly clear in Article VI of the Master Deed.

What all that means is that some parts of the Master Deed CAN be amended with a 67% vote of the Owners…as long as any amendment is recorded on the Deed Records for Sevier County, Tennessee.

What it also says is NOTHING can EVER change the Percentages – the percentage ownership of the common area OR the percentage of operating costs for the property – unless there is 100% approval by every homeowner AND every lender involved with Deer Ridge.

I would say that is a somewhat unlikely event.  So, my guess is what you just read is still the law of the land – at least Deer Ridge land.

What ARE Our Correct HOA Fees and Special Assessment?

Well, if I am doing my math right, then:

Of course, this assumes that the driving assumptions -  the amount needed for GGRC and the special assessment – have been correctly calculated and accounted for.

I have serious doubts about this – and that is why I plan on filing a lawsuit against GGRC and RML – to force the Board and Joe Thomas to allow ALL owners the right to make copies of any and all GGRC and RML document they wish to see.

My three decades of experience in real estate and management scream that something is wrong with the Board’s numbers – for both the monthly HOA fee and the Asinine Assessment.

Have Joe Thomas And The Board of Directors Committed Fraud – Or Is It Gross Negligence?

The Board has been WRONGLY and arbitrarily ignoring the above requirements of the Master Deed and the Bylaws for YEARS.

If my above analysis is correct, the Board has zero choice. They MUST abide by the Master Deed Percentages.

But they haven’t.

However, if the Board knowingly ignored the clear directives of the Master Deed and the Bylaws when allocating costs to various unit types, and overcharging certain unit types on a regular basis, my opinion is that the Board and Joe Thomas may have acted fraudulently.

If they have not been fraudulent, then they have been, at the very least, grossly negligent.

And, hey guys, the indemnification clause of the Master Deed and Bylaws do NOT protect the Board or Employee Joe if there was any fraud – or gross negligence.

Since Joe Thomas and the Board dissect this very section of the Master Deed every time there is an owner’s vote – makes me think they absolutely knew the requirements for cost allocation and chose to ignore it – maybe for very self-serving reasons.

The unit type that will suffer the most from the proper application of the Master Deed Percentages is the 2-2-L which happens to be the kind of unit that two of our Board members have – including our Treasurer who is a CPA.

I may be wrong, but it is my understanding that this CPA is the one who did the budgets, calculated the HOA fee split that was instigated in January 2009 – and he is the one who, according to the minutes, made the motion before the Board that the current HOA fees be the amounts charged to all owners.

Coincidence that the HOA fees and the Special Assessment Allocation were changed to most benefit the 2-2-L unit owners?

Too soon to tell.  But do stay tuned.

Let’s Get Personal – I Have ALREADY Been Wrongly Overcharged By At Least $10,000 By Deer Ridge Board and General Manager Joe Thomas – Just On My 1-1 Unit!!!

We have one of those puny 1-1 units.  If you look at my analysis, we and the 29 other 1-1 owners have been grossly, and possibly intentionally, victimized by the Board for years.  1-1 units represent 36% of ALL units at Deer Ridge.

In our case, we have been paying $270 for our monthly HOA dues since January of this year.  Based on the above numbers, we should have been paying $148 per month.  Let’s assume that is the same difference for all 50 months we have owned at Deer Ridge.

That means that we have been overcharged by Joe Thomas and the Board by exactly $6,100 over the past four years for HOA fees.  We were overcharged when the Board required us to pay $1,600 on the two prior assessments since we bought here.

We have been overcharged EVERY month for the $122.42 we are charged for water and cable TV – since those, too, MUST be allocated in accordance with the Master Deed Percentage.  According to my numbers, we should be paying $52.91 for water and $9.82 for cable = to a total of $62.73 per month instead of the $122.42.  If you think that sounds like chump change, over the 50 months we have owned here, that adds up to be over charged by $2,984.60!

That’s pretty near $3,000 – which to me, is more than chump change.

Add that to the overcharge of $6,100 HOA overcharge and we are already up to more than $9,085 – not counting the prior two assessments we have been overcharged on.

We are having to recalculate all these numbers – but need the documents that Employee Joe and the Board refuse to hand over.

However, our best guess is that we have been grossly, and possibly intentionally, overcharged for all of the above for a total of over $10,000!

That doesn’t include interest, penalties, court costs, legal fees, punitive damages – or compensation for any fraud we may or may not be able to prove.

Also, if all other 29 owners of 1-1 units at Deer Ridge have averaged the same time of ownership, that would make the claims of all current 1-1 owners exceed   $300, 000 against GGRC and RML – with the possibility, as I understand it, of personal claims against each and every Board member – and General Manager Joe Thomas – if gross negligence and / or fraud were to be proved.

But, I digress for the moment.  Much more about this in an upcoming post here at this blog.

This also means that my and all other 29 1-1 owners’ share of the $353,500 Asinine Assessment would be $2,156 for the two years instead of the currently billed $3,400!

This is a massive mistake by the Board – apparently, one of many.

Again, if this Board and/or Joe Thomas KNEW that the Master Deed Percentage HAD to be followed – but still knowingly overcharged all 30 1-1 units…well, we will see what we will see – when the Court grants us our subpoena to get copies of ALL books and records.

If my analysis is correct, this also probably opens up GGRC and RML to justifiable and actionable claims by prior 1-1 owners since this wrongly applied fee structure had the effect of significantly reducing the market value of 1-1 units when they were sold – or forced them to sell – or drove them into foreclosure and / or even bankruptcy.

In the meantime, know that the amount of your own HOA monthly fee and your allocation of the Asinine Assessment appears to us to be in MAJOR violation of your property’s Master Deed.

What you, as an individual owner, do about it – is up to you.  But you might want to get on the phone to Luther or Joe and ask them why this major screw up.

Also, know that any and all units that are currently for sale – will need this immediately resolved by the Board so that proper disclosure to any prospective buyers can be made.  Otherwise, it opens up both owners and brokers for claims of misrepresentation by any subsequent buyers.

Anybody Want To Cop A Plea?

Note:  I am offering immunity from MY civil prosecution and lawsuit to the FIRST current or past board of directors member who can provide me “smoking gun”, irrefutable written proof that Joe Thomas and / or any other Board member EVER knew about these proper Master Deed allocation percentages – but chose to ignore the law and intentionally and fraudulently apply some other percentage to some unit types.

PS:  I am not empowered to offer any potential CRIMINAL immunity.  That will probably be out of my hands.

Luther And Joe, What Say You?

Have I overlooked something here?  Is my math wrong?  Is my interpretation of the Master Deed and Bylaws wrong?

Did either of you, or anyone else on the Board, know about this Master Deed Percentage?  Was there EVER any discussion of any kind about this – and the right allocation of common area costs to the various unit types at Deer Ridge?

If my math and my analysis are correct – I want my more than $10,000 overcharge – plus interest at the highest legal limit – back right now. I will also want a whole lot more for punitive damages, etc. if I have to take you to court and /or we find out that there was fraud at any level or for any reason.

Also, if I have to go litigate THIS issue on top of all the OTHER issues I intend to litigate, I will be making claim for even more legal fees, court costs and even more damages involved in this long running, gross misrepresentation by the Deer Ridge Board.

We ALL await your answers – since even this month’s HOA fee appears to be WRONG.

PS:  Luther and Joe:  Please let me know TODAY how much money I need to write on the check for October 2009 for both my CORRECT HOA fee and my CORRECT water bill and cable TV bill.

As soon as I have the CORRECT amounts, I will write you a check that same day.

Have a GREAT weekend!