HOA BLAMES BUILDERS - UNPAID DUES $93,268

Vice President of Hidden Lakes Homeowners Association Jeremy Hanson and HOA Board member Sarah Joesten contacted Orting News this week, asking for the chance to communicate the challenges facing their neighborhood, including $93,268 in unpaid dues and no reserves left in the HOA bank account.

Hanson said, "At the start of this development each builder was required to pay a fee of $300 per lot for a total of $42,000 to be set aside for once the HOA took control of the development. Once the HOA took control, our bank account had $0 in it available to us. We have proof that the funds were collected and dispersed to our property management company. Where we are having trouble is the management company was not informed that these monies were for the HOA, but they were instructed by the president at the time, Bill Riley, to pay any and all bills that were forwarded to the management company. We have confirmed this with them, that their place is not to question what to pay, just that if there is a bill received and money available, their job is to pay said bill. Knowing that this money was reserved for the HOA, Bill Riley sent all developing bills to be paid out of this money. These funds were collected exactly for the crisis we are in now. If they were not misused we would not be in the situation we are currently in."

Hanson said Hidden Lakes is one of the few Orting upper end developments that still has houses for sale, but their problems worsened when the real estate market started going stale. Many of the builders started renting the unsold homes to cope with the economy.

Builder-owners found ways to skirt paying dues by claiming Declarent Status, which means that they do not have to pay dues until the lot becomes sold status. As long as the original builder holds the titles and rents them out, he technically has not sold, however this law was not intended for them to open it up to be a rental community and generate revenue without paying dues, yet using the resources to generate income, Hanson commented.

The builder-homeowners representing 95 of the lots and homes have not paid 2007 dues, paid partial dues in 2008 and have not paid 2009 dues that were due by Jan. 31st. Out of 95 lots owned by builder-homeowners only 1 is current on their dues. Annual dues are $350 per lot. The amount in arrears by those overdue also includes an additional 14 homeowners, Joesten said.

The HOA is trying to develop payment plans and ways for all to be brought current. Some properties have gone back to the bank and some are in foreclosure. The bank has not paid dues, but negotiations are in progress with them to bring them current, Hanson said.

110 homes were in various stages of being built in the neighborhood. 43 homes are currently owner occupied. 30 lots are undeveloped. The balance of homes are occupied by renters.

The HOA is attempting to maintain the common areas. The last time paid maintenance occurred was April 15th. "We are trying to establish a rapport with residents to convey that we are doing everything possible to maintain the development, however it is very difficult when the burden of that falls on the minority owner occupied homes" Hanson said.

The HOA cancelled property management and maintenance contracts effective June 1st. They have advised owners and renters alike to not maintain common areas so that the builder will step forward and do it, however there have been several homeowners and renters who have made efforts to maintain them. "If the builders would pay their dues we wouldn't be in the situation we're in," Hanson said.

"We have cancelled all expenditure contracts except for PSE and insurance and are maintaining budgeting and operations in house by a volunteer HOA board of 5 homeowners. We have paid this years taxes and assessments and hope to be able to bring everybody current by the end of the year and be out of the situation that we're in. We do have an insurance policy in place that protects the board members and neighborhood liability.

The north lake is still operating at full power. The south lake pump broke and is a $1500 repair estimate. The board has paid to get the pump to the manufacturer for diagnosing the repair and shipping costs. The plan is to get that fixed as soon as possible.
Overall the neighborhood is solid and the structure of the homes is good. I would recommend this neighborhood to anybody. In two years this is going to be the development of Orting." Hanson said.

According to the two HOA board members information, Nilles Construction filed bankruptcy on the 5 lots they owned, which went back to the bank 2 years ago. Soundbuilt recently defaulted on the loans for 15 lots in various stages of development. Those properties are now owned by Washington Federal Bank. Benum Enterprises, with 26 lots in various stages of development, is currently in foreclosure proceedings and go up for auction August 28th.

Hanson said Bill Riley is the only builder left in the development. Prospect Homes, owned and operated by Bill Riley Commmunites had 71 lots at the first phase of construction. They currently hold 46 homes that are managed by various property management companies.

Hanson said that Bill Riley is in negotiations with the HOA and with other financial institutions to make attempts to improve the situation, however without the sale of the property it is difficult.

Hanson said the HOA has decided not to pursue litigation to protect the group's financial resources. "The builder experiences gain by renting or selling their properties, therefore they should take responsibility for maintaining their properties" he added.

Over a week ago Orting News made three attempts to contact Bill Riley Communities by phone. The receptionist said we needed to speak to Laurie Morrison who was working with the attorneys. We left her a recorded message explaining that we were working on a story about the financial situation of Hidden Lakes HOA and possible consequences rumored to be occurring. No one has returned the calls.

According to their website www.brc-homes.com/
they are currently marketing six new home communities including Voight Creek Estates, across the highway from the hatchery.

Hanson also said that the recent deck failure of one of the rental homes resulting in injury to the resident is under investigation and has gone to a state level, according to the City of Orting, but they have been asked not to discuss it by city officials at this time. "The decks were built after the houses were built, and the decks may not have been inspected at the time the houses were occupied. I definitely feel there were some shortcuts in the inspection of the homes by building officials" Hanson said.

According to the information on their website, the Attorney General's Office does not have jurisdiction or oversight authority over homeowners associations. On the site they say "We can best serve you by suggesting you contact a private attorney for legal advice. If you do not know an attorney in your area, the Washington State Bar Association's Web site provides information on attorney referral services for persons of varying income levels. You may also contact the Bar by calling 1-800-945-WSBA (9722)."

People with comments and concerns can email the HOA board at hiddenlakesorting@yahoo.com Hanson said.