PING: real estate lawyers (the saga is finally over)

[cartman]

Are any of the legal eagles on this board of the real estate variety? If so, PM me if you don't mind. I've got a question I'd like to bounce off of you as a sanity check.

[cartman]

Thanks to the couple of PMs I received. I have retained the services of a lawyer in the area.

For those curious, evidently I'm getting sued by the ROA for the horrible act of requesting a variance. Yep, that's right, the simple act of asking for a variance can evidently get you sued.

The story behind it is this. Back in the fall, a large number (~25% of the residents) requested variances from the Architectural Committee for the ROA (since this is Texas, it is Ranch Owners Assoc., not Home Owners) to allow the possibility to drill water wells on our lots. The requests were documented and approved per the CCRs, and the necessary paperwork was filed with the county. The group that is the developer of the subdivision also owns the sole water provider for the development. Well, to complicate matters, we found out that the developer was behind on their payments, and the bank was starting foreclosure proceedings. So that is what caused the application for variances, to cover our bases in case the water company shuts down.

Well, the developers did get foreclosed on, as did the water company. But they also retained control of the ROA. When they found out about the variances granted by the Architectural Committee, they fired the members of the committee, and then retroactively declared the variances null and void.

A few of the homeowners then filed a petition in court to determine the validity of their variances. So what does the ROA do? Instead of addressing the matter, they proceed to sue ANYONE who had requested a variance. So here I am, sitting at home, when I am served with notice of a lawsuit for the simple act of asking for a variance. I wasn't part of the group that petitioned a judge for the validity of the variances. I was going to wait it out until the foreclosure was settled before deciding what to do.

This is example #1A of why HOAs can be a bad thing. I never would have thought in a million years that asking for and receiving a variance would expose me to a lawsuit. Now it is time to head over to the 'Drunk Guy' thread.

[Chief Rum]

Originally Posted by cartman

Thanks to the couple of PMs I received. I have retained the services of a lawyer in the area.

For those curious, evidently I'm getting sued by the ROA for the horrible act of requesting a variance. Yep, that's right, the simple act of asking for a variance can evidently get you sued.

The story behind it is this. Back in the fall, a large number (~25% of the residents) requested variances from the Architectural Committee for the ROA (since this is Texas, it is Ranch Owners Assoc., not Home Owners) to allow the possibility to drill water wells on our lots. The requests were documented and approved per the CCRs, and the necessary paperwork was filed with the county. The group that is the developer of the subdivision also owns the sole water provider for the development. Well, to complicate matters, we found out that the developer was behind on their payments, and the bank was starting foreclosure proceedings. So that is what caused the application for variances, to cover our bases in case the water company shuts down.

Well, the developers did get foreclosed on, as did the water company. But they also retained control of the ROA. When they found out about the variances granted by the Architectural Committee, they fired the members of the committee, and then retroactively declared the variances null and void.

A few of the homeowners then filed a petition in court to determine the validity of their variances. So what does the ROA do? Instead of addressing the matter, they proceed to sue ANYONE who had requested a variance. So here I am, sitting at home, when I am served with notice of a lawsuit for the simple act of asking for a variance. I wasn't part of the group that petitioned a judge for the validity of the variances. I was going to wait it out until the foreclosure was settled before deciding what to do.

This is example #1A of why HOAs can be a bad thing. I never would have thought in a million years that asking for and receiving a variance would expose me to a lawsuit. Now it is time to head over to the 'Drunk Guy' thread.

Interesting. So what exactly is the lis pendens purporting to do against you? Is it to seek an injunction to stop the variances being confirmed as valid and reinstated? If so, it seems like a normal counter-sue situation. Now, why the compnay would be against you drilling these wills, I couldn't tell you. I would imagine you are contracted through the ROA to purchase water services from them anyway, correct? Wouldn't they get their money either way?

As for the foreclosure, do you know at what point in the proceedings it is? Has it gone to sale? Do you know of any efforts to purchase the water company? With any luck, another water company (or perhaps the municipal organization that handles water in your city/area) will step in and make this purchase, and you won't lose water at all.

I would definitely keep a careful eye on the foreclosure proceedings. (P.S. I work in the title industry with foreclosures, although my work is based in the Northwest, Washington-Oregon, etc.; not that familiar with Texas).

[cartman]

Originally Posted by Chief Rum

Interesting. So what exactly is the lis pendens purporting to do against you? Is it to seek an injunction to stop the variances being confirmed as valid and reinstated? If so, it seems like a normal counter-sue situation. Now, why the compnay would be against you drilling these wills, I couldn't tell you. I would imagine you are contracted through the ROA to purchase water services from them anyway, correct? Wouldn't they get their money either way?

As for the foreclosure, do you know at what point in the proceedings it is? Has it gone to sale? Do you know of any efforts to purchase the water company? With any luck, another water company (or perhaps the municipal organization that handles water in your city/area) will step in and make this purchase, and you won't lose water at all.

I would definitely keep a careful eye on the foreclosure proceedings. (P.S. I work in the title industry with foreclosures, although my work is based in the Northwest, Washington-Oregon, etc.; not that familiar with Texas).

The 'lis pendens' is exactly that, to make us 3rd party defendants to their counter-suit to declare the variances null and void. The foreclosure is said and done. No one put a bid on the title, so the bank is now the current declarant on the ROA. The people filing the petition for judgement have petitioned to add the interim foreclosure entity as a plaintiff as well.

We are rural, so there isn't a local water company to step in and take over. The current water company was operating under a temporary license, and was supposed to drill two new wells to support the current resident base. That never happened, and in fact, the development company proceeded to sell lots in a new area of the subdivision that did not have water or ROAD coverage. So there are a couple of houses that have been built that have only a dirt road leading to them and no water lines available. So we have a single, over-worked well, and some residents with no water service at all.

[Chief Rum]

Originally Posted by cartman

The 'lis pendens' is exactly that, to make us 3rd party defendants to their counter-suit to declare the variances null and void. The foreclosure is said and done. No one put a bid on the title, so the bank is now the current declarant on the ROA. The people filing the petition for judgement have petitioned to add the interim foreclosure entity as a plaintiff as well.

We are rural, so there isn't a local water company to step in and take over. The current water company was operating under a temporary license, and was supposed to drill two new wells to support the current resident base. That never happened, and in fact, the development company proceeded to sell lots in a new area of the subdivision that did not have water or ROAD coverage. So there are a couple of houses that have been built that have only a dirt road leading to them and no water lines available. So we have a single, over-worked well, and some residents with no water service at all.

Wow, what a clusterfuck. Sorry to hear that, cartman.

If no one bid at all on title, that almost certainly means even prospective investors don't see this as an area to get involved with. Are you in an unincorporated area? It would seem this is a point at which the local authorities need to be brought in for the public good, be they city or county officials.

Isn't the developer in violation of the services it has agreed to provide by not providing adequate water to all lots in the sub?

[Chief Rum]

BTW, once again, I am somewhat familiar with the real estate issues, if not the legal ones. But it seems to me that adding you all as third party defendants on their countersuit is just a standrad legal ploy, in case damages arise which they can apply to you. So if you believe you are in the right with respect to the original case made, I wouldn't be too concerned about that (companies that lsoe lawsuits won't be getting awarded any judgments, of course).

[cartman]

Originally Posted by Chief Rum

Wow, what a clusterfuck. Sorry to hear that, cartman.

If no one bid at all on title, that almost certainly means even prospective investors don't see this as an area to get involved with. Are you in an unincorporated area? It would seem this is a point at which the local authorities need to be brought in for the public good, be they city or county officials.

Isn't the developer in violation of the services it has agreed to provide by not providing adequate water to all lots in the sub?

We are inside the city limits of Driftwood, but it is a rural location. Prior to our development getting built, there were less than 100 residents in Driftwood.

Supposedly there was a bond placed before the new section was developed relating to the roads. But it has been almost six months since the development was started, and no progress has been made. The roads have been rough-cut, but there has been no progress on the bridge over the creek, so the houses over there have to drive 10 miles out of the way to get home. Supposedly the county works department has set an ultimatum down to the bond company to complete the roads. But that doesn't address the water situation at all.

And since the developer is in foreclosure, they have neither the funds nor the inclination to fulfill their responsibilities. Because they are a LLC, there isn't a lot to go after in regards to legal recourse.

I'm still in shock that I can be sued for simply requesting a variance. Unreal.

[cartman]

WOOT! After all this time, a judge has finally signed off the summary judgement in our favor, stating that the variances are valid. We have a mediation meeting next month to wrap up the loose ends. What a friggin' nightmare to have to deal with this over the past year. If I ever move again, I'm going to stay far away from any places with HOAs.

[cartman]

Well, back then I just thought that we were done with this case. It turns out the judge signed a partial summary judgment in our favor, and there were still portions that could only be decided by a jury.

We finally went to trial starting last Tuesday, and the jury rendered their verdict today. Most of the ruling went our way, but a couple of other decisions didn't. But on the whole it was very good for our side. Now there really are just some loose ends to wrap up.

As an interesting piece of trivia, the courtroom we were in was turned into a movie set used in Idiocracy.

[cartman]

The wheels of justice turn slowly. This thing still isn't decided. The HOA filed an appeal with the Texas 3rd Court of Appeals. Our side then filed as well. Back in March, the hearing happened, and in June, the appeals court gave their opinion. It was a slam dunk in our favor. Literally every point of appeal they made was rejected, and every point of appeal we made was affirmed, with one portion (attorney's fees) remanded to trial court. Back at the trial, the jury awarded our side $400K in attorney's fees, but the judge only awarded $100K, payable by the developers. This was sent back to the trial judge for reconsideration. Our expectation was that the trial judge would grant the amount awarded by the jury.

So, where do things stand now? After the appeals court entered their opinion, the HOA filed a motion to have the entire appeals court panel render a decision. That motion has yet to be acted on. In the mean time, the entity that foreclosed on the developers has filed a lawsuit against the HOA, asking the courts to indemnify them against any damages, and have the HOA liable for any damages stemming from the lawsuit.

Needless to say, this is not making for a happy holidays in the neighborhood.

[cartman]

The State Supreme court has declined to review the case, so the legal wrangling is almost over. We won 100% of the legal arguments. All that is left now is for the appeals court to direct the local judge to set how much the other side has to pay to our attorney. He's been working on contingency this whole time, while the other side's attorneys have been billing again the HOA insurance policy. He's relieved that the ship is about to come in.

This has definitely been a strange 5+ year journey through the legal system. Makes me glad I never progressed past taking the LSAT.

[JediKooter]

Congrats!

But...does everyone have water now?

[cartman]

Originally Posted by JediKooter

Congrats!

But...does everyone have water now?

They did drill another well for the water system a couple of years back, and that did help. But quite a few more houses have been built, and there are still plenty of more lots without houses yet, so it won't be long until we are back in the same boat with the oversubscribed water system. The legal status of the water company is still in limbo, so the prospect of more money being spent to upgrade the system further seems pretty remote. As for the roads, a judge ordered the construction bond to be used, and the bridge and rest of the roads to the new section were completed.

[Chief Rum]

Originally Posted by cartman

The State Supreme court has declined to review the case, so the legal wrangling is almost over. We won 100% of the legal arguments. All that is left now is for the appeals court to direct the local judge to set how much the other side has to pay to our attorney. He's been working on contingency this whole time, while the other side's attorneys have been billing again the HOA insurance policy. He's relieved that the ship is about to come in.

This has definitely been a strange 5+ year journey through the legal system. Makes me glad I never progressed past taking the LSAT.

Heh... I completely remember this thread when you originally started it, and I somehow missed every single one of your updates until now.

Congrats, cartman, I am glad this has worked out for you. And good question, JK, do you have water?

[Chief Rum]

Originally Posted by cartman

They did drill another well for the water system a couple of years back, and that did help. But quite a few more houses have been built, and there are still plenty of more lots without houses yet, so it won't be long until we are back in the same boat with the oversubscribed water system. The legal status of the water company is still in limbo, so the prospect of more money being spent to upgrade the system further seems pretty remote. As for the roads, a judge ordered the construction bond to be used, and the bridge and rest of the roads to the new section were completed.

Ah ha, and here is the answer.

Hmm, I presume you are still within the Driftwood city limits. In California, you pretty much can't build a full subdivision without accounting for how utilities will service that sub, including gas, electric and water. Is this a situation where someone with the developer maybe greased the wheels of beauracracy with the city?

[JediKooter]

Originally Posted by cartman

They did drill another well for the water system a couple of years back, and that did help. But quite a few more houses have been built, and there are still plenty of more lots without houses yet, so it won't be long until we are back in the same boat with the oversubscribed water system. The legal status of the water company is still in limbo, so the prospect of more money being spent to upgrade the system further seems pretty remote. As for the roads, a judge ordered the construction bond to be used, and the bridge and rest of the roads to the new section were completed.

Oh cool. The whole thing just seems crazy. There should be a law of 'common sense' because this HOA was seriously deficient in it. Another reason I can't stand HOA's. Wow and they are building more houses. That's just...I don't know what to say about that.

Congrats again. Hopefully the saga will finally now have a permanent conclusion.

[cartman]

Originally Posted by Chief Rum

Ah ha, and here is the answer.

Hmm, I presume you are still within the Driftwood city limits. In California, you pretty much can't build a full subdivision without accounting for how utilities will service that sub, including gas, electric and water. Is this a situation where someone with the developer maybe greased the wheels of beauracracy with the city?

Well, the city is unincorporated, so there is no city government. We are covered by the county for that stuff. The original plan submitted had multiple wells, so that was good enough to get the subdivision plans approved and started. The problems didn't arise until the original developer sold, and the new guys didn't want to spend any money of their own.

[Passacaglia]

Sounds like when I play SimCity.

[sterlingice]

I feel like I just learned something I never wanted to know

SI

[cartman]

Originally Posted by cartman

The State Supreme court has declined to review the case, so the legal wrangling is almost over. We won 100% of the legal arguments. All that is left now is for the appeals court to direct the local judge to set how much the other side has to pay to our attorney. He's been working on contingency this whole time, while the other side's attorneys have been billing again the HOA insurance policy. He's relieved that the ship is about to come in.

This has definitely been a strange 5+ year journey through the legal system. Makes me glad I never progressed past taking the LSAT.

It finally took 6 months to wrap things up. The judge first sent all parties to mediation to try and work something out, and after a couple of failed attempts, a hearing was scheduled. God bless him, but the HOA's attorney tried as hard as he could to get the whole case opened back up, but the judge was very firm that all the appeals court remanded to him was the issue of our attorney's fees. After that hearing adjourned, we overheard their attorney telling the HOA that we'd be lucky to get one red cent. (keep in mind their attorney is a guy that wrote a book on how HOAs in Texas can handle lawsuits)

So a couple of weeks ago the judge issued his final ruling. The HOA and the entity that holds the title on the foreclosed developers had to pony up a little over $600,000 to our attorney. Our guy got paid, and we got a little bit kicked back to us, on average about 15% of what we paid in to cover office expenses. I was on the low end of the list, with only $1,500 of my own money in the mix. Others had upwards of $20,000. So I got a check for $225, and the legal option to drill my own well or bury a propane tank if I so choose.

Now to see if the neighborhood can get past this, and get back to the way things were before the whole legal mess happened. Hopefully we get enough new people in to dilute the bitterness of those who kept clinging to an ultimately losing cause.

[PilotMan]

Man I totally missed this thread. Wow, what a nightmare. Glad to hear it's finally behind you though. It's amazing for a group to be in foreclosure that they found enough money to keep the lawsuit alive all the way through a couple appeals and a submission to the Supreme Court. You would think at some point they would just let it go.

[cartman]

Originally Posted by PilotMan

Man I totally missed this thread. Wow, what a nightmare. Glad to hear it's finally behind you though. It's amazing for a group to be in foreclosure that they found enough money to keep the lawsuit alive all the way through a couple appeals and a submission to the Supreme Court. You would think at some point they would just let it go.

Well, the group in foreclosure was a part of the lawsuit, but the folks that foreclosed on them assumed their liabilities, this lawsuit being one of them. The actual people that got foreclosed on only showed up at the trial when they were subpoenaed, and the group that foreclosed on them actually argued before the court that their hands should be clean of the matter. That got slapped down pretty hard by the appeals court.

[sterlingice]

I guess all's well that ends well. Tho by the sounds of it, you still are out $1K, right ($1500-$225)?

SI

[cartman]

Yeah, but considering that is all I'm out after that long of a legal battle, I consider that a win as well.