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Can a common area be converted to personal property in a failed, foreclosed development?

Waynesville, NC |

If I buy the undeveloped majority (including the common areas) of a minimally developed subdivision at foreclosure, for which the HOA was never incorporated, and if I do not intend further development, what rights and responsibilities do I have in regard to the common areas? Can they be converted to my personal use?

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Attorney answers 2

Posted

You've got a pretty complex question here. Any answer you get is going to be subject to having an attorney look at and examine the documents before you are going to get a reliable answer. YOu may well be able to take control of the common areas, but I'd never dream of telling you that without knowing a lot more information and examining the title for the property. Unless you are willing to just roll the dice on this, I'd strongly advise you hire a lawyer to assist you in sorting through these issues. You may spend several thousand dollars to do so, but the amount of problems you can save yourself would likely make it well worth it.

Posted

The other attorney gave a great answer. I will add that what raises a flag for me is you say "undeveloped majority," which might imply that there is a "developed" minority. And if that minority has owners, then things will be more complex than they already are. You NEED a real estate attorney to look at this. I often hate given that sort of canned advice (and dismayed by the attorneys that simply post answers saying "go see an attorney.", but you are contemplating a complex real estate transaction that if done wrong will cost substantially more in the long run than investing in hiring an attorney up front to get it done right.

If there are minority owners, at a minimum, some sort of severance or partition action will likely need to take place and those owners may need to be compensated as I suspect their deeds gave them some right to common area. Just speculating. Hopefully this helps.

Since we don't really know the scope or the risks with what you are proposing, hard to really provide much more insight.

John W. Bowers

John W. Bowers

Posted

I largely agree with Matthew. Looking at the documents that have been recorded, how many other property owners exist, what their deeds say, whether any plats have been recorded, are among the many factors involved in this matter. Giving you an answer more than of more than "you need to consult with an attorney" is impossible under these circumstances. There are so many unknowns here that will have a definite impact on the ultimate answer that anything we tell you here is pure speculation and guesswork, all of which would be subject to being changed given certain facts and information we just don't know. You may have a real opportunity here, but you also could have a real disaster lurking behind this. Good luck.

Matthew Scott Berkus

Matthew Scott Berkus

Posted

John, I wasn't referring to you John with that comment. Just a general comment and frustration with participants on AVVO. It wasn't directed at you at all. Sorry if that wasn't clear.

John W. Bowers

John W. Bowers

Posted

I didn't take it that way at all! No worries. :) I'm sorry if I conveyed that. My saying I largely agree with you was I'm just not sure what rights and expectations the other developed properties will have in a common area. Is this a failed subdivision? Were there just promises of common areas by the developer, or is there something more? Does a recorded plat show the common areas? Can an HOA still be created? Does this purchase put the individual in the place of the developer? I can imagine a lot of stuff that we have no idea about without examining the title work and deeds and learning more about the transaction. Regardless, I appreciate your kind thoughts.