Homeowners want developer to turn over control, but can it?

Article Courtesy of  The Herald-Tribune

By Josh Salman

Published October 29, 2013


MANATEE COUNTY - Residents living in the gated Stoneybrook neighborhood of Heritage Harbour are asking the community's developer to turn over control of their homeowner's association and its assets.
But after a decade of controlling Stoneybrook, Miami-based Lennar Corp. may not legally own what residents are asking for from the company.


Many deed-restricted HOAs become entangled in issues, but Stoneybrook's situation has spread far beyond overgrown grass and simple foreclosures.

The problems have become so acute that a homeowner task force plans to meet next week to consider options for taking control of the community they say should have been rightfully theirs years ago.

“This is a huge concern,” Stoneybrook homeowner Rob Bloom said. “We have been fighting for this for more than three years.”

Stoneybrook, an upscale subdivision of 947 homes, was built by Lennar beginning almost

The sign for the Stoneybrook neighborhood at Heritage Harbour in Manatee County.

a decade ago. In 2005 residents say, the community reached a threshold of being 90 percent complete, at which point state laws mandate developers have to turn over any governing association -- usually consisting of physical assets like clubhouses and homeowner dues for improvements -- to residents.  

But that same year, Lennar added 289 more acres to Stoneybrook for another 735 new homes.

The builder argued those new lots allowed the company to maintain control of the HOA and to continue collecting $419.81 each in quarterly dues from homeowners.

When the market began to slide into recession, Lennar put building there on hold, and refinanced an existing mortgage in 2008 — using the added land as collateral.

Three years later, in May 2011, the builder defaulted, and Lennar was hit with a $9.3 million foreclosure judgment, court records show.

Sometime later, Manatee County builder and developer Carlos Beruff acquired the land at a foreclosure auction. Lennar, however, refused to relinquish control of the community.

Now, because some of the assets pledged on the mortgage were never turned over to Beruff's Medallion Home, the builder has taken legal action against Lennar.

Meanwhile, residents have grown uneasy.

“The battle is between the residents and Lennar as to which assets they can turn over to us and which will go Medallion Home,” Bloom said. “It's a very convoluted system.”

Who owns what?

A Community Development District, or CDD, that governs most of Heritage Harbour now controls several of the overall community's parks, baseball fields and roads.

The CDD also is responsible for repaying the bonds Lennar used to build the community.

Lennar officials did not return calls seeking comment Friday, nor did Stephen Thompson, a Bradenton attorney representing disgruntled homeowners.

Beruff said he has no interest in the association, and wants only to resolve the issue so he can begin building homes on land he bought two years ago.

“We're pretty well down the road on getting this thing fixed with Lennar,” Beruff said. “Our issues are really unrelated to the HOA, but they're wrapped up in it because our property is part of the HOA.”

Homeowners are scheduled to gather Monday evening in the community's clubhouse — a meeting Lennar initially wanted to charge them for.

Lennar told the group last month that the company would hand over control of the association by the end of the year.

But until a title search is completed, residents will not know if Lennar or Beruff or another lien holder control the association's assets.

The HOA's manager says the push is being driven by small coterie of Stoneybrook residents, including Bloom and George Najmy, a local insurance agent and founder of the now defunct Bradenton bank First Priority.

The HOA is set to elect a new board on Jan. 1, presumably after Stoneybrook homeowners are in control.

Dennis Colletti, owner of ICON Management Services, which manages the association, said he expects a smooth transition.

“We work for the board and right now, the developer controls the board,” Colletti said. “That will change hands to the residents next year, and we will do what they want. I think both parties want to do what's right, it's just a matter of getting there.”