HOA & performance bond

[dreamhouse]

What is the name of your state? Hawaii

I recently purchased an unfinished lot in a subdivision with an HOA. I've secured a construction loan, submitted plans to HOA for approval, obtained HOA approval, necessary permits for construction. I am an owner/builder and therefore will not be hiring a general contractor for the construction. HOA design rules state that prior to start of construction, copy of performance bond from contractor is to be supplied to HOA. As owner/builder, I have not obtained performance bond on project. Construction has started. (Foundation will be poured in next week). Can HOA legally halt construction because of performance bond issue? I have a very tight construction schedule and significant delays can put me in default of construction loan.

 

[I AM ALWAYS LIABLE]

What is the name of your state? Hawaii

I recently purchased an unfinished lot in a subdivision with an HOA. I've secured a construction loan, submitted plans to HOA for approval, obtained HOA approval, necessary permits for construction. I am an owner/builder and therefore will not be hiring a general contractor for the construction. HOA design rules state that prior to start of construction, copy of performance bond from contractor is to be supplied to HOA. As owner/builder, I have not obtained performance bond on project. Construction has started. (Foundation will be poured in next week). Can HOA legally halt construction because of performance bond issue? I have a very tight construction schedule and significant delays can put me in default of construction loan.

My response:

Then you should have thought about this before construction started, and followed the rules and conditions of your HOA approval. You had no right to start construction without the bond - - especially in light of the agreement you signed.

Yes, the HOA has the right to halt your construction until such time as you comply with the agreement. You're not starting off on the right foot, already, and you haven't even moved in yet!

You have no one to blame but yourself.

IAAL

 

[dreamhouse]

MMM. Interesting comment. Perhaps additional clarifications are needed. First, HOA approval has been obtained in writing. Your response stated that I should have followed the rules and conditions of the HOA approval. I did, approval was obtained in writing. Second, as stated in design rules, "Upon receipt of final approval from the Design Committee, the owner may proced with the commencement of construction." Third, Design rules has a section on Preconstruction meeting. In this section is the following:
"After receiving Final Approval and before starting any construction, the owner and/or the owner's contractor, is required to meet with the Ranch Manager at the site. At this time, the constactor will submit to the Ranch Manager the following items:" Performance bond is listed as an item. The design rules also define a contractor as "a general contractor duly licensed in the State of Hawaii and bonded in an amount equal to the contract sum of the work to be performed for the owner."
I cannot find anywhere in the design rules that says that an owner is required to obtain a performance bond. There is also nothing in the design rules or CC&R that state that an owner is required to use a general contraction in the construction of a home. Again please note that an owner/builder permit has already been obtained from the county. Based on this additional information, do you still believe the HOA can legally halt construction because of the bond issue?

 

[HomeGuru]

MMM. Interesting comment. Perhaps additional clarifications are needed. First, HOA approval has been obtained in writing. Your response stated that I should have followed the rules and conditions of the HOA approval. I did, approval was obtained in writing. Second, as stated in design rules, "Upon receipt of final approval from the Design Committee, the owner may proced with the commencement of construction." Third, Design rules has a section on Preconstruction meeting. In this section is the following:
"After receiving Final Approval and before starting any construction, the owner and/or the owner's contractor, is required to meet with the Ranch Manager at the site. At this time, the constactor will submit to the Ranch Manager the following items:" Performance bond is listed as an item. The design rules also define a contractor as "a general contractor duly licensed in the State of Hawaii and bonded in an amount equal to the contract sum of the work to be performed for the owner."
I cannot find anywhere in the design rules that says that an owner is required to obtain a performance bond. There is also nothing in the design rules or CC&R that state that an owner is required to use a general contraction in the construction of a home. Again please note that an owner/builder permit has already been obtained from the county. Based on this additional information, do you still believe the HOA can legally halt construction because of the bond issue?

**A: I agree with IAAL. In the state of Hawaii, you do not have to hire a GC and as owner-builder, you ARE the GC provided you comply with the Owner-Builder law and obtain the requisite building department approval. Pursuant to the HOA CC&R's, a performance bond is required in all cases. This requirement is not waived under an owner-builder exemption. Do you understand why a performance bond is required by the HOA? If you did, you would understand that the requirement is prudent: if a GC constructs the project or not.