Part 10: GWLUA/GW Inc legal issues

Part 10: GWLUA/GW Inc legal issues Gillian Fryer posted 5 months ago

The board never did talk about the pros and cons of incorporation, so this is what I envisioned before the board actually filed the paperwork.

Pro:

1.Chavez, the first HOA specialist we hired, told us that the case law regarding the NM HOA Act consistency held that HOAs in New Mexico were required to be formed as a non-profit corporation. The text of the law itself does not specifically say this.

Incorporation would protect community members from being personally liable for injuries on the 'common land' if that land was held in our name.
Would require the creation of an initial board to create the founding documents.
Would require new documents, which would offer the community the opportunity to be involved in the creation of these documents, and to right some wrongs.

Con:

Potentially creates a permanent business entity. The GWLUA was created under the law NMSA 53-10 which limited the lifespan to 20 years. The GWLUA documents created an association with a 25 year lifespan. At its inception, it was clear that Mike did not intend the original GWLUA to exist beyond 25 years. A new corporation could have a pre-determined lifespan or goal or it could be a perpetual organization. Getting rid of a perpetual organization could be difficult.
Requires regular filing of documents in order to remain in good standing.

As it turned out, #3 and #4 of the pro section, became a CON because of the way the board acted. And their lawyer told them it was all OK! Again, I gave Emery all of our documents and told him about NMSA 53-10 that formed the GWLUA. Had he actually READ the law, he should have questioned the power of the board to act unilaterally.

Since the land was the only public reason for incorporating, we need to look at those lands.

Our deeds all refer to the common lands. They add value to our property, even though the lands themselves have little commercial value.

The concept of common lands reserves undeveloped green belts in developments. Every community member has an undivided interest in the lands and that ownership 'runs with the land.' That means that your right to use the land exists by virtue of your private property ownership, so if you sell your GW property, you lose your interest in the common lands. These lands are not to be developed or encumbered (mortgaged.) We all have an equal interest in the lands: we cannot prevent any other member from entering the land and we cannot use them for our personal benefit, so we cannot use them to store our stuff, to regularly park on and we cannot take stuff from the land, like rocks, plants... or soil. That includes Mike Reynolds. If these are truly common lands, Mike has no more claim to them than the rest of us and he cannot use them for personal or commercial purposes.

Lots that are landlocked, have driveways that cross over the common lands. This is legally problematic, as no formal easements exist, which should preclude obtaining a mortgage. But hey, this is Taos, so who cares? Technically these roads are open to all the membership to use, although the associated property owners are expected to maintain these driveways. Once the driveway crosses onto private land, community members have no right to enter.

The HUGE question is whether these are OUR lands.

Mike and the board have claimed they are our lands and our deeds reflect this. They have billed the community for expenses related to the lands: property taxes, insurance and road maintenance. In the LUC, a contract which was never renegotiated, Mike promised to maintain the roads until 90% build-out, so he should be legally bound to that commitment, regardless of land ownership.

Until February 2021, the land was legally titled under Mike's name. Mike was the legal owner. This means all of our Deeds are faulty, and I would say that they are fraudulent, because Mike knew that those deeds were faulty when he executed them. Mike made more money from the sale of land because he was selling them with the claim of the additional common land ownership. To misrepresent what you are selling, especially in a material manner such as this, is fraud.

If the lands belong to Mike, then they are NOT common lands and he can do what he wants with them. But he also has NO claim to make us pay for them.

This HUGE legal issue is made even bigger because Mike created the moat. The Moat is that giant hole in the ground in front of the well.

That wasn't there when GW was first planned. Earthships don't have enough soil on the property to both fill all the tires and berm the building, so Mike has been taking soil from the well, on the common land, for years.

I've been told that the cost to berm an earthship today is about $15,000. Mike has built about 70 houses plus another 10 Earthships of various kinds in the commercial area, so that equates to $1.2 million. Since some Earthships are smaller than others, the amount of soil will vary and the cost of that soil would have been cheaper back in 2000 than today, so lets call it a cool $750K.

The land is either Mike's land or it's our land, it cannot be both depending on what suits Mike's fancy. If these are our lands, Mike has taken $750K of soil from us and he needs to compensate us for our losses. If they are HIS lands, then he needs to compensate us for the over $100K we have spent on the lands and the roads. Pick a side Mike. (You might look up fraud with this much $$ involved, to help decide the best choice.)

The solution to this conundrum, leads to whether we even need an HOA.

Mike claims we HAD to have an HOA because we were deemed a subdivision by the county, even though we were not a party to the lawsuit that Mike lost. The county has not enforced the subdivision laws as it is, so we have no moral duty to abide by that claim of authority over us. I can't tell you whether there is a legal duty to comply. I do know that the only reason the county wanted an HOA was so they could avoid liability for road maintenance.

A big wad of cash would solve the problem. If hell froze over, and Mike actually reimbursed us for the soil he has taken, that money could run GW for the indefinite future: it would be enough to maintain the roads, pay the taxes and build that community center the we don't have, all without community dues or an unelected board.

An HOA has a few simple duties:

to protect the assets of the community
enforce the covenants
to make sure that agreed upon maintenance is completed and paid for.
to ensure that expenses associated with community assets are paid.

I've already pointed out the the board has NOT protected community assets: they are letting two members (employees of EB) fence off a road on common land, and they are letting Mike take soil from common land.

They do not enforce the covenants (there is a container/stick building in the subculture), and enforcement has been arbitrary depending upon whether you are a friend of Mike. John LaSala has repeatedly stated publicly that the board cannot enforce the rules!

Once the community nears full build-out, the need for a board becomes less important. Since they currently do not enforce the building rules, it makes little difference if they exist, does it? Since there are no utility easements, it would be very expensive to build a standard stick house, so only environmentally friendly houses would be possible regardless of whether they were earthships.
A simple maintenance organization could see to the other issues, without the need for a board or an formal HOA.

If the need to incorporate was so imperative that the board had to do so deceptively in order to speed things up, how can the board explain why it then took a year and a half to have the common lands turned over to Greater World, Inc?

Now that the land has been turned over, Mike still retains the use of two acres around the well. We know what those two areas are for, don't we? Will the board charge Mike the current market price for the soil he is taking? It's their duty to do so.

I believe the board has never acted in the best interests of the community, and they have thereby violated their duty to the community. Only two of the five board members involved in the incorporation, were elected, and both of those ran unopposed. The remaining three were appointed. John LaSala, the current president of the board, was NEVER ELECTED.

Not only did the entire community NOT get to vote in writing regarding incorporation, they did not get to vote on the initial board or any of the documentation. The board forced an organization upon us without our agreement and it appears that their lawyer told them that this was OK.

So what happened as a result of the two community meetings regarding incorporation?

A number of community members contributed to a legal fund and we hired our own HOA specialist, Mark Glenn. I was the go-between with Mr. Glenn. His conclusion was that the board acted improperly and has no authority over the community. He sent the board members the following letter:

https://www.greaterworldcommunity.org/file/document/3854220439/kcErYWxz82W7vBW6.pdf

The board members simply ignored it. Of course they did.

This is the email correspondence with Mr. Glenn:

https://www.greaterworldcommunity.org/file/document/3854220439/kOSqhc2hd72tiNQC.pdf

His conclusions were that, "If the Board fails and refuses to do so (comply with the demand letter above), your alternatives are to do nothing or file a state district court lawsuit asking a judge to declare the actions illegal, void, or unenforceable."

All this time, we have been hoping that the current lawsuit would resolve some of our issues. With a court date finally set for February 2022, perhaps there is some light at the end of the tunnel.

Based on what I've presented above, I think we have a much more compelling argument than first appeared. Hell just might freeze over after all.

Before we were deemed a subdivision, Mike sold memberships, not land.

The problems all arose after Mike lost the subdivision lawsuit. He refiled our documents, but without any community agreement, albeit, still a small community. He then sold lots, with the common lands listed as an asset. I've heard that some old deeds don't mention the common lands. From this point forward, the problems developed.

I'm sure he was pissed about it all, and just did what was expedient to get his GW project back to building again, since there had been a hiatus on building during the lawsuit. Once everything was moving again, I doubt he gave any thought to the pesky details.

Mike told us, the board, that he hadn't deeded over the common lands because it was too complicated (irrelevant if you're already selling land and claiming there is common land as a benefit) and expensive (also irrelevant.) Nothing changed over the years, except the current lawsuit, where the judge finally said 20 years was long enough to wait to transfer the land.

Somehow, Mike found a solution that had been there all along. Mike just had to be forced to comply.

It was clear Mike didn't want to survey lots until he had to, and the county allowed him to do that.

Many of us have known for years that we didn't own the common lands, but we never saw it as a legal issue that warranted pursuit. It certainly wasn't because we trusted Mike, because I doubt anyone really trusts him. Maybe it was because we were too scared to speak out? Maybe it was because we felt defeated before we even started? The board never seriously discussed it... as if it was a subject that was off-limits. Mike was always on the board, after all.

In retrospect, it all feels like an abusive relationship we couldn't leave. That's the price we paid for allowing ourselves to be a treated like doormats. Mike never thought anyone would speak up. The community members behind those first feeble voices paid a hefty price, but they begat a few more voices. The tipping point is near.