(Published Monday, August 13, 2007 11:33:01 AM CST)
A d v e r t i s e m e n t
By Mike Heine mheine@gazetteextra.com
LAKE GENEVA-Three homeowners in the upscale Geneva National neighborhood are suing the gated community's developer, saying residents should have more control of development.
The plaintiffs, who say they have support from many of their neighbors, think the developer, Forward Geneva National, is exercising too much control without approval from the residents.
For example, Forward Geneva bought a water and sewer system for $8.5 million and billed residents without a vote, and it erected a new gatehouse for $850,000 without a vote, attorney Brad Hoeschen said.
"The developer is making a significant financial commitment for the unit owners without the owners having a say," Hoeschen said.
The residents say the development should fall under Wisconsin's condominium laws, which state that developers lose their control after 10 years or after selling 75 percent of the units, whichever comes first, according to court documents. An attorney general's opinion supports that position, Hoeschen said.
John Brady, an attorney representing Forward Geneva National, a division of the real estate company Keefe and Associates, said Geneva National shouldn't have to follow condominium law because it is a master planned community that includes condominiums, single-family housing, businesses and golf courses.
A community association board that gives nearly equal say among all the entities decides what goes on, Brady said.
Single-family homeowners have four votes on the board, as do condominium owners, the golf courses and Forward Geneva National. The commercial properties inside the complex get three votes.
If 85 percent of the lots inside Geneva National are sold, Forward Geneva National loses its control as outlined in the original developers agreements, Brady said.
The community was tabbed to have 1,950 units. There are 1,051, or 54 percent, sold to date, Brady said. When 1,666 units are sold, Forward Geneva National will no longer have a say on the board.
"The community associations runs it and will always run it," Brady said.
But Hoeschen said the association is made up of residents hand-picked by Forward Geneva National.
"They have the ability to remove anyone they want from the community association if they believe that individual is acting against the interests of the developer," Hoeschen said.
A court decision favoring the three plaintiffs-Mark J. Solowicz, Jessie E. Soltis and Stephen J. Havey-could have "a dampening effect" on the real estate industry in Wisconsin, according to an opinion by the Wisconsin Realtor's Association filed on behalf of the defendants.
"This lawsuit could become a red flag to other developers and their lenders, warning them to take their plans and money to other states instead, if master planned communities are classified as condominiums in Wisconsin," the opinion reads.
Developers need to have control of their development long enough to make the investment worthwhile, Brady said.
Hoeschen said the WRA opinion is a scare tactic.
"Developers go where the money is, and the money is in residential development in Wisconsin right now," he said.
The only dampening effect a win by the plaintiffs might have is on large-scale condominium-type developments, Hoeschen said.
The case is pending before a Walworth County judge, who will decide to either dismiss the case or hold a trial.
