Mooresville homeowners wrestle for control of HOA; Developer could control 17 more years

Residents at Waterfront at Langtree are worried about their finances and safety after the person essentially in charge was accused of violent threats.
Residents at Waterfront at Langtree in Mooresville say the person appointed by the developer to...
Residents at Waterfront at Langtree in Mooresville say the person appointed by the developer to the HOA board has made threats against them and mishandled association funds.(WBTV)
Published: Aug. 23, 2022 at 6:56 PM EDT

MOORESVILLE, N.C. (WBTV) - Townhome owners in a Mooresville community say they’re desperate to take control of their Homeowners Association after the person left in charge of the HOA is accused of threatening residents with a gun and harassing behavior.

The developer of the community maintains complete control of the HOA because of the community’s covenants and shows no signs of wanting to allow residents any more representation. The developer’s rights could last until 2039.

“We’re kind of trapped, and that’s what’s very frustrating,” Kathy Caputo Worek told WBTV.

Several residents sat down with WBTV for an interview about their predicament at Waterfront at Langtree in Mooresville. More owners said they were afraid to speak on camera because of the tense situation with the resident-owner representative on the HOA, Paul Harraka Sr.

“The name calling just progressively got worse,” Chris Collins said.

“He turns nasty and starts calling me names and telling me I’m not smart,” Ellen Scherr told WBTV.

Neighbors described having to call police and threatening behavior like driving closely behind walkers and demanding proof of ownership in the neighborhood.

Harraka’s next-door neighbor successfully filed a no-contact order against him, after video showed Harraka threatening to use a firearm and “put a bullet between (his) eyes.” The judge ordered Harraka to steer clear of his neighbor and not discuss him on social media.

Another Waterfront resident also filed for an order and Harraka has filed his own no-contact cases against other residents. None of those requests have been granted and Harraka is waiting for a court hearing in one case left open.

While most neighborhoods with an HOA could simply hold a vote to remove a board member, residents at Waterfront at Langtree don’t have that ability yet.

That’s because the developer, JRN Investments (which recently changed its name to JRN Development) maintains “Special Declarant Rights” that essentially allow complete control over who sits on the association board.

JRN is controlled by Richard (Rick) Admani, who also runs several other developer entities across the Piedmont.

Waterfront’s covenants make it clear that JRN has the right to “elect, appoint or remove any officer or board member of the Association” during their control period.

Waterfront residents WBTV interviewed thought that day would come sooner rather than later based on statements made by the homebuilder when they were considering buying into the community.

“As soon as they finished building the townhomes that had been planned, the developer would then be turning over the community to the HOA,” Worek told WBTV.

That option does exist. According to the covenants, the developer rights could expire five years after all the lots have been built out or the property has been completely transferred from the developer.

But JRN still owns an undeveloped lot at the very front of the community entrance and all the common area spaces in Waterfront. Without all of the property being transferred, the developer’s rights don’t expire until Dec 31, 2039.

The Special Declarant Rights in the Waterfront covenants allow the developer to stay in control...
The Special Declarant Rights in the Waterfront covenants allow the developer to stay in control of the board until 2039.(WBTV)

In response to an email from WBTV asking when JRN intended to release the developer’s rights, Admani wrote “JRN Development will fully comply with the Declarant Rights expiration scenarios, as they were originally presented.”

“Why is JRN holding back releasing the neighborhood? What is he afraid of in giving us control of our funds?” Worek said.

Control of the HOA funds is what started much of the tension at Waterfront.

Residents who spoke with WBTV worry there has been financial mismanagement, especially because they have not been given a thorough accounting of the revenues and expenses.

Emails WBTV obtained from residents show that when townhome owners complained about the spending and lack of transparency, Admani told them to bring it up with Harraka.

“Red flags should go off to anybody. Where is our money going?” Cody Kaufman said.

Harraka granted WBTV access to the Waterfront community Facebook page where posts from Harraka make it crystal clear he has overseen the funds, although he tells WBTV that Admani or the board has final say.

Harraka gathered signatures from resident owners on a piece of notebook paper to build support for installing a gate. A $26,000 deposit was paid but the plan to build a gate hit a brick wall.

An email Harraka provided to WBTV shows a Mooresville official incorrectly told him the gate wouldn’t need a permit. The mistake was made because, the town official said, since 2008 the town has never received a request to add a gate and turn a public street and area into a private development.

The town board ultimately denied the permit.

Residents also complained about money spent on a substandard playground and dog park that are adjoined and only separated by a fence.

An attorney working with some of the homeowners wrote a letter to Admani listing nine different grievances against Harraka including breach of fiduciary duty.

The letter also included a signed statement from a landscaper claiming Harraka tried to involve him in a plan to overcharge the HOA to save money on his personal landscaping bill.

In response to questions from WBTV about HOA expenses, Harraka shared one of his Facebook posts on the community page listing purchases and claiming he paid from his own pocket and is waiting to be reimbursed. Harraka denied any claims saying he was defrauding the HOA.

State law requires HOAs to provide all financial and other records when requested. But a picture of a yellow legal pad with written expenses is all that Waterfront residents have been given.

WBTV has obtained emails from both the company managing the HOA and a local CPA who was set to manage some aspects of it, distancing themselves from Waterfront and terminating their relationship.

After WBTV started digging for answers, Harraka was removed from the board.

A statement from Admani said “upon receiving reports of multiple allegations of improper communications made against him, he was terminated from his HOA role immediately.” Harraka maintains he resigned and sent WBTV several emails showing he was not removed or terminated.

A letter provided by Paul Harrak that was sent to Waterfront residents claiming Harraka...
A letter provided by Paul Harrak that was sent to Waterfront residents claiming Harraka resigned from his position.(WBTV)

Residents were able to apply and interview for the HOA board position vacated by Harraka but they recently received an email the Admani controlled board stating “the board have decided to choose someone internally to fill the vacant board position.” There are currently only two members of the board, neither of them Waterfront residents.

In an email to WBTV, Admani wrote “We do NOT have any concerns from the HOA’s original inception through the present with the financial accounting records or expenses of the HOA.”

Both Harraka and Admani claim “the overwhelming majority of the HOA residents are fully satisfied.”