Thinking of letting your HOA dissolve? Here is my nightmare

TishS (Washington)
Posts: 116

Posted:

A word of warning to anyone with a dissolved corporation or inactive homeowners association

My case has just been decided by a judge...this is no joke

In 1971 my plat was established, homeowners association was incorporated, and CCR's were filed on my deed.

In 1980 the corporation dissolved administratively and no one noticed.

In 1986 a new group used the exact same name and started a new corporation. Everything appeared to be the same. When you received documents from title, they provided the originals from 1971. No mention of this "new" corporation.

In 2004 "ammended" bylaws were filed with the county. These ammended bylaws increased the size of the HOA from 29 to over 100 lots. The added lots were owned by the president and his cousin. Only a very few people knew these existed.

In 2009 I received a copy of 2004 bylaws by accident. It was not immediately apparent because although the bylaws say mandatory homeowners association that runs with the land, it was being treated as a voluntary non profit community organization, even though the term homeowners association is in the name of the corporation. As being one of the very few properties with the CCR's on my deed, I proceeded legally to clear this mess.

Although, they admitted the bylaws are not followed, the new corporation has nothing to do with the CCR's, there is nothing that would indicate this is a non profit community club and not a homeowners association,..they prevailed and actually got ownership of the park that was dedicated to the community, because of the statute of limitations.

Yes, now we have a massive problem. The plat has to be vacated..whatever that means? The CCR's are one big question mark (I guess that will be part of the vacating the plat) The park most likely will lose tax exempt status and the property taxes are out of this world. IRS taxes are not a problem, because they never filed them, State wants their share of taxes

In my defense, I only bought recently, and did go through title, but title will not cover any HOA mess in our state. I did have a good lawyer, but it took 11 months for all the twists and turns of this nightmare to be disclosed. When we began it was a mandatory homeowners association with issues..boy did evolve into something different.

This all happened because no one protected the corporate name from being used by someone else.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Tish,

The legal term "vacated" means "set aside".

I'm not sure what the outcome of your trial was. Aside from the plat being vacated (which makes no sense to me, but I'm not an attorney!), what else did the judge rule? And regarding the plat, is that the plat for the 1971 HOA or the 1980 HOA? Is there a mandatory or voluntary assn? Does your property have deed restrictions?

The fact that the same name was used for the "new" corp is not unusual. When a corp dissolves the name is up for grabs if the corp is not reinstated w/i a certain period of time.

Whethe voluntary or mandatory, the term "homeowners assn" can apply. In other words, even if it's a voluntary organization it can be called a homeowners assn.

The fact that the original HOA was administratively dissolved does not affect the deed restrictions, which run with the land. BTW, the HOA does NOT run with the land. The original 29 properties still have deed restrictions. A homeowners assn is not required to enforce the deed restrictions; the only function of an HOA is to maintain common areas. However, if an HOA exists they will have the power to enforce the CCRs. W/o an HOA each deed restricted property owner has the power to enforce the CCRs in small claims (justice) court.

TishS (Washington)
Posts: 116

Posted:

The judge ruled that the community park was a corporate asset. The judge ruled that since the association had paid the tax (technically the property was tax exempt) The new corporation has control. The judge accepted the statements made that it is a voluntary association so they could have more flexibility on what they did, but did not require them to change the bylaws they recorded against the new properties that say mandatory, as long as they never try to lien my property they are in the clear with the judge and they have not clouded my title until they actually act on what they have recorded against my deed. Basically said I have not been damaged yet.

I am sure it seemed a little strange that I was the only one that complained...the average age of the other homeowners is over 80. The only younger person..is the guy who added all the properties and was president or vice president continuously for the last 30 years

14000.00 in legal fees and I am exactly where I was when I started, with the exception of I do not have to pay dues and assessments (they are completely rebuilding the community park and putting in a marina...several hundred thousand dollars I am sure, but that should be offset by the 1200 new members that are to be added)

The new corporation immediately locked the community park and are demanding 1000.00 each if you would like a key. This is a small park only parking for 3 cars

My best guess is that as each property changes hands they will get these bylaws (no CCR's) and will become mandatory members of what ever this corporation is. The group sent out an email that said they were going to create governing documents. This corporation is 30 years old.

TishS (Washington)
Posts: 116

Posted:

The judge ruled that the community park was a corporate asset. The judge ruled that since the association had paid the tax (technically the property was tax exempt) The new corporation has control. The judge accepted the statements made that it is a voluntary association so they could have more flexibility on what they did, but did not require them to change the bylaws they recorded against the new properties that say mandatory, as long as they never try to lien my property they are in the clear with the judge and they have not clouded my title until they actually act on what they have recorded against my deed. Basically said I have not been damaged yet.

I am sure it seemed a little strange that I was the only one that complained...the average age of the other homeowners is over 80. The only younger person..is the guy who added all the properties and was president or vice president continuously for the last 30 years

14000.00 in legal fees and I am exactly where I was when I started, with the exception of I do not have to pay dues and assessments (they are completely rebuilding the community park and putting in a marina...several hundred thousand dollars I am sure, but that should be offset by the 1200 new members that are to be added)

The new corporation immediately locked the community park and are demanding 1000.00 each if you would like a key. This is a small park only parking for 3 cars

My best guess is that as each property changes hands they will get these bylaws (no CCR's) and will become mandatory members of what ever this corporation is. The group sent out an email that said they were going to create governing documents. This corporation is 30 years old.

TishS (Washington)
Posts: 116

Posted:

Oh..the reason to vacate the plat is the community beach was dedicated to the plat for use of the "public" and fee interest was based on the lots within the plat. Well at some point in time after the plat was recorded the beach property was given (again) to the original HOA by quick claim and this time they named the HOA.

The beach is no longer public and does not belong to the lots within the plat..so the recorded plat is wrong..so that is why it has to be vacated..at least that is what I understood from the powers at be in the county.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Check into the deeds.

A quit claim conveys only the interest that a person has in a parcel of land. If that person has no interest whatsoever to give the land to anyone, then the conveyance is precisely that - no interest in the land.

If you can prove the person who recently deeded the property to the HOA had no right to do so, or did it incorrectly by not getting permission of the owners, etc, you can ask the court to invalidate that transfer, thus bringing you back to your original community beach. This would prevent a marina, etc.