Inactive HOA

Started by MargaritaS • 3 replies • 3131 views

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MargaritaS (California)
Posts: 1

Posted:

Hi,
I would like to buy a condo in a 10-unit building (the price is about 50% lower the market price), the problem is an inactive HOA. What does it mean, what should I know about this situation before considering purchusing? Thank you in advance.

DanielH1 (California)
Posts: 482

Posted:

I don't think that "inactive HOA" is a technical or legal term. It just describes the situation where everybody in the HOA stopped having meetings or doing anything related to the HOA.

You should do some detective work to see how the building is being maintained. Perhaps people have come to some informal agreement as to who (either individually or in groups) pay for items such as hallways, landscaping, roofs and foundation. Or perhaps they are just neglecting everything and waiting for it to fall apart.

In this economy, it is not surprising, especially with small buildings, that HOAs might become inactive. People may be foreclosed upon or not have the time/money to operate the HOA.

The danger is that the building becomes neglected and major problems are not addressed. If the HOA is inactive, you may find it impossible to get money out of the other owners such that these problems would be fixed. In the end, you might have to pay to fix problems all by yourself or get stuck living/owning a condo that is unsellable because of major problems (which you would have to reveal to a buyer).

A key question is: "How many other owners live here versus banks/landlords?"

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You may be in luck. HOA stands for Homeowner's Association. Which translates to HOMEOWNER's grouping together for a single cause of maintaining property values. If the homeowner's in the condo have no interest in keeping a HOA together then there is no HOA.

Here's the issue you may face... BECAUSE their is NO ACTIVE HOA don't expect the common use areas to be maintained. Your on your own as is your neighbors. This means that annoying piece of grass shared by everyone isn't getting mowed it's because NONE of the neighbors wants to do it. There is NO THEY or THEM in a HOA.

If someone does decide to revive the HOA it's most likely due to common property upkeep issues. It's better for ALL the neighbors to pay $10 a piece to mow the lawn than 1 owner paying $50 and being grudgy about it... It's basically a "Kitty" where everyone throws in their cash...

You can go to the courthouse and request to view any documents pertaining to the HOA. They should have the CC&R's and Incorporation documentation if they exist. By-laws may or may not be filed as with Archectual control documentation. Those 2 documents are optional in some cases. Keep in mind a REALTOR, MORTGAGE COMPANY, or CLOSING ATTORNEY is NOT responsible for informing you about the HOA rules/conditions. It is considered YOUR responsibility to inform yourself. You may try to contact a homeowner to see if they have a copy.

Former HOA President

SusanW1 (Michigan)
Posts: 5,202

Posted:

Do they have a management company? Can you ask the neighbors?
Who's watching the store, anyway . . .??

Are you using a realtor? That person should be able to find your CCRs, bylaws, rules and regs. Insist on seeing a profit/loss statement and balance sheet and any information of any court cases or legal proceedings this HOA may be responsible for.

Do NOT buy until you can be sure you aren't going to be 'taken'

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