ANyone ever dissolved an HOA?

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Brian, dissolution of an HOA can be tricky and should be described in your Declaration. Declarations can vary significantly, following are two examples in Colorado. For one the Declaration can not be terminated and the other allows the Common Interest Community to be terminated. Some HOA's just seem to die, however this does not necessarily relieve the homeowners of obligations.

13.1 Duration.
The covenants, restrictions and obligations of this Declaration shall run with and bind the land in perpetuity.

9. Termination of Common Interest Community
(a) Except in the case of a taking of all the Units by eminent domain, a Common Interest Community may be terminated only by agreement of Unit Owners of Units to which at least sixty-seven percent (67%) of the votes in the Association are allocated.

(b) An agreement of Unit Owners to terminate must be evidenced by their execution of a termination agreement or ratifications thereof in the same manner as a deed, by the requisite number of Unit Owners. The termination agreement must specify a date after which the agreement will be void unless it is recorded before that date. A termination agreement and all ratifications thereof must be recorded in every county in which a portion of the Common Interest Community is situated and is effective only upon recordation.

(c) Subject to the provisions of a termination agreement described in this section, the Association, on behalf of the Unit Owners, may contract for the sale of real estate in a Common Interest Community following termination, but the contract is not binding on the Unit Owners until approved pursuant to this Section. If any real estate is to be sold following termination, title to that real estate, upon termination, vests in the Association as trustee for the holders of all interests in the Units. Thereafter, the Association has all the powers necessary and appropriate to effect the sale. Until the sale has been concluded and the proceeds thereof distributed, the Association continues in existence with all the powers it had before termination. Proceeds of the sale must be distributed to Unit Owners and lien holders as their interests may appear, taking into account the value of the property owned or distributed that is not sold so as to preserve the proportionate interests of each Unit Owner with respect to all property cumulatively. Unless otherwise specified in the termination agreement, as long as the Association holds title to the real estate, each Unit Owner and the Unit Owner's successors in interest have an exclusive right to occupancy of the portion of the real estate that formerly constituted the Unit. During the period of that occupancy, each Unit Owner and the Unit Owner's successors in interest remain liable for all assessments and other obligations imposed on Unit Owners by this Article or the Declaration.

(d) Following termination of the Common Interest Community, the proceeds of any sale of real estate, together with the assets of the Association, are held by the Association as trustee for Unit Owners and holders of liens on the Units, as their interests may appear.

(e) Creditors of the Association who obtain a lien and duly record it in every county in which any portion of the Common Interest Community is located are to be treated as if they had perfected liens on the Units immediately before termination or when the lien is obtained and recorded, whichever is later.

(f) The respective interests of Unit Owners referred to in subsections (c), (d) and (e) of this Section 9 are as follows:
(1) Except as provided in paragraph (2) of this subsection (f), the respective interests of Unit Owners are the combined fair market values of their Units and Allocated Interests immediately before the termination, as determined by one or more independent appraisers selected by the Association. The decision of the independent appraisers shall be distributed to the Unit Owners and becomes final unless disapproved within thirty (30) days after distribution by Unit Owners of Units to which twenty-five percent (25%) of the votes in the Association are allocated. The proportion of any Unit Owner's Interest to that of all Unit Owners is determined by dividing the fair market value of that Unit Owner's Unit and its Allocated Interests by the total fair market values of all the Units and their Allocated Interests.
(2) If any Unit or any limited Common Element is destroyed, to the extent that an appraisal of the fair market value thereof prior to destruction cannot be made, the interests of all Unit Owners are their respective Common Expense Liability immediately before the termination.

(g) Except as provided in subsection (h) of this section, foreclosure or enforcement of a lien or encumbrance against the entire Common Interest Community does not terminate, of itself, the Common Interest Community. Foreclosure or enforcement of a lien or encumbrance against a portion of the Common Interest Community other than withdrawable real estate does not withdraw that portion from the Common Interest Community. Foreclosure or enforcement of a lien or encumbrance against withdrawable real estate does not withdraw, of itself, that real estate from the Common Interest Community, but the Person taking title thereto may require from the Association, upon request, an amendment to the Declaration excluding the real estate from the Common Interest Community prepared, executed and recorded by the Association.

(h) If a lien or encumbrance against a portion of the real estate comprising the Common Interest Community has priority over the Declaration and the lien or encumbrance has not been partially released, the parties foreclosing the lien or encumbrance, upon foreclosure, may record an instrument excluding the real estate subject to that lien or encumbrance from the Common Interest Community. The Executive Board shall reallocate interests as if the foreclosed sections were taken by eminent domain by an amendment to the Declaration prepared, executed and recorded by the Association.

Hope this helps,
Roger

Brian, from what you stated the owners can approve dissolution. Why not send a letter signed by the President and Secretary of your HOA to the City. It could include a statement, such as, "upon acceptance by the City of ______ , which is established by signature of the undersigned authorized representative of the City of ________ , the ____________ HOA herein transfers ownership of all of its common areas, including but not limited to the two water retension basins. You could provide for signatures and notaries by each signature.

This document could be filed with all counties involved. Then, with no common areas for which the homeowners could be liable, you could officially terminate the HOA at a meeting and file the minutes of that meeting with all counties involved.

Good Luck,
Roger

The legal disclaimer below applies.

Whatever happened to your association? Did you get it dissolved?
How did you handle the retention basins?

My sisters did. Turns out they were having issues and someone discovered they articles were never recorded at the court house. Only what is officially recorded at the courthouse counts!!

Sorry, I dont know all the details. Just that it was disolved. In fact it really never was!! They have no common areas except for a front gate. I think the homeowners all pitch in and keep it looking nice.

Who takes care of the roads and storm water management and snow removal,etc?

Julie: i believe you are stuck. I think this is one crack in the system that isn't thought out well. The cities want nothing to do with the management of the basins, lands, etc.. That is one reason they are so happy to have HOA's spring up, that's less landscaping, maintenance, etc. for them. IMO, there is NO way a city wants to take back/allow an HOA to dissolve. There is no upside for them, just downside.

Thank you Brian and Harold. I agree with everything you say. Our CC&Rs state, "The City of Phoenix is not responsible for, and will not accept maintenance of, any private facilities, landscaping, or similar improvements within the Common Area, the maintenance and responsibility for which will be that of the Association." It's a great deal for them--guess that's why Phoenix is one of the "Best Managed" cities in the country (or at least that's what the sign on 43rd and Glendale says!).

In answer to Charles' question, the streets and street lights are maintained by the city. Chances of snow in Phoenix, enough to accumulate and need clearing, is virtually impossible. I don't even think the city owns salt trucks or plows. When trees were trimmed after a monsoon storm and set out for a quarterly loose trash pick-up, the city would not pick them up because we pay for water only, not sewer and sanitation. Using that rationale, I would say the city wants nothing to do with the Common Areas.

It seems as if the retention basins being owned (you are right, Harold) by the HOA is limited to Arizona. I hadn't thought about the deed restrictions. I'll ask the management company about that.

I was afraid we are pretty much backed into a corner. I am preparing end-of-year "this is what you owe" letters with a sheet telling people what will happen if they don't pay, i.e., liens, garnishment and foreclosure and all the associated court and legal fees. Perhaps if people realize that when they go to sell the property they will be out several thousand dollars they might think twice, especially with the prices of housing decreasing so dramatically in this area.

Thank you so much for giving me your opinions. I really needed to know if we had pretty much exhausted our options and now I definitely have a better idea.

I realize the CC&Rs have no bearing on the City of Phoenix but I thought it does show that the city makes it pretty clear they are not interested in the retention basins. I had thought about the special taxing district but didn't know how they could do it until Harold brought up the deeds. And you are right, there won't be any wiggle room for owners. I will add that info to the "What happens if the HOA dissolves?" section of the deadbeat letter I am writing.

I am hoping I can salvage things before it gets too late. I am the Treasurer but also a stay-at-home mom so I can devote more time to this than most people. Our one and only President has 3 small children and work problems so he's doing the best he can but is burnt out.

My last ditch hope is to suggest that we forgo the monthly landscaping and use that money to sue/take to court those that owe the most. Paying up front court and lawyer fees have been killing us. Let's just hope it never gets to that point. In the mean time I will check into the bylaws about dissolving again. Ours seem to be absent that important point but I could be wrong.

That is to bad. Peple don't realize how HOA works, and it is a thankless job. I would check with a attorney about any monies that are involved or left, and give it back to them. You may be suprised how mwny come to meeting..good luck

Now you know why I am just Treasurer, Harold. I have the hot head while our President is a much more mellow guy. You are correct; I hadn't thought it all the way through, obviously. I just get so upset about the guy who's into us over $3k in back assessments and is just daring us (literally) into foreclosing on him.

We have considered a special assessment as our last resort, actually. First I am sending out, "In case you didn't realize it, our 2007 records show you are XX behind in assessments and if you don't pay, these are the things that can happen" letter. Our next Board Meeting is March 5 so we can see what, if anything, that effort produces.

On a happy note, our management company finally sent us the 2007 and 1/08 financial statements and our second biggest offender has started a payment plan. The December letter from the attorney must have worked.

We could stop paying taxes on the retention area but last year's taxes were a combined total of $55.60. We can still afford that and the management company is paying it as well as registering us with state annually, which is only $10. I wonder if some poor sap would buy it, with its valuation only at $500 for each parcel (there are 4 I think), I am sure they would think they are getting quite a deal. Hah!

No they don't buy it to "use" - it can't ever be anything but a retention basin because of the deed restrictions on the retention property, but they buy it because they think it fell thru the cracks at the HOA and they can buy it cheap and "sell" it back to the HOA for more than they paid for it. Quick turnaround of their investment. Just wondering out loud what would happen if an HOA told them no thanks - you own it now, take care of it. LOL.