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BrianB (California)
Posts: 2,820
Posted:
I am the president (for life, it seems) of a small HOA in arizona. I am a board of 1, as the other two elected board members were late with their dues once, and that automatically removes them from office. We have not held elections or even an annual meeting in 4 years, as we cannot get anyone to even nominate another human being for potential election. And, with Az law, i can't have an annual meeting without an absentee ballot, and I can't do an absentee ballot with nomination. We once had a meeting to discuss spending $10,000 or more on landscaping, and only got 3 members, one of which was me, so threatening to spend money does not impact apathy either.

My issue: I might be moving to another state very soon, which means that the HOA will be leaderless. When i leave, the check signer, tax preparer, and bookkeeper go as well, as all of those functions reside in my household. So, as the last living person in my HOA who cares, what should I do? Walk away without looking back? Appoint someone to take my position as president? If so, who, since no one is willing to serve. Can i just appoint a couple people and hand over the keys to the mailbox, spreadhseet and checkbook?

Any advice?
WilliamT (Arizona)
Posts: 489
Posted:
Brian, this is the definition of an HOA in chaos, and since it is a corporation it falls under the non-profit corporation law, as I'm sure you're aware.

The Brown Law Group, HOA attorneys in the Phoenix area wrote an analysis of the Non-Profit Corporation Law Chapter 37, Voluntary Dissolution, Article 3 Judicial Dissolution Section 10-11432 Receivership.

The analysis goes like this: "A judge will impose a receivership over an association if through internal chaos or otherwise, it is not able to administer its affairs. Receiverships are extremely expensive. They inhibit sales. Members and directors should compromise to avoid these at all costs."

What you can do is to send a letter to the community advising that you are leaving, and if no one steps up to run the HOA then you will have no choice but to contact an HOA attorney and ask him to petition the courts to appoint a receiver(s) to run the Association. Explain that they will have to pay the fees and expenses for the receiver(s) and it will not be cheap. In fact it could mean a court mandated assessment to pay those fees.

If no one steps up, then in my opinion, you have no choice but to contact the attorney and hand over the books to him. If you just walk away without handing over responsibility to the proper persons, then they may, unfortunately, come after you later.

Give the Association a firm date, like 30 days, that you will be resigning and contacting the attorney to hand over all the documents, and stick to it. The attorney will take it from there.

I think you'll get plenty of action when they get that letter.

I have the full law that I received from our PM, who got it from Olcott. You can look on their web site and they may have some infor there. It's the Brown Law Group in Phoenix. I'm not advertising them or recommending them, it's just where you may find a lot of information.

Make sure you're ready to move before the receiver is appointed so you don't get stuck with an assessment to pay the bills.

Good luck
RogerB (Colorado)
Posts: 5,067
Posted:
Brian, have you asked the two who were automatically removed to please come back and serve on the Board? As the remaining Board member you have the authority to appointed them to the Board. If they are not willing then I would send a letter to all owners explaining their choice to step forward or an attorney will be paid to go to court and set up a receivership. Emphasized how much this would cost each owner in money and loss of Covenant enforcement.
BrianB (California)
Posts: 2,820
Posted:
thanks for the advice. I stand a chance to get one of the previous members to take the reigns. If not, then the advice about turning over to an attorney seems very smart. that way, i don't have to worry about a lawsuit from a disgruntled association tracking me down in 2 years.

No matter what, i will not do this until AFTER my house is sold. I definately see the downside to paying any more in dues than i have to, as well as the potential decline in my sales price, should i have to admit the HOA is in receivership.
LanceT (Alabama)
Posts: 121
Posted:
I was in a similar situation. My last 6 months in office 5 of my 7 board members either moved or were put into care facilities. The 2 left, one was didn't attend meetings and was rumored to be deployed to Iraq. The other was my Vice-President who was on a heart transplant list and seriously behind on his dues. (A fact that got brought up constantly.) Our documentation did NOT allow for mid-year elections. My term was up in January and I had MOVED out in November!!! Although I moved to the neigbhorhood NEXT door (can see it out my front yard) I had kept my HOA as Rental property.
My HOA was extremely dependent on me. I even ran and formed the neighborhood watch! Some people's view was that because I was the only person for all intense and purposes that I was some kind of "Dictator" and made up my own rules. NOTHING could have been farther from the truth. It was because I was the ONLY person that I depended on the other General members and stuck CLOSELY to the by-laws/CC&R's. I acted more of a "Facillitator" and did what the members wanted done. If they wanted the streets painted "red"... I went out and got bids and budgetted "red" streets.
I think this is what you need to start doing. Start acting as a "facillitator" and give the people their own "power" to make decisions. Educate the people who are willing to volunteer and participate. Have a meeting and discuss your responsibilities and theirs. Let them know how a HOA runs. Give the HOA back to the members and let yourself go.
It's been over 2 years since I left the HOA. I still get phone calls from residents! At one point, I was going to be voted back in and I wasn't even running nor lived in the neighborhood! It was hard for me to "let go" and realize that my goal to educate and empower the members had come to fruition. Unfornately, the new board members were and are a selfish irresponsible group of ingrates. (Being EXTREMELY NICE!). However, because of their bad behavior, the good apples are "floating" to the top. I had left behind enough "seeds" that the HOA has been able to keep afloat.
Your decision to "turn over" the HOA is NOT your decision to make. It's a MAJORITY of the members choice. It's in your documentation on how that process goes. One person can't decide on disolving a HOA. In our HOA, it takes a 75% MAJORITY vote of ALL members to dissolve the HOA. It still doesn't get dissolved. The HOA has to be turned over to a management company. That means that the residents will no longer have a right to vote for anything.
If your that concern. Discuss hiring a Management Company or Bookkeeping service. Sooner or later, when someone understands a HOA setup, they will empower themselves to the same position you are at. Believe me, there's ALWAYS a BIGGER fish!

Recovering Ex-President of a HOA
BrianB (California)
Posts: 2,820
Posted:
thanks for the thoughts lance.. i have no intention of dissolving the HOA, just selling my home and moving. What happens to the association after i sign the sales paperwork is of zero concern to me. What happens to it up to that point is a concern, of course.
CharlesW1 (Georgia)
Posts: 826
Posted:
Posted By WilliamT on 02/03/2007 1:04 PM

Brian, this is the definition of an HOA in chaos, and since it is a corporation it falls under the non-profit corporation law, as I'm sure you're aware.

The Brown Law Group, HOA attorneys in the Phoenix area wrote an analysis of the Non-Profit Corporation Law Chapter 37, Voluntary Dissolution, Article 3 Judicial Dissolution Section 10-11432 Receivership.

The analysis goes like this: "A judge will impose a receivership over an association if through internal chaos or otherwise, it is not able to administer its affairs. Receiverships are extremely expensive. They inhibit sales. Members and directors should compromise to avoid these at all costs."

What you can do is to send a letter to the community advising that you are leaving, and if no one steps up to run the HOA then you will have no choice but to contact an HOA attorney and ask him to petition the courts to appoint a receiver(s) to run the Association. Explain that they will have to pay the fees and expenses for the receiver(s) and it will not be cheap. In fact it could mean a court mandated assessment to pay those fees.

If no one steps up, then in my opinion, you have no choice but to contact the attorney and hand over the books to him. If you just walk away without handing over responsibility to the proper persons, then they may, unfortunately, come after you later.

Give the Association a firm date, like 30 days, that you will be resigning and contacting the attorney to hand over all the documents, and stick to it. The attorney will take it from there.

I think you'll get plenty of action when they get that letter.

I have the full law that I received from our PM, who got it from Olcott. You can look on their web site and they may have some infor there. It's the Brown Law Group in Phoenix. I'm not advertising them or recommending them, it's just where you may find a lot of information.

Make sure you're ready to move before the receiver is appointed so you don't get stuck with an assessment to pay the bills.

Good luck


Brian,

I can understand your concern, I sympathies with you. I appreciate all your insight on HOA situations. Your knowledge has helped educate me, tremendously. You and many others have posted and replied to many situations, other board members are confronted with on a daily basis.

I hear what you’re saying. I do what’s best for me and my family it’s generally what I would do for my community as well.

I too would suggest, as previously posted, writing a letter. Let the community know exactly what will come become of the HOA, if someone doesn’t step up to the plate and relieve you of some of the responsibilities. Go into details explain to them the expenses that will accrue.

Does the HOA have funds for printing, mailing, ext.? I would type this letter. Perhaps even show a budget of these expenses. Write it in view of a homeowner to a homeowner. I think many of residents within your community will be more understanding of such recourse.

Your knowledge and drive to be an HOA president, Vise President, Treasure, and Secretary, ext is very admirable indeed. I commend you!

I don’t know if it in the “forum rules” or not, I would really appreciate it if you would continue to post on this forum though. Your advice has and will continue to help me and my community.

Best of luck
Chuck W.


Charles E. Wafer Jr.
WilliamT (Arizona)
Posts: 489
Posted:
Brian, there is one more thing to consider. I am not familiar with the Arizona real estate disclosure laws, however, if the situation remains as tenuous as it is, I would recommend you check to see how much you would be required to disclose to your buyer about the community, since you are the only board member and would have what can be legally called "superior knowledge" about the state of the Association.

If you have knowledge that no one has stepped up to the plate to take over prior to signing the closing papers, you would know that the Association is going to possibly face a chaos situation that could result in much higher assessments than the buyer has knowledge of. By not disclosing that, depending on Arizona law, the buyer may be able to come back to you for non-disclosure.

If you are familiar with the Arizona real estate disclosure laws then you know what to do. If not, then you may want to seek the advice of a real estate attorney at the proper time.

I would not recommend discussing this with your realtor. They will have to disclose anything they know to the buyer. That's why they don't want to know too much. (That's the way it is in California, and as I said I'm not familar with the Arizona RE laws yet.)

I would like to echo the request that you keep posting on this site after you move, if you have the time and desire. With your dedication, background and pool of knowledge that's valuable to anyone interested in HOA operation I would think that HOA Talk would welcome your continued postings with open arms.
hoatalk (California)
Posts: 603
Posted:
Posted By WilliamT on 02/04/2007 7:18 AM

Brian, I would like to echo the request that you keep posting on this site after you move, if you have the time and desire. With your dedication, background and pool of knowledge that's valuable to anyone interested in HOA operation I would think that HOA Talk would welcome your continued postings with open arms.


Yes! I agree with WilliamT. Brian, we welcome your continued participation here and hope you will continue to join us after your move. You have valuable insights and knowledge and we want to thank you for all your postings thus far. We hope you will continue in the future.

Best Regards,
HOATalk


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hoatalk (California)
Posts: 603
Posted:
Posted By CharlesW1 on 02/04/2007 6:52 AM

I don’t know if it's in the “forum rules” or not, I would really appreciate it if you would continue to post on this forum though. Your advice has and will continue to help me and my community.


CharlesW1: The rules are a general guideline and we certainly hope Brian will continue to participate here, even after he leaves his role in the HOA.

Allow me to explain the purpose and spirit of the rules: They are simply in place to keep this forum on topic and prevent it from becoming a HOA bashing site like some others out there. We changed the rules to prevent individual homeowners from posting their complaints here for 2 reasons: (1) Those posts were turning into anti-HOA, anti-Board rants that added nothing to our education mission; and (2) Individual homeowner posts take the valuable time of our frequent posters and don't add much to our education mission.

Even if Brian is not on a Board in the future, he has a lot to add here and if he is willing to stay around, we welcome him to join in!

THANKS TO ALL OF YOU THAT TAKE YOUR TIME TO HELP OTHERS HERE!
HOATalk

HOATalk.com, A free service of Community123.com
Provider of Upscale Community Websites
CLICK HERE to get a FREE trial community website
*See legal notice below (end of page)
RogerB (Colorado)
Posts: 5,067
Posted:
Brian, I would second the advice William gave you about legal aspectes of a real estate sale. If it comes to having to go to a receiver, and I was aware of it, I would not tell my real estate agent but would consult with another knowledgeable real estate agent or attorney as to what needs to be disclose. I think if I knew and did not disclose to the Buyer, in Colorado they would have a good case if they wanted to pursue it.
LanceT (Alabama)
Posts: 121
Posted:
It's always good to keep an ex-president around on these pro-HOA educational websites. I've been on the others who bash HOA's and find anyone willing to share their experience and knowledge a "Blessing". Please keep posting when you get a chance.
I am NOT so sure about this "Disclosure" issue. I think your responsibilities END with informing the buyers/real estate agents, that there is a HOA. How it is run or problems it faces, may NOT be needing to be disclosed at the time of sale. Just that there is a HOA, what the dues amounts is, what the dues cover, meeting dates/times, and given a copy of the rules/regulations. Everything else should be figured out on their own, as I feel you most likely did. ;)
Your responsibility for "Disclosure" is more bound to the condition of your home/property. If you have maintenance issue, bug problems, or structural issues involving your house, then that has to be disclosed to the buyers.
I know many of you will disagree with me on this or think that it's "hiding something". However, these purchasers buying a home are NOT homeowner's yet! You can ONLY know the business of the HOA if your a homeowner! It would be like letting someone who's walking down the street and handing them the minutes of your last meeting. They aren't due paying members. Only due paying members have the rights to know what happens in meetings.
If anything, I would try to pick buyers who you may find that would be interested in being involved in the HOA. You may ask their opinion of what they think a HOA is and if they have ever been in one. (I'd pick the one who's never been). You may find someone who's willing to help you out.

Recovering Ex-President of a HOA
RonaldW (South Carolina)
Posts: 901
Posted:
Posted By WilliamT on 02/04/2007 7:18 AM

Brian, there is one more thing to consider. I am not familiar with the Arizona real estate disclosure laws, however, if the situation remains as tenuous as it is, I would recommend you check to see how much you would be required to disclose to your buyer about the community, since you are the only board member and would have what can be legally called "superior knowledge" about the state of the Association.


I don't believe you have any obligation to disclose anything about the association other than the assessment and possibly the governing documents. That's all that was disclosed to me when I bought my property.


Ron
SC
WilliamT (Arizona)
Posts: 489
Posted:
Here is the url to a sample copy of the Arizona real estate disclosure statement.

http://www.aaronline.com/documents/spds_samp.pdf

"Line 26 states: Are you aware of any proposed or existing association assessment(s)? Explain"

While the possibility of judicial receivership is not technically a "proposed" association assessment, it is a situation that will most likely cause one.

Another question asks what are the dues assessments.

Line 217 is a very important catch all question:

"What other material (important) information are you aware of concerning the Property that might affect the buyer's decision making process, the value of the Property, or its use? Explain."

The fact that an HOA is in chaos and may face judicial receivership, with a resultant special assessment to pay the receiver fees is, in my opinion, crucial to the decision making process of a home buyer, and the value of the property.

Even if one member has stepped up to the plate, the fact that the board does not have the required number of board members is a material fact, because it could be a clue that something is drastically wrong, which could affect the buyers decision to buy or not buy into this community.

Here is a url to read the Arizona statute 33-1260 regarding selling and buying a planned community home.

http://www.azleg.state.az.us/ars/33/01260.htm

My advice on home discloser laws will always be: When in doubt, disclose.

If you don't want to disclose, then get a written opinion from a real estate attorney to cover your butt.
BrianB (California)
Posts: 2,820
Posted:
Good points, William..

Here' is how I would answer in court:

"Line 26 states: Are you aware of any proposed or existing association assessment(s)? Explain" No, there are no proposed or existing association assessments other than the standard annual assessment for operating expenses, which is currently $240 per annum.

Line 217 is a very important catch all question:

"What other material (important) information are you aware of concerning the Property that might affect the buyer's decision making process, the value of the Property, or its use? Explain."

Given it is impossible for me to know any or all of the thoughts that might be in another person's head as they make a decision, i could not assume to know what might be material to them and what might not be. The legal use of the property is completely explained in the CC&R's, and the value of the property was determined at the time of the sale and agreed upon by all parties concerned. The HOA has to this date shown no impact, positively or negatively, to the actual value of the property.

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