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ShelleyH
Posts: 11
Posted:
In 1996 our HOA passed a Declaration of Permanent Membership. People could choose to become permanent members, whereby they would pay dues every year for use and upkeep of the HOA facilities (pool, tennis courts, small clubhouse, volleyball court, playground). The permanent membership would become part of their property deed. Those who chose not to consent could not use the neighborhood facilities.

In 2005 our HOA tried (but ultimately failed) to pass new covenants after our old ones had expired. One member disliked those covenants so much that he began to do some research on our 1996 Declaration of Permanent Membership. He found that only 99 people signed the consent form by Oct. 5, 1996, the date when 100 people were to have signed, as stated on the Declaration itself, in order for the membership to be valid. No one knew there were only 99 consent forms until 2005 - NINE years after the Declaration of Permanent Membership had been in place. At that point, one other member attempted to get out of permanent membership, but the HOA attorney advised the board NO WAY, so the person dropped it.

Back to 1996. Apparently our HOA pres at the time in charge of the permanent
membership drive must not have counted the consents correctly. He signed the affidavit as though all was in order. He claims he thought we had 103 consent forms signed by owners - we actually had 104 RECORDED about six weeks later.
"Owners" according to our attorney, can mean each individual owner, i.e., husband and wife can count as two owners, in which case our HOA is well ahead of the game. That interpretation does not conflict with the text in our 1996 Declaration, but our attorney agreed the "owners" argument is not an extremely strong one if the Declaration were ever challenged. He did say we'd probably win on "promissory estoppel," as we INTENDED, and for all intents and purposes, we all THOUGHT we had 100 members consent by the due date. And we now have 125 permanent members out of 158.

Flash forward to 2006. We recently drafted and passed new and improved covenants. Since the passage, one member sent a threatening letter to the board wanting out of permanent membership, and of course noted the 99 vs. 100 issue of our 1996 Declaration. Our attorney is drafting a letter to them as they're threatening to take this to court if they are not let out of permanent membership.

Sorry for the lengthy flash back and forward post. If I haven't made you dizzy or put you to sleep and you have some insight or viewpoint, would love to hear it!

Shelley
LanceT (Alabama)
Posts: 121
Posted:
I think I understand what your saying. The original HOA may not have been "legal" so the NEW updated 2006 formation may not be "valid". Correct? Or along those lines... Then you have one member who refuses to be part of the NEW updated HOA siting that it isn't "valid" due to the past formation not being legal.
Your best step is to keep working with the attorney. Find out if your HOA is INCORPORATED. It should most likely be a NON-Profit corporation. With a HOA there are typically 3 pieces of paperwork. 1. Articles of Incorporation (filed with the STATE and making it a corporation). 2. Convenants and Restrictions. (Filed at the COUNTY courthouse). 3. By-laws. (Filed most likely with the HOA itself unless required to be with CC&R's). I won't bring up the ACC paperwork at this point. If this paperwork doesn't exist, then your HOA will need to work on creating it. It's best to have an attorney for this.
There is good news that may be helpful. Your HOA may be able to keep or create a "volunteer" membership instead of a required one. Just like the original. Just modify the rules as you update to reflect this. That may be a resolution to look into if you do have too much dissention in the group. It may be better to deal with owner's willing to band together and share amenities than work with one's not interested. Just don't allow them to participate in the amenities or make them pay a different rate if they visit the amenities. NO membership/no admittance.

Recovering Ex-President of a HOA
CandyB (Pennsylvania)
Posts: 11
Posted:
I don't want to be the devil's advocate, but it sounds as if your original declaration isn't legal. If I lived in your community and wanted out of the permanent membership, I'd certainly take you to court. I like LanceT's suggestion of maintaining a voluntary membership. Our HOA requires all members to be included and pay annual dues. The only volunteer membership we used to have was the pool. People could pay for membership if they wanted to join each year. However, we determined that the pool is an amenity that helps sell homes, thus all community members should "pay a piece" in maintaining the asset. The Board voted and agreed then raised everyone's dues by only $10/quarter, and no one complained. By creating permanent membership, it appears as if you've created a division within the community that isn't necessary.

ShelleyH
Posts: 11
Posted:
Hi Lance-
Yes our HOA is incorporated as tax-exempt, nonprofit org. Yes we have Articles of Incorporation, Bylaws, and have had three sets of covenants. Yes you understand what the member is claiming. (Although no one is disputing our original HOA and covenants, formed/drafted in 1987, as invalid - although the 87 covenants are expired.) Dispute arises in 1996 when the Declaration of Permanent Membership was added.) Member claim the new covenants aren't valid because of their foundation on the 96 Declaration, which they say is invalid.

Creating a "volunteer" membership defeats the purpose of why we created our permanent membership status back in 1996. We had a volunteer membership from 1987 to 1996. The permanent membership Declaration allowed our HOA to have more revenue, thus maintain and improve our amenities on a more consistent basis.

This disgruntled member claims he would like to be a volunteer member. Our Bylaws state that's possible, BUT the individual must not have signed the consent form for permanent membership, and they must pay 150% of the dues the permanent members pay. This member DID consent to permanent membership back in 1996.

Thanks for your help, and hope your recovery from being an HOA pres doesn't take forever!

Shelley
ShelleyH
Posts: 11
Posted:
Candy-
Thanks for playing the devil's advocote. It helps me to understand this issue from various viewpoints.

We had no division within our neighborhood from the time we established the permanent membership back in 1996- until the time a member discovered the 99 vs. 100 consent forms in 2005. From 1987-1996 we DID have a voluntary membership, but in mid-90s many of our neighboring subdivisions were establishing permanent memberships. An enormous amount of research was done by the board at that time, who determined that PM was the way to go.

Out of 158 homes, 125 are currently PM homes and pay dues of $375 a year. The remaining 33 homes pay NO dues, except a few homeowners volunteer to pay associate dues of $100, just as a contribution to common areas landscaping, etc. They are not allowed access to the amenities and cannot vote, from what I understand.

I'm saving everyone's posts to my HOA file, as I do find your responses insightful.

Shelley
ShelleyH
Posts: 11
Posted:
Lance-
Clarification on my last reply to you. A member who has not signed the permanent membership form CAN be a voluntary member and pay 150% of the yearly dues the rest of us pay to get access to the amenities. We also have "associate" member dues, whereby a homeowner voluntarily contributes $100 towards upkeep of common areas, etc., but is not allowed access to amenities and cannot vote, I don't believe.

Shelley

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