HOA seemingly dissolved. Do I have to join the new HOA?

Started by MichaelL18 • 7 replies • 1927 views

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MichaelL18 (Georgia)
Posts: 3

Posted:

I live in Georgia.

Our HOA reverted from the builder to the lot owners on Jan 1, 2009 but no board was formed. Actually, nothing was done about the HOA at all.

The builder formed a non-profit corporation for the HOA. The HOA reverted to the residents, but the corporation was administratively dissolved by the GA SOS in 2012. No one kept up with annual registration with the state so the SOS dissolved the corporation. Does this mean the HOA is officially dissolved?

I'm asking because a group of banks that recently bought and now own the remaining lots want to establish, in their words, a "new HOA."

Our covenants say that membership is mandatory, but is that true if a new HOA is formed? Our covenants have the old HOA name all over it.

Can they force me to join a new HOA? Can they enforce the covenants upon me if I choose not to join?

Thank you so much for your help!

BrianB (California)
Posts: 2,820

Posted:

ianal, but...

your HOA may not be registered by the state, but mostly, that's semantics. Your CC&R's are still active, you just don't have a corporation/group of people running them. The bank can come in and buy up a lot of lots, but the bank gets 1 vote per lot (typically), and can't do anything more than any other block of voters.

Most likely, the bank can come in, and re-establish the HOA, and begin to enforce the CC&R's through a board elected by the by-laws, etc.. They might, if they have enough votes, change some/all of the CC&R's through the right process.

I doubt that they can just suddenly institute a brand new set of CC&R's that somehow go with the land/titles, and make it mandatory, mostly because the originals are still recorded, and applicable, and I doubt anyone is going to be able to legally just toss those out, and do their own.

MichaelL18 (Georgia)
Posts: 3

Posted:

Thanks Brian.

The community has a total of 52 lots, over half are built and privately owned. Three different banks bought the remaining lots when the builder went bankrupt.

The letter I received today is from an LLC.

The letter is calling a meeting, pursuant to an article in our by-laws (which I never had a copy of, and cannot get a copy of from the builder), to discuss formation of a new HOA and "other" business.

I'm guessing the letter is from either one or a combo of the banks that own some of the empty lots. They do not control half or more of the lots.

GlenL (Ohio)
Posts: 5,491

Posted:

Michael it also depends on whether or not they acquired "Declarant Powers", the items specifically that allow the declarant to function. Things like ability to amend the Covenants, multiple votes per lot owned, etc. If not they are like any other lot owners and have no more rights than you and your fellow homeowners do, however if they can gather the votes they can make it happen. Just as a group of your neighbors could gather enough votes to do the same thing.

Now without knowing anything about your HOA if it is typical, you have one or more rain water retention ponds and maybe some other common elements like playgrounds or an entrance marker. I'm assuming nobody has been paying assessments so I doubt that the HOA has any insurance in place. Now I'm not an attorney but as I understand it, without the corporate shield that an functioning HOA provides, if someone were injured or god forbid killed on the HOA property, each and every homeowner could be sued. The phrase in the law is "jointly and severally" meaning those with deep pockets will pay a lot.

Studies show that 5 out of 4 people have problems with fractions

JohnB26 (South Carolina)
Posts: 1,569

Posted:

You STILL have a HOA as per the CCRs

but

it is no longer INCORPORATED

(only the corporation was disolved, NOT the HOA)

YOU ARE NOW OPEN TO PERSONAL LIABILITY for any adverse events occuring on the 'common grounds' ~ since there is no longer a 'corporate shield'

YOU ARE RESPONSIBLE FOR YOUR SHARE OF MAINTENACE AND EXPENSES whether you are incorporated or not.

simply put: you own stuff - you pay to maintain it - including any liability

if i were you: INCORPORATE THE HOA ASAP

CAVEAT EMPTOR

MichaelL18 (Georgia)
Posts: 3

Posted:

Yikes. That's something I had not considered or even knew could happen.

JohnB26 (South Carolina)
Posts: 1,569

Posted:

u r welcome

DaveD3 (Michigan)
Posts: 796

Posted:

The bank has no more power than any other owner. Get some people together, consult an attorney on how to proceed, and re-incorporate the HOA... under the same name as before if possible. Call the state, too. They might be able to reinstate the corporation in exchange for some fees and paperwork.

Where are the people who were on the board at the time the corporation was dissolved? Still around?

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