Proceeds from sale of common property

Started by KristiL • 5 replies • 1983 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

KristiL (Washington)
Posts: 3

Posted:

Our HOA is looking at selling a portion of the common property.

Can the proceeds of the sale be distributed to the membership?

We are in Washington State

any help or advice is welcome!!!

GlenL (Ohio)
Posts: 5,491

Posted:

Kristi it should be spelled out in your documents how the money is to be distributed. Questions I would ask is does the Board have the power to sell the common property without a vote of the homeowners and if the homeowners must vote on it what percentage is required? Next depending on what they are trying to sell, do the mortgage holders have to sign off on it? The mortgage is often based on not only your home but your undivided interest in the common property, if the HOA sells something that is included in the mortgage then it would seem to me, the funds would need to go to the mortgage holders. Time to ask an attorney so you don't end up shooting yourselves in the foot.

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

KristiL (Washington)
Posts: 3

Posted:

Thank you for the response.

Our documents are silent on the sale of common property and our board is trying to set an amendment to the documents so that a 60% membership majority will approve of sale of the common property. (This is far too low in my opinion.)

We do have an undivided interest in the common property.

The HOA board does not want to distribute the funds claiming "the intent of the documents" restrict the distribution of funds.

KristiL (Washington)
Posts: 3

Posted:

TimB4 (Tennessee)
Posts: 21,059

Posted:

Kristi,

If they are distributed to the members, it would likely be in the form of lower assessments rather than a check being cut.

When our Association sold common area (due to a public road construction) the money went into the Reserves (which was good because the Association Reserves were not properly funded at that time).

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By GlenL on 09/16/2013 11:10 AM
Kristi it should be spelled out in your documents how the money is to be distributed. Questions I would ask is does the Board have the power to sell the common property without a vote of the homeowners and if the homeowners must vote on it what percentage is required? Next depending on what they are trying to sell, do the mortgage holders have to sign off on it? The mortgage is often based on not only your home but your undivided interest in the common property, if the HOA sells something that is included in the mortgage then it would seem to me, the funds would need to go to the mortgage holders. Time to ask an attorney so you don't end up shooting yourselves in the foot.

Talking to a tax expert would also be helpful - I would think this is a non-profit organization and there could be tax implications from the sale.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here