Owner or owners disguised ownership

Started by RH2 • 11 replies • 1558 views

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RH2 (Kentucky)
Posts: 4

Posted:

We are a small HOA and have an owner or owners who formerly had a partnership that is now dissolved. However, I have learned from our county government that they can leave the property in the partnerships name indefinitely as long as someone pays the county and city taxes. Our problem is that we cannot even file a lien against the property to collect our fees as the entity that the lien was filed against no longer exist. The current resident, who we believe was part of the partnership, has lots of banking and corporate collection experience. The HOA does not have amenities that we can deny access to like swimming pools or parking other than their driveway. Does anyone have any suggestions as to what we can do? We consulted a lawyer and the legal remedies are very expensive and may not work unless ownership can be clarified.

AllisonD (Florida)
Posts: 449

Posted:

Who is the house deeded to? Is the current resident an owner or renting? You should be able to still file a lien on the owner listed on the deed, and include the partnership, the individual persons who made up the partnership and who ever pays the taxes. Check your secretary of state website to see if they officially dissolved the partnership. Also check your county official records to see if there is paperwork filed creating or dissolving the partnership. The registered agent listed on the secretary of state site should be served or sent the lien notices as well as anyone else you name. There is something done in the legal world called 'blunderbuss'. When soldiers used muskets, the musket had a flared muzzle where the multiple shots would come out of, and instead of having to shoot one bullet and aim really carefully, they could hope that some of the shots fired hit the target. This is what they do in the legal world; they sue everyone they can find and hope somewhere in there, is the correct person. This is why you sometimes see many defendants and also John and Jane Does listed as defendants, this is to make sure you sue the correct people. Its important to preserve your right to amend your pleadings by strictly adhering to time frames promulgated by statutes. So an attorney might call and say 'we would like an extension of time to respond to you and try to figure out who is the proper owner' when in fact, all they are doing is letting the statutory time run out where you would not be able to amend your pleadings any longer or file some new documents to make sure you did not get the correct owner.

If it were me, I would send collection letters certified mail, to all of the above. In your state, are you allowed to foreclose on a lien? I would threaten that if you can, as an additional remedy after a lien is filed, you may get a response if you make that threat.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Corporate documents, typically available thought the State Corporation Commission, should show who the prior Officers and/or registered agent was.

I would simply write each officer and the registered agent asking what individual(s) are responsible for the property. A little bit of research, a few letters and some stamps may resolve the issue.

TimB4 (Tennessee)
Posts: 21,059

Posted:

In case you don't have it, here is a link to the corporation search page for Kentucky:

http://app.sos.ky.gov/ftsearch/

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Just skip the lien and proceed with foreclosure. The owner will magically come forward.

RH2 (Kentucky)
Posts: 4

Posted:

Thank you for the suggestion. We will certainly follow through with certified letters to all the potential owners. Thanks to you and the other responders we now have a much better lead on who they may be beyond the current occupant. The problem is that the property, which is in Kentucky, is still deeded to the former corporation. The state website helped clarify this as well!

again I appreciate your assistance with this. As a group we badly need it.

RH2 (Kentucky)
Posts: 4

Posted:

Your response is particularly helpful. I was able to get the names of some of the people involved that we never knew and find that it was an LLC not a formal partnership. In addition, you helped me establish that the LLC was actually dissolved by order of the secretary of state five years ago. The dissolution was because of failure to provide annual reports and other necessary paperwork. Interestingly, this does not take the property deed out of the name of the now defunct corporation and as originally explained I know from the County Clerks office that neither the State or the County will ever do anything as long as the property taxes are paid. The property can stay in the defunct corporations name indefinitely.

RH2 (Kentucky)
Posts: 4

Posted:

Thanks for your response. With the information I have gained from the other replies, I think we have some due process to follow before that will be possible, but we can certainly get on with making enough of an impression to find out who owns the property and should be paying us.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Good for you. I had to deal with a LLC who was behind in their dues. It was quite difficult. Don't think we were ever able to properly lien the property. So could not proceed with the foreclosure process. They finally sold off the property and used it as rental. The home basically was abandoned for almost 10 years! It was like a spider webbed filled time machine when I went into it.

For those not familiar with a LLC set up. It's good to do some research in case it happens in your HOA. That is one area where a HOA should have powers to limit in my opinion if a HOA could limit such things. It basically allows a group of people to own a property but not one of them take 100% responsibility. A member can walk away and have the others holding the bag. However, even that person doesn't have to hold the bag because it was a group owned and not individual. It is very very complicated when trying to take legal actions. A regular corporation or a S1 corporation there are better legal options available to pursue.

The responses and your pursuit, should help others in the same situation. It's another one of those small areas that unless your experienced it and responsible, you would never know as a regular member.

Former HOA President

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By RH2 on 11/30/2013 10:34 PM
We are a small HOA and have an owner or owners who formerly had a partnership that is now dissolved. However, I have learned from our county government that they can leave the property in the partnerships name indefinitely as long as someone pays the county and city taxes. Our problem is that we cannot even file a lien against the property to collect our fees as the entity that the lien was filed against no longer exist. The current resident, who we believe was part of the partnership, has lots of banking and corporate collection experience. The HOA does not have amenities that we can deny access to like swimming pools or parking other than their driveway. Does anyone have any suggestions as to what we can do? We consulted a lawyer and the legal remedies are very expensive and may not work unless ownership can be clarified.

RH:

I know nothing of Kentucky law but generally state statutes allow a dissolved corporation to continue to exist as long as they are not "doing business." That means the old officers are still officers, the old directors are still directors, the dissolved corporation can still own property, and the dissolved corporation can still sue or be sued. Basically, nothing really changed from your standpoint.

While consulting a lawyer sounds like the right thing to do, it sounds like the one you consulted wants to resolve the ownership issue with the equivalent of a "quiet title" action before you move forward. I do not believe that this is a necessary step to record a lien and a court could easily rule that your association lacks standing to bring such an action. I would suggest finding an attorney experienced in construction law as they deal with liens constantly. An alternative would be to find an attorney who specializes in corporate law to advise you as to the status of the owners, although you should be able to find this topic addressed in the Kentucky statutes regarding dissolution of corporations.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

I am not nor do I play a lawyer

LLC's can vary from state to state. Quite often they are one person who set it up to protect their personal assets in case of a suit against their business. That is how my last two LLC's were set up though neither owned a/my home. Some use a Sub Chapter S Corporation?????? to do the same thing.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Yep. What do you call a lawyer who graduates dead last and barely passes the bar exam? A lawyer, just like any other lawyer.

I've met plenty of licensed professionals in my life who were idiots.

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