What's a Board to do?

Hello Everyone,

I would like some feedback on our current situation:

After a complaint was filed by a member of the HOA, myself as the President, and the Vice President have uncovered quite a few things that have lapsed or were never put into full effect regarding our governing documents. We weren't an HOA that was completely asleep, however, it doesn't look like an audit was ever done, which could of brought all of this to light. The most important one is that our charter was forfeited 13 years ago, and although it looks as if someone tried to revive it, the mgmt. company never bothered to file the actual papers.

We have met with an attorney, and have come to the conclusion that due to there being no charter, it is not in our best interest to proceed on any violations that have occurred during this unchartered status. And we were preparing to do just that, however any homeowner in violation could potentially sue us on the grounds of our not being chartered, and even though we can argue that we are still an entity because we have been collecting assessments, doing approvals, and paying bills we would still have to fight it. It's now a matter of a simple cost basis analysis that shows us it would not be in the best interest of the HOA to do so.

The attorney suggested we make a resolution that provides for absolution giving us a clean slate and from there, all structures currently in existence that have been allowed, with or without the ACC approval, will be grandfathered in. In our CCR's, it states that the ACC will issue a "Certificate of Compliance" upon completion of construction etc, and it doesn't look like one was ever issued, and we are considering using this as a way to document our start clean.

We will ask that any homeowner who has an existing structure that was or wasn't allowed, such as a shed, garage or fence, remit a simple form and a drawing or picture of the structure, and we will provide them with the certificate, no questions asked. If a homeowner chooses to ignore the request, and not obtain the Certificate, then they could still be held accountable for the structure in the future.

The final struggle we have is when and just how much information do we provide regarding this entire mess? We don't want or need a sense of panic, but we also want to "transparent". Should we get a letter out now that states we are charter-less and are working on it, or do we wait until we get it reinstated?

We want some feedback from the owners regarding the resolution, but aren't sure just how much information should be given and when it should be given. If we send out a letter now about the charter not being in place, we can guess that some might take the opportunity to build etc something that is against the CCR so that it could be grandfathered in.

Since this was discovered on our watch, we are committed to getting our HOA on a path and track that takes away all of the assumptions that have been made over the last thirteen years, and as well, put into place certain sections of our CCR's that never were before.

Thanks in advance for your thoughts and suggestions!
Jo

If any of your members read this site, I would definitely act very closely to the advice given by legal counsel.

Jo,

Keep in mind that any restrictions stated in the declaration remain enforceable regardless of the status of the owners' association. Normally the association has no power to waive any explicit restrictions set forth in the CC&R's. Therefore, the resolution for absolution can apply only to those situations where the association had the authority to approve.

Because a lot of things can go wrong in trying to reinstate your association's corporate charter, I would wait until that step is completed before letting the entire community know what has happened.