Antiquated Deed Restrictions & New Laws

I am a board member of an HOA in Ohio with 900+ homes that was formed in the late 60's. We are governed by Warranty Deeds that have not been updated since their inception. Our current deeds provide no funding of any kind except a one time membership fee paid upon closing. We have on piece of common property which is a pool. Through the years the association has bounced on the bottom financially using pool membership fees as a source of revenue. However this is unsustainable and we will run out of money if nothing changes.

With a new state law passed in 2010 we are trying to be complient. We've had a reserve study completed and drafted new Warranty Deeds to comply with the laws. However many members do not want pay any money to support a common area they do not use.

As best we can tell we are in a catch 22. Every option requires funding, even closing the pool, however every option requires funding which many will not support.

If we are unsuccessful and run out of money then what? Do State Laws (Ohio) ever trump the Warranty Deeds? What would happen in bankruptcy?

Thanks for the Help!

Thanks for the help. For the purposes of this I've heard other folks say deed restrictions, or covenants. It's essentially the legal document that binds the home to the HOA and can stipulate everything from fees, assessments, what color your house is, etc... Does that help?

Thanks again.

It is a bit of both. The HOA is mandatory. When you close your home purchase you become a member. Use fees for the pool are voluntary. It's run similar to most city pools. The city via taxes owns the pool and upkeep. Residents who use the pool pay use fees. Our issue is that the HOA has no mandatory way to collect money. Does that help? Thanks again.

Wow, I'm doing a poor job of explaining this.
We have two sources of income. Pool use fees and one time HOA closing fees. Those combined cause us to to break about even every year. The issue is we have zero money in any kind of reserve fund and need money for capital expenses. If nothing changes we will go bankrupt. Then what?

Thanks for the thoughts. We've explored those but gotten nowhere as we have no buyers or funding.

Any thought on what would happen in bankruptcy?

Thanks again for the help!

You could donate the property to a school or other organization. Of course, this may mean that they operate the property as a public facility and the additional traffic, etc. may be more then the membership wants.

I'd suggest that the Board explores all possibilities. Identify both the good and the bad and how each option may affect every owner of properties within the development. Then put the issue to a vote (if you want, it can be a non-binding vote) and see what the members want to do. My experience is that if the members are properly informed, they can make an informed decision (vs. a decision based only on what they believe). Typically, informed decisions are the right option.