RayC4 (Virginia)
Posts: 173
Posts: 173
Posted:
Our declarant controlled HOA has filed for bankruptcy. (Don't even ask.) Anyone know whether a member's personal credit rating, etc can be impacted by such a proceeding?
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HOA Bankruptcy
Started by RayC4 • 6 replies • 1550 views
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MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
Did you ever give the HOA your social security number? (Never ever do that regardless) Then my answer is no. The HOA is NOT owned by the members yet. It is the declarant that has filed bankruptsy who owns the HOA. If the owners owned the HOA, then that may be a different story.
If the declarant decides to turn over the HOA to the owners, expect you all to have to pay more. A HOA is only funded by it's members for it's members. Meaning you all will have to kick in your fair share to get the HOA operational and functional again.
If the declarant decides to turn over the HOA to the owners, expect you all to have to pay more. A HOA is only funded by it's members for it's members. Meaning you all will have to kick in your fair share to get the HOA operational and functional again.
Former HOA President
TimB4 (Tennessee)
Posts: 21,061
Posts: 21,061
Posted:
Has the Declarant filed for Bankruptcy or has the Association filed for bankruptcy (they are typically two different entities)?
As you know, I am not an attorney and I do not work within the legal profession. I'd suggest that the owners get together and, with the assistance of an attorney, petition the court to have control of the Association transferred to the membership and, if needed, have the Association severed from the bankruptcy proceeding. This way, the Association can actually make claims on the declarants' performance bond and any other available funds to the court. Additionally, this can give the owners some say so when the declarants property is sold to another developer (that is if the members get together and amends the documents limiting the voting power of the new declarant).
If the Association is also going through bankruptcy, there may be higher assessments in the near future as the receiver goes through the paperwork.
As you know, I am not an attorney and I do not work within the legal profession. I'd suggest that the owners get together and, with the assistance of an attorney, petition the court to have control of the Association transferred to the membership and, if needed, have the Association severed from the bankruptcy proceeding. This way, the Association can actually make claims on the declarants' performance bond and any other available funds to the court. Additionally, this can give the owners some say so when the declarants property is sold to another developer (that is if the members get together and amends the documents limiting the voting power of the new declarant).
If the Association is also going through bankruptcy, there may be higher assessments in the near future as the receiver goes through the paperwork.
RayC4 (Virginia)
Posts: 173
Posts: 173
Posted:
Quote:
Posted By TimB4 on 05/06/2014 12:23 PM
this can give the owners some say so when the declarants property is sold to another developer
this can give the owners some say so when the declarants property is sold to another developer
The homeowners should be so lucky. No, it is the HOA corporate entity that filed, not the declarant (the development company).
A bankruptcy proceeding is way over my head. But as far as I can see, the HOA is without 'assets' other than some cash which of course is way less than the HOA debt (according to the declarant).
TimB4 (Tennessee)
Posts: 21,061
Posts: 21,061
Posted:
Ray,
Common area is an asset, it's just unknown if someone will want to purchase it.
What type of bankruptcy did they file for (chapter 7, 13, etc.)?
Here are some links that may be helpful:
Q&A: Condominium and Homeowners Association Bankruptcy 2011 article
What Happens When a Homeowners Association Goes Bankrupt?
Read more: http://www.ehow.com/about_6585165_happens-homeowners-association-goes-bankrupt_.html#ixzz30yX1VCdc
Representing a Homeowners’ Association Facing the Developer’s Bankruptcy not directly related but may have good info.
Hope it helps,
Tim
Common area is an asset, it's just unknown if someone will want to purchase it.
What type of bankruptcy did they file for (chapter 7, 13, etc.)?
Here are some links that may be helpful:
Q&A: Condominium and Homeowners Association Bankruptcy 2011 article
What Happens When a Homeowners Association Goes Bankrupt?
Read more: http://www.ehow.com/about_6585165_happens-homeowners-association-goes-bankrupt_.html#ixzz30yX1VCdc
Representing a Homeowners’ Association Facing the Developer’s Bankruptcy not directly related but may have good info.
Hope it helps,
Tim
RayC4 (Virginia)
Posts: 173
Posts: 173
Posted:
Quote:
Posted By TimB4 on 05/06/2014 3:07 PM
Common area is an asset, it's just unknown if someone will want to purchase it.
The common area is still owned by the development company. We are still under declarant control. No 'turnover' steps per POAA begun yet.
What type of bankruptcy did they file for (chapter 7, 13, etc.)?
Chapter 11
I will look the links over. Thanks much!
Common area is an asset, it's just unknown if someone will want to purchase it.
The common area is still owned by the development company. We are still under declarant control. No 'turnover' steps per POAA begun yet.
What type of bankruptcy did they file for (chapter 7, 13, etc.)?
Chapter 11
I will look the links over. Thanks much!
TimB4 (Tennessee)
Posts: 21,061
Posts: 21,061
Posted:
One more, since we know it's chapter 11:
Reorganization Under the Bankruptcy Code from the federal courts web site.
Reorganization Under the Bankruptcy Code from the federal courts web site.
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