Dissolving HOA in VA

Welcome to HOATalk, Iain. I'm sorry you're in such a bind.

You'll most likely get some wise responses, but if you're incorporated, you might review VA corporations codes to see a bout dissolving your (non profits, I assume) corporation. But your won documents, perhaps your CC&Rs, might also deal with the subject.

Iain,

In the big picture, the issue with storm water management (SWM) is actually coming from the EPA. The EPA will fine States that fail to maintain storm water management systems. The State pushes down to the County level. Each County handles it differently. I live in Fairfax County and per a 2014 newspaper article Fairfax County is looking to take on some of the stormwater management systems HOAs are responsible for. Unfortunately, it appears that your County is not. It also appears that your County has pushed the issue down to the cities.

There may be grants available to assist in maintaining your SWM systems. Check your City or County's stormwater management website.

Now, to answer your question - There have been Associations that declared bankruptcy when large debts were due. The most recent one was Olde Belhaven HOA. However, since the city has already threatened to collect from the property owners directly, I'm not sure that even that would help. That would be something to ask your Attorney. You simply may be stuck with having to defer your road maintenance and adjust your Reserves and Assessments so both can be properly maintained from the Reserves.

To dissolve an Association the following would need to occur:

1) Arrange for the removal, sale or transfer of common elements.

Common area land could be subdivided and sold to each homeowner. Then that individual homeowner would be responsible for maintaining the SWM systems on their property.

Same thing with playgrounds and pool, simply remove the equipment. OR donate the playground to the City/County/other non-profit as a public park/public pool (however, that may increase traffic in the area.

Roads could still be maintained by a new Private Road agreement (vs an HOA) or donate them to the City/County (but the city/county would also have to agree to take them - which won't always happen).

2) Vote to abolish or amend the CC&Rs to remove the existance of the HOA and/or amend them to become a private road agreement (attorney needed here).

3) Vote to dissolve the corporation known as HOA,Inc.

4) Create a new corporation to manage the private road funds (with new bylaws, etc.)

As you can see, it can happen but it isn't easy. It also may be just as expensive, if not more, than dealing with the issue you currently face.

Some Associations will dissolve the corporation or let the corporation be administratively dissolved by the State. However, that doesn't dissolve the actual Association. To dissolve the Association, you need to dissolve or amend the deed restrictions.

Note: There may or may not be legal challenges by the city to dissolving the Association. As they likely approved the development providing an Association was created.

I know that this isn't what you wanted to hear. Hope it helps.

Oh, you can always negotiate with the city and, perhaps, if the city sees repairs happening and a plan in place they will hold off any financial penalties.

The city might not be willing to accept responsibility. If you do attempt to dissolve the HOA, I see a couple of possible outcomes in addition to what's already been mentioned so far:
1) A judge decides the HOA doesn't go away and appoints a receiver to run it. The receiver will make whatever assessments are needed to do the work done and collect a healthy fee on top of that.
2) The city agrees to take things over and create a special taxing district to pay for both the major work and ongoing maintenance.
Neither of these occurrences would likely cost the homeowners less than keeping the HOA as is and just assessing the required amounts.