Corporation is perpetual.

Started by WilliamK7 • 3 replies • 1617 views

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WilliamK7 (West Virginia)
Posts: 1

Posted:

The Corporation began for this community in 1969 as were the Covenants. A paragraph in the Covenants read " No sale or transfer of the land shall be effective unless the purchaser or transferee shall be appraised of the terms hereof. This agreement shall run with the land and be effective thereon for 35 years." We are getting mixed responses from attorneys concerning this clause. A. Covenants have expired and this is no longer an HOA, and we can no longer collect " Road Maintenance Fees", B. The Certificate of Incorporation states PERPETUAL and as long as we remain a Corporation Fees can be collected. Many have stopped paying fees primarily because of this clause and we, the Association Board, don't want to file liens if the HOA is non existent. The Board Members have already spent a great deal of money out of our own pockets to get mixed law interpretations.

PitA
Posts: 311

Posted:

The HOA exists whether incorporated or not.
Incorporation shields the members from personal liability.

The actual USERS of the road WILL be required to pay for its' maintenance.

Whether incorporated or not makes no difference.

Y'all WILL NEED an HOA or a 'Road Maintenance Association'.

Seek legal advice NOW, before the law suits begin.

COMPETANT legal advice re: the roads in use and privately owned by the members.

LarryB13 (Arizona)
Posts: 4,099

Posted:

William,

I am a member of a rural HOA whose primary mission is to maintain the roads. There is a body of common law that holds that those who use a privately-maintained road may be compelled to contribute to the road's upkeep. An association such as yours or mine provides an orderly means by which the roads are maintained. Without an association each and every member would have grounds for suing each and every other member to force them to contribute. The association, therefore, brings some order to what would otherwise be chaos.

Without having the entire text of your covenants it is hard to say just what effect the 35 year clause has on your association. I have seen similar clauses in other declarations but they are always followed by an automatic renewal unless the members decide otherwise.

Your association will keep on going as long as it files all the reports and tax returns required by law but its mission may need to be restated if the covenants actually are void. You could adopt a voluntary membership to collect road maintenance fees from members and bring suit against non-paying parties.

The case law I rely on is that of Freeman v. Sorchych, __ P.3d __, __ Ariz. ___, (App.2011). This can be found online at http://caselaw.findlaw.com/az-court-of-appeals/1553750.html

BobD4 (up north)
Posts: 1,002

Posted:

WilliamK7 (West Virginia)

1 - "B. (The Certificate of Incorporation states PERPETUAL) and as long as we remain a Corporation Fees can be collected. "

Behind this line of thinking, would you mind sharing the rationale as to its validity ? How does your argument go to reach that conclusion ?

( eg Couple of guys incorporate to carry on a trucking business. Buy a truck and get a state licence to operate it. We concurrently find customers & enter contracts to provide a service to those customers and be paid for it.

But the customers pay & cancel us. We start drinking and the state cancels our truck's licence for DUIs.

But wait : "Hey you customers & state licensors : You can't cancel either of those ! We have Articles of Incorporation that say our truck venture is (still) a corporate entity !"

2 - To be compensated for certain unpaid minimal benefits, LarryB13's Arizona case is worthwhile read & widely relevant - as to demonstrating a judicial line of reasoning - much further outside Arizona than most of you would think.

(xcrpted : The claimant contributors struck out with the 5 criteria'd Unjust Enrichment analysis, but the appeal court accepted that "¶ 14 In Arizona, contribution is an equitable remedy that has been recognized by the Arizona courts and legislature in limited circumstances, most notably in the insurance and tort contexts. . . . ¶ 15 . . Arizona courts may modify common law that appears unjust or out of step with the times. See Villareal v. State Dep't of Transp., 160 Ariz. 474, 477, 774 P.2d - See more at . . . ... ¶ 24 Applying the foregoing principles to this case, we conclude that, absent the creation of a duty expressly in the conveyance document or by other contract, the doctrine of equitable contribution should be extended to permit one dominant tenant to require another dominant tenant to contribute to the necessary repair and maintenance of an easement if both tenants are using the easement. Consequently, the Freemans and Sorchych have a shared obligation for the necessary maintenance and repair of the roadway easement even absent language in the conveyance imposing such an obligation and even absent a cost-sharing agreement between the parties...” )

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