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HOA conversion from voluntary to mandatory

Started by JulesF ā€¢ 9 replies ā€¢ 2669 views

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JulesF (Florida)
Posts: 3
Posted:
How difficult is it to convert a voluntary HOA to a mandatory HOA?

I anyone aware of a HOA that has successfully completed this process?

PitA
Posts: 1,416
Posted:
almost impossible

it would require 100% of actual owners to 'sign off'

then

the new Covenant would have to be recorded 'against' every deed affected

good luck
BobD4 (up north)
Posts: 1,002
Posted:
- But just read some of the horror stories in the MRTA topics here. Voodoo attempts sound easy with enough chutzpah. But doing so LEGALLY : a very different matter.

- Unless compliant with some jurisdiction's law & the CCRs into which owners have bought for less than 100% conversion, shouldn't a default 100 % also have to include consent by ANY party with an interest lands running with title to component properties ? : eg lenders with prior registered mortgages /charges on title ?

A huge burden if done lawfully.
RogerB (Colorado)
Posts: 5,067
Posted:
Quote:
Posted By JulesF on 01/23/2016 6:25 AM
How difficult is it to convert a voluntary HOA to a mandatory HOA?

I anyone aware of a HOA that has successfully completed this process?

There are two HOAs which we manage which are converting from voluntary to manditory. The first step is to amend the Declaration of CC&Rs which required a written vote of 2/3 of the homeowners which was filed with the amendment. The amendment allowed for new owners, who purchase after the filing the amended CC&Rs with the County, to have an assessment and be Permanent members of the HOA. Meanwhile current owners were not subject to an assessment but may be voluntary members of the HOA by paying dues.

The current status of these two associations is:
1) HOA of 123 homes with all but 5 properties having an assessment.
2) This HOA recently is in the process of conversion with 2 out of 3 sections just being amended in 2015. There are over 500 homes with about 60 currently under the new Covenants and have a property assessment with Permanent HOA membership. There are an additional 270 homeowners who voluntary pay dues to join their HOA. The remainder of the homeowners do not have a property assessment; do not pay dues and are therefore not members of the HOA. However, those homeowners are still subject to the current amended Covenants.
KevinK7 (Florida)
Posts: 1,343
Posted:
I have experienced this not once but twice Florida neighborhoods. Both times the neighborhoods got less than 100% and as soon as the pro-mandatory side felt they had enough to win they started enforcement on the rest of the neighborhood and then things got ugly. Neighborhood one started threatening lawsuits and most people gave up but one homeowner sued them and 50 of his neighbors for the illegal conversion costing hundreds of thousands (the lawsuit lasted several years) and eventually resulted in a judgement against the HOA bankrupting it.

Neighborhood 2 "converted" back in 2001. Nobody challenged and the HOA started going after people. They screwed up and MRTA caused the restrictions to expire. They decided to ignore the law and threatened lawsuits. Some homeowners challenged them and it has essentially boiled down to lawyers going back and forth for years, with the HOA demanding submission or else and when confronted they back off.

Basically, from my understanding and experience it is damn near impossible, yet because of the lack of oversight or legal protections for homeowners, a HOA could bully their way into being mandatory
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By RogerB on 01/23/2016 1:03 PM
There are two HOAs which we manage which are converting from voluntary to manditory. The first step is to amend the Declaration of CC&Rs which required a written vote of 2/3 of the homeowners which was filed with the amendment. The amendment allowed for new owners, who purchase after the filing the amended CC&Rs with the County, to have an assessment and be Permanent members of the HOA. Meanwhile current owners were not subject to an assessment but may be voluntary members of the HOA by paying dues.

The current status of these two associations is:
1) HOA of 123 homes with all but 5 properties having an assessment.
2) This HOA recently is in the process of conversion with 2 out of 3 sections just being amended in 2015. There are over 500 homes with about 60 currently under the new Covenants and have a property assessment with Permanent HOA membership. There are an additional 270 homeowners who voluntary pay dues to join their HOA. The remainder of the homeowners do not have a property assessment; do not pay dues and are therefore not members of the HOA. However, those homeowners are still subject to the current amended Covenants.


Roger,

Colorado just may be the only state where it is lawful to amend the CC&R's to add restrictions to existing declarations. See Evergreen Highlands Assā€™n v. West, 73 P.3d 1 (Colo. 2003).

Following the Lakeland line of cases, the courts in several other states have ruled that CC&R's cannot be amended in such a way as to place additional burdens on property owners. See:
Lakeland Prop. Owners Assā€™n v. Larson, 459 N.E.2d 1164 (Ill. 1964);
Caughlin Ranch Homeowners Assā€™n v. Caughlin Club, 849 P.2d 310 (Nev. 1993);
Boyles v. Hausmann, 517 N.W.2d 610 (Neb.1994);
Meresse v. Stelma, 999 P.2d 1267 (Wash. 2000); and
Dreamland Villa v. Raimey, ___ P.3d ___ (Ariz.App. 2010).

I would caution anyone considering trying to create a mandatory HOA by amending their declaration to first seek legal counsel and a written opinion from a qualified attorney before moving forward.
JulesF (Florida)
Posts: 3
Posted:
Some more information about this situation:

The existing HOA is a voluntary HOA in a Deed Restricted community located in Florida, containing in excess of 5000 lots of which approximately 20% have been developed with existing homes, the other 80% of the lots are vacant building lots, owned by individuals and will eventually will be be developed or resold to another owner.

Approximately 10% of the existing property owners are members and these members are also likely to be homeowners.

Our existing Deed Restrictions provide that they may be amended by a majority of those voting. Is it feasible to have a plebiscite to change the voluntary HOA to a mandatory HOA.

Your thoughts and opinions are appreciated.

JulesF (Florida)
Posts: 3
Posted:
Some more information about this situation:

The existing HOA is a voluntary HOA in a Deed Restricted community located in Florida, containing in excess of 5000 lots of which approximately 20% have been developed with existing homes, the other 80% of the lots are vacant building lots, owned by individuals and will eventually will be be developed or resold to another owner.

Approximately 10% of the existing property owners are members and these members are also likely to be homeowners.

Our existing Deed Restrictions provide that they may be amended by a majority of those voting. Is it feasible to have a plebiscite to change the voluntary HOA to a mandatory HOA.

Your thoughts and opinions are appreciated.

KevinK7 (Florida)
Posts: 1,343
Posted:
Despite that your restrictions state they can be amended by a certain percentage, that number doesn't count when when that vote is to force property owners into membership of a corporation. In my neigh orhood we had a list of negative restrictions (no this, no that). They attempted a conversion with an amendment forcing homeowners to pay a "mandatory maintenance assesment" arguing that they kept the association voluntary but we're still forcing people to pay. Sure they had an attorney but in court he argued that he was right to convert based on unrelated condo and mobile home laws and court cases and because of the feelings of the homeowners who initiated the conversion.

It was a losing argument.

Here is the thing - if you are allowed to make such a conversion, than it would also be legal for two of your neighbors to file restrictions on your property forcing you to pay them money and do what they want and you couldn't do anything about it because majority rules, right?

If that above scenario sounds reasonable than good luck in court.
GenoS (Florida)
Posts: 4,276
Posted:
KevinK7 is right in that changing from non-mandatory to mandatory membership is a significant change that alters the very nature of the association. All of a sudden you will be subject to FS 720 by virtue of mandatory membership. That's a significant change that, in my non-lawyerly opinion, cannot be effected by means of a vote of the members of the current non-mandatory association.

Are there currently deed restrictions noted on the recorded deeds themselves?

FS 720.306(1)(d) talks about, "... amendments to the associationā€™s governing documents that adversely affect the priority of the mortgageeā€™s lien or the mortgageeā€™s rights to foreclose its lien or that otherwise materially affect the rights and interests of the mortgagees".

I'm not going to pretend to know what that's all about, but I'm pretty sure that it gives current mortgage holders a say in the process. Again, once you're under FS 720 there are lien rights that come into play. Either way you slice it, converting to a mandatory HOA with a homeowner obligation to pay mandatory assessments represents a significant and material alteration of the rights and interests of both the homeowners and their mortgagees.

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