Help on Proper HOA Administration

Started by JamesM33 • 8 replies • 1374 views

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JamesM33 (Arizona)
Posts: 2

Posted:

Background Information: In 1984 a 10-Acre parcel in Maricopa County, AZ, was purchased by an individual and his residential home constructed. In 2004, the property was subdivided into 5 2-acre lots with a common paved road and city water /sewage to each lot was made. The HOA was created and registered with the Arizona Corporation Commission and the CC&R's were created and recorded at the Office of the Maricopa County Recorder. Its my understanding that the HOA By-Laws must be maintained in the HOA and that a copy of the CC&Rs and the By-Laws are required to be made available to the lot owners. The property has a city of Litchfield Park address but situated on an unincorporated tract in Maricopa County.

Issue at Hand: While the CCR's are present and available it seems that the By-Laws do not exist. The HOA Board received the CCR's when the development was handed over to the HOA by the Developer in 2004 but not the By-Laws. The original Developer does not remember if By-Laws were ever created. Since the Arizona Corporation Commission does not require that the By-Laws be filed, only that they are maintained in the office of the HOA, it is entirely possible that the By-Laws were never created. Without the By-Laws, there is no direction on the powers of the Board Members, length of term, a definition of the Architectural Review Committee composition and term, if or how CC&R's can be amended, etc.

The Problem: Now that lots are being resold by the original purchasers, new owners have many questions / interpretations about the sections of the CC&R's and we have no point of reference of intent or direction on how to handle certain issues without the guidance normally found in the By-Laws.

My Questions;

(1) Is the HOA currently in violation of state law by not having, maintaining, and making available HOA By-Laws?

(2) Can this be remedied by the HOA creating By-Laws now, or are there residual liability to existing Lot owners?

(3) Can the validity or enforceability of the CC&R's be challenged due to the fact that no By-Laws exist, or are these completely separate issues?

(4) What resources might we look to for assisting or guiding the HOA in creating the By-Laws retroactively?

Any feedback on this situation would be most appreciated.

Thank you

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By JamesM33 on 07/14/2016 10:15 PM
My Questions;

(1) Is the HOA currently in violation of state law by not having, maintaining, and making available HOA By-Laws?

Not really. There are no HOA laws addressing this issue but there may be some statutes in the Non-Profit Corporation Act. No one is going to drag you to jail because you have no current bylaws.

Quote:

(2) Can this be remedied by the HOA creating By-Laws now, or are there residual liability to existing Lot owners?

Creating bylaws is precisely what you need to do. Since yours is a small association, hold a meeting with all members present and decide on what your group wishes to do. Since it appears that many provisions are missing from the bylaws and the CC&R's, you may have to draft new documents from scratch but you will likely need 100% of the members to approve of the changes.

Quote:

(3) Can the validity or enforceability of the CC&R's be challenged due to the fact that no By-Laws exist, or are these completely separate issues?

Completely separate issues. The bylaws dictate how the incorporated association operates; the CC&R's restrict what may be done with the real estate.

Quote:

(4) What resources might we look to for assisting or guiding the HOA in creating the By-Laws retroactively?

Steal something off the Internet, to start with. Bylaws for a non-profit corporation would be a good place to start a search. HOA bylaws may be better.

Quote:

Without the By-Laws, there is no direction on the powers of the Board Members, length of term, a definition of the Architectural Review Committee composition and term, if or how CC&R's can be amended, etc.

Some of these issues would not normally be addressed in the bylaws. How to amend the CC&R's would normally be found in that document. As I said above, you may have to start from scratch as it sounds like your developer did not know what he was doing.

JamesM33 (Arizona)
Posts: 2

Posted:

Larry - Thanks for your feedback, it is very helpful. Yes, the original Developer was a well meaning "do-it-yourselfer" but clearly more guidance would have been useful. The current lot owners for the most part have varying degrees of experience but this is new to us so we are finding our way through the weeds. Fortunately, all five owners are reasonable people.

JeffT2 (Iowa)
Posts: 880

Posted:

Quote:

Posted By JamesM33 on 07/14/2016 10:15 PM
Background Information: .... The HOA was created and registered with the Arizona Corporation Commission

Authority for the bylaws is usually derived from your Articles of Incorporation. Try going to the website for the Arizona Corporation Commission to look up your HOA by name:

http://ecorp.azcc.gov/Search

Check out all the info there and scroll down to find the scanned copy of your Articles of Incorporation. I think you need to start with that document to create your bylaws.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JeffT2 on 07/15/2016 8:16 AM

Posted By JamesM33 on 07/14/2016 10:15 PM
Background Information: .... The HOA was created and registered with the Arizona Corporation Commission

A Declaration of Covenants, Conditions, and Restrictions (CCRs) should have been filed with your local Recorder of Deeds (or whatever its called where you are). That document is of higher priority than the Bylaws and should be understood first.

Sikubali jukumu. Read all posts at your own risk.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By JamesM33 on 07/14/2016 11:41 PM
Yes, the original Developer was a well meaning "do-it-yourselfer" but clearly more guidance would have been useful.

Check the records for your association online at http://ecorp.azcc.gov/Search

Be sure that the do-it-yourselfer developer incorporated your association as a non-profit corporation and not as a business corporation.

Also be sure that your annual reports are up to date. The late fees can kill you if reports are delinquent.

JanetD4 (Illinois)
Posts: 5

Posted:

Hi all, I have a question. This ecorp.azcc.gov is an awesome site for Arizona residents. Where is the search of the same results for the state of Illinois?

JanetD4 (Illinois)
Posts: 5

Posted:

Hi all, I have a question. This ecorp.azcc.gov is an awesome site for Arizona residents. Where is the search of the same results for the state of Illinois?

TimB4 (Tennessee)
Posts: 21,061

Posted:

Janet,

Welcome to the forum.

It's best to start a new topic then to reactivate an old topic.

As for your question, see:

https://www.cyberdriveillinois.com/departments/business_services/corp.html

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