CC&R expired - does HOA still have right to operate?

Hello.

I am the new Pres of an HOA here in MA. A number of years back under circumstances I don't fully understand our CC&R expired (after 30 years). We have continued to operate the HOA, and collect annual assessments, since that time. We have common areas, sidewalks, and lights that the Association maintains on behalf of all members. We have articles of incorporation and by-laws by which we operate the HOA, which specify the language around annual dues and member responsibilities. So those have always been held separate from the CC&Rs.

My question is this: does the HOA still legally exist and have the right to collect assessments, etc, even though the restrictions are no longer valid?

I am a newbie here but have a non-profit corporate leadership background and would venture to say the answer is "Yes" given our articles of incorporation and bylaws, but would love to get some input from others with more experience here.

Thanks in advance!

GS

Welcome to HOATalk, Gene.

Tim's reply makes sense. And as you reasoned, you're clearly a corporation. I don't know if it's typical for Articles of Incorporation to discuss annual dues, ours sure don't. But since yours do, it seems like you're OK.

But, also with Tim, I'd seek an HOA attorney's opinion.

No.

The Bylaws are part of a Corporations' governing documents.

Your CC&R's are essentially a contract between the homeowners and the association. CC&R's normally have a provision that requires membership in the association. That contract ceased to exist when the CC&R's expired.

The association's legal existence is a matter of complying with the state laws governing associations. It's existence is not dependent on CC&R's but without an active declaration membership is now voluntary and the association has no authority to levy assessments from non-members, nor may it enforce property restrictions, levy fines, or foreclose on anyone except members.

The common areas present a problem. It is hard to imagine that the C&R's expired without some sort of provision for dealing with the common areas. I believe there is a body of common law that says those who use or benefit from an amenity have a legal obligation to contribute to its maintenance. The value of an association in this circumstance is that it provides an orderly means of maintaining those amenities without having one owner suing another.

But I gotta ask: Why do you believe the CC&R's expired, especially when you say you "don't fully understand" the circumstances? If it was me I would be asking for the written opinion of an attorney before accepting that conclusion. If there was no attorney involved in the past this is the time to find one. (A common situation is for an association to be administratively dissolved due to failure to file annual reports and for members to wrongly conclude that the CC&R's are no longer in effect.)

I would also echo the advice to ascertain and understand that CCR's are, indeed, expired. Many years ago, the corporate documents in my HOA were not renewed in a timely manner and went "inactive". They were subsequently re-activated, but when the actual CCR's expired, there was a lot of confusion among owners who were disbelieving because the corporate documents had been registered with the state. These owners had confused the corporate documents with the contractual documents which had, indeed, expired by operation of MRTA (Marketable Records Title Act).

Many do not understand that their HOA is two separate-but related-entities.

CCR's are the contract that "runs with the land". Its promises and restrictions bind all owners for the duration of the contract. In Florida, (as in at least 19 other states), MRTA expires CCR's at the 30 year mark, unless they are "renewed" according to statute. The CCR's also typically provide for a corporation to operate the common properties. That corporation is entirely separate from the CCR's though its authority to exist and mission arises from the CCR's.

The corporation and its ancillary documents do not expire with CCR's. However, they are often gutted when CCR's expire because they contain authorities given to the HOA corporation. If your CCR's are expired, you are operating under an "illusory contract" with owners. This is a voluntary quid pro quo arrangement, though owners, banks and other 3rd party interests are not usually aware of that nor are they aware of the new set of risks that such an arrangement presents. With the expiration of CCR's, the HOA has lost the ability to enforce certain restrictions and compel certain behavior. All who do business with the HOA must rely on the kindness of strangers and a handshake. The State will not intervene in HOA corporate matters unless there is criminal activity.

It should be remembered that corporate documents are not contracts and do not "run with the land". Their provisions cannot be enforced by the HOA against member/owners.

Insofar as assessments, the contributor who mentioned that owners have the duty to pay regardless of the existence of CCR's is correct. Here is the citation:

As recognized by the Massachusetts Supreme Court in Sullivan v. O’Connor, 81 Mass App.Ct. 200, 961 N.E.2d 143 (2012), MRTA does not act to relieve homeowners from their implied contractual duty to pay their proportionate share of the maintenance and operation costs of those common elements they use or benefit from.

The downside is that the HOA cannot foreclose on a non-payer; it can only seek a judgement in the same way that any other entity can. Owners might want to appear to courts to petition certain expenses as those they are unable to use, such as in the case of disabled owners who do not have access to the pool. Whether such an owner benefits from the existence of a pool that they are prevented from accessing and using is fodder for the lawyers.

Disclaimer: I am not an attorney and the above should not be construed as legal advice.

Thank you all for your excellent comments and insights. I am beginning to get a grasp on this.

Note: the HOA CC&Rs were in place for 30 years, after which time due to clerical missteps they were allowed to expire (after 30 years by MA law) and have not been re-instituted)

I guess the question comes down to whether membership in the HOA has now become essentially voluntary, OR if homeowners are still compelled outside of any CC&Rs due to what is stated in the articles of incorp and/or the bylaws (plus the ongoing existence of common areas).

On this point I suspect I will need a lawyer to interpret and give an opinion.

Thanks again for your help I really appreciate it!

GS