Shutting Down the HOA- Request Guidance

In 2014 our 47 members had a takeover (via voting - 37 to 1) from the developer who allowed their corp license and declarant rights to expire - they were also very dishonest and have never lived up to a verbal promise. When the developer began to develop the other side of the lake, they created HOA2. Our side has no public lake access (all private properties), but the newly developed side does via public roads. The dam is registered in the developers name and they pay the 6-yr inspection and insurance fees.

Since that time I have been either a Board Director, Pres, VP, Secretary, Asst treasurer etc and Grounds chair. Our board gets along great, however we are tired. At the end of 2017 we strongly believe no one will run for the board. We are considering shutting down HOA1. We don't have any community property. Our HOA1 pays all expenses to maintain the entrance (1 mile of fencing and grass cutting) with annual permission from the two property owners. We also pay for insurance, VA state licensing, etc. If we dissolve the HOA, no clue who will maintain the front entrance, guess the developer will have to if they want to sell new homes. Lake access will be obtained by driving through the public road in HOA2. HOA1 members on the lake, own the land under the lake half-way across. All savings will be distributed equally. We assume the developer would be glad for members on our side to join their HOA for their $600 annual fee.

We will notify our members of the boards intent to dissolve the HOA, in July 2017, when we call for new 2018 candidates. If we don't receive at least 3 candidates (by-laws and covenants require 3), then the current board will begin the shut down process with our attorney.

Thoughts?, Guidelines?, Suggestions?

Jack C
[email protected]

Are all your expenses related to the entrance? If so, someone's going to have to take over the maintenance and I doubt it'll be the city or county. You probably can't put this back on the developer if the homeowners took over your community.

You really need to talk to your association attorney about the pros and cons of shutting down the association. If there are people who would like to join the second HOA, you'll need to figure out how that would work - and you'll have to negotiate something with the developer. But first talk to the association attorney - if you don't have one, get one (you need someone who specializes in HOAs, so go to your local bar association to get a referral if necessary).

A final quick tip - verbal promises don't mean jack, as you've found out the hard way (it's amazing how people still believe that, but don't seem to realize there's usually no way to prove who said what). Next time, get promises IN WRITING.

90% of the expenses are covering the entrance. The rest is std HOA insurance, corp registration fees, legal advice, postage.

The entrance land, fence and monuments are owned by the individual land owners, the developer never got an easement; they pissed off the owners. The land owners are responsible to cut their own grass, maintain their fence and monuments. However, the community voted to offer those services to the land owners at no cost to them with an annual renewal.

No Electric, lights, sidewalks, playground, storm water mgmt. retention ponds, hoa signs, no land – no nothing!  Streets are state maintained, trash is up to the individuals and land owners on the other side of the lake own their half underwater.

As for amending the CC&Rs, we tried but lost by 1 vote. Then one of the neighbors put together a group to work on CC&Rs, that was last Sept and they cannot agree on anything except some are waiting for the developer to finish on the other side then combine the 2 HOAs – that will be 3-5 yrs.

In a nut shell, if no one runs for the board, the risk of not doing anything is higher than dissolution. Personal opinion - if no one steps up, no need for a vote, lack of participation closes that door and the current board will execute with our attorney.

Jack,

I understand the frustration of membership apathy. I ran into that situation earlier, see: Subject: Seeking advice on how to handle this issue.

All I can say is that it will likely work out in the end.

Be sure to also check your CCR's and State Laws to see if the Local Government has to approve allowing you to disband the HOA. In my area the local government has to also agree. Also, keep in mind if you do this then if a neighbor decides to not take care of their property and park junk vehicles, etc. then you and others will have no recourse to correct except for local government ordinances. If they do something your local ordinances do not cover it will be too bad ... so sad.