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AndrewJ4 (North Carolina)
Posts: 2
Posted:
I'm sure this scenario plays over and over on this forum. I'll just lay it out... maybe someone has a few thoughts.

Purchased mountain home in North Carolina with HOA. At time of purchase, the HOA Non-Profit Articles of Incorporation and Restrictions were provided, as recorded in county records. Not much else was communicated, and I didn't know enough about HOA's to ask more. In retrospect, it's surprising how little our realtor seemed to know about HOA's, didn't advise us to ask more questions. Everyone, especially the bank, just seemed to be thankful there was something in place for the road maintenance agreement. I guess many communities don't have anything at all.

For context, there are only about 25 owners, under 10 homeowners that live full time. After moving in, we found 2 of the 3 HOA officers were related, and the third just said "they made him President" but didn't seem to question much. I wouldn't either, he was outvoted anyway, why bother. Apparently someone about 10 year prior, the developer, basically just dumped it on the first homeowners to be up here full time.

Fast forward to our 4th year. They made me the President. I didn't decline the request to serve, but I didn't vote either. I naively just assumed everything was in order. They also voted the other 2 officers from newly moved-in residents, all too happy to be done with it. But the new 2 were also related. Upon 'taking office', I discovered there were:

-no meetings - board or membership
-no tax returns
-no by​-​laws
-​improper voting​, sometimes 1 year, sometimes 2 year terms
​-​don't know ​specific date ​when​ board takes office
-no budgets, no planning
-inadequate records
-no contingency plans
-certain requirements under law, notices, etc​ not being made​
-had no insurance
​-poorly maintained
-uncompleted projects, road signage, mailbox/road signage

​After they 'made me' President, I attempted to bring these and other things to the other 2 newly elected but related board members. Over the course of 14 months, they cancelled meetings at last minute, didn't reply to email requests, never provided full records of organization, told me in an email they 'don't do meetings'. Basically, they just wanted me to be President in name and not worry about anything. One of the few conversations with the new VP was that they personally wanted to buy a single - valuable - parcel from the HOA. Or how he put rocks in the road 'just to see if someone would move them'. To me, doesn't seem like rational, nice people.

The association only charges about 60% of the true cost it would take to properly maintain our roadway, so it's not like people are making big money by volunteering to run the association. But the place isn't maintained very well anyway. There are a few people who never pay and years/thousands past due. Perhaps it's because they feel the roadway is crap. Nobody attempts to collect.

Despite my efforts, none of the homeowners seem to want to bother stepping up and running for the other 2 offices. They complain, but they're just like everyone else, nobody cares, nobody wants to do anything. So we have still 2 related folks controlling everything - and not well.

After dozens of emails over the course of 14 months, with no board or membership meetings, I finally 'resigned'. I guess I didn't 'really' resign because I don't think it's a 'real' organization anyway. I know the requirements, and the responsibilities of President, and if I have no control or knowledge, I won't be responsible.

My question is what can I do, if anything? I do not want to litigate, and I'm fine just continuing to pay my dues - as long as they don't go up. If they went up without budgets, clear plan that already started on improving, I won't pay more - I guess they'll have to litigate with me to collect.
MarkM19 (Texas)
Posts: 1,459
Posted:
Andrew,
From reading your post I have a few comments.

1) Never buy anything without doing Due Diligence. That does not mean falling in love it means investigating what you are about to spend a lot of money on.
2) Realtors are not your friends. They want to sell properties. Don't expect them to advise you.
3) Small HOAs always run into board apathy even large one's do
4) It appears like your community is sleep walking through life. Increase your dues the maximum you are allowed to without going out to a vote every year. This will wake some of the zombies wake up and have them take note. This is perfectly legal and needs to be done. Want more people to show up for a meeting raise the dues. It works every time.
5) Do you really think you will fix things by quitting?
6) If nobody is going to drive the Bus it crashes every time.
7) Seems like you are going to stay in your home. You need to knock on doors and meet your neighbors. They are not going to love what you have to say but they need to listen.
8) The options are not great. Pay me know or pay me later. Not many bigger investments than the home you live in.
CathyA3 (Ohio)
Posts: 6,299
Posted:
Yipes.

I'm going to assume that this HOA operates mostly like the ones I'm familiar with, so here are things I'd be looking at.

* Corporate status: in my state HOAs need to file paperwork periodically renewing their corporate status. This is important because without it, HOA members are **jointly** **personally** liable if the HOA is sued. Somebody gets hurt on those roads that aren't being maintained properly and sues? The lawyers will come after the individual homeowners. Since nobody is filing tax returns, I'm going to assume that nobody is paying attention to corporate status either.

* Insurance: An HOA needs to insure commonly owned areas (ie, roads) and they need to provide something called Directors and Officers insurance to protect board members if they're sued for actions taken as directors of the HOA. Again, without insurance, the homeowners are putting their personal finances at risk in the event of a lawsuit. Personally, I would not own property in an HOA that does not have adequate insurance, and I would not serve on the board without D&O insurance. Good call on officially resigning as President.

* Taxes: HOAs that I'm familiar with must file tax returns each year.

* People who buy homes in an HOA become financial partners with every other homeowner in the community. This carries certain risks. Just because it's being managed poorly doesn't mean that the HOA "disappears". In the OP's place, I'd be figuring out exactly what my legal and financial exposure is as a member of this HOA and deciding whether or not this is an acceptable situation.
SheliaH (Indiana)
Posts: 6,964
Posted:
Mark and Cathy have given you great advice. As you talk to your neighbors, you might want to mention that if they DON'T wake up and start taking their responsibilities as HOA members seriously, they (and you) may find themselves on the hook financially if someone should get injured on HOA property (the road) and sues the HOA, such as it is. Since you really don't have one in operation, that would make all the homeowners individually and collectively responsible for any damages. As you might imagine, that could get expensive.

I'd also go to the Community Association Institute website (CAI) and take a look at their education section to buy a few books on running HOAs - the subjects range from rule enforcement to reserves (critical when it comes to taking care of the roads). If nothing else, YOU need to educate yourself on best practices so you'll know what to look for and how to explain it to your neighbors.

Get ready for a long and strange trip - it may seem like a lot, but if you're going to live here, you need to do your part in protecting your investment. Keep on coming back to this site if you have questions (and you will), and read some of the conversations. They're very helpful in showing you what to do (or not). Good luck!

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
AndrewJ4 (North Carolina)
Posts: 2
Posted:
Thanks for the really great advice, very kind of all of you to take time reading my verbose story, let alone offering such great advice. Yes, I'm fully aware of requirements, NC planned community statutes, filing requirements, etc. Unfortunately, there isn't currently any motivation other than me to comply with anything. It kind of almost seems like a big joke to all the other owners - they do not comment anything constructively at all other than 'huh' when I broach the subject - in a 'well this is how we've done it' kind of way... you see, we're from 'up north', and I suspect there in lies a subtle undertoe of my involvement. LOL. I will certainly continue attempting to have discussions, and for sure have found CAI so helpful. Unfortunately the ship of deciding to buy here has sailed... years ago, so we'll see what happens.

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