Managing a proposal to dissolve the HOA

For the sake of brevity I am not giving a lot of background on this, but can add it if it would be helpful.

I am a board member. We have one homeowner (in a single-family HOA with 56 lots) who has told the board that he proposes to dissolve the HOA.

Our by-laws have the following provisions:

1. The Association may be dissolved with the assent given in writing and signed by at least two-thirds (2/3) of the votes of each class of Members.

Notes: The association was established with Class A and Class B members. The Class B members are, in essence, the builder before the HOA was turned over to the homeowners. At that time, the Class A members had 1 vote per lot and the Class B members had 3 votes per lot. There are no longer any Class B members. The interpretation of this clause by the board is that the word "votes" is for purposes of defining the number of eligible votes of all members, not a number of votes actually cast. Therefore for dissolution to pass, we consider that there must be a "yes" vote cast by at least 2/3 of all homeowners (not 2/3 of whoever shows up for a meeting or casts a vote). Therefore 38 "assents" would be required to dissolve. We have not yet asked a lawyer about this wording.

This provision does not require that a meeting be conducted to take a vote, only "assent given in writing and signed."

The following is also in the by-laws:

2. Section 2. Special Meetings. Special meetings of the Members may be called at any time by the President, the Board of Directors, or upon written request of Members who are entitled to vote at
least one-fourth (1/4) of all of the votes of either class of Members.

In response to this homeowner the board has declined to call a special meeting for several reasons: 1) The proposal was not raised until shortly after our annual meeting in October, where it could have been put on the agenda for discussion 2) This homeowner did make this suggestion briefly during discussion of another matter at the annual meeting, and there were no comments on it 3) The proposal is not really a proposal at all but only an expression of a desire to dissolve; it does not describe a plan for executing dissolution, nor describe the benefits or costs of doing so, and 4) the board judges that dissolution is not in the interests of the homeowners.

Notwithstanding the board's position, if the homeowner could muster 13 other homeowners to request a special meeting, then we would be obliged to conduct the meeting. We do not think there is any other support for this, but surprises happen.

We want to be transparent and responsive to homeowner concerns but we believe that the board is not obligated to go down every rabbit hole that every homeowner brings up.

Is the board acting properly in responding to the homeowner that the board does not support the proposal, the board will take no further action on the request, and that the homeowner is free to collaborate with like-minded homeowners and the board will take any action required by the by-laws?

If the homeowner wants to dissolve the association, let him do the homework. What will That entail, how much would it cost, what will be done with the common areas - and can be done up with enough support to push this through?

If he wants it dissolved, he needs to be prepared to provide all that information and if he can't or refuses to, simply state this is a major issue and he needs to be willing to do the research because the is too busy running the association. You and your colleagues have a life, and homeowners should remember that. You find out pretty quit whose willing to roll up their sleeves and work as opposed to yapping for the hell of it.

Ultimately, the homeowners make the final call, so it's ok to decline to hold a special meeting. The homeowner can petition his neighbors to sign a petition to call a meeting (check your documents to see how that's done). If he gets the signatures, the board will have to hold the meeting and at that time you can make your argument as to why this isn't as easy as he thinks it is. The homeowner can make his argument and you'll see what happens from there.

I agree with the board that this would require 2/3 of the entire voting interest of the association, not 2/3 of attendees to a meeting. I think the wording is pretty clear on this.

While a letter is reasonable, as Augustin provides language, it is a kindness I would not provide.

I would simply ignore the owner proposing this. I would ensure the Board did not feel they were bound to reply. And, that there is nothing requiring them to discuss it further.

its

After my initial laughter and picking myself off the floor... I have to agree to just respond with "Do the research". Apparently hasn't read any documents nor gets the concept of what an HOA is/does. Our HOA if you read the documents it can ONLY be dissolved if we owners agree to turn it over to a management company. A fact you may want to point out means no owner has voting rights nor can set the dues.

You can keep explaining the ramifications of not having a HOA but it's just going to fall on deaf ears. They are not reasonable person so you can't reason. So don't try. Just listen and move on.

I'm not an attorney or an expert on this specific situation, but I believe here in New York, the first step would be to eliminate the Board and have the Association go into receivership. I can't imagine anyone could sell their home in such a situation. Plus, what do you do with the common land and amenities?

This all sounds frivolous to me. I would tell the homeowner to sell and go find a single home on a single property, where he could be President of his own HOA.

I omitted the background in my first post but you may find this interesting.

Some of you may have seen my post earlier this year about homeowners who are proposing to drop the word "Plantation" from our HOA name. At the annual meeting this particular guy ranted about that and said if you really want to do something meaningful then you should just dissolve the HOA because HOAs have a history of being established to block non-whites from buying homes. Nobody rose to agree with him. We thought he was being rhetorical but after the meeting he continued to push this with the board, as described earlier.

It's just one person. Let him make a motion to dissolve the HOA. Sounds like it wouldn't go far. Then ignore him.

I believe that 3 creditors who are owed >$16k by the HOA could force it into involuntary Chapter 7 bankruptcy and seek to dissolve it that way, but even that's not assured.

I do not think this is accurate. It's true that, in the first half of the 1900s, developers bought land and wrote "restrictive covenants" to apply to the land. These restrictive covenants typically messed over big time Black folks, Jewish folks, Catholics, "ethnics" et cetera. But back then, HOAs did not exist. For crying out loud, HOA statutes did not exist. I think even the idea of a HOA being incorporated, with all the corporate statutes applying, did not even exist. From the Washington Post, October 21, 2020:

"In the first half of the 20th century, developers built neighborhoods with restrictive covenants to shape their demographics. The covenants were institutionalized by the Federal Housing Administration, created in 1934, which offered loans to neighborhoods with covenants under more favorable terms. The banking industry followed the practice, creating redlining maps that perpetuated unfair lending even after covenants were outlawed."

Around the 1950s, HOAs took root. I have doubts that the unlawfully discriminatory restrictive covenants still on the books today are in "HOA Declarations" in great numbers. Rather, I think these unlawful restrictive covenants existed before HOAs existed. Per the WaPo Oct 21, 2020 article, these non-HOA restrictive covenants are still present (without legal force) in great numbers.

I think it is a bad idea to conflate the issue of (1) an Owner wanting to dissolve a HOA; with (2) an Owner wanting to change the name of the HOA. I do not care if this Owner is one in the same person. The Board should insist that these issues are separate. The stance on (1) (soap opera to a large extent) should be unrelated to the stance on (2) (not soap opera, AFAIC).

This is sort of a gossip-y thread IMO. If people want to vent, then FWIW I get it and encourage it within reason. But practically speaking, I regret the issue of racially-discriminatory restrictions (and perhaps HOA names) is being brought up here in a discussion of terminating a HOA.

Jeff

You are letting one "cuckoo" run the show. Until he commences some type of action, ignore him. If you feel the need to reply just say: The BOD is in receipt of your Email.

I read your post it will take 2/3rds of all owner voting yes to dissolve the HOA.

I understand. Your reasons make sense. "But for the grace of {god / the goodness in all people}, there go I."

In a more normal exchange that is what I would have done. However, the history of this person is to write long rambling emails to rebut everything we respond to. He had demonstrated in past emails that he is familiar with the by-laws so I don't need to tell him what he needs to do to request a meeting. I am not inclined to waste any more cycles on one individual.

I believe it can be appropriate for the board to provide an opinion on a matter up for vote as long as the opinion is consistent with the board's responsibility to the HOA and not just an aggregate of personal opinions, kind of like a judges are supposed to to rule according to the law and not their own opinions. That is probably a whole other thread.