Do banks require a townhouse to have an HOA?

Started by CindyH6 • 17 replies • 561 views

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CindyH6 (Florida)
Posts: 71

Posted:

Since our tiny zero amenities townhouse community is getting nowhere regarding the roof.

Some owners want to dissolve the HOA. My only question is the HOA required for banks to give loans so property can be sold?

Getting rid of the HOA would give us the freedom to replace the roof in our building

TimB4 (Tennessee)
Posts: 21,059

Posted:

To dissolve the HOA you would need to:

1) dispose of common area and common amenities
2) amend the covenants to remove the formation of the HOA/COA

From your description on other threads, I suspect that your development is considered a condominium. For that reason alone, I doubt you would be able to abolish the Association.

CindyH6 (Florida)
Posts: 71

Posted:

Thank you Tim for giving me lots of good information.

We definitely are NOT a condominium, just 20 patio homes and the 3 townhouse 1 story buildings with 6 unit’s each .

No common areas and no amenities.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Typically, when the Association is responsible for repair/replacement of structure (roofs, etc.) the courts consider it a condominium. However, I have seen HOAs where the Association does all the exterior maintenance, repair and replacement.

Therefore, your development could be either.

Regarding common amenities - these could be things not typically thought of as amenities:
private roads/parking area, street lights, playgrounds, signage, etc.

CindyH6 (Florida)
Posts: 71

Posted:

Thanks Tim, definitely not a condominium in our CC &Rs and definitely no street lights ,signs or common areas . The HOA doesn’t maintain anything, they just claim to have the creative control but homeowners pay for everything and we are responsible for windows, HVAc system,doors , plants etc..

I used the information that you provided and drafted a petition for owners to sign

At least which ever way the owners vote the people that want to replace their roof will be able to at their own expense

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Cindy

You are going about it the wrong way meaning working on giving more autonomy to each owners. You should be spending your time and effort in getting a good BOD elected. A BOD that knows what has to be done even if economically painful.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I think you have the wrong idea about HOA's and their relationship with the bank. There is no relationship nor need of a bank to have an HOA. The reason there is an HOA is so that the members/owners have the right to collect due to pay for the HOA's expenses.

A bank does look at the financial health of an HOA to base their risk level for new loans or refinancing. It doesn't really care otherwise if a place has a HOA or not.

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Cindy,

Note: You said that the Association is responsible for replacing the roofs.
This is something that the Association maintains (perhaps other building components as well).

My understanding is that your row of town homes has a single roof line (i.e. not staggered heights/setback so each town home has it's own roof line). Without an Association, what do you do if neighbor 3&4 don't want to replace the roof when it's due?

I suspect that this is one reason why the Association was established and that issue will need to be addressed prior to dissolving anything.

As and FYI:

The only petition an Association has to comply with is the members request for a special meeting of the membership for a specific purpose. As this right is outlined in the governing documents and statute.

Any other petition would be seen as an advisory statement to the board.

CindyH6 (Florida)
Posts: 71

Posted:

Hi Tim,

You are correct, it’s one roof for 6 units. Right now all 6 owners are ready to replace the roof. I will immediately sell and they will have a good run on a new roof.

The HOA is not allowing us to replace the roof at our expense because they require all 3 buildings to replace at the exact same time. Other building owners don’t care if their roof is covered in tarps.( so we are stuck)

I wanted to have a petition to lazy Dissolve the HOA and since they have not paid the cooperation fees and request the paltry reserves be equally divided between all the owners.

The property management company said we could use a petition for that purpose.

The builder should have staggered the roofs .

CindyH6 (Florida)
Posts: 71

Posted:

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Cindy

If you want to dissolve the association, retain a lawyer to explain how to do. Do not believe posterts on this chat nor your PM. Get an attorney.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I'm going to go out on a limb and say if you have multiple units in a single building, it will be impossible eliminate an HOA (or some sort of mechanism of dealing with things that don't belong to single owners). It's not just the roof, it's the foundation, the plumbing, sewer and water systems, and possibly electricity for things like exterior lighting.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Oops, forgot about the land underneath the building: who owns that?

This isn't an HOA problem or a bank problem - it's a homeowner problem.

Assuming that the HOA could be legally dissolved - which I think it can't - you still have the problem of getting multiple people to agree on maintaining stuff that is essentially jointly owned. Those stubborn board members who think the roof doesn't need to be replaced aren't going anywhere - they'll be opposed to it with or without the HOA, and they'll probably be equally stubborn about other spending.

And without the legal structure of the HOA and its CC&Rs, there would be no way to force anyone to pay their fair share of anything. How long do you think that will work?

An HOA is simply a legal framework that allows for maintenance of commonly owned property. If there is commonly owned stuff, you need the framework, no matter what it's called.

And yes, mortgage lenders will care because they have a financial interest in that commonly owned property since it's part of what the borrower is buying. No responsible lender would make a loan to a buyer without the legal framework protecting their interests. Without that, the only people you could sell your home to are cash buyers who don't understand what they're getting into.

CindyH6 (Florida)
Posts: 71

Posted:

Thank you,

We all own our units , land , yard , fences . Windows, doors etc. No common areas or amenities

No legal board , no HOA money, the HOA has no good purpose and the CC&Rs are a joke they don’t even have the correct name of our tiny community,

Just a lot of stupid nonsense that doesn’t apply , it discusses different phases of development that doesn’t exist, a pool that doesn’t exist, a playground that doesn’t exist.

It says all owners pay and maintain their property, but we can’t do anything like replace the roof unless the owners vote and majority 2/3 and pay the special assessment. So it never passes,

I have asked myself ,why even have an HOA for a single street ,

They HOA offered a terrible mowing service a few months out of the year. That only a few units would use.

I was reading the financials and so much money went to pay for the mowing service and property management company, instead of saving for the future roof . What a stupid waste of money... just recently found out the terrible mowing service is owned by the property management company😐.

My guess is 15 years ago the builder was a buddy with the property management company. And it’s just a grift for cash

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By CindyH6 on 03/05/2021 1:53 PM
Hi Tim,

You are correct, it’s one roof for 6 units. Right now all 6 owners are ready to replace the roof. I will immediately sell and they will have a good run on a new roof.

The HOA is not allowing us to replace the roof at our expense because they require all 3 buildings to replace at the exact same time. Other building owners don’t care if their roof is covered in tarps.( so we are stuck)

I wanted to have a petition to lazy Dissolve the HOA and since they have not paid the cooperation fees and request the paltry reserves be equally divided between all the owners.

The property management company said we could use a petition for that purpose.

The builder should have staggered the roofs .

If all 6 owners are ready to replace the roof then that's exactly what I would do. This leaves them one choice and that is to take the issue to court where it belongs. You'll spend less money on replacing the roof than you will on initiating a lawsuit, fixing potential water damage and the reduction in the value of your home. Suppose you and the 6 owners replace the roof with the same type of material and it's done well. What the hell are they going to sue for?

CindyH6 (Florida)
Posts: 71

Posted:

Hi John,

All 6 owners are ready, we have an elderly stubborn lady that wants to follow the rules. Even though the property management company is finished with us in a few weeks.

But at least she wants the roof replaced.

So I’m going to have the non felon board guy explain to her that this is the best way to handle or it will be a slum in the near future.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MelissaP1 on 03/04/2021 3:51 PM

A bank does look at the financial health of an HOA to base their risk level for new loans or refinancing. It doesn't really care otherwise if a place has a HOA or not.

REALLY?

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By CindyH6 on 03/09/2021 4:14 PM

Hi John,

All 6 owners are ready, we have an elderly stubborn lady that wants to follow the rules. Even though the property management company is finished with us in a few weeks.

But at least she wants the roof replaced.

So I’m going to have the non felon board guy explain to her that this is the best way to handle or it will be a slum in the near future.

I really feel for you and wish you well!

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