Help with Dissolved HOA

AndreiP (Indiana)
Posts: 8

Posted:

Hello all,

I recently moved into a home in a subdivision and I could use some help on a topic. The subdivision is name Stone Gate Farm, in Porter County, city of Valparaiso, IN.

I have a copy of the covenants from the original builder. I am looking to put in a shed on the property.

In 1993, a building committee was formed by three members with the same last name of Truitt. The covenants required that no building permit shall be obtained by Porter County, IN until the plans were reviewed and approval was given by the Building Committee.

Then it states, "No structure shall be...placed...on any lot in this subdivision ...unless structure is expressly approved by the Building Committee."

However, this was 1993, and the building committee has since been dissolved. The last section of the covenants writes, "The Stone Gate Farm Homeowner's Association Inc shall be an indiana not-for-profit corporation, shall be created by the Developer acting on behalf of the owners and future owners of the lots in this subdivision."

At some point, ownership or management of this HOA was transferred to a Dan Shumaker, which used to live in the house next to mine. However, he hasn't lived in this subdivision for over a decade. The current corporation status of the HOA is "admin dissolved."

Currently, there is nobody to get permission from to put in a shed, and this is a conundrum a few of the community members are faced with. My neighbor to my right, and his neighbor want a shed, in addition to my neighbor to my left. However, there's this gray area. Sheds are not prohibited, but the committee to approve them no longer exists and the HOA has been dissolved and many of the covenants are not currently enforced.

My understanding is that when an HOA is dissolved in Porter County, Indiana, that the governing body to approve a shed is the county itself, through which I would need to get a permit. However, my neighbor is concerned that one of his neighbors might get upset enough to take him to court over putting in a shed when the covenants requires him to get permission to do so, but where to get permission if there is no governing body to get it from?

My next question is, what would it take to have the HOA reinstated, should I choose to do so?

I appreciate your assistance greatly!

AugustinD
Posts: 3,698

Posted:

AndreiP,

-- First, the dissolution of a corporation does not remove the corporation's title to land.

-- Second, do you know whether the corporation has title to any land? You may have to do some research at the county clerk to identify any land that the corporation owns. County Clerk staff typically are there to help members of the public with such questions.

-- Third, do the covenants state that the corporation is responsible for things like a sign at the entrance to the community; lighting; roads; or other infrastructure?

-- Fourth, from the internet, it appears this corporation was dissolved around 2001. Corporate registration fees are owed to the state of Indiana for the last 20 years or so. I doubt the total owed is more than a few thousand dollars.

-- Fifth, you can contact the Indiana Secretary of State and get information on how to return the corporation to good standing, such that it is no longer administrative dissolved. If you google for the Indiana Secretary of State's site, there's a good chance instructions will appear at the site to help you.

-- Sixth, the corporation may owe back taxes on land it owns.

-- If you respond to the questions above, I will respond further. I expect others will offer their opinions in a bit as well.

AndreiP (Indiana)
Posts: 8

Posted:

Quote:

Posted By AugustinD on 08/21/2021 6:30 PM
AndreiP,

-- First, the dissolution of a corporation does not remove the corporation's title to land.

-- Second, do you know whether the corporation has title to any land? You may have to do some research at the county clerk to identify any land that the corporation owns. County Clerk staff typically are there to help members of the public with such questions.

-- Third, do the covenants state that the corporation is responsible for things like a sign at the entrance to the community; lighting; roads; or other infrastructure?

-- Fourth, from the internet, it appears this corporation was dissolved around 2001. Corporate registration fees are owed to the state of Indiana for the last 20 years or so. I doubt the total owed is more than a few thousand dollars.

-- Fifth, you can contact the Indiana Secretary of State and get information on how to return the corporation to good standing, such that it is no longer administrative dissolved. If you google for the Indiana Secretary of State's site, there's a good chance instructions will appear at the site to help you.

-- Sixth, the corporation may owe back taxes on land it owns.

-- If you respond to the questions above, I will respond further. I expect others will offer their opinions in a bit as well.

Thank you for the reply. Just as a note, my primary concern is being able to put in a shed. I've already spoken to three of my neighbors about this and none of them are aware of any active HOA. One moved in 7 years ago and the other 2 years ago. The third neighbor has been here since the subdivision was built and told me that there's nobody enforcing any covenants. In fact, he put in a fence in his back yard (which would have required the approval of the building committee per the covenants), and nobody has complained.

I'm not sure what benefit there would be to the neighborhood to re-instate the HOA, but it was an idea brought up to protect the community.

I do not know if the corporation has title to any land. I can call the county clerk on Monday to inquire about this. I highly doubt it given the nature and size of this subdivision. This is only about 15 houses.

The covenants do not make any mention of a corporation being responsible for signage, lighting, roads, or infrastructure of any kind.

If I bring the corporation back to good standing, would I then be considered the president, if the current president is unable to be located or contacted?

I will know more about the back taxes once I inquire about any land ownership. There is one vacant lot on this subdivision that hasn't been developed, so there is a small chance that it belongs to the HOA and back taxes would be owed on it.

But again, this is all secondary to my highest priority, which is putting in a shed without any HOA or building committee to ask permission from.

Thank you again. I didn't know anywhere else to look and I was ecstatic to find that forums are still being actively responded to like this one. I used to spend untold hours contributing to forums before my automotive communities died down and everything moved to Facebook.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By AndreiP on 08/21/2021 6:54 PM

If I bring the corporation back to good standing, would I then be considered the president, if the current president is unable to be located or contacted?

If the corporation and/or HOA are reactivated, I would assume elections would need to be held to elect a board of directors, and typically the board elects officers (president, treasurer, secretary, etc.). The exact details might depend on the association governing docs and state corporate law.

In my last association, the docs said that any ARC requests there were not denied within 30 days were automatically considered approved. If yours includes this, you should be in the clear, send a certified letter with your request to the last address shown in the corporate registration for the registered agent. Assuming that comes back undeliverable, I would proceed with your plans after 30 days. If any other owner does sue, you would have proof that you attempted as best possible to get permission. Obviously, nobody here can say with assurance how a given judge will rule, I think you would have a good chance of prevailing.

Even if you docs don't have the 30 day clause, I think you chances are good of prevailing against a suit if you show you make an attempt to get approval.

You could also consult a local attorney for an opinion.

Escaped former treasurer and director of a self managed association.

AugustinD
Posts: 3,698

Posted:

AndreiP,

From reading the case law over the years, and given that the HOA has no board at present and so mechanism for approval, then I believe that if you erect a shed, then your neighbors could successfully sue you to have the shed removed. Nationwide, the courts say that covenants are contractual terms, enforceable by the courts. One of your community's covenants says 'No sheds without approval of the building committee... ' When you bought into this community, the covenants were on public record with the County Clerk. The courts say this is notice to you of the existence of the covenants, and that this means you agreed, at purchase, to abide by the covenants.

You should check the covenants to see who appoints the building committee. Ordinarily it is the HOA Board. Your HOA has no board. The law of real property says that, therefore, you cannot get approval, and therefore if you build a shed, then it violates the covenants. Neighbors may very well successfully sue you to have it removed.

There are caveats to the above. For example, do other lots have sheds? How about other structures? Have the sheds or other structures existed for over ten years? If so, then the covenant arguably is legally abandoned.

Since the HOA is currently "administratively dissolved," I doubt there is a president or board somewhere. If a President or Board existed, then it would not have let the HOA remain administratively dissolved all these years.

If you stepped up and paid what was owed to the state so that your HOA corporation was once again, in good standing, then you would have a duty to run an election and elect new board members. Under the law, you do not become a director or President simply because you pay the corporation's debts to the state (annual corporation registration fees) and county (property taxes, possibly).

Have you seen bylaws for your HOA?

The Indiana Secretary of State's office may very well have a copy of the HOA corporation's Articles of Incorporation and Bylaws. Obtain a copy of these. If you locate a copy of the Bylaws, report back here. Follow what the Covenants, Articles of Incorporation, and Bylaws say, to the letter.

By my reading, your HOA is not subject to the Indiana HOA Act. This is because the act came into existence only in 2009.

Your HOA is, even in its dissolved status, still subject to the Indiana Nonprofit Corporation Act.

Are there ponds within the boundaries of this HOA? If so, who legally is responsible for maintaining them? Again, this may be a question for the county clerk staff.

You spoke of protecting the community. The reason for my earlier questions is that, if there is anything that the HOA corporation owns (like a pond, park, signs, drainage system et cetera) then the corporation may very well need liability insurance. If liability insurance is not maintained, and someone gets hurt, then the victim could go after the individual homeowners.

I am not an attorney. What I wrote above is preparation you should consider doing before meeting with an attorney. I expect an opinion from the attorney about whether you can build the shed and not risk litigation from neighbors now or in the future will cost you $1000 to $5000. The more research you do with the Indiana Secretary of State and County Clerk, the less you may have to pay in attorney fees.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By DouglasK1 on 08/21/2021 7:43 PM

Posted By AndreiP on 08/21/2021 6:54 PM

If I bring the corporation back to good standing, would I then be considered the president, if the current president is unable to be located or contacted?

If the corporation and/or HOA are reactivated, I would assume elections would need to be held to elect a board of directors, and typically the board elects officers (president, treasurer, secretary, etc.). The exact details might depend on the association governing docs and state corporate law.

In my last association, the docs said that any ARC requests there were not denied within 30 days were automatically considered approved. If yours includes this, you should be in the clear, send a certified letter with your request to the last address shown in the corporate registration for the registered agent. Assuming that comes back undeliverable, I would proceed with your plans after 30 days. If any other owner does sue, you would have proof that you attempted as best possible to get permission. Obviously, nobody here can say with assurance how a given judge will rule, I think you would have a good chance of prevailing.

Even if you docs don't have the 30 day clause, I think you chances are good of prevailing against a suit if you show you make an attempt to get approval.

You could also consult a local attorney for an opinion.

I am going to go with Douglas and not the other.....

AugustinD
Posts: 3,698

Posted:

AndreiP, one other thing: You could always just build the shed and roll the dice that no one threatens or files suit because you violated the covenants.

You could seek written approval from all your current neighbors, but even this is not a guarantee that a new neighbor down the road won't object and sue you.

If this is an inexpensive shed, that is relatively attractive, then maybe all will be fine. If someone objects and files a lawsuit against you, then you can proceed from there and decide how much time and money you want to spend defending your shed.

At present, I respectfully disagree with DouglasK1. If there's no board and no committee, then you do not have an entity to whom you can submit an application. Therefore it's not fair to say that "you submitted an application."

AndreiP (Indiana)
Posts: 8

Posted:

Quote:

Posted By AugustinD on 08/21/2021 7:51 PM
AndreiP,

From reading the case law over the years, and given that the HOA has no board at present and so mechanism for approval, then I believe that if you erect a shed, then your neighbors could successfully sue you to have the shed removed. Nationwide, the courts say that covenants are contractual terms, enforceable by the courts. One of your community's covenants says 'No sheds without approval of the building committee... ' When you bought into this community, the covenants were on public record with the County Clerk. The courts say this is notice to you of the existence of the covenants, and that this means you agreed, at purchase, to abide by the covenants.

You should check the covenants to see who appoints the building committee. Ordinarily it is the HOA Board. Your HOA has no board. The law of real property says that, therefore, you cannot get approval, and therefore if you build a shed, then it violates the covenants. Neighbors may very well successfully sue you to have it removed.

There are caveats to the above. For example, do other lots have sheds? How about other structures? Have the sheds or other structures existed for over ten years? If so, then the covenant arguably is legally abandoned.

Since the HOA is currently "administratively dissolved," I doubt there is a president or board somewhere. If a President or Board existed, then it would not have let the HOA remain administratively dissolved all these years.

If you stepped up and paid what was owed to the state so that your HOA corporation was once again, in good standing, then you would have a duty to run an election and elect new board members. Under the law, you do not become a director or President simply because you pay the corporation's debts to the state (annual corporation registration fees) and county (property taxes, possibly).

Have you seen bylaws for your HOA?

The Indiana Secretary of State's office may very well have a copy of the HOA corporation's Articles of Incorporation and Bylaws. Obtain a copy of these. If you locate a copy of the Bylaws, report back here. Follow what the Covenants, Articles of Incorporation, and Bylaws say, to the letter.

By my reading, your HOA is not subject to the Indiana HOA Act. This is because the act came into existence only in 2009.

Your HOA is, even in its dissolved status, still subject to the Indiana Nonprofit Corporation Act.

Are there ponds within the boundaries of this HOA? If so, who legally is responsible for maintaining them? Again, this may be a question for the county clerk staff.

You spoke of protecting the community. The reason for my earlier questions is that, if there is anything that the HOA corporation owns (like a pond, park, signs, drainage system et cetera) then the corporation may very well need liability insurance. If liability insurance is not maintained, and someone gets hurt, then the victim could go after the individual homeowners.

I am not an attorney. What I wrote above is preparation you should consider doing before meeting with an attorney. I expect an opinion from the attorney about whether you can build the shed and not risk litigation from neighbors now or in the future will cost you $1000 to $5000. The more research you do with the Indiana Secretary of State and County Clerk, the less you may have to pay in attorney fees.

When I bought into this community, I had read the covenants and it was implied that I could get permission to build a shed. Under no circumstance was I prepared to find that there was no committee to even request permission from. In fact, I was advised that there was an active HOA but that they simply weren't collecting fees. I discovered this to be false, since there is no active HOA. The president of the dissolved HOA corporation no longer lives at his address (I heard he moved to Florida and, after 20 years, I probably couldn't find him if I wanted to, if he's even still alive), and he and the secretary are both listed under an address around the corner that doesn't even exist, between two houses.

The building committee was self-appointed by three members of the Truitt family, who are no longer here. The building committee existed prior to the HOA. The covenants were written by the building committee and the last section of the covenants states that the HOA shall be created on behalf of the owners and future owners of the lots in the subdivision. The covenants appear to be in violation of themselves if the HOA exists only as an idea and cannot be practically contacted, consulted, or requested approval from.

Do other lots have sheds? No, not in this immediate subdivision. The adjacent subdivisions? Yes. However, regarding the rest of your caveats, there is a case. My neighbor across the street has a 6ft wrought iron fence that he put in years ago. Section 3 of my covenants read, "no structure shall be erected, altered, placed or permitted to remain on any lot in this subdivision other than a single-family dwelling not to exceed two stories in height unless said structure is expressly approved by the Building Committee. Structure as referred to herein shall mean fence, kennel, patio, playhouse, building, shelter, lean-to, garage, dock, storage shed, whether temporarily or permanently, upon the Real Estate or any other building or fixture except the dwelling house which extends above ground level." He put that fence up without the approval of any building committee since said committee hasn't been here for who knows how long. Furthermore, the following covenant is generally disregarded by multiple neighbors:
- "no vehicle shall be permitted to be parked on any lot or anywhere in the subdivision for more than 48 hours unless in a garage" - I hear Truitt used to be a real stickler about this one but since he left, nobody cares and almost all houses now have cars in the driveway for extended periods.

There is a pond that is shared by five houses in this subdivision, but nobody does any maintenance on them that I am aware of.

It seems absurd to consider that nobody in the neighborhood would be allowed to make any additions to their home, add a fence, shed, or any structure whatsoever, simply because there is nobody to get approval from, without risking some kind of lawsuit in the future.

When my realtor called the county, the county informed him that this situation is very common in this region and that in the absence of any active HOA or building committee, that any construction on the property falls under county regulations instead. I was comfortable with that answer, but now I'm not so sure anymore.

AndreiP (Indiana)
Posts: 8

Posted:

Quote:

Posted By AugustinD on 08/21/2021 7:51 PM
AndreiP,

From reading the case law over the years, and given that the HOA has no board at present and so mechanism for approval, then I believe that if you erect a shed, then your neighbors could successfully sue you to have the shed removed. Nationwide, the courts say that covenants are contractual terms, enforceable by the courts. One of your community's covenants says 'No sheds without approval of the building committee... ' When you bought into this community, the covenants were on public record with the County Clerk. The courts say this is notice to you of the existence of the covenants, and that this means you agreed, at purchase, to abide by the covenants.

You should check the covenants to see who appoints the building committee. Ordinarily it is the HOA Board. Your HOA has no board. The law of real property says that, therefore, you cannot get approval, and therefore if you build a shed, then it violates the covenants. Neighbors may very well successfully sue you to have it removed.

There are caveats to the above. For example, do other lots have sheds? How about other structures? Have the sheds or other structures existed for over ten years? If so, then the covenant arguably is legally abandoned.

Since the HOA is currently "administratively dissolved," I doubt there is a president or board somewhere. If a President or Board existed, then it would not have let the HOA remain administratively dissolved all these years.

If you stepped up and paid what was owed to the state so that your HOA corporation was once again, in good standing, then you would have a duty to run an election and elect new board members. Under the law, you do not become a director or President simply because you pay the corporation's debts to the state (annual corporation registration fees) and county (property taxes, possibly).

Have you seen bylaws for your HOA?

The Indiana Secretary of State's office may very well have a copy of the HOA corporation's Articles of Incorporation and Bylaws. Obtain a copy of these. If you locate a copy of the Bylaws, report back here. Follow what the Covenants, Articles of Incorporation, and Bylaws say, to the letter.

By my reading, your HOA is not subject to the Indiana HOA Act. This is because the act came into existence only in 2009.

Your HOA is, even in its dissolved status, still subject to the Indiana Nonprofit Corporation Act.

Are there ponds within the boundaries of this HOA? If so, who legally is responsible for maintaining them? Again, this may be a question for the county clerk staff.

You spoke of protecting the community. The reason for my earlier questions is that, if there is anything that the HOA corporation owns (like a pond, park, signs, drainage system et cetera) then the corporation may very well need liability insurance. If liability insurance is not maintained, and someone gets hurt, then the victim could go after the individual homeowners.

I am not an attorney. What I wrote above is preparation you should consider doing before meeting with an attorney. I expect an opinion from the attorney about whether you can build the shed and not risk litigation from neighbors now or in the future will cost you $1000 to $5000. The more research you do with the Indiana Secretary of State and County Clerk, the less you may have to pay in attorney fees.

I forgot to respond to the rest of your post. No, I haven't seen the bylaws for my HOA. They were not available to me. My realtor was able to only find the original building covenants when we purchased the house as that's all that was on file and again that doc is from 1993. I can contact the secretary of state's office to get a copy of the articles of incorporation and bylaws.

Again, I'm still baffled that the covenants imply the possibility of being able to build a shed, fence, whatever, but that it would simply need their approval first, for obvious reasons given the *stated intent* of the covenants in the first place ("for the purpose of enhancing and protecting the values, desirability and attractiveness of the area").

AndreiP (Indiana)
Posts: 8

Posted:

Quote:

Posted By AugustinD on 08/21/2021 7:58 PM
AndreiP, one other thing: You could always just build the shed and roll the dice that no one threatens or files suit because you violated the covenants.

You could seek written approval from all your current neighbors, but even this is not a guarantee that a new neighbor down the road won't object and sue you.

If this is an inexpensive shed, that is relatively attractive, then maybe all will be fine. If someone objects and files a lawsuit against you, then you can proceed from there and decide how much time and money you want to spend defending your shed.

At present, I respectfully disagree with DouglasK1. If there's no board and no committee, then you do not have an entity to whom you can submit an application. Therefore it's not fair to say that "you submitted an application."

The shed I'm looking at will cost me $13k to put in. It perfectly matches the house, even the roof pitch and color scheme. It's a high end TuffShed Premier Pro Tall. Definitely an attractive shed, and definitely well within the "for the purpose of enhancing and protecting the values, desirability, and attractiveness of the area," especially since it would allow cars to be parked in the garage instead of a lawnmower. Furthermore, there are three other neighbors (that I know of) that also strongly desire a shed for the exact same reasons.

Is it even legal for an HOA to require approval when it is impossible for approval to be obtained?

MaxB4
Posts: 3,513

Posted:

I would fiollow Douglas's advice and one other thing. If there is no Board, there probably no Bulding Committee, but there might be an agent still on file. If so, send them the appliciation and wait the 30 days. Even if there was an HOA with a governing body, if your neighbor didn't like your shed they could still sue you even if the Board gave their blessing.

AndreiP (Indiana)
Posts: 8

Posted:

Quote:

Posted By MaxB4 on 08/21/2021 9:27 PM
I would fiollow Douglas's advice and one other thing. If there is no Board, there probably no Bulding Committee, but there might be an agent still on file. If so, send them the appliciation and wait the 30 days. Even if there was an HOA with a governing body, if your neighbor didn't like your shed they could still sue you even if the Board gave their blessing.

Worth noting that my realtor was advised by Porter County that if there is no building committee, that the authority to permit structures to be built falls back on the county. This exact same thing happened to my own realtor's subdivision (which frankly is nicer and larger than mine, with all houses USED starting at $500k). The builder abandoned the subdivision, nobody kept up with the HOA, and people started getting permits to do work through the county instead. I know all of my neighbors that have visibility to my property and they all support my adding a shed. The one that would see it isn't going anywhere any time soon as he just moved in 2 years ago and just finished remodeling so he could retire there. Just thinking out loud here.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Everyone is concerned about the shed, and I'm like: "There is a POND!!? That's not being maintained!!? In a dissolved HOA??? Is this on common area? Who insures this pond, and what happens if somebody drowns in it?"

Getting this HOA back on solid legal and financial footing should be the first order of business, and it should happen yesterday.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By AndreiP on 08/21/2021 9:04 PM

Is it even legal for an HOA to require approval when it is impossible for approval to be obtained?

-- It is not the HOA per se that requires approval. Instead, it is the contractual agreement that you have with your fellow owners that requires approval by a certain committee, as described in the covenants.

-- You have a contract with your fellow owners, and this contract says no structures may be built unless xyz happens. XYZ is not happening, hence you cannot build the structure.

-- Would a court say that this term of the contract unenforceable because it is say, "unconscionable"? From my reading of the case law, no, it is not. You have within your power the ability to ask your fellow HOA members to put the HOA corporation back into good standing and elect a board, who I expect then have authorization under the covenants or the state nonprofit corporation statute to appoint a building committee. Why do you have to do all this work? Because when you bought the lot, you had proper notice of this contract (the covenants) that you have with all your neighbors. When you took title to this home and lot, you agree to the terms of this contract with your neighbors. So did the neighbors. The terms say this Building Committee calls the shots on approval. It is within your power to get this Building Commitee re-established.

-- You keep writing of the HOA as though it were some entity that makes decisions, pursuant to the covenants, without any say by your neighbors and you. This is mistaken thinking. Depending on what sort of decision is to be made, the HOA corporation is represented by either a Board elected by the membership; the membership itself; or an agent that the Board authorizes pursuant to the covenants. Either way, the members (you and your fellow neighbors) directly or indirectly determine how decisions are made. Members of a HOA are equivalent to, for one, shareholders in a publicly traded corporation. Members of a HOA have many rights.

-- One of these rights typically is amending the covenants. Is there a section stating how the CC&Rs can be amended? Usually a vote of the owners must happen, and a certain super-majority must agree to amend. Is it possible you have enough neighbors to amend your covenants?

-- I suspect that whoever is telling you that, in the absence of a HOA Board and this HOA Building Committee, the County gets to decide whether you can have a structure is miscommunicating. Nationwide, covenants that are more restrictive than a county ordinance trump the ordinance. For example, suppose a County ordinance permits any non-residential structure on residential property that is under 50 feet in height. Suppose a HOA that is within the boundaries of the county has a covenant that states all non-residential structures on lots must be under 15 feet in height. What is allowed on homes within the HOA, structures up to 50 feet or 15 feet in height? The answer is: Only structures that are up to 15 feet in height. I suspect who ever told you that the County gets to decide really meant that whatever you build on your lot has to comply with county ordinances and covenants alike, and then leaped (mistakenly IMO) to the opinion that a dissolved HOA means what you wish it would mean.

-- I could write more about how to proceed in the absence of Bylaws, using the state's Nonprofit Corporation Act but will hold off for now. Ask me for more info on this point, and I will share my thoughts.

-- One home having a structure that does not have approval is not going to cut it, in my experience, when it comes to arguing the covenant on approval of structures by the building committee is abandoned.

-- From my reading for years about covenants, including much case law, "intent" of a contract might be considered (with other things) only when the terms of the contract are ambiguous. I do not feel that the covenant about structures is ambiguous. If you want to argue more about this, do take your arguments to an attorney. As I said earlier, I post my thoughts only to help prepare you for a meeting with an attorney.

-- Any attorney with whom you meet had better be smart enough to know that a dissolved corporation does not mean the covenants dissolve and does not mean any property, like this pond, is now deeded, say, to the county. If county records show the HOA corporation owns the pond (or land on which it sits), the HOA corporation, even in its presently "dissolved" state, still owns the pond and is still very much potentially liable for any injury the pond may cause to others, from flooding to drowning to algae blooms to whatever. "Dissolved" does not mean what a lot of newbies (attorneys or non-attorneys) think it means. State statutes are very clear that a dissolved corporation continues to have standing to be sued and more, for one.

-- Regarding the pond: I know full well that this is not your first concern. But if this pond is legally titled to the HOA corporation, or the covenants speak of the HOA corporation having the maintenance responsibility for the pond, then the stakes start getting high. Listen to CathyA3. What she raises is exactly what is on my mind (and no doubt the minds of many other folks, who have served as HOA directors, who post here). Depending on what the covenants say, liability insurance may be critical here. (And I get that you do not want to hear about this. But this forum is about being thorough and helping folks make decisions about their HOAs. You can ignore the comments here on the pond. This is your choice. I am posting for the archives and so future readers as much as I am you. Depending on what the covenants say, the pond may be a big legal deal. Your neighbors and you may very well not have your back sides covered at present.)

-- I hear your thinking out loud. You asked for input. I am offering my opinion on the legalities here and the risk of someone suing you. I'd say you should figure out how much risk you want to take; how much work you want to do; how much money you want to spend; and then consulting an attorney specialized in HOA law as desired or not desired.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By AugustinD on 08/22/2021 6:43 AM

-- Would a court say that this term of the contract unenforceable because it is say, "unconscionable"? From my reading of the case law, no, it is not.

I meant to write, here before 10 AM:

Would a court say that this term of the contract is unenforceable because the term is say, "unconscionable"? From my reading of the case law, no, this contractual term is not unconscionable. This contractual term is enforceable, meaning your neighbors likely could prevail in a suit against you to remove any shed you built with the HOA currently dissolved and not having a board.

AndreiP (Indiana)
Posts: 8

Posted:

Quote:

Posted By AugustinD on 08/22/2021 6:43 AM

Posted By AndreiP on 08/21/2021 9:04 PM

Is it even legal for an HOA to require approval when it is impossible for approval to be obtained?

-- It is not the HOA per se that requires approval. Instead, it is the contractual agreement that you have with your fellow owners that requires approval by a certain committee, as described in the covenants.

-- You have a contract with your fellow owners, and this contract says no structures may be built unless xyz happens. XYZ is not happening, hence you cannot build the structure.

-- Would a court say that this term of the contract unenforceable because it is say, "unconscionable"? From my reading of the case law, no, it is not. You have within your power the ability to ask your fellow HOA members to put the HOA corporation back into good standing and elect a board, who I expect then have authorization under the covenants or the state nonprofit corporation statute to appoint a building committee. Why do you have to do all this work? Because when you bought the lot, you had proper notice of this contract (the covenants) that you have with all your neighbors. When you took title to this home and lot, you agree to the terms of this contract with your neighbors. So did the neighbors. The terms say this Building Committee calls the shots on approval. It is within your power to get this Building Commitee re-established.

-- You keep writing of the HOA as though it were some entity that makes decisions, pursuant to the covenants, without any say by your neighbors and you. This is mistaken thinking. Depending on what sort of decision is to be made, the HOA corporation is represented by either a Board elected by the membership; the membership itself; or an agent that the Board authorizes pursuant to the covenants. Either way, the members (you and your fellow neighbors) directly or indirectly determine how decisions are made. Members of a HOA are equivalent to, for one, shareholders in a publicly traded corporation. Members of a HOA have many rights.

-- One of these rights typically is amending the covenants. Is there a section stating how the CC&Rs can be amended? Usually a vote of the owners must happen, and a certain super-majority must agree to amend. Is it possible you have enough neighbors to amend your covenants?

-- I suspect that whoever is telling you that, in the absence of a HOA Board and this HOA Building Committee, the County gets to decide whether you can have a structure is miscommunicating. Nationwide, covenants that are more restrictive than a county ordinance trump the ordinance. For example, suppose a County ordinance permits any non-residential structure on residential property that is under 50 feet in height. Suppose a HOA that is within the boundaries of the county has a covenant that states all non-residential structures on lots must be under 15 feet in height. What is allowed on homes within the HOA, structures up to 50 feet or 15 feet in height? The answer is: Only structures that are up to 15 feet in height. I suspect who ever told you that the County gets to decide really meant that whatever you build on your lot has to comply with county ordinances and covenants alike, and then leaped (mistakenly IMO) to the opinion that a dissolved HOA means what you wish it would mean.

-- I could write more about how to proceed in the absence of Bylaws, using the state's Nonprofit Corporation Act but will hold off for now. Ask me for more info on this point, and I will share my thoughts.

-- One home having a structure that does not have approval is not going to cut it, in my experience, when it comes to arguing the covenant on approval of structures by the building committee is abandoned.

-- From my reading for years about covenants, including much case law, "intent" of a contract might be considered (with other things) only when the terms of the contract are ambiguous. I do not feel that the covenant about structures is ambiguous. If you want to argue more about this, do take your arguments to an attorney. As I said earlier, I post my thoughts only to help prepare you for a meeting with an attorney.

-- Any attorney with whom you meet had better be smart enough to know that a dissolved corporation does not mean the covenants dissolve and does not mean any property, like this pond, is now deeded, say, to the county. If county records show the HOA corporation owns the pond (or land on which it sits), the HOA corporation, even in its presently "dissolved" state, still owns the pond and is still very much potentially liable for any injury the pond may cause to others, from flooding to drowning to algae blooms to whatever. "Dissolved" does not mean what a lot of newbies (attorneys or non-attorneys) think it means. State statutes are very clear that a dissolved corporation continues to have standing to be sued and more, for one.

-- Regarding the pond: I know full well that this is not your first concern. But if this pond is legally titled to the HOA corporation, or the covenants speak of the HOA corporation having the maintenance responsibility for the pond, then the stakes start getting high. Listen to CathyA3. What she raises is exactly what is on my mind (and no doubt the minds of many other folks, who have served as HOA directors, who post here). Depending on what the covenants say, liability insurance may be critical here. (And I get that you do not want to hear about this. But this forum is about being thorough and helping folks make decisions about their HOAs. You can ignore the comments here on the pond. This is your choice. I am posting for the archives and so future readers as much as I am you. Depending on what the covenants say, the pond may be a big legal deal. Your neighbors and you may very well not have your back sides covered at present.)

-- I hear your thinking out loud. You asked for input. I am offering my opinion on the legalities here and the risk of someone suing you. I'd say you should figure out how much risk you want to take; how much work you want to do; how much money you want to spend; and then consulting an attorney specialized in HOA law as desired or not desired.

Regarding the pond; there are several homes that back up to it. Mine isn't one of them. This shows the layout: https://www.google.com/maps/@41.4502943,-87.1369318,336m/data=!3m1!1e3

Ok, I think I understand what you're saying here. The covenant requires that permission be obtained. Permission cannot be obtained since the building committee (consisting of the original developers) is no longer available. However, the covenants do provide for an HOA in the last section of the covenants to be created by that developer, acting on behalf of owners and future owners of the subdivision. Therefore, the HOA then would have the authority to approve or deny such structures being added. So what you're saying is, since the HOA no longer exists, its president and secretary no longer reside in the community and have abandoned the HOA, I can ask my fellow homeowners to put the HOA back into good standing and appoint a building committee, which would involve paying all applicable fees. Now, what if they decline to do so? Then what? How would this building committee be appointed? What if all of the homeowners are not available to provide representation or do not respond to the request in a timely fashion?

There is no section in the covenants regarding amendments. My understanding is that in Indiana, this means that 100% of property owners would be required to make amendments.

I understand your posts are here to prepare me to speak to an attorney, and I do greatly appreciate the advice and effort you've put into helping me here. My response probably shows some of my general frustration of this circumstance since apparently putting in a shed might be significantly more work (and possibly expense) than initially anticipated.

Regarding the part where the county gets to decide, that was not misunderstood. The exact scenario was cited to be commonplace in this region; that the covenants cite that a homeowner needs to obtain approval from a building committee to add a structure to the property, that the building committee has since moved on from the community and is not available for contact, and that the HOA is effectively dissolved and without representation. In this case, the covenants do not place any restrictions on any structures with the exception that fences cannot be greater than 6 feet tall unless approved by the building committee. The only clause here is that it needs to be approved by the building committee. The one that was acting in 1993. Note that the HOA was created a month after the covenants were published.

I would like to hear more about how to proceed in the absence of bylaws.

I can return to the topic of the pond if needed, but I can also express that concern to the homeowners that are adjacent to it to promote the re-instatement of the HOA corporation should I decide to pursue that path. As noted, it isn't my primary concern as my property isn't adjacent to it and it is not available for public access.

I've already looked up a couple of real estate attorneys in the area, one of which offers a free consultation. I will be contacting them on Monday.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By AndreiP on 08/22/2021 7:25 AM

Regarding the pond; there are several homes that back up to it. Mine isn't one of them. This shows the layout: https://www.google.com/maps/@41.4502943,-87.1369318,336m/data=!3m1!1e3

Your home not backing up to any of the ponds does not mean you do not have an 'ownership interest' in the pond. As I indicated above a couple times now, the question is who has title to the pond and who has the maintenance responsibility for the pond. The answers to these questions likely lie in either the covenants; the plats recorded with the county; your deed or your neighbor's deeds. If the HOA has title to the pond or has the maintenance responsibility for the HOA, then you likely have an ownership interest and could be liable for any damage, to property or life, that the pond causes.

Quote:

Ok, I think I understand what you're saying here. The covenant requires that permission be obtained. Permission cannot be obtained since the building committee (consisting of the original developers) is no longer available.

The covenant also says 'No structures allowed unless... '

Quote:

However, the covenants do provide for an HOA in the last section of the covenants to be created by that developer, acting on behalf of owners and future owners of the subdivision. Therefore, the HOA then would have the authority to approve or deny such structures being added. So what you're saying is, since the HOA no longer exists, its president and secretary no longer reside in the community and have abandoned the HOA,

Stop right there for a minute. These people you keep referring to as President or Secretary are not the President or Secretary if they were not properly appointed as officers (President, VP, Secretary, Treasurer) by the HOA Board, with said Board having been properly, lawfully elected by the HOA's owners pursuant to the Bylaws, or in the absence of the Bylaws. I will post more on Bylaws in a bit, again, mostly in preparation for meeting with an attorney.

Quote:

I can ask my fellow homeowners to put the HOA back into good standing

I would first suggest that you, personally by yourself, ask the Indiana Secretary of State staff what is needed to put the HOA back into good standing. The state of Indiana may simply want the last 20 years of annual corporate registration fees to restore the HOA to good standing. Or the state will want more than this, like the name of all the HOA Board directors and the address of a "registered agent." If the state wants more than money and has forms that need to be completed, you may have to get the owners together to make things happen.

Quote:

and appoint a building committee, which would involve paying all applicable fees. Now, what if they decline to do so? Then what?

You either (1) go get an attorney's advice; or (2) accept that you cannot build the shed; or (3) look for a provision in the covenants that let's you seek an amendment, despite the corporation being dissolved and see if you can get the votes to amend. Though if you go the latter route (3), I again urge using an attorney.

Quote:

ow would this building committee be appointed? What if all of the homeowners are not available to provide representation or do not respond to the request in a timely fashion?

In my experience, here as you are stuck thrashing around in highly turgid, muddy, legal waters trying to get some cooperation from your fellow neighbors, A non-response or untimely response is a "no vote."

As you noted, I agree that the pond may work to your advantage here. If the pond belongs to the HOA corporation, or the HOA corporation has the maintenance responsibility for the pond, you could cleverly send a letter to the neighbors indicating your concerns about the absence of a board and the implications of all having an ownership interest, and so potential liability for, the pond, along with any other land the corporation owns.

It's a lot of work.

Quote:

There is no section in the covenants regarding amendments. My understanding is that in Indiana, this means that 100% of property owners would be required to make amendments.

I hear you. I advise obtaining a copy of the HOA corporation's "Articles of Incorporation." The Indiana Secretary of State should have a copy for you. See if the Articles of Inc. say anything about amending the CC&Rs.

I looked at the Indiana Nonprofit Corporation Act some on this point (amending the CC&Rs). But then realized that the latter statute concerns nonprofit corporations in general. HOA corporations are a sub-category of nonprofit corporations, with the unique feature that covenants are a part of the mix (whereas not all nonprofit corporations have covenants to consider).

Maybe one could try to amend the Articles of Incorporation, per what the Articles of Inc and the nonprofit corporation statute say? Now this is getting beyond my experience. You might want to glance at https://www.lawserver.com/law/state/indiana/in-code/indiana_code_title_23_article_17_chapter_17 and see what it says about amending the Articles; how many have to vote to amend, and so on. Then have this double checked by an attorney. I am not sure the latter link is up-to-date. Amendments to statutes happen and sometimes are not on the sites I pull up quickly with a search.

Quote:

I understand your posts are here to prepare me to speak to an attorney, and I do greatly appreciate the advice and effort you've put into helping me here. My response probably shows some of my general frustration of this circumstance since apparently putting in a shed might be significantly more work (and possibly expense) than initially anticipated.

Yes, unless you have non-litigious neighbors (and you might), in short this really sucks eggs for you and others.

Plus as I think you are now understanding at least somewhat, the pond may be a risk to you personally, if the covenants say the HOA corporation owns it or has the maintenance responsibility for it.

I believe one of the leading causes of legal disputes nationwide is drainage of land. City/county Land Use Departments spend extraordinary time helping developers and land owners meet the city/county code requirements for drainage. We are talking about a helluva lot of regulation of land when it comes to drainage. Even with all the regulation, flooding that causes damage happens. Subsequently, lawsuits may be threatened, and the city/county may require adjustments to drainage designs, et cetera.

Quote:

Regarding the part where the county gets to decide, that was not misunderstood. The exact scenario was cited to be commonplace in this region; that the covenants cite that a homeowner needs to obtain approval from a building committee to add a structure to the property, that the building committee has since moved on from the community and is not available for contact, and that the HOA is effectively dissolved and without representation. In this case, the covenants do not place any restrictions on any structures with the exception that fences cannot be greater than 6 feet tall unless approved by the building committee. The only clause here is that it needs to be approved by the building committee. The one that was acting in 1993. Note that the HOA was created a month after the covenants were published.

You have the covenants in front of you. I do not. The question is whether you are reading the covenants correctly, with an eye to legalities, and considering related statutes and case law as you do. As I post here now and then: There's a reason attorneys spend three years in law school; have to pass the bar exam; and to have any competence, work under the supervision of experienced attorneys for a few years.

Quote:

I would like to hear more about how to proceed in the absence of bylaws.

See my subsequent post(s).

I really hate that I am sitting here saying, "Prepare some, then go see a land use attorney or HOA specialized attorney." But if I did not recommend this, then I would be dishonest.

FWIW, the issues you are raising lead the way for why many go around saying, "I hate HOAs." If you want to blame anyone for what is a sad situation here, blame the cities and county governments and ordinances that often require that a developer write covenants that require a HOA corporation, a board, et cetera. For several decades now, it's been about saving cities and counties money by transferring responsibilities to HOA corporations.

I suggest: Keep track of whatever you pay an attorney, noting especially anything you pay to help put the HOA corporation back in good standing, and run a lawful election. If down the road, you land on the board, then you could motion for reimbursement. If a board majority agrees, then you could in theory be reimbursed for some of your HOA fees. You might want to even break down the discussion with the attorney, very formally, with the attorney noting how much time he/she spent on reviving the HOA corporation, electing directors et cetera, and how much time he/she spent answering concerns about your specific lot. Granted there is overlap. Still, try.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I'm sorry, I went off topic with the pond. I don't think it affects the shed issue. Rather it's a significant liability issue if this pond is on common area (ie. land owned by the HOA and not by an individual owner). If the HOA's corporate status is no longer active, it means that the HOA can't obtain insurance on the common area, which leaves homeowners/HOA members jointly and personally liable if someone gets hurt and sues the HOA. Ponds/lakes/etc. that aren't being maintained are big issues for any HOA.

But as I said, it shouldn't affect any decisions about the shed since I assume the shed would sit entirely on your own lot.

AndreiP (Indiana)
Posts: 8

Posted:

I will ask try to find out more about the pond. I did speak to my neighbor across the street today, and he mentioned that he had the fence put in and that the previous owner even had a gazebo built on the lot, well after 2001. He personally said he has no problem with it but mentioned the only thing he could suggest is that I go around and talk to all of the neighbors to hear what they have to say.

I understand the concern regarding the pond, and that may simply be an acceptable risk for some. There is no mention of the pond in the covenants or who maintains or owns it. I assumed that the pond and any responsibility for it was split evenly among the residents surrounding it. Also worth noting that the HOA never collected any fees even when it did exist.

You may be right that those people weren't appointed. I will know more once I get the articles of incorporation for the subdivision.

Does the HOA need to be back in good standing with the state in order to function? What can the HOA functionally do if it is not reinstated? What I'm trying to figure out is if the HOA needs to be in good standing with the state in order for the community to elect a new board and building committee.

I appear to have non-litigious neighbors from the ones I have talked to so far. I can talk to the rest of them as well. They are all very accommodating, but I will have to speak to them more in general.

I'm trying to get as much information here (which again I appreciate immensely) before I go talk to an attorney, since that will inevitably cost me significant amounts of money, and the risk may be so small that it may not even be worth that. Keep in mind that this HOA has not been active for 20 years. I will keep records of everything I do, so thank you for that. I don't think that the subdivision will be interested in re-instating the HOA, on the basis that it would require an expense (even shared) to do so, for something they have all lived happily without for two decades.

AugustinD
Posts: 3,698

Posted:

Suggestions for How To Proceed When a HOA's Bylaws Appear To Be Missing in Indiana:

(Below, to get to a reliable copy of the Indiana Nonprofit Corporation Act, also known as Indiana Code Title 23, Article 17, go to http://iga.in.gov/legislative/laws/2021/ic/titles/023#23-17 .)

1.
Contact the Indiana Secretary of State (corporations yada division) and see if the SofS maybe has a copy of the bylaws on file. Indiana does not require Bylaws to be on file. Be prepared for this to be a dead end.

2.
Obtain a copy of the Articles of Incorporation from the Indiana Secretary of State. See if directors may be elected lawfully using what the Articles of Incorp say. This is unlikely, but sometimes Articles of Incorporation are quite detailed. The Articles of Incorp are worth checking. Also it is worth having your own copy of the Articles of Incorporation. "The Articles," as they are often known, are legally more powerful in many respects than the Bylaws. See also Indiana Code section 23-17-12-1., discussing other powers the Articles of Incorp might possibly provide for establishing a Board.

3.
Contact people and law firms listed at the end of the covenants or Declaration. See if perhaps they have a copy of the Bylaws.

4.
The Indiana Nonprofit Corporation Act requires that a corporation have a Board. See Indiana Code section 23-17-12-1. at http://iga.in.gov/legislative/laws/2021/ic/titles/023#23-17-12

5.
The Indiana Nonprofit Corporation Act further states that:

"If it is impractical or impossible for a corporation to call or conduct a meeting of the corporation's members, delegates, or directors or otherwise obtain their consent in the manner prescribed by the corporation's articles of incorporation, bylaws, or this article, upon petition of a director, an officer, a delegate, a member, or the attorney general the circuit or superior court of the county where a corporation's principal office is located may order that a meeting be called or that a written ballot or other form of obtaining the vote of members, delegates, or directors be authorized in a manner that the court finds fair and equitable under the circumstances."

This means you, AndreiP, can request a court to order an annual meeting of the HOA's members for the purpose of electing directors. You would tell the court that (1) statute requires a board of directors; (2) you believe that the bylaws and only the bylaws state how directors are to be elected; (3) statute says to elect directors using the bylaws; (4) a copy of the bylaws cannot be found ("Please Your Honor, we have tried everything. Help us."); (4) more pertaining to quorum requirements. The nonprofit corporation act is annoyingly silent on quorum. The Indiana HOA Act (applicable to HOAs formed after 2009) is not applicable. Even if the 2009 Indiana HOA Act were applicable, it too is annoyingly silent on quorum. AndreiP, you have to figure out a number for quorum that is reasonable and that the judge would approve, solely for this one meeting to elect a board of directors, said board being required by the statute. AndreiP to the Court: "In other words, your honor, the HOA needs to get the ball rolling again. If the quorum number is too high, the proposed meeting of member may not have enough for a lawful election. If too low, then this could be unfair to members. I think I can get at least eight of the 15 the members to appear in person or by proxy at a meeting of the members. 50+% is a commonly required number for quorum, per ______ ." (5) more about how exactly you would send notice to members of the meeting. Sending the notice certified mail, return receipt requested is likely best in this case. Ten bucks or so per mailing.

6.
Once the HOA has a lawful board of directors, then under the aforementioned Indiana Nonprofit Corporation Act section, the Board can (1) go hire an attorney; and (2) use said attorney to possibly petition the court to amend the Bylaws, pursuant to Indiana Code Section 23-17-12-1 and 23-17-18-1.

7.
Be aware that the Indiana Nonprofit Corporation Act Section 23-17-22-5. also states in part:
"Dissolution of a corporation does not do the following:

(1) Transfer title to the corporation’s property.

(2) Subject the corporation’s directors or officers to standards of conduct different from those under this title.

(3) Change the following:

(A) Quorum or voting requirements for the corporation’s board of directors or members.

(B) Requirements for selection, resignation, or removal of the corporation’s directors or officers.

(C) Requirements for amending the corporation’s bylaws.

(4) Prevent commencement of a proceeding by or against the corporation in the corporation’s corporate name.

(5) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution.

(6) Terminate the authority of a registered agent.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By AndreiP on 08/22/2021 9:03 AM
I understand the concern regarding the pond, and that may simply be an acceptable risk for some. There is no mention of the pond in the covenants or who maintains or owns it.

Go to the county and ask for what is called "the plats." Ask the county staff for help in determining who has ownership and maintenance responsibility for the pond. Bring your covenants with you, if only to show the staff that the covenants are silent on the point.

You are right to inquire about the powers of a dissolved corporation. They are rather extensive. To start getting an idea of how "dissolved" does not come anywhere near to terminating and emasculating a corporation, see the Indiana Nonprofit Corporation Act, Section 23-17-22, titled "General Dissolution." Just google on

Indiana 23-17-22

and a number of sites will come up that will be good enough for now.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By AndreiP on 08/22/2021 9:03 AM
Keep in mind that this HOA has not been active for 20 years.

How could I possibly forget the seeming injustice of folks nationwide routinely being stuck with re-establishing a HOA that, by all appearances to a layperson, appears to have been terminated and "not applicable," by these folks' laypersons' understanding.

Meanwhile respectfully, please keep in mind that "covenants run with the land," meaning so help everyone god and unless lawfully amended, one is stuck with the covenants. Look for this phraseology ("run with the land") in your own covenants. Why do you think covenants are recorded with the county? It's because such county recordings serve as public notice (according to the courts) to all prospective buyers (and others) to beware.

Covenants are a contract. A deal's a deal. If you're shocked to read this, so are 95% of owners of lots subject to a HOA; 94% (sic) of HOA directors.

MaxB4
Posts: 3,513

Posted:

And all this for a frigging shed.

AugustinD
Posts: 3,698

Posted:

Yup. It really argues for rolling the dice. Who knows? Maybe the odds are in the OP's favor.

On the other hand, from the looks of the homes in this HOA, I can see neighbors lawyering up when they see something they do not like. Then all hell breaks loose. And after a couple years of litigation without an end in site, the winners are: The attorneys.

Maybe install an inexpensive $1000 shed to 'check the pulse' of the neighbors? Granted a Tuffy brand shed is likely not the OP's or his/her neighbors' taste. It might even raise the neighbors' hackles more than the $13,000 shed.

BancsS
Posts: 269

Posted:

Quote:

Posted By CathyA3 on 08/22/2021 8:28 AM
I'm sorry, I went off topic with the pond. I don't think it affects the shed issue. Rather it's a significant liability issue if this pond is on common area (ie. land owned by the HOA and not by an individual owner). If the HOA's corporate status is no longer active, it means that the HOA can't obtain insurance on the common area, which leaves homeowners/HOA members jointly and personally liable if someone gets hurt and sues the HOA. Ponds/lakes/etc. that aren't being maintained are big issues for any HOA.

But as I said, it shouldn't affect any decisions about the shed since I assume the shed would sit entirely on your own lot.

Good for you Cathy, to bring up the pond issue. No insurance would absolutely mean the HOA members/homeowners would be personally liable if someone gets hurt or drowns. This should take priority over the desire for a shed. You could also take out umbrella insurance as an addition to your homeowner's insurance. Protect yourself first and foremost unless you have an enormous bank account.

I like Augustin's idea of putting up a less expensive shed and see where that leads with your neighbor.