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FarmM (Colorado)
Posts: 1
Posted:
Hello, I'm new here. I've been reading a lot, but thought some direct questions might be in order as you guys seem to know your stuff!

Ten years ago, I bought a property in Larimer County Colorado. Like you've heard a thousand times, we were told at closing that the HOA was not active, no dues were necessary, etc. The 'community' consisted of 19 tracts of land. We don't live out there, just own a piece of land there. I'm quite positive that we did sign covenant documents when we closed, and I somewhat behaved thereafter as though the association still existed, by getting permission to build a barn and paying dues when requested. The association didn't do much for the first few years, but later sent out dues requests to property owners, so I paid.

But then as elected board members moved away or otherwise didn't continue to perform association tasks, I began to see my dues checks return to my account after sitting stale for 90 days. So we would go back and forth a bit from nobody at the wheel, to then getting dues requests all over again.

Eventually the association just fell apart as there was virtually no elected board members anymore as most all of them had sold and moved away without getting replaced. The treasurer was still an owner, but wasn't depositing my dues checks at all, and the post office gate the PO Box to someone else due to nonpayment.

Most recently, within the last 18 months or so, I heard that the HOA dissolved itself. I received a letter from the association, where the letter stated that the association wasn't functioning well, that very few property owners were paying dues, that it had become a burden to those who were in positions on the board, etc. The letter stated that they simply held a quick vote and dissolve the association. There were some concerns about the roads that are supposedly easements along or through these properties, and the concerts were that if the HOA is dissolved, then the easements no longer exist and a property owner could then fence off a road and such. Well those concerns didn't last because the concerned owners sold and moved away.

Now we get to the most recent development; a flood washed out a few of these roads this past summer. This of course caused property owners to ask, "Who is going to rebuild these roads?". So a few of the owners joined together and declared that they've now created a 'Road Association', that will only handle the road maintenance, but will otherwise stay the heck out of everyone's business and let them do as they wish.

So in December I received an email from this new Road Association, asking for dues that are 150% higher than the dues assessed under the former HOA. This pushed me to start looking around to see if this is legit, because I know I never signed any covenant agreement with this new road association.

It appears that in Colorado, the association can't be dissolved by a simple vote like this, but I can't be sure. Please advise.
I'm finding no termination agreement recorded with our county.
The former association is listed as 'delinquent' with the Colorado SOS.
I don't find any newly recorded covenants with the county, or the new association listed with the SOS.

Right now, the new Road Association board is simply moving forward with business to repair the damaged roads and collect these dues. I just don't know if they terminated the former association correctly or created this new road association correctly.

So what's my next step?
CathyA3 (Ohio)
Posts: 6,299
Posted:
These are legal questions that will probably need a lawyer's opinion. But...

* In general, you're correct that there is a process to dissolving an HOA. Your CC&Rs (covenants, conditions and restrictions) may specify the required steps. Some covenants even have an expiration date in them (after 30 years, for example) but this isn't common. In addition, there may be state laws governing community associations that have something to say. But you're correct that this can't be done casually, and generally involves lawyers and paperwork.

* Here's the part where I scare you. Most HOAs are organized as corporations, with elected boards to run the organization and pay the bills. Among other things, this allows the HOA to obtain liability insurance on common areas such as streets and green space. Keeping the HOA's corporate status in effect usually requires periodic filing of a document verifying that the corporation still exists. If your community has been as lackadaisical as you say, it's very possible that nobody has taken care of this. Ditto filing yearly tax returns.

This means your HOA can't obtain insurance. This means that all owners are jointly, personally liable if someone is injured on common area and sues. It also means that the board, such as it is, is no longer covered by directors and officers insurance, making board members personally liable if they get sued. Obviously this is Not Good. And of course the IRS will have something to say. (Personally, though, I'd rather face the IRS than deal with an uninsured injury on my property.)

Having an existing HOA that has allowed its corporate status to lapse is potentially worst case.

So...

Your first order of business is finding out exactly where your community, and you personally, stand in all this. If I were in your shoes, I'd find a lawyer who's well versed in HOA law and at least get a feel for how much of a problem this is. Then depending what I heard, I'd get in touch with the so-called board or even the entire community and lay it on the line. Right now I can't tell whether your community is in big trouble or if this isn't so bad and easily fixed - but the consequences of being overly optimistic can be much worse than those for being overly pessimistic.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Farm

My initial blush is your association just went inactive. It was not dissolved. I think the "Road Committee" is probably a good idea but they would have to follow the Covenants/Bylaws to from one. Can they form one? I say yes.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By CathyA3 on 03/30/2022 11:59 AM

* In general, you're correct that there is a process to dissolving an HOA. Your CC&Rs (covenants, conditions and restrictions) may specify the required steps.
In this vein --

-- Please quote word-for-word what your CC&Rs say about terminating.

-- Please indicate whether the HOA's Declaration states the HOA is subject to the Colorado Common Interest Ownership Act (CCIOA).

-- Please indicate what month and year your HOA was created. The CCIOA has a section on termination that may or may not apply, depending on the year of creation.

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