So I Was Trying to Find Some Info...

... about a condo association a few miles away from me, and after much fruitless digging I discovered that they failed to renew their corporate status a couple years ago. The association is officially listed as Dissolved.

I think it would be a real kindness if I were to alert someone, if I could figure out who to contact. This community makes it very hard to find information. There are two townhomes currently up for sale and one that is pending - I guess I could contact the listing agents. Someone needs to be in a screaming panic over this before somebody gets injured on the common elements.

Good point, don't want to scuttle any sales.

I suppose I could send a copy of the info from our Secretary of State's website to the address Google lists as the association's address. I mean, I could be a prospective buyer who's doing her due diligence and who came across the info.

I really hate to let this go because the consequences could be so bad for the owners in that community - although a mean person could view it as the reward for not paying attention to what their board is doing.

Remember when I commented that my main issue with condos and HOAs is that I'm forced into a financial and legal relationship with a bunch of strangers? This is the kind of stuff I'm talking about. Carefree condo living, my foot.

Furthermore... this community's corporate status expired almost two years ago, and homes have been selling all this time. Guess that answers the question about whether or not lenders or title insurers or other interested parties are paying attention to this. The lender in particular probably should pay attention because they want to see proof of insurance, and the common elements in this community have not been insured.

Lord have mercy.

It's probably all a moot point anyway, because I can't figure out how to give anyone the heads up without risking getting sued myself, and I have no desire to be the poster child for good deeds and punishments.

According to the links that ElleN provided, the association still retains a number of powers:

"the corporation shall cease to carry on business and shall do only such acts as are required to wind up its affairs, or to obtain reinstatement of the articles in accordance with section 1701.07, 1701.921, 1785.06, or 5733.22 of the Revised Code, or are permitted upon reinstatement by division (C) of section 1701.922 of the Revised Code, and for such purposes it shall continue as a corporation for a period of five years from the dissolution, expiration, or cancellation."

The phrase "wind up its affairs" is repeated a number of times, and it's clear there is a clock ticking. Unfortunately, the powers needed to wind up affairs are mostly the same ones that allow the association to continue acting as though nothing is wrong. Sorta like Wile E. Coyote walking off the cliff: he's fine until he looks down.

I know I've heard from a number of sources, including some training sessions I've participated in, that allowing the corporate status to lapse is potentially very bad. When we became a client of Big HOA Law Firm, their first acts were checking our corporate status and reviewing our CC&Rs/bylaws for compliance with current state code.

Quote from an article in the LA Times: Ultimately, lacking the proper corporate status potentially puts the board at risk for a variety of liabilities and may make individual titleholders liable for debts or judgments imposed on the association. A corporate status insulates individual directors and owners from direct liability.

Full article: Q&A: Why homeowners can face financial harm if HOAs let their corporate status lapse

Quote from another article: If members voluntarily pay into a fund, good for all of you. But the first time someone becomes late or simply withholds their assessments, the lack of powers from the CC&Rs and the Davis-Stirling Act means nobody can force them to pay their share. ... When a corporation is suspended by the state, it is no longer recognized by the law as existing. It cannot appear in court to defend itself or to pursue a claim.

Full article:HOA Homefront: When is your association deemed ‘dead’?

I suppose things could be different in California, but corporate laws are broadly similar. This would seem like a pretty major issue on which to have a diversity among states. And I'm still baffled that it appears that lenders aren't checking such things. On the other hand, if the lender is planning to sell the mortgage to Fannie or Freddie, somebody else will be left holding the bag if it goes bad. (Remember "toxic assets"? More Wile E. Coyote stuff: everything is fine until it suddenly stops being fine and is Very Bad Indeed.)

I am aware of a certain corporation that voluntarily dissolved in the early 1980s. As of 2018, it still had legal title to "orphaned land" (meaning small strips of land sitting among much larger owned parcels of land) here and there throughout the city. As developers seized on opportunities involving the larger parcels, the orphaned land was often discovered. The developers would negotiate a selling price with the dissolved (but still winding up its affairs) corporation. In at least one case, the county tax assessor did not indicate any taxes were owed, as the orphan land had fallen off its records somehow.

As Cathy indicated, state law matters here. But in general, I do not expect title to land, belonging to a dissolved corporation, to suddenly disappear or revert say to the state.

With a dissolved corporation, but covenants that run with the land, I agree there may be a clash between these two realities (dissolved corporation vs. active covenants). Homeowner associations are taking a risk that legal battles will ensue. However the instant a HOA learns an owner is refusing to pay assessments due to the HOA corporation being administratively dissolved, I believe it's often a pretty simple process to remove the HOA corporation from "administratively dissolved" status.

This happened to the eastern side of the highway in front of the Woodlands area north of Houston many decades ago. Right after that association folded, or had its restrictions lapsed because of that event, my mother and the ex-County Judge brokered the sale of land for the first commercial development there. After that development, the whole area became commercially developed - it almost happened overnight it went so fast.

Any Real Estate agent worth their weight in salt would be able to disclose this to their buyer once the RE
asks for the estoppel letter or inquires on the health of the HOA.