Some residents wants to dissolve the HOA

KM8 (Virginia)
Posts: 2

Posted:

Hello, I have recently gotten involved with the HOA I moved into about a year ago. The neighborhood is small (<50 homes) and a subset of neighbors would like to dissolve the HOA. The HOA covenants contain the following clause:

"""
These covenants are to run with the land and shall be binding on all parties and all person claiming under them for a period of twenty (20) years from the date these covenants are recorded, after which time, they shall be automatically extended for successive periods of ten (10) years unless an instrument signed by a majority of the then owners of the lots has been recorded, agreeing to change said covenants in whole or in part.
"""

This is timely as the neighborhood has just recently reached the 20-year point mentioned in this clause. Some neighbors believe this clause means the HOA can be dissolved with a simply majority vote after 20 years. It is not obvious to me this is the case, as it says nothing about invalidating the by-laws and dissolving the HOA would leave behind ~5 acres of common land.

I am trying to find an attorney that is willing to give guidance on how to properly interpret this clause, but thus far have been unable to find one willing to help. In lieu of proper legal advice, and while I continue to search for it, I was hoping to solicit opinions here to see if anyone has thoughts on the intention behind this clause. Can this be used to dissolve the HOA? If that is the case, what would happen to the common land currently owned by the HOA? Has anyone been in a similar situation? From some basic internet research I've noticed that HOA covenants frequently contain clauses similar to the above, but I have not been able to find any cases where this clause was used to dissolve the HOA.

DouglasK1 (Florida)
Posts: 2,046

Posted:

My daughter lives in a subdivision that originally had an HOA. The small amount of property they owned was sold to the county for a few thousand dollars.

Escaped former treasurer and director of a self managed association.

CathyA3 (Ohio)
Posts: 6,299

Posted:

The association attorney is the one to ask about this. But the board has to do the asking - the attorney won't talk to individual homeowners.

I'd be very surprised if the legal underpinnings of your HOA make it that easy to dissolve it. At best it will require amending your governing documents and will require homeowner approval (very likely unanimous approval). It's hard to get a community to agree unanimously about anything unless a situation is so awful that everyone wants relief NOW.

TimB4 (Tennessee)
Posts: 21,059

Posted:

KM8,

Are there any common areas in your Association that the HOA maintains?
Are there any common elements in your Association that the HOA maintains (roads, sidewalks, entrance monuments, signage, playgrounds, street lights, etc.)?
Does the HOA provide any services (trash/recycling pick up, clearing roads of snow, etc.)?
Does the HOA maintain any storm water management sites (lakes, retention ponds, etc.)?

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By KM8 on 10/28/2024 6:35 AM
Hello, I have recently gotten involved with the HOA I moved into about a year ago. The neighborhood is small (<50 homes) and a subset of neighbors would like to dissolve the HOA. The HOA covenants contain the following clause:

"""
These covenants are to run with the land and shall be binding on all parties and all person claiming under them for a period of twenty (20) years from the date these covenants are recorded, after which time, they shall be automatically extended for successive periods of ten (10) years unless an instrument signed by a majority of the then owners of the lots has been recorded, agreeing to change said covenants in whole or in part.
"""

This is timely as the neighborhood has just recently reached the 20-year point mentioned in this clause. Some neighbors believe this clause means the HOA can be dissolved with a simply majority vote after 20 years. It is not obvious to me this is the case, as it says nothing about invalidating the by-laws and dissolving the HOA would leave behind ~5 acres of common land.

I am trying to find an attorney that is willing to give guidance on how to properly interpret this clause, but thus far have been unable to find one willing to help. In lieu of proper legal advice, and while I continue to search for it, I was hoping to solicit opinions here to see if anyone has thoughts on the intention behind this clause. Can this be used to dissolve the HOA? If that is the case, what would happen to the common land currently owned by the HOA? Has anyone been in a similar situation? From some basic internet research I've noticed that HOA covenants frequently contain clauses similar to the above, but I have not been able to find any cases where this clause was used to dissolve the HOA.

Does the development contain any drainage features maintained but the BOA like rention ponds and catch basins?

KM8 (Virginia)
Posts: 2

Posted:

Quote:

Posted By TimB4 on 10/28/2024 11:52 AM
Are there any common areas in your Association that the HOA maintains?

Yes, there's a ~5-acre plot of common land.

Quote:

Posted By TimB4 on 10/28/2024 11:52 AM
Are there any common elements in your Association that the HOA maintains (roads, sidewalks, entrance monuments, signage, playgrounds, street lights, etc.)?

No.

Quote:

Posted By TimB4 on 10/28/2024 11:52 AM
Does the HOA provide any services (trash/recycling pick up, clearing roads of snow, etc.)?

No.

Quote:

Posted By TimB4 on 10/28/2024 11:52 AM
Does the HOA maintain any storm water management sites (lakes, retention ponds, etc.)?

No.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By KM8 on 10/28/2024 12:13 PM

Posted By TimB4 on 10/28/2024 11:52 AM
Are there any common areas in your Association that the HOA maintains?

Yes, there's a ~5-acre plot of common land.

The Association would have to sell or give away the common area prior to disbanding.

Once that is done, the membership would need to amend the covenants to remove everything dealing with the Association.
Examples: Prior approval, assessments, liens, membership, etc.

At the same time, the membership would also have to follow the procedures in the Articles of Incorporation to dissolve the corporation known as HOA, Inc.

Obviously, check with an attorney, as there may be additional requirements I am unaware of.

ElleN (Idaho)
Posts: 1,333

Posted:

Quote:

Posted By KM8 on 10/28/2024 6:35 AM
Hello, I have recently gotten involved with the HOA I moved into about a year ago. The neighborhood is small (<50 homes) and a subset of neighbors would like to dissolve the HOA. The HOA covenants contain the following clause:

"""
These covenants are to run with the land and shall be binding on all parties and all person claiming under them for a period of twenty (20) years from the date these covenants are recorded, after which time, they shall be automatically extended for successive periods of ten (10) years unless an instrument signed by a majority of the then owners of the lots has been recorded, agreeing to change said covenants in whole or in part.
"""

This is timely as the neighborhood has just recently reached the 20-year point mentioned in this clause. Some neighbors believe this clause means the HOA can be dissolved with a simply majority vote after 20 years.

First, in my opinion based on reading much covenant case law, elimination of the covenants would require a unanimous vote of all owners. Why? Because the courts have said that amendments to covenants must be 'fair and reasonable.' Eliminating all the covenants is not reasonable IMO. Why? Because owners who bought into this HOA have a right to expect that the covenants will continue, say the courts, with only reasonable amendments from time to time.

Second, if you want some quick ammo, call the city land use department and ask if city ordinances require HOAs for new developments as part of the terms of city approval. Nationwide this is pretty common. I think this might be another legal hurdle to get over.

Third, when covenants like the above exist, nationwide courts are split on whether amending the Declaration can only occur every ten years. See further discussion at https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/356874/view/topic/Default.aspx

Else I agree that the common area would have to be sold, probably via a unanimous vote as well.

Pound on the likely unanimous vote requirements. Ask the board to get a legal opinion on the matter.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Quote:

Posted By KM8 on 10/28/2024 6:35 AM
Hello, I have recently gotten involved with the HOA I moved into about a year ago. The neighborhood is small (<50 homes) and a subset of neighbors would like to dissolve the HOA. The HOA covenants contain the following clause:

"""
These covenants are to run with the land and shall be binding on all parties and all person claiming under them for a period of twenty (20) years from the date these covenants are recorded, after which time, they shall be automatically extended for successive periods of ten (10) years unless an instrument signed by a majority of the then owners of the lots has been recorded, agreeing to change said covenants in whole or in part.
"""

This is timely as the neighborhood has just recently reached the 20-year point mentioned in this clause. Some neighbors believe this clause means the HOA can be dissolved with a simply majority vote after 20 years. It is not obvious to me this is the case, as it says nothing about invalidating the by-laws and dissolving the HOA would leave behind ~5 acres of common land.

I am trying to find an attorney that is willing to give guidance on how to properly interpret this clause, but thus far have been unable to find one willing to help. In lieu of proper legal advice, and while I continue to search for it, I was hoping to solicit opinions here to see if anyone has thoughts on the intention behind this clause. Can this be used to dissolve the HOA? If that is the case, what would happen to the common land currently owned by the HOA? Has anyone been in a similar situation? From some basic internet research I've noticed that HOA covenants frequently contain clauses similar to the above, but I have not been able to find any cases where this clause was used to dissolve the HOA.

Of course, you need an attorneys so this is just "Peanut Gallery" perspective:

1. If your HOA has passed the 20 year anniversary, then my opinion is the community missed the chance to dissolve the HOA w/ a majority vote. Owners would not maintain a perpetual right to disband if that deadline is missed. The next window opens in 10 years.

2. The second hurdle that the "legal instrument" that would have dissolved your HOA would need the literal signatures of a majority of your property owners (one signature per lot).

3. I would say the more restrictive provisions of CC&R changes are mostly in effect EXCEPT for the once-per-decade allowance for a majority vote to rewrite the HOA rules or disband.

GregoryT1
Posts: 315

Posted:

My opinion is different.

Check on any state law.

Check your docs for discontinuing the HOA.

I am only seeing every ten years that there can be amendments but I am not seeing that means dissolution. I think dissolution is the correct term. That is when I had to get a certificate of dissolution to close down an incorporated company I had. I agree with Ellen there might be wording where if you want to dissolution of the outfit it might mean 100% of the vote.

Checking the docs is vital.

GregoryT1
Posts: 315

Posted:

Hi quick clarifications.

I looked into my docs.

The expression is "Termination". This is done by a deed of revocation. All owners have to agree. That is 100%. Also in there it state owners, holders of mortgages, and holders of liens and that is all owners. Not small item to do. It looks like the group of owners may not be understanding on how things work.