HOA selling Club House/Pool

My neighborhood is over 30 years old. It is no longer mandatory for homeowners to be members of the HOA or pay dues. Due to previous mismanagement, our HOA does not have the money to repair the pool or the clubhouse. Currently, we do not have a management company and with a run down clubhouse with an empty pool, the HOA does not have much to offer. Our property values are not going to change much, with or without a HOA in my opinion. We have a lot of renters who have run down the neighborhood.

***Anyway, my question is, can the HOA sell the property with the clubhouse and pool and keep the money? Our HOA tells me the money will be in the HOA account and will be used to “fix up” the neighborhood. They want to sell the property to a church.

For some reason, I smell a rat.

Your input is greatly appreciated.

Dan,

I suggest you look up the State nonprofit corp statutes and look for an article on "dissolution". This will tell you the procedure that must be followed to dissolve a nonprofit corp. You will have to dispose of all assets, for one thing. Is there anything else besides the pool and the clubhouse -- any other common areas. I would also check with the city/county regarding any common areas you are resp. for maintaining. As Michele says, you may not be able to sell them. In AZ most common areas are water retention basins which cannot be sold and used for something else. And that, in itself, makes it almost impossible to dissovle an HOA.

Now, with regard to your question concerning the distribution of proceeds from the sale of the property. According to the AZ statute, the BOD would have to prepare articles of dissolution and state the disposition of all assets. If no provisions have been made in the gov. docs for distribution of assets on dissolution, the assets are transferred to the members of the corp. If this is also TX law, then I would think the members would all have to agree to use the money to improve the neighborhood.

I wouldn't be too sure of that, Susan. The church already knowing or investigating whether they can or are able to purchase a certain plot of land.

We just had a huge scandal here where a church was sold property that wasn't legally available for sale.

In addition you to state laws, you need to read your CC&R's carefully as there should be a section on what to do with the property. If the money is returned to the H/O, IMHO it should be split among the people who have supported the center and pool even when they didn't have to but that would be up to the CC&R's. Also don't forget to check with a tax adviser if it's returned as you will probably have to pay taxes on the money.

I don't know while you think we're at odds, you mentioned state laws; I just suggested that they also check their CC&R's. Besides the corporate return if the money is disbursed to the H/O as the poster wants I was just pointing out there would be personal tax liabilities as well. As Bill Cosby explained to Theo on the Cosby Show: "The government comes for the regular people first."

Many thanks to all that responded! Everyone’s advice is critical.

The reason I suspect foul play is because the leader of the church who wants to buy our HOA property is the president of our HOA! He will benefit the most from this deal, especially buying at the bottom of the housing market. So far, he has been leasing our HOA property on weekends. I think he is intentionally trying to sell the property to his church/himself, rather than try to fix the pool. The property is not a lost cause and they would have a lot more members if they got the pool running again, and more cash flow if run wisely.

If our HOA does sell their property, what is the point of having an HOA? This neighborhood is over 30 years old and the HOA has no authority to enforce any rules. Once the clubhouse and pool are gone, our HOA will have little or no cash flow. I believe selling, rather than fixing is a huge loss for our neighborhood. The pool and clubhouse, was a positive buying point for us in 2002.

Thanks to all,
Dan

I took it upon my self to get a copy of our HOA property deed. It reads:

“The property herein described is to be used forever as a recreational area, and it is to be enjoyed for such purpose by the members of the High Country Homeowners Association generally. If any part of the property herein conveyed shall not be used and maintained for recreational purposes, or if any part of the property ceases to be used for recreational purposes, or if any part of the property is used for purposes inconsistent with recreational purposes, then all the right, title and interest in and to the property and to the improvements thereon shall revert to and revest in Grantor, it successors or assigns, as fully and completely as if this instrument had not been executed.”

To me, “forever” means the board cannot sell the property. However, it can go back to the builder, and then the builder can do what they will.

***Any opinions of interpretation of what this paragraph means?

Thanks again,
Dan

Dan,

The "grantor" is the person who sells or transfers title of the property. The "grantee" is the person who owns the property. So, I would agree with your assesment in that the property would revert back to the developer if the use where to change. But the assn could sell the property to the Church if the Church is going to keep it for recreational use. That clause would remain in the deed upon sale, IMO. Of course I am not an attorney and this is just my opinion.