Forming another association

Started by TammyS2 • 18 replies • 1202 views

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TammyS2 (Indiana)
Posts: 21

Posted:

One other question for anyone; do any of you know anything about just forming another association in conjunction with the one that exists? We were just going to use our current bylaws and covenants, establish another bank account, either using the current tax id number or getting a separate one. Send out a meeting notice and go from there. I doubt anyone would file a lawsuit as we are dealing with a bunch of folks who just want to do things their way and don't want new people invading their meetings or their authority.

GlenL (Ohio)
Posts: 5,491

Posted:

No you can't form another HOA. Better to use the existing documents and take back the existing HOA.

Studies show that 5 out of 4 people have problems with fractions

SusanW1 (Michigan)
Posts: 5,202

Posted:

Tammy - Is your HOA incorporated?
You could no more take over your HOA's corporation's busiess than you could take over the McDonald's corporation.
If your board is not running your HOA the way people want, then replace, recall or get them to resign.

SusanW1 (Michigan)
Posts: 5,202

Posted:

MaryA1 (Arizona)
Posts: 7,043

Posted:

Tammy,

Please explain why you want to form another assn. What would be the purpose of having 2 assns?

BrianB (California)
Posts: 2,820

Posted:

Depending on what you are attempting to do Tammy, the answer could be "no, you can't" to "sure, go ahead. it's a free country".

If you want to form an HOA that 'replaces' an existing one, it can't be done. The McDOnalds analogy is spot on target.

If you simply want to form some other voluntary group of people who feel obligated to pay money for some services you define, then go ahead. However, that "hoa" will in no way reduce their obligations to the legal HOA, which is written into their deed restrictions and titles.

TammyS2 (Indiana)
Posts: 21

Posted:

The association that myself and a few others would form would run by the bylaws and covenants. Then we say, let them do their own thing and we will do ours. We want to make improvements to the roads and such and they will NOT allow it. We want to discuss the topic of a noise ordinance, they don't want that. They want to serve alcohol at all meetings to the point of intoxication, we don't want that. The list goes on why we feel the need to form another assoc.

TammyS2 (Indiana)
Posts: 21

Posted:

Right. My attorney has said, "go for it". As long as people are either paying their dues or have them in escrow, no judge, if there is a lawsuit is going to penalize folks. She said, we just have to show that they are violating and have continued to violate our bylaws as well as covenants.

I would much rather stay as one............I think the proxy voting is something I need to investigate. I am trying to locate Indiana nonprofit law that talks about proxy voting for HOAs. If I can't find it, I will have my attorney get it. I try to do as much as I can on my own, expenses you know.

GlenL (Ohio)
Posts: 5,491

Posted:

Tammy as Brian pointed out you can have something separate but you will still be bound by the original Declarations which run with the land. This means you will still have to pay assessments to them and follow their rules. Your "new" HOA will have zero power unless you can convince people to voluntarily join it and be bound by it. My advice stands: Take back the one you have.

Studies show that 5 out of 4 people have problems with fractions

TammyS2 (Indiana)
Posts: 21

Posted:

Yes I agree. We certainly have been trying to 'take it back'. With the proxy thing I just might get that done. I first have to find the Indiana law for nonprofits where it talks about proxys. Our bylaws do not have any provisions either way for proxies. So I have to resort to the Indiana Laws.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Tammy your attorney needs to be replaced if she suggested that escrowing your assessments would keep a judge off your back.

Wrong. Wrong. Wrong. And wrong.

And you and whomever else does it will find out the hard way.

BrianB (California)
Posts: 2,820

Posted:

Quote:

Posted By TammyS2 on 10/08/2009 9:16 AM
Right. My attorney has said, "go for it". As long as people are either paying their dues or have them in escrow, no judge, if there is a lawsuit is going to penalize folks. She said, we just have to show that they are violating and have continued to violate our bylaws as well as covenants.

I would ask your lawyer to put those statements in writing, and notarize them. Those are worth gold when you eventually sue said lawyer for making such statements that you relied upon.

There are very few absolutes in the world.. death, taxes, hydrogen and stupidity are the 4 biggies. Right up there in the top 10 are that judges can and will do whatever they want, whenever they want, no matter what.

In the words of a judge AT TRIAL, "I don't care what the LAW says, in this court, we do things the way I decide." So good luck with that promise from the lawyer..

DonnaS (Tennessee)
Posts: 5,671

Posted:

Tammy,

It seems to me that you are doing this ass backwards. You have a Board that is not working for you. You have a team of concerned people who want to take back control. Did anyone ever think about just recalling the Board? That would be the simpler, smarter thing to do. Start an association within the association would not be allowed--per your own documents (IMHO)

Statring another non-profit corp would be costly for you as there are legal fees in document preparation and costs of incorporation. You cannot incorporate common property that is already under the exhisting corp, you cannot incorporate the exhisting covenants because they belong to the exhisting corp. That corp is in control so my best advice is to change the system from within what you have in place.

EllenS1 (Florida)
Posts: 1,148

Posted:

It's absolutely amazing how much crappy advice you can get from a poor attorney. Our board (here in Florida) was advised by some attorney that the board could spend the reserve funds for whatever without a vote of the members. I'll believe that when he puts it in writing.

EllenS1 (Florida)
Posts: 1,148

Posted:

Donna,

I hope Tammie takes your advice. This whole thing is silly. Suppose they end up with two associations (which they won't) and down the road someone wants to put a third association in place..eek! Buyers purchased with the existing hoa and that is the only one that should be in place. Members have many options to change what they do not agree with but it appears they don't want to do the hard work.

TammyS2 (Indiana)
Posts: 21

Posted:

Thanks to everyone for the comments. After reading what Glen had about proxy voting, I found that is the way we can go. I'm going to write letters to those folks who cannot attend our meetings and see if they will sign proxies so we can have more people voting on things instead of the usual 10 to 6 vote where nothing ever gets to be changed.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Tammy,

You cannot use proxies if your documents do not allow for their use. You cannot use proxies If the State of Indiana does not allow for them. Did you check with those 2 places first before you decide that they will be your answer, which they will not be?

MaryA1 (Arizona)
Posts: 7,043

Posted:

Tammy,

I don't know how many things your members are permitted to vote on, but in most assn's it's very limited -- election of board members; amendments to gov docs; perhaps ratification of the budget and some assn's require a member vote for expenditures in excess of a certain amount. Those are about the only things members vote on. Most of the voting is carried out by the BOD at their board meetings. If you can gather enough proxies you may be able to get someone elected to the board who you think will do a better job than those now in office, but that would only be one board member.

IMO, wanting to start a new HOA because you don't like how yours is being run sounds like a little kid who isn't getting his way. If the BOD is violating the gov docs you should gather your like-minded friends and start a recall petition, but you certainly should have proof that this is happening. Just because you don't like how they are handling the assn's funds doesn't mean they are doing anything wrong. There's not a HOA BOD in the country that is capable of pleasing every member of their assn all the time. All we can hope for is that they do what they feel is in the best interests of the assn. If enough people in the assn think they are not then they can be recalled or they will not be re-elected. It's not that I don't believe you, it's just that we here on HOA Talk only get to hear one side of the story so we sometimes do like to give the BOD the benefit of the doubt.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

It's absolutely amazing how much crappy advice you can get from a poor attorney.

Q. What do you call a lawyer who graduates at the bottom of his class, fails the bar exam 4 times then finally passes?

A. A lawyer.

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