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TimJ3 (North Carolina)
Posts: 2
Posted:
bought a home in neighborhood that HOA is said to be dissolved. where would these documents be to support this be found?
timj85
raleigh, nc
SusanW1 (Michigan)
Posts: 5,202
Posted:
You can ask the State agency that watches over corporations. Get the EIN number of the corporation. They would know if it has been dissolved, because they would have had to be notified.
or
ask your neighbors.
TimJ3 (North Carolina)
Posts: 2
Posted:
thanks for the quick answer.
MichaelK11 (Texas)
Posts: 432
Posted:
I find the topic of HOA dissolution confusing.

I think a corporation is either active or inactive or dissolved (probably depending in part on state corp laws), and many HOA's are incorporated.

However, I don't think the deed restrictions that govern the properties within the HOA are not dependent on the Corporation (although their enforcement may be, in a practical sense).

I think it may be difficult or even impossible to remove the deed restrictions. These should be on file with the County property records. (As an aside, I have been unable to find my HOA's deed restrictions through the County Clerk; although it's not important, since I have copies from the HOA.)

If the HOA is inactive and non-functioning and if the corporate entity is dissolved or inactive, then the deed restrictions may not matter for practical purposes.

Can someone who understands this better help me out, please?
JohnB26 (South Carolina)
Posts: 1,569
Posted:
Quote:
Posted By MichaelK11 on 10/14/2009 8:45 PM
I find the topic of HOA dissolution confusing.

I think a corporation is either active or inactive or dissolved (probably depending in part on state corp laws), and many HOA's are incorporated.

However, I don't think the deed restrictions that govern the properties within the HOA are not dependent on the Corporation (although their enforcement may be, in a practical sense).

I think it may be difficult or even impossible to remove the deed restrictions. These should be on file with the County property records. (As an aside, I have been unable to find my HOA's deed restrictions through the County Clerk; although it's not important, since I have copies from the HOA.)

If the HOA is inactive and non-functioning and if the corporate entity is dissolved or inactive, then the deed restrictions may not matter for practical purposes.

Can someone who understands this better help me out, please?

you are exactly correct
SusanW1 (Michigan)
Posts: 5,202
Posted:
What kind of deed restrictions? Are you talking about condos or detached homes? Certainly property boundaries could not be altered or ingnored.

The CCRs would fall to the wayside, but not deed restrictions that are also overseen by municipal laws.
MichaelK11 (Texas)
Posts: 432
Posted:
I am thinking in terms of single family homes. I don't know if things are different for Condo associations.

My understanding is that the CCRs ("Declarations of CE&Rs" for my HOA) are the deed restrictions. I don't think that's related to municipal zoning.

Am I missing something? Is this a condo-specific issue?
MaryA1 (Arizona)
Posts: 7,043
Posted:
I don't think you're missing anything, Michael. Deed restrictions "run with the land" and dissolution of the HOA does not remove them. This applies to any property -- single family home or condo or any other type of housing.

In AZ there are two types of dissolution that would apply to HOAs:

1) administrative dissolution: An administrative dissolution simply means the Corp Comm has "dissolved" the corp because of failure to provide annual reports accompanied by the required monetary payment. I've spoken to official of the Comm and have been told they do not "police" nonprofit corps and, in a nutshell, an admin dissolution is almost meaningless. Although the HOA is supposed to no longer "conduct business" there are no penalties if they do. The reinstatement process can easily be undertaken by simply paying the outstanding annual report fees plus a small penalty.

2) judicial dissolution: there are several instances where a judical dissolution may take place. The one that would apply to HOAs mostly is: "The court may dissolve a corp in a proceeding by the corp to have its voluntary dissolution continued under court supervision." The dissolution proceeding is conducted by the attorney general. In such a court proceeding, ". . .the court may issue injunctions, appoint a receiver with all powers and duties the court directs, take other action required to preserve the corp. asets whereever located and carry on the activities of the corp until a full hearing can be held." Then there are other statutes that apply to "receivership", "decree of dissolution",and "deposit with dept of revenue".

Of course different states may have different requirement so the OP should definitely check out his state laws.
GlenL (Ohio)
Posts: 5,491
Posted:
Tim, usually somewhere in the CC&R's is a provision on how to dissolve the HOA. These typically require an affirmative vote of anywhere between 90 & 100% of the homeowners. If the steps outlined in the documents were followed and filed with the county then your HOA has been dissolved. If everyone simply threw up their hands and said we don't want to do this anymore and allowed the HOA Corporation to dissolve then the HOA is simply inactive. If that is the case it does not preclude a group of homeowners from resurrecting it and if that happens you would most likely be a member since the deed restrictions run with the land. So the first place to look would be at the County Recorder's office for all documents filed on your property and HOA name, you could also try a search of the County Court civil cases under the HOA name.

Studies show that 5 out of 4 people have problems with fractions
SusanW1 (Michigan)
Posts: 5,202
Posted:
Contact the Secretary of State in North Carolina to see if a corporation has been dissolved (inactive)
MicheleD (Kentucky)
Posts: 4,491
Posted:
Quote:
Posted By SusanW1 on 10/16/2009 4:47 AM
Contact the Secretary of State in North Carolina to see if a corporation has been dissolved (inactive)

Susan, that may or may not give him an actual answer.

In Kentucky, if the corporation does not file it's annual report by a certain date, it's considered inactive.

BUT that's entirely different from "dissolved."

At any point it can be activated by submitting an updated annual report and paying a minor fee.

If no one is managing the association, or hasn't been for a number of years, the status with the secretary of state might indeed be "inactive," but that doesn't mean it's "dissolved."

I think Glen's advice is probably the most accurate.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Michele,

I agree with you. What Susan mentioned is called an administrative dissolution, which I explained in a prior post.
MichaelK11 (Texas)
Posts: 432
Posted:
Quote:
Posted By GlenL on 10/16/2009 12:41 AM
Tim, usually somewhere in the CC&R's is a provision on how to dissolve the HOA. These typically require an affirmative vote of anywhere between 90 & 100% of the homeowners. If the steps outlined in the documents were followed and filed with the county then your HOA has been dissolved. If everyone simply threw up their hands and said we don't want to do this anymore and allowed the HOA Corporation to dissolve then the HOA is simply inactive. If that is the case it does not preclude a group of homeowners from resurrecting it and if that happens you would most likely be a member since the deed restrictions run with the land. So the first place to look would be at the County Recorder's office for all documents filed on your property and HOA name, you could also try a search of the County Court civil cases under the HOA name.
As usual: concise, thorough, and to the point.

Would you say that dissolving the HOA according to the requirements of the deed restrictions (if any) actually terminate the deed restrictions (CC&Rs, etc.)? These must be the foundation and substance of the HOA; if they are gone, there is no basis for any mandatory HOA unless all the owners agree to create new deed restrictions.

I would add, with respect to Susan's point about checking the corporate shell with the state:

If there was a corporate entity for an HOA that has since been dissolved, then a new (probably non-profit) Organization could be established and incorporated by homeowners to enforce and comply with existing deed restrictions.

Finding the old corporate entity in State records (probably available on-line, whether inactive or dissolved) could provide you with the officers and agent who were last involved with the HOA, and they could probably tell you more about what happened to the HOA.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Michael,

Dissolving the HOA does only that -- the deed restrictions remain intact. W/o an HOA to enforce the covenants, it's up to each property owner to enforce. There are many, many s/d's with deed restrictions and no HOA. It's the presence of common areas and/or amenities that require the formation of an HOA for the purpose of maintaining them. When an HOA is dissolved, the BOD must liquidate its affairs including disposing of its properties.
MichaelK11 (Texas)
Posts: 432
Posted:
Quote:
Posted By MaryA1 on 10/16/2009 8:38 AM
Dissolving the HOA does only that -- the deed restrictions remain intact. W/o an HOA to enforce the covenants, it's up to each property owner to enforce. There are many, many s/d's with deed restrictions and no HOA. It's the presence of common areas and/or amenities that require the formation of an HOA for the purpose of maintaining them. When an HOA is dissolved, the BOD must liquidate its affairs including disposing of its properties.
Thanks, Mary. This makes some prior threads more clear.

So, an HOA entity (usually a corporation) can own and maintain common properties and facilities and enforce deed restrictions. When there is no such entity, then any common properties would be owned equally by all the individual homeowners (which may be inflexible and onerous). I wonder if this is automatic, in the case of dissolution of such corporate entity.

Tim, why the interest in the HOA? Do you have concerns about enforcing deed restrictions? Are there any common areas or facilities?
DeeS1 (Michigan)
Posts: 223
Posted:
Our CCRs not only require the 80% community vote and 80% of the mortgage companies. Also, they require Township's approval.

It's typically pretty hard to officially disolve because the HOAs can financially benefit other organizations pretty significantly by maitaining the common area road frontages, private streets, and general curb appeal property values.
MicheleD (Kentucky)
Posts: 4,491
Posted:
Michael, the "ownership" of the common areas is what makes dissolving an HOA tricky.

In many cases, some entity must be responsible for maintaining them, especially if the property contains a retention basin.

Sometimes the municipality will take ownership. But that's not a given and many do not want them.

It's likely a very messy situation all the way around.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Michael,

As Michele says, some entity must take resp. for maintaining the common areas and other amenities if there are any. Someone else mentioned their HOA must also get approval from the township to dissolve. There was a requirement in the CCRs of my former assn that city approval was required to terminate maintenance of the common areas. In AZ, if the HOA were to be dissolved, part of the dissolution process is to adopt a plan of dissolution which ". . .shall indicate to whom the assets owned or held by the corp will be distributed after all creditors have been paid." The assets would include any common areas or amentities titled to the corp (the HOA).

If the HOA did not go through the process of dissolution but simply quit functioning I'm not sure what happens to the common areas with regard to ownership. But I do know that if someone were to be injured on the common areas all members of the assn would be liable. For just that reason, the members should be very careful in handling the dissolution process correctly. The proper procedure to follow may not be outlined in the gov docs but it most likely is outlined in the State's nonprofit corp act. The gov docs most likely will only address the required % of members that must vote on the issue and whether approval is required of any other entity.
KirkW1 (Texas)
Posts: 1,665
Posted:
Actually, I would look at the title search for information about the HOA. At least in Texas the title search must include mandatory HOAs since they are an encumbrance on the land to which the title is held.

The thing is that in most cases a bank will require title insurance which in turn requires a title search. But without that requirement buying land without a title search is just crazy since there might be 1000 liens you don't know about already.

Unfortunately, I suspect most HOAs don't employee a lawyer to wrap up all the loose ends when they choose to dissolve. Most people would rather simply ignore it and let it go away. But I would think it would leave open the door to expensive litigation as a few could come behind and resurrect said HOA. The litigation would come in to figure out just what the status really is when an organization simply stops reporting and paying whatever fees to the state. In many cases they may be able to come alive by paying that year's fee and declaring themselves active.

Personally, I would look for an amendment to the Covenants declaring the HOA to be mandatory. Either that, or an opinion from someone willing to pay damages for being wrong.
MegL (Florida)
Posts: 7
Posted:
I have seen many posts that state the Deed Restrictions should run with the land for the specified amount of time listed in the Declarations. Our's is 99 years. Many of us want to dissolve the HOA and I would like to see the Deed Restrictions gone as well.

"10.1 Duration. The easements, conditions, covenants, and restrictions of this Declaration shall run with and bind the Property, and shall inure to the benefit of and be enforceable by the Developer, the Association, the Architectural Control Board, and the Owner of any land subject to this Declaration, and their respective legal representatives, heirs, successors, and assigns, for a term of ninety-nine (99) years from the date this Declaration is recorded, after which time said covenants shall be automatically extended for successive periods of ten (10) years each unless an instrument signed by the then Owners of seventy-five percent (75%) of all the Lots subject hereto has been recorded, agreeing to revoke this Declaration. Provided, however, that no such agreement to revoke shall be effective unless made and recorded three (3) years in advance of the effective date of such revocation, and unless written notice of the proposed agreement is sent to every Owner at least ninety (90) days in advance of any action taken."

The Declarations state that with a 2/3 Vote we can Amend the Declaration. Can anyone see why we can't Amend to reduce the amount of years to two years and then Dissolve the HOA?

Our s/d (2006) is only 64 homes on one acre lots. We are one neighborhood with two associations! The old (1992) side is voluntary, they own the front entrance and we own NOTHING. We already pay County taxes for street lights and a retention pond.

Any thoughts on this?
Meg (FL)
MaryA1 (Arizona)
Posts: 7,043
Posted:
Meg,

Sorry, but you're stuck with the deed restrictions for 99 years from the date they were recorded. At the end of 99 years they will automatically be extended for an additional 10 years unless 75% of the owners vote to terminate them. If that is done the termination cannot occur until 3 years later.

Exactly how is the amendment provision worded? Is there any mention of admending the term of the deed restrictions? If not, then I suppose that can be done but I would first check with an attorney.

Either way, the HOA can be dissolved as it has nothing to do with the term of the deed restrictions which can be in place w/o an HOA. There are many, many communities with deed restrictions and no HOA. In that case, each individual property owner is resp. for enforcing the deed restrictions by taking the violator to small claims court.

You state your HOA owns nothing, but I would say you're wrong. You mention having to pay the Co for street lights and a retention pond which means the HOA owns those entities. Before the HOA can dissolve an agreement would have to be made with the CO concerning the street lights. If your state is like AZ, the retention pond cannot be used for anything else so it would be hard to sell. You're only alternative is to ask the CO or city to take over ownership. If they do not agree then the property owners are stuck!!
MegL (Florida)
Posts: 7
Posted:
Thank you for your input. The Orange County Property Appraiser site indicates the Pond is owned by OC. In 2006 Phase 3 was added to a Resolution that created a Municipal Service Benefit Unit for Maintenance of the Retention Pond. The streetlights are owned by Progress Energy of Florida. Both of these are included in our Non-Ad Valorem Assessments.

I've included the paragraph from our CCR's about Amending the Declarations.

10.4 Amendment. In addition to any other manner herein provided for the amendment of this Declaration, the covenants, restrictions, easements, conditions, charges, and liens of this Declaration may only be amended, changed, or supplemented by approval at a meeting of Owners holding not less than two-thirds (b) votes of the membership in the Association; provided, however, that so long as the Developer or its affiliates is the Owner of any Lot affected by this Declaration the Developer’s consent must be obtained if such amendment, in the sole opinion of the Developer, affects Developer’s interest. In the event GREATER COUNTRY ESTATES PHASE II, LLC, is not the Developer, no amendment may be made which, in the opinion of GREATER COUNTRY ESTATES PHASE II, LLC, adversely affects its interest, without its consent. Further, no provision of this Declaration may be amended if such provision is required to be included herein by any law. The foregoing three (3) sentences may not be amended. Without limiting the generality of the foregoing paragraph, the Developer specifically reserves the right to amend this Declaration in order to comply with the requirements of the Federal Housing Authority, Veteran’s Administration, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Orange County. Any amendment to the Covenants and Restrictions which alter any provision relating to the surface water or stormwater management system, beyond maintenance in its original condition, including the water management portion of the common areas, must have the prior approval of the St. Johns Water Management District.

I don't see anything that specifically states we can't amend the term for the Deed Restrictions but I'm not an attorney.
AlanW5 (Arizona)
Posts: 1
Posted:
Best bet would be to make the HOA prove that it has standing to take action.
Make them produce any documents that you signed. Make them prove that they
are currently properly registered to do business and that that business
has the authority to do what they are trying to do. They've probably screwed
up somewhere along the line. This is the HOA equivalent of "show me the note".

You will probably need a lawyer but if you contest any lien that they put
on the property, you can make them prove that they're authorized and that
might not be possible for them.
JanetB2 (Colorado)
Posts: 4,219
Posted:
Tim ... you can go here for your state statutes: http://www.associationtimes.com/stateInformation.htm#Mlook Also, review the documents when you purchased your home to be sure if there is anything stating covenants. The warranty deed may state covenants running with the land. If there are any documents pertaining to an HOA they will be found usually via your county clerk's office.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Tim,

When you purchased your home were you told there is an HOA? Did your settlement statement show assessments and perhaps a transfer fee to be paid to the HOA? Are you being billed assessments? Who said the HOA was dissolved?

If the HOA was formally dissolved papers should have been filed with the Corp. Commission. Also an amendment to the CCRs stating the HOA has been terminated should have been recorded with the Co recorder of the CO in which the HOA is located.

Check your deed to see if it states there are deed restrictions on your property. If it does, know that these deed restrictions "run with the land", meaning they transfer to all property owners. Dissolution of the HOA does NOT mean your deed restrictions no longer apply. When there is no HOA to enforce the deed restrictions each property owner may do so in small claims (justice) court.

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