BiggerPockets

I've recently become involved in an HOA that is really struggling. It is a high foreclosure pocket and there are now many vacant units and non-paying owners. Only about half of the owners pay the dues. We've lost our master insurance policy, and we are only able to provide lawn care to the residents.

The non-paying owners are so far upside down on their properties that foreclosing and getting the deed would be foolish, especially since the mortgage company's foreclosure would be right around the corner. We'd lose the money we spent to foreclose.

A select group of residents wants to dissolve the HOA, but we don't feel that's a wise option.

Does anyone have any suggestions?

Nick,

The short sale thing is a good idea. I will think that one over!

Our HOA's fees are pretty reasonable. There aren't really any unnecessary expenses. Without the HOA the neighborhood would probably become 90% investor owned and become very undesirable.

That's also a good idea about the debt collection companies. I hadn't thought of that. We can certainly get a judgment instead of foreclosing and try to seize other personal assets, but many owners live out of state and it makes that very difficult.

I would suggest that the ONLY reasons for an hoa to exist are to provide jobs for lawyers and management companies, that they do nothing the city/county does not already do, and city/county services are already paid for by taxes.

I am on the isde of those who want to dissolve. If the hoa IS dissolved, I would bet a cyber cuppa that more people would be interested in buying in, and not just investors.

Why do you want to keep it going?

FWIW, collection agencies here have been about useless...

Ofgift

I never really understood the point of HOA anyway it seems like you really not getting any kind of benefits while shelling out a bunch of money for their fees.

Dan, I notice that you have just recently become involved with the HOA.

This makes me believe that you do not understand all the rules and regulations of that HOA.

Most of these have to have meetings and elect officers, ect every so often. If this is not done then it is a violation of the "charter" and the HOA can be dissolved, or becomes dissolved automatically. Also certain "rules" must be voted on and "reconfirmed" or they become null and void.

The best way to dissolve a HOA is just to let it become ineffective.

I too am against any HOA as they limit your rights to do things that you want to do. There is one HOA right now that I know of in the same "area" as you described that is trying to force the 50% remaining to pay for the other 50%'s forclosures!!!

This just is not right on any level, they even tried to stop me from putting up boards up over my nieces grandmothers windows when a hurricane was approaching because I would be putting holes in their walls to attact the wood to.

I invited them to call the cops and see who the cops arrest!!!!
Me for damaging their walls, or them for not providing safe living conditions for an elderly lady?

HOAs have a deservedly bad reputation because of the people who run most of them are on power trips. They hire or get "Barney Fife" type volunteers to cruse the neighborhood looking for violations of the covenants and restrictions. Earth destroying things like pine straw beds with too little, or too much, pine straw in them, cars parked in the driveway but too close to the street and one of the worst of the worst, an open garage door. Oh the humanity!

However, there are exceptions. I have been involved in the HOA here since we moved in almost 10 years ago. The people are reasonable and while do have the one or two people from time to time who want to control the actions of their neighbors, by and large things are okay. It is a small neighborhood, 99 homes and that surely helps.

The HOA here maintains the pool, tennis courts and common areas. Those common areas include a 9.5 acre park owned by the HOA and therefore the homeowners along the river. It is one of the major reasons we have very little turnover in the neighborhood and until this year the usual time on market was 2 weeks. Yes, 2 weeks. We have one house currently for sale that is WAY overpriced and that is skewing the numbers. It would've been overpriced at the peak of the market 2 years ago so they are going to be sitting on it for a long time.

Oh, yeah, I forgot to mention our HOA is voluntary which means we have to prove value to keep the members paying their dues. No, we do not have 100% participation. We have over 90% though while most other voluntary HOAs in north GA are dissolving due to lack of funds.

The first step is see if they kept the corporation up to date. If it has been administratively dissolved by the state all that is left is to close the bank account and stop collecting dues.

Originally posted by Dan Inc

I am surprised everyone is so against keeping the HOA in place. Without it, units will become dilapidated, people will paint their doors and shutters odd colors that don't match the neighborhood, there will be mix and match roofs, etc.

That's the propaganda perpetuated by bullies and control freaks, property managers and lawyers, who would not have that income if the hoas die. .
Without the hoa, the home owners would actually enjoy all the rights granted to everybody by the US Constitution, Bill of Rights, and state laws. (which hoas take away, but nobody says that. Buyers learn that later) People would decide for themselves what colors to paint their houses, what kinds of roofs are best for them, and even park cars in the driveway.
As for your concerns, there is probably a city or county code that addresses each one, including neighborhood nuisances, weeds, noise, pets, and junk yards...The owners already pay taxes to the city/county pay for the enforcement of them, so why are they paying the m anagement company to enforce them? AND the city has a bigger stick than the hoa does...

Originally posted by Dan Inc

This is not an area of town where you can trust people to do the right thing. They WILL make it an undesirable place to live or invest.

propaganda. Where do you get the right to decide what is "the right thing"? And if you are so afraid of your neighbors, why did you buy there?

Originally posted by Dan Inc

The current board is down to one person, and the bylaws haven't always been followed precisely, because no one wants to be involved in the HOA. What grounds do the owners have to force the dissolve of the HOA?

It does appear that the owners want to dissolve the hoa, and are letting it die.
What grounds? Look to your bylaws, ccrs, state laws. The directions for dissolution/termination will be there. Ours is, and HAS to be voted on in 3 years--20 years after the date of incorporation, as to whether to continue it for another 10 years, or to dissolve it. I think our ccrs say that 90% of the people AT the special meeting called to vote on it have to vote for dissloution in order for it to take effect. Otherwise it stays in place for another 10 years.
Our state law addresses dissolution, and what must be done with the common areas. There is a way to handle all common areas and the money we have in reserve. IE, common areas COULD be deeded to the abutting lots, or, there are two lots ( a little park) that could be sold for building on. Reserve funds COULD be used to correct/repair certain items so that they last for several more years, or, be turned over to the (road) authority that would deal with repairs in the future...
And, there are two hoas here that were dissolved by court order.
Look into it, and offer your owners the right to vote to dissolve. That's the moral thing.
Ofgift

When people buy into an hoa, they are rarely told they are buying a piece of a corporation.

And as partial owner of said corporation the board of directors (HOA management) are responsible to act in the best interest of its owners, the actual homeowners.

They were originally created as a way to keep out the "undesireables" by passing regulations to discourage anyone or anything that they the ORIGINAL landowners thought would "devalue" their assets before they could sell them for the great profit that they expected. Then to be also to somewhat control those that buy in despite their best efforts to keep them out.
This tends to bring in the lazy who would rather pay a fee to have someone else take care of their property for them without them even having to think about it. Or those such as the retired who can no longer do what is necessary to keep up a property and would have to hire someone anyways to take care of the property for them.
Either way when the HOA dissolves there will likely be a few properties that will be cited by the regulating authorities!!!!!!

They were created to benefit the homeowners, but only really the original few homeowners and their "vision" for the entire area as a whole.

But when the HOA is down to one person, it is no longer a Home Owners Association, but really becomes a HOME OWNER DICTATORSHIP!!! HOD.

Wow, I am shocked at the direction his this thread has taken.

Jawsette, no one is forcing opinions on the owners. There is a select group of people that wish the HOA dissolved. However, the vast majority of all owners are out of state, and are unwilling or unable to participate in owners meetings. It isn't a dictatorship, because we are ACTIVELY LOOKING FOR VOLUNTEERS, but no one expresses interest, they just want it all done for them.

Ofgift, these are townhouses. If one person decides to put a tan roof on instead of a black one, or paint their front door purple, instead of beige, how do you think that will change the image of the subdivision? It will look like garbage. You talk of all these rights being taken away, but the bottom line is that the owners bought into an HOA, it wasn't forced upon them. The only reason a select few desire to terminate it is because they now feel that they aren't getting enough for their dues. The property manager gets a TINY amount, and the rest of the money is used appropriately. The dues are only $65 a month. There is no waste. AND, I am not afraid of my neighbors, but I do know that part of town, and how people will treat their property. It WILL be an issue, they WILL start looking like S**T, and it will remain a rental neighborhood for life.