What About Just Dissolving the HOA or Condo Association?

When Owners are dissatisfied sometimes someone tells them – just dissolve the association, why not? Here’s an email from a loyal reader who has sent many questions in to me via email (and so has had many questions answered in my blogs):

“I wanted to thank you for taking the time to post a blog
regarding my issues. You are right. Properties that are condemned aren’t always
HOA’s. I briefly contacted the HOA activists and after all these years of
ranting (I’ve done my share) their solution is simple; dissolve the HOA…
problems solved… literally. If that isn’t insanity, I don’t know what else to
call it.”

She is right. When someone says “Just dissolve the association,” they are not helping the owners. The solution that is next to impossible to achieve, and not even feasible in most of the HOA or Condo situations. It’s right up there with the flip answer many throw out when an owner in an association is unhappy with their plight – “Just move out!”

“Right.”

Neither CARELESS answer makes much sense to a frustrated owner and both just tend to exacerbate an already troubled relationship. These are not the only solutions and some just don’t take time to consider all options before they speak.

Where the association has maintenance responsibilities for any common areas, especially in a condo association, where the common areas are the buildings that house the units, just try to imagine the problems that would arise if owners try to maintain their “part of the box” separately. Think patchwork, fights, and difficult neighbor relations.

Clearly if there is common area that needs to be maintained it is much more difficult to get the neighbors involved in the maintenance without an association board, without any CC&Rs, without any “teeth”. And if the associaton tries to divvy up the common area then it isn’t easy trying to get the work doneto accomplish the property description changes in a way that won’t screw up the title searching and insurance. The paperwork can be expensive- and it usually takes 100% member approval to change the maps and legal descriptions. Furthermore, and last, but not least, the California Corporations Code requires 100% member approval to dissolve an HOA that is incorporated and has maintenance responsibilities with regard to the property.

So if the “activists” are advising dissatisfied owners to “dissolve the association”, they are telling owners to do something that is not even feasible in 99% of the situations.

 

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3 Responses to What About Just Dissolving the HOA or Condo Association?
  1. tramky
    June 22, 2012 | 5:51 am

    And what happens if the HOA has no board of directors? They all resigned and no unit owner is willing to serve on the Board. So no discussion of issues, no decisions, no voting on HOA actions of any kind. What happens then?

    • Beth Grimm
      July 12, 2012 | 4:40 am

      The way I see it, the bills won’t get paid, no property will be maintained, none of the association obligations will be met, and there are bound to be ramifications. However, if the association has very few obligations, it will take awhile before something happens. If there are assessments to be collected, there is no one to collect. If anyone tries to sell or refinance and the bank or lender seeks information, there will be no response, and that will likely adversely affect the sale or refinance. If the association is a corporation, at some point the active status will be suspended and then the corporation has no powers. It will be like a ship that is moving without anyone at the helm. Sooner or later there will be a problem.

    • Beth Grimm
      August 23, 2012 | 5:25 am

      Imagine a moving ship without a captain at the helm. Board members who left the association without either appointing successors or putting the association into receivership have some risk for breach of fiduciary duty. I am not suggesting they created the problem but just saying – leaving with no replacement is like being the last man standing (that can become a target). Your association is headed for trouble. If no one is collecting the assessments, paying bills, providing management or maintenance, responding to escrow demands, making disclosures, responding to association or owner responsibilities, then who would want to live there, buy, refinance, insure, or do any work for the association or its members?