For three years I was a member of the 3-person board for my HOA. Then I helped officially dissolve the HOA.
I bought my house over 20 years ago.. admittedly I was rather naive about HOAs and the rhetoric about ‘protecting your property values’. But I had a family on the way.. it was a quiet and (at the time) rural part of the state I’m in and it was a nice house at a reasonable price. So I figured why not.. I’d only be there a couple of years and then I could sell and move on.
For various reasons we stayed at the house. Those included the housing market crash where I was underwater on the house for a number of years and I wanted to avoid the uprooting the kids out of the schools they were in etc.
During that time I watched some of most egregious behaviors and treatment of myself and my neighbors happen, all on the part of the board:
- Selective enforcement of CC&Rs (IOW if you were not friends with the board, you were targeted).
- NO enforcement of ANY CC&Rs (i.e the board did nothing)
- A prior iteration of the board deciding to “outsource” to a property management company that appears to have embezzled thousands from the HOA (looking back that was probably the board that did nothing with respect to enforcement)
So if I hate HOAs so much why did I join? Well, because I figured I couldn’t complain if I didn’t contribute. If I didn’t at least try to introduce some kind of sanity and consistency of enforcement (given HOAs considered a ‘de-facto form of government’) then was I really doing anything to make the situation better for myself and my neighbors… Unfortunately I quickly discovered the source of the problem. In my first year I ran headlong into exact people who were the root of the problem in past years. During a routine ‘walkthrough’ that was done twice a year to see whom would need to be notified of violations of Conditions, Covenants and Regulations (CC&Rs) one of the board members wanted to start assessing fees for a yard that was “out of compliance” based on the gravel the used around their yard and had done so since before he moved into the neighborhood. I had to explain that would be a violation of CC&Rs based on how I read them and likely the lawyer would agree. This was especially likely since this owner had the landscaping when Weyerhaeuser was initially managing the community as they were the company that planned the development and clearly approved it given there were no prior complaints.
Even so, the simplest concept that federal legislation that trumped our now 20+ year old CC&Rs eluded this person. For example; we could not enforce placement of digital satellite dishes on a homeowners property (only size) due to federal law that had been passed over 15 years earlier. This member was outraged at the notion.. They would constantly resort to hyperbole (‘Then what is to stop them from putting a satellite dish in the middle of street‘???!). Fortunately because of my constant pushback the person opted to not run again citing ‘other priorities’. Much to the relief of the new board members (who were far more reasonable). We then continued to work on the problems that actually needed resolving – the biggest issue facing the board was replacing the mailbox stands. This was something no prior board would or could accomplish do to the infighting and name calling between them (perhaps those members should have erased the mailboxes for the board rather than leave an audit trail…). Then one day something really odd happened; I had multiple neighbors ask me if it was possible to “dismantle the HOA”.
I told them; ‘ Yes but it’s a LOT of work.. we need at least 2/3 of the home owners to vote on ballots saying ‘yes’ to dissolving the HOA. A ‘no’ vote or not voting were the same thing.
So the board agreed unanimously to put it up to a vote.. we went door to door.. collected signed ballots from each home owner.. answered any questions they had.. including; “Well, what if people vote to keep it…?” We’d reply; “Then the HOA stays.. that’s clearly what the homeowners want!” And of course there was the: “Well don’t you care about your house value?? We need an HOA!” Of course we would tell people the same thing ‘ If you think keeping it’s the right thing to do.. you should vote accordingly’.
In the end.. it was clear the people living here (some of whom were the original buyers of their house and still living here from when the development was first put in) had had enough of dealing with the HOA. They all felt the same pain and frustration that I did. We got OVER 2/3 of the home owners voting to dissolve the HOA.
So what lessons did I learn from all of this… a few.. and I want to share with anyone reading this in case you face a similar situation. To dissolve and HOA you have to take the following into account.
Disclaimer: I’m not a lawyer and this is not legal advice. This is anecdote based on personal experience. Your experience may be different.
- Get a real estate attorney and consult with them before doing anything. Your HOA already has one? DO NOT USE THEM. This effort puts them out of work and it’s a conflict of interest on their part. Does that mean someone on the board might have to pay out of their own pocket for the initial consultation? Possibly, yes. Consider it an investment.
- Dissolving an HOA does NOT vacate the CC&Rs. It vacates the governing body and oversight committees enforcing the CC&Rs. If you want to vacate all CC&Rs you have to be explicit the language of not only the filing you will have to do with the state but also in the ballot you circulate.
- Circulate hand-signed ballots. Go door to door if you have to. Do NOT rely on Docusign, or any Digital medium for this. Why? Because….
- Regardless of the outcome keep the ballots in a safe deposit box or safe for 7 years to ensure that if something is ever contested one of you who was on the board at that time can present the appropriate audit trail should a legal need arise. Otherwise if a disgruntled homeowner tries to contest and you have no audit trail – you will lose.
- Do you have any common areas? Do you pay for any electricity? Do you have entrance monuments to the community (something that says the name of your community)? All of these have to be considered when you decide to dissolve an HOA. Consult with the lawyer in your state (see point 1) to determine how those would be handled. In my situation we had no common areas and the electricity was only to power lights at one entrance monument.
- Dissolving an HOA costs money. If the HOA doesn’t have the funds to do it, then the board will have to pay it or start a bake sale or ask anyone who voted yes to contribute. For example – if you no longer have an HOA you will likely have to tear down the entrance markers – best to have a qualified contractor do this so no questions are raised about how HOA funds were used in the dissolution.
- Consult with the lawyer what should be done with any remaining HOA funds – likely you will have to divide remaining assets equally and mail checks out to the homeowners.
In the end was it worth it? Absolutely yes.. over 5 years later and we have had no drop in our homeowner values. Everyone here still looks out for each other and we have a happier community than ever.