Help!!

I would suggest opening a new separate bank account for the HOA for members to pay dues to. Assigning a treasurer or hiring an accounting firm may be helpful. A HOA is only funded by it's owners for it's owners. I would suggest maybe raising the funds by a special assessment of the owners to pay for the legal fees. It's best to get a lawyer familiar with contractual/business law. There should be some resources in your phone book to find lawyers. It is helpful to know what kind to get as they all specialize in different areas. Understand also not only do you pay a retainer, but their hourly rate as well. They do charge for phone/email/general conversations. So be careful if you call or email them as they may be able to charge for this contact. I never leave a message of who called if they aren't in the office.

Their attorney sounds like he's using some fear tactics. I wouldn't be threatened by them or pressured in coming up with a "compromise". You don't have to pay them the full contractual amount for the 4 years IF your contract says you can give them a notice to severe the contract (either side) at any time. You need to find out if there are conditions that exist on how to cancel this contract. Honestly, I don't believe their attorney's statements and you may be in the right. Sounds like a shister deal going on with him.

This may be a court case higher than small claims due to the nature and amount involved. The HOA will have to pay for the court costs above just the legal fees of the lawyer. The good news is that the HOA can request these be paid once it goes to court.

I just wouldn't be pressured by their lawyer and request everything in writing. It sounds like your HOA has a good case and the ability to cancel this contract. It just needs to be more organized in handling the issue. Assign maybe 1 or 2 people out of the group to have direct contact with the attorney if you hire one. That way the signals aren't cross and reduces costs.

Jennifer, your HOA is not dissolved. The corporation that is controls the HOA may be, do to improper filings or failure to pay fee's. It usually just takes paying those fee's and filing the proper forms to get back in the Secretary of State's good graces. Your other problems will require more work.

You and your neighbors need to read and follow both your CC&R's and state HOA law (if there is none then the non-profit corporation statutes) to first replace the Board and take control of the HOA, then with that you can deal with the MC. You probably aren't going to like my answer but it sounds like it is a legal contract entered into with an authorized member of the Board and you are probably obligated to it. While there should be a termination clause in the contract usually requiring X number of days notice, often only for cause and being too expensive is not cause.
Now it may be an improper contract violating either the CC&R's or state law but that will have to be resolved.

Now for the lecture, your neighbor's have only themselves to blame for this mess. Instead of being willing to give up an hour or two a week of TV to pay attention to what was going on with probably the biggest investment of their lives; they were content to let one person carry the ball and do all of the work.

Since the original association was dissolved in 2004, the contract with property management company is probably not legal. The homeowners owe the property manager zero. A property manager who is unaware that his client was legally dissolved nearly eight years ago is just plain stupid. A prudent person would not enter into a contract with an association without verifying their legal right to do business. Part of a property manager's job should be keeping the association legal, or at least advising it when it is not.

How much money is in the checking accounts and CD? Given the complexity of the situation it just may not be worth fighting over. It might be a bitter pill to swallow but you may be best off to just walk away from that money. Let the property manager’s attorney know that if he insists upon suing over the contract that you and your fellow homeowners will counter-sue over his conversion of your funds. That ought to shut him up.

You now need to move forward. You will need to consult an attorney to take the next steps, which are to either revive your old association or form a new one. If you have to form a new association you will need to amend your CC&R’s. (If the CC&R’s specify that the association will be the ABC HOA and the ABC HOA name cannot be revived you will need to amend the CC&R’s to specify the name of the new association.)

What is the story with the previous one-person board? Were they in control when the association was dissolved in 2004? That person may have some liability to everyone else.

I am confused on one point. You indicated that you were going to file amended articles of incorporation because the board was now composed of new members. Is this normal? In Arizona, we are required to file an annual report naming board members, among other things, with the Corporation Commission. We are never required to file amended articles of incorporation just because our BOD changed.

Finally, you and the other homeowners need to get out your checkbooks. It costs money to operate an HOA so you all should be prepared to spend some big bucks.

Most management contracts I've seen state that either party can end the contract with 30 days notice with or without cause. It is critical that you see the contract because they are probably scamming you. It might be time to involve your local district attorney and Office of Consumer Protection.
Jeanne

Thanks for all the feedback!! We have thought about opening a new banking account, our only fear/hold back on that is if for some reason we are bound to this contract that we might be putting our self in breech of the contract by doing so. I have also filed a complaint against the company with the better business bureau stating everything they have done. I did contact the attorney general's office, and they basically told me that there was nothing they could do for us, and we needed to contact an attorney. When I spoke with their attorney I did try to fight the angle of the fact that the individual did not have the consent of the 75% of homeowners(which our bylaws state). His rebuttal was that his client is protected under an "apparent authority doctrine". I have done some research into this doctrine, and from what I have read this has caused big issues in HOA's, and that in a lot of court cases the third party(being the management company) can be protected by this. I also went on to tell the attorney that I can not understand how we can be expected to continue business with a company that refuses to speak to us, and refuses to provide us with our documents when requested. That's when the attorney went on to say that he is sure his client will deny our claims.

To answer one of the questions from above, the reason why we were requesting an amended article of incorporation is, because the one that is supposed to be filed in February of every year listed old board members(the individual, and several others that haven't been on the board in about 7 years). I contacted the management company and requested or new or amended article be filed naming the new board. I asked them if this was something we are suppose to file or is it something that they handle. They stated that it was something that they file on our behalf, and that it had already been taken care of. So we requested a copy for our personal records, and were told about a hundred times that it was being mailed to us, and we have yet to receive it. That's why we finally contacted the secretary of state our self only to find out that the article of incorporation has not been filed since 2004, and that our HOA is dissolved.

We have also requested copies of all of our banking documents, contracts with clients, and monthly statements from the bank, and bills being paid. They sent us an email on their excel spreed sheet that is very vague(and from the previous month). We contacted them again stating that we would like the copies to be from the actual clients, and bank on their letter head(ie: photo copies of the originals). They have yet to provide us with that information. We contacted them again on Monday requesting all of this, the article of incorporation(even though we know that they have not filed this, we just wanted to see their response), and the contract. We received a phone call back around 2:30 from the management company stating that from this point forward they refuse to speak to us, and will not be providing any documents. We then asked to speak to the head of the company, and we told not only will he not talk to us, but no one else will. And that if we have something to say or request to call their attorney, and then they hung up on us.

Just thought I would update everyone, I spoke with the attorney we had contacted to help us in this matter. They have agreed to review all of our documents for free! So we faxed everything over to them. They said they would go through everything, and get back to us Friday on how they would advise us to move forward(with no obligation to use their services). Should we require their services then we would have to pay the retainer. But they said they are sympathetic to our situation, and will do this in steps to make things as cheap as possible for us.

We also were able to find out some information with the banks as well. It took about a million phone calls to get to the right person at the bank, but finally talked to someone who could help us. We explained our situation, and were told that if we can bring in the minutes from our meeting, and the the actual votes nominating us as the new board they would allow us to put our names on the account.

So I figured we would go to the bank with the CD, and have the property management company's name completely removed from that account. Then go to the bank with the checking account... Leave the property management company's name on that account for the time being(until we can figure things out with this contract, and not put ourselves in breech by removing their name, because one of their duties was to pay bills), but also add our names. That way we can access the money for the retainer for the attorney, but also put some sort of alert on the account to contact us when checks are being written. I figure by doing this that when the bank alerts us that if it is something other then a bill, then we can put a stop payment on the check.

So this is what I have been able to come up with as a plan so far, if anyone has any suggestions or ideas please let me know.