HOA has no money!

SandyJ1 (Maryland)
Posts: 3

Posted:

My association was recently cited by the county government due to lack of repair/building hazard. The problem is that the HOA has no money, no reserves. Can we amend the bylaws and allow unit owners to do the repair on their own?

GlenL (Ohio)
Posts: 5,491

Posted:

You can try, in most cases it would involve at least 75% of all homeowners voting yes to make such changes in the documents but more importantly why would they want to? From your post I'm assuming you live in a condo community and the selling point is maintenance free living. Note, I did not say free maintenance which is what some people assume but to have a group of people to share in the costs of major repairs. You have bigger problems than this one building; the number one being how did the community get in such dire straights? You probably will need to have a special assessment of all of the owners to pay for the repairs and to raise assessments to start building your reserves.

Studies show that 5 out of 4 people have problems with fractions

SusanW1 (Michigan)
Posts: 5,202

Posted:

You don't say how much this repair would entail.

Call an emergency meeting and try to figure out a way to raise the money - or take out a loan or seek a grant.

Act now or the government MAY do the repairs, and then bill everyone on their taxes!

SandyJ1 (Maryland)
Posts: 3

Posted:

Here is the problem

1. We have a very high delinquency rate. (49%)
2. Due to the unit owners not paying their fees, we do not have money in the reserves.

3. Because of our high delinquency rate and our lack of reserves, no bank is willing to give us a loan. We recently calculated that we would have to require each owner to pay $20,000 in order to do the entire renovation. They are not paying their monthly fees, so we know that they will not pay the $20,000.

4. Finally, the county is threating to sue us and do the repairs themselves if we do not.

However, I spoke with several owners who are willing to pay for their individual unit themselves using their own contractors. Apparently, a few owners had contractors who came out and surveyed their individual units and gave them individual quotes.

So my question, is can we amend the bylaws and have the individual owners do their own repairs and have them sign a waiver to release the HOA? By them signing the waiver they are stating that by them altering the exterior of their properties they are fully responsible for future repairs that the their units may require. Of course we would have to include our lawyer in this but, can this be done?

SandyJ1 (Maryland)
Posts: 3

Posted:

Here is the problem

1. We have a very high delinquency rate. (49%)
2. Due to the unit owners not paying their fees, we do not have money in the reserves.

3. Because of our high delinquency rate and our lack of reserves, no bank is willing to give us a loan. We recently calculated that we would have to require each owner to pay $20,000 in order to do the entire renovation. They are not paying their monthly fees, so we know that they will not pay the $20,000.

4. Finally, the county is threating to sue us and do the repairs themselves if we do not.

However, I spoke with several owners who are willing to pay for their individual unit themselves using their own contractors. Apparently, a few owners had contractors who came out and surveyed their individual units and gave them individual quotes.

So my question, is can we amend the bylaws and have the individual owners do their own repairs and have them sign a waiver to release the HOA? By them signing the waiver they are stating that by them altering the exterior of their properties they are fully responsible for future repairs that the their units may require. Of course we would have to include our lawyer in this but, can this be done?

TonyM3 (Arizona)
Posts: 170

Posted:

You only have 51% eligible to vote, probably not enough to amend the CC&Rs which would probably be where the maintenance clause resides. Then just because owners may repair their own units it probably won't make them exempt from a lawsuit.

Maybe you're better off letting the county come in and fix the place up.

KirkW1 (Texas)
Posts: 1,665

Posted:

I don't think that what you propose will solve the problem. Once the county does the repairs they will file a lien and shortly after that they will likely foreclose. And then everyone loses their property interest.

You need to call an emergency meeting and get a real BOD. And those people need to start the lien and foreclosure process on the delinquent owners. I am not a fan of foreclosure, but sometimes it is the only way. And you can look at it this way: better that the people paying are able to keep their properties then nobody keeping them.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Sandy, could you tell us exactly what the $20,000 repair is and why the county is involved?