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Subject: reestablishing a HOA
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JohnK42
(Michigan)

Posts:6


09/27/2019 2:43 PM  
our president sold his home in 2014 and left. well the association went down teh tubes with no one collecting the monthly fees/dues for years. finally in December of 2018 i had enough of no street lights, no insurance and no snowplowing. So i contacted explained our situation and he met with me. he asked me to be acting president and distributed a letter a letter to the owners explaining the situation. we have since been able to pay our past due street light bill, plow in teh winter and get an insurance policy. the issue that has arisen is that some people say were are not an association and thay they bought there homes with no knowledge of association. i am trying to be the "emergency manager" to get things brightened out and even look at the city possibly taking us over .
Any advice or help would be appreciated
SueW6
(Michigan)

Posts:586


09/27/2019 3:15 PM  
Well, it was operating in 2014, so it DID exist, right?

Were you incorporated? If so, make sure the annual report is filed with the State of Michigan. (LARA)

Gather all your legal papers, including the bylaws and establish authority again.

Call a board meeting, if you still have board members. If not, gather all the homeowner members and elect a board.

Make sure things are right with the bank, too.


.
SueW6
(Michigan)

Posts:586


09/27/2019 3:20 PM  
Why are people questioning the association? Who do they think has responsibility for the lights and snow plowing in their neighborhood and who has been paying the bills up to 2014 (and just recently?)

(Your deed may talk about the association, too. )
CathyA3
(Ohio)

Posts:459


09/27/2019 3:49 PM  
Yes, if you were incorporated, you probably need to periodically file paperwork with the state to retain your corporate status. Why is this important? Because if your HOA is not recognized as a corporation, then homeowners are jointly **personally** liable if anyone were hurt on the common elements and sued the HOA.

So, reinstate your corporate status if necessary and get yourselves insured STAT. Probably no one is going to sue you in the next month or so, but the consequences of being wrong about that are pretty unpleasant, a lot worse than burned out street lights or unplowed streets.

In addition to insuring your property, you'll need to have Directors and Officers insurance (your governing documents may require it). Without this, board members can be held personally liable for actions taken as a board member. I would not serve on any HOA board that did not carry this insurance. Until such insurance is in place, I'd seriously consider beefing up my personal liability insurance/umbrella policy. (I actually beefed mine up when I was elected to the board even though we do carry D&O insurance.)

Feel free to scare your neighbors when they push back about getting their acts together, which I assume some of them will. They sound pretty clueless, although I hope I'm wrong about that.

If you end up getting enough push back that you can't form a new board, I'd stop and think about whether living in your home and community is worth it. Living in an HOA that doesn't believe it is one carries risks that living in neighborhoods outside of an association does not.
JohnK42
(Michigan)

Posts:6


09/28/2019 3:45 AM  
We have gotten caught up with LARA on all past paperwork as the past president who moved came to my house in January and signed them and we paid the late fee.

The insurance policy I purchased for the association does have a direct and officers section so I am covered there.

The past president also put my name on the bank account so i have been able to make deposits and write checks to pay bills from the electric company (including a past due balance of $700) to get the street lights back on, pay to snow plow, and get the insurance policy.

Its a one man show here but i feel we are making progress. Yes/ No?

How do we convince the 8 members out of 28 who have not paid their dues that we need their dues to be paid? we have 2 storm drains that need to be repaired asap as a contractor and myself do not thing they will make it thru the winter.

Dues are $25 a month. we are not asking anyone to pay back dues as there are no records of them just to begin with January of this year.

I have given all units a copy of the bylaws and have mailed and updated the members with each move i have made.

We have also had 2 meetings of members with 7 showing the first time and 9 the second time. How do we get more to attend?

At the second meeting the nine who attend asked me to get a formal vote from the members to determine if we should pursue the city of Adrian in annexation of us. This was 3 weeks ago. We asked for the votes to be back by Sept 30. To date we have just 9 votes back. I was told by a member that we need 75% of the members in favor of annexation to approach the city to see if they are interested. Is this correct?

Thanks for quick replies from my first post. They were very helpful!



MelissaP1
(Alabama)

Posts:8601


09/28/2019 4:26 AM  
Just because you annex into the city doesn't make your HOA taken over by the city. It just means you and your neighbors will now be that city's residents. The HOA still has CC&R's and Articles of Incorporation. Your HOA is most likely a non-profit corporation. So it's like your moving your business to a new town. You would need to disband your HOA not just move it to a city.

Plus the HOA isn't responsible for providing the CC&R's or Articles of Incorporation. CC&R's are on file at the local courthouse and the Articles are state level. They are considered PUBLIC documents. However, I don't see anything wrong with making a CD with a copy of the documents with the caveat that the HOA isn't to provide them legally. This is a courtesy copy to get things in place.

Former HOA President
MelissaP1
(Alabama)

Posts:8601


09/28/2019 5:08 AM  
Forgot to include when/if you annex into the city, your streets may become PUBLIC. Which limits some of the restrictions your HOA may be able to do to control parking or traffic controls. It's not a bad thing. Our HOA did it. It's just if your membership/neighbors don't want public roads it may be a sticking point.

Former HOA President
SueW6
(Michigan)

Posts:586


09/28/2019 5:11 AM  
I don’t believe “annex” is the correct term. You just want the city to take over your streets. The HOA can still exist even if that happens.

Easier said than done and the city may require that the streets are brought up to code or standards before they take over. Much research is needed to be done.
SueW6
(Michigan)

Posts:586


09/28/2019 5:31 AM  
Guess Im confused. Are you currently a community within a township?
JohnK42
(Michigan)

Posts:6


09/28/2019 5:40 AM  
we are a HOA within the city of Adrian
CathyA3
(Ohio)

Posts:459


09/28/2019 6:04 AM  
I'm also confused. If the former board president sold his home a few years ago, then he no longer has any role or say in what happens to your HOA (unless your governing documents state explicitly that non-owners are allowed to serve on the board). This means that any document he signed recently as board president is very likely to be invalid - you may as well have grabbed someone off the street. You may need to look at re-signing yourself if you are now acting in an official capacity.

I would recommend that you become very, very familiar with your HOA's governing documents. Especially look at your bylaws to see what has to happen to form a board of directors - the directors are the only ones with the authority to make decisions and spend money on behalf of your HOA. A lot of this stuff can appear to be nitpicky and legalese-y to someone who isn't familiar with how HOAs operate. But if you don't dot your i's and cross your t's, you're going to be opening the door to legal challenges from homeowners who don't like what you're doing. (You can pretty much assume that someone won't like what you're doing - it's a fact of life in community associations.)

Hopefully someone from Michigan can suggest some resources for you to educate yourself about running HOAs. Logic only gets you so far, and a lot of serving on the board is on-the-job training. Since you're essentially starting from scratch and you don't have experienced colleagues to show you the ropes, you need to learn somewhere else. This web site is a good resource since there are many experienced current and past board members and property managers who post. Just be aware that laws can differ from state to state.

Words to Live By: federal law supersedes state law which supersedes local municipality law which supersedes your governing documents which supersede your community's rules and regulations (although there can be some nuances). If your governing documents contradict any laws higher up on the food chain, the higher law prevails.

You may also want to hunt around for a law practice that specializes in HOA and COA law to help you navigate your way around this stuff. Better to have a vetted attorney waiting in the wings than having to hunt around for one when you're under the gun.
JohnK42
(Michigan)

Posts:6


09/28/2019 6:50 AM  
again thanks for all the comments this is helping me out a lot

so when the president sold his house and moved the VP/treasurer took over. nothing was communicated to to the members and no dues are collected. Then he divorces his wife and moves. She has no idea what to do.

So when i get tired of 2 years of no street lights and snow plowing I ask her about and she says there is no money in the account and no one has been collecting fees. She turns over what she has to me after i meet with the president signs the past due forms with the state of Michigan. he also does a letter to the members stating he has named me the interim president. to me it has been more like the emergency manager to solve the problem

As i look into things i see we have a past due account of $700 on street lights and that no one has paid fees for a few years and that there are even uncashed fee/dues checks that total over $2500. $2000 of which is from a chapter 13 settlement that i tried to get reissued but could not. The others i was able too get new replacement checks cut.

so any suggestions all of you have are appreciated. I am just to get this all solved so we can move along in whatever direction the members want to go in. If i was not doing it nobody would be doing it
CathyA3
(Ohio)

Posts:459


09/28/2019 7:38 AM  
OK, I've thought about this for a while. Keep in mind where I'm coming from: as a board member, I always tried to figure out how one of our decisions could go off the rails, how badly, and how likely it was to happen. Hope for the best, plan for the worst.

So this is worst case scenario, but I already see a couple spots where you're putting yourself at risk. A person who claims to act on behalf of another person or organization, for which he has no legal authority to act, is committing fraud (or some such, I'm not a lawyer). I already mentioned that your ex-president had no legal right to sign anything on behalf of the association after he moved out and divorced his wife unless your governing documents specifically state that non-owners can sit on the board (very unlikely). And seriously, a former board president doesn't know about fraud? Yipes. So you're still not protected by the HOA's corporate status, putting all owners' personal assets at risk.

Second, unless you were properly appointed or elected to the board according to your bylaws, you are neither a director nor an officer. You have no legal right to make any decisions on behalf of the HOA or to spend any HOA funds, and more to the point, you are not protected by any D&O insurance. You're out on a legal limb here and any homeowner can challenge this in court and will likely win.

I'm sure similar things have happened in other associations, and probably people have gotten away with it, but that's no protection if someone in your HOA chooses to challenge this. You badly need legal advice, and your HOA needs a knowledgeable person to walk you through the proper steps to reinstate your corporate status and appoint a valid, functioning board. You may need to go into short-term receivership until all of the pieces are in place (this is where all of that money that people "saved" by not paying their assessments gets spent. At any rate, in your shoes I would not touch this. There is no way I would put my personal assets in danger, or risk being found guilty of fraud, in order to get the street lights working again.

Find a good attorney who is knowledgeable about HOA matters and follow his advice. He is the only one who will have your back.
JohnK42
(Michigan)

Posts:6


09/28/2019 7:47 AM  
at our 2nd meeting i was voted to represent the HOA by the 9 people present. does that make a difference.

i agree a lawyer is a good way to go but with only $2000 in our account i am not sure we can pay for one.

does anyone know of lawyer here in this area that we could go too?
NpS
(Pennsylvania)

Posts:3758


09/28/2019 8:09 AM  
The thing I like is that you've demonstrated to your community that you're willing to step in and clean things up.

Sounds like you have things moving in the right direction.

Not sure you need to go to the expense of an HOA lawyer yet.

Agree with others that dedicating your streets can be a long and frustrating experience even after you have the necessary votes. Better to wait til you have others willing to work on it with you.

First thing to do is hold an election. Get yourself (and hopefully some others) voted in. Get a budget approved by the members. Doesn't matter that everyone doesn't participate. All you need is a majority of a quorum to get these things accomplished without a fuss.

The delinquency issue isn't going to get resolved right away. There are strategies you can try, but I recommend waiting til you have others who are ready and willing to share the responsibility with you.

Best of luck.



Sikubali jukumu. Read all posts at your own risk.
NpS
(Pennsylvania)

Posts:3758


09/28/2019 8:11 AM  
Posted By JohnK42 on 09/28/2019 7:47 AM
at our 2nd meeting i was voted to represent the HOA by the 9 people present. does that make a difference.


You need to go through the formal process of an election. Proper notice. Call for candidates. Whatever your bylaws require.

Sikubali jukumu. Read all posts at your own risk.
SueW6
(Michigan)

Posts:586


09/28/2019 1:42 PM  
Was there any remnant of a board left?

If not, dont be concerned about an election now but set the date for the annual meeting and hold it then.

Carry on and good luck.

JohnK42
(Michigan)

Posts:6


09/30/2019 7:35 AM  
there was not one board member left living in the association

thanks for all the info everyone it has been very beneficial
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