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Subject: What happens to HOA if no BOD exists?
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Author Messages
GloriaL
(Georgia)

Posts:195


03/20/2008 4:24 PM  
I know that somewhere in all of the many topics on this forum, I read an answer to this question, but my memory is fuzzy and I would appreciate if someone could help me.
At our last Annual Meeting, just barely making quorum, the discussion arose about what would happen if a new Board could not be elected. The HomeOwner was making the assumption that the old Board must serve forever.
My question is what would happen to the HOA if a new Board cannot be elected for whatever reason, and the old Board resigns in mass, moves away, dies from boredom-burnout-overuse-apathy-really, really dies...whatever??
I cannot remember what state agency steps in, how that is done, or anything else. Does the HOA cease to exist? Who controls it and how is the HOA billed for their services?
Hopefully, we won't get to that point in our HOA, but I'd like to be prepared to give a correct answer next time.
Thanks,
Gloria
SusanW1
(Michigan)

Posts:5202


03/20/2008 4:39 PM  
Your Articles of Incorporation should outline what is needed to dissolve the corporation.
GlenL
(Ohio)

Posts:5191


03/20/2008 5:10 PM  
Gloria the court would appoint a conservator to oversee the association's affairs; like Brittney Spears' dad does for her now. This person (Usually a lawyer) would be paid out of association funds to do so even if it means raising assessments. You do not want this to happen.

"Common sense is like deodorant--the people who need it most never use it."
BrianB
(California)

Posts:2803


03/20/2008 7:12 PM  
more or less, Glen nails it... it will take a little longer in some cases, a little shorter time in others, but eventually, your HOA (with no board) will do one of two things: Fail to pay bills, get sued, and have the courts appoint a conservator, who will choose his own salary to run your association. Or, your HOA will fail to pay insurance, and before the courts can step in, someone will sue the tar out of your HOA, and with no insurance, you will be forced into receivership, PLUS, have the money owed from the lawsuit still hanging over your heads.

In either case, you can count on your assessments being raised to pay for the convenience of not having to run for board membership, sign bills, etc.. Someone else will be happy to do that for you, for about $60,000 or more per year.

GloriaL
(Georgia)

Posts:195


03/20/2008 11:11 PM  
Brian and Glen, thanks for the uplifting advice! As I posted, this line of questioning came up at our Annual Meeting. I thought it was pointless as we had enough present and through proxy for a quorum (barely), and enough people nominated from the floor to go ahead with a vote for the BOD. But since the question was posed, I wanted to have more accurate information next time then what I remembered vaguely from reading on this forum. This HomeOwner wanted to hire a Management Co (which our very, very small HOA cannot afford to do) and not have a BOD. I told him our CCR's REQUIRE a BOD who have the authority to hire a Management Co, not the other way around. The HomeOwners don't want to dissolve the HOA...they just don't want to volunteer to do anything. I gather from this forum that apathy amongst HOA's is very common, especially if things are running smoothly as they are here. Maybe having a BOD that collects 100% of its dues, is prudent in spending, addresses violation issues quickly and fairly, and stays out of people's personal business can have a downside too. We don't annoy enough people to make them become involved. No good deed goes unpunished.
Thanks,
Gloria
BrianB
(California)

Posts:2803


03/21/2008 9:06 AM  
an MC without a BOD is technically impossible, as you pointed out. The MC cannot raise dues, cannot authorize expenditures, cannot fine violators, etc.... the BOD must do that, although they can delegate the commission of said duties to an MC.

An MC without a BOD is generally a recipe for disaster.
GloriaL
(Georgia)

Posts:195


03/21/2008 10:45 AM  
I know that a MC without a BOD cannot and should not happen. It was making some other HomeOwners, who just want to delegate responsibilities and duties to others, understand that. I'll wager that a large majority of the HomeOwners have never really read through their CCR's...I am making the assumption that they even know where they are!
Each time a raise in dues comes up for a vote, it is voted down yet grandiose plans of upwardly spirally expenditures keeps being brought up by the same HomeOwners. Then the BOD has to bring everyone into a reality check by living within our meager budget. It was like pulling teeth to force the issue of starting a Reserve Fund this year, but I persisted siting our direction in the CCR's to do so.
Now at least, I can present accurately what would happen if everyone decided to stop volunteering for BOD positions. I know that I myself would not like that to ever happen...and hopefully I am not alone.
HaroldS
(Arizona)

Posts:906


03/21/2008 11:29 AM  
Gloria - do your documents actually require approval of your members to raise dues? Usually it is just required if over a certain percent. Most I've seen, and state laws too, allow a specified percent increase without member approval. Otherwise, like school districts faced with budget problems, eliminate the librarian, but never administration - oops wrong soap box. But if you can't raise dues without approval, eliminating expenditures is the only other alternative.
BrianB
(California)

Posts:2803


03/21/2008 11:31 AM  
From experience (in Arizona at least), all you really need to run an HOA is one person to "volunteer". we ran an HOA for many years with just two board members, for example, and one of them was not active, just a back up in case the other guy got killed by a bus or something. One active person is all that it takes to keep an HOA out of receivership.
SusanW1
(Michigan)

Posts:5202


03/21/2008 12:08 PM  
What do you mean, "no one wants to do anything"? What "things" need to be done?

The Board can make decisions and then hire out anyone to carry them out. I understand that people are tired when they get home from work and don't want to rake the community flowerbed. But someone has GOT to do it, and the Board should hire those jobs out, if needed.

If people squak, show them the annual budget and job items the Board deems necessary to keep property values up.

Maybe then they will volunteer.
GloriaL
(Georgia)

Posts:195


03/21/2008 12:14 PM  
Harold,
The BOD did raise dues this year as allowed within our CCR's by 5%. Anything above that requires 2/3 assenting vote by the entire membership. Considering that we are only 27 homes, and 5% of $300 annually comes to a whopping increase of $405. We are not increasing our available funds by very much. Our normally collected dues total $8,100, plus the additional $405, brings this year's total to $8,505...not a whole lot to play with after insurance for BOD, retainer for our attorney, electricity, water, lawn maintenance. Seasonal plantings are additional...pine straw is additional...painting for the fencing is additional...AND we are finally starting to establish a Reserve Fund.
We cut out any funding of social events and now are trying to get volunteers to do the seasonal plantings, so our BOD is being very judicious with the little funds we do have. Yet the HomeOwners dream of a Management Co., adding lights to the existing stone columns, running electricity under the street so we have power on both sides. The list goes on and on, yet the dues increases keep getting voted down. Makes me wonder where they think the money will come from.
I think we have about eliminated all the "discretionary spending" we can find. Boy, we sound pretty pathetic, huh?
SusanW1
(Michigan)

Posts:5202


03/21/2008 2:01 PM  
Your group needs to do a Strategic Plan:
What did we look like in the past? What was so good/bad about that?
What do we look like today? What is so good/bad about that?
What do we want to look like in 5, 10, 20 years?
What do we have to do today to get there? (the vision)
How can we do that?

There are some professional people that can lead strategic planning sessions.

Sounds like there's a big gap in vision and reality.
GloriaL
(Georgia)

Posts:195


03/21/2008 8:29 PM  
Susan,
I like the questions, and our HOA answers are not that bad.
We are a young HOA, just taking over from the developer about 5 years.
Past?--Messy from developer's construction
Today?--Manicured, and have expanded the stone columns and plantings in our entrance and in the process of joining the GA POA.
5, 10, 20 years?--Add lights, electricity, more landscaping
How (the vision)?--This is the one question that needs to be developed, expanded and implemented.
As far as hiring professional people to help with strategic planning... we need to have more money left over after paying for the necessities of life before we head down that road.
So we'll just have to continue to work on the gap between financial reality and dreaming.
Thanks for the thoughts.
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Forums > Homeowner Association > HOA Discussions > What happens to HOA if no BOD exists?



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