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BethM
(Colorado)

Posts:4


04/07/2009 9:52 PM  
We own a condo with an HOA that was dissolved with the Secretary of State as of 2003. On March 25, 2009, the HOA was reinstated. Is there a legal obligation to pay the dues from the time the HOA was not registered with the state?
SusanW1
(Michigan)

Posts:5202


04/08/2009 4:45 AM  
Beth, you were not "dissolved" - only placed into an "inactive" status because you did not file the correct papers with the State.

The residents dropped the ball by letting the HOA get nto this condition (especaily the officers of the last Board who should have let the residents know what was going on and the consequences)

Can you bill retroactively? You could TRY but trust is probably a really lows commodity for this board. Expect a real revolt!!

You need to call a Special Meeting of the Members and explain why you are even needed - OR they might even get together and vote for a dissolution. You must prove that an HOA is even needed, after letting things go for so long.

MicheleD
(Kentucky)

Posts:4491


04/08/2009 5:41 AM  
The board probably could collect back assessments for all those years.

As Susan said, the HOA wasn't dissolved, only its Corp status with the State was inactive. It's very easy and relatively inexpensive to update to an Active/Good Standing status with the SoS. Here it only costs a minor fee.

The HOA still existed during that time, it was just, apparently, poorly run.

Chances are no one stepped up to the plate to run for the board. That doesn't mean it was "dissolved."

Now, apparently, some homeowners decided it was time for involvement and time to get things back on track. I commend them, but it's going to be an uphill climb since it was left static for so long.

It also doesn't mean the HOA can't go back an collect assessments. The CC&Rs probably cover that somewhere in language that says something about failure to act is not a waiver of the CC&Rs.

But in good faith, they (the board members) should probably only go back about 2 years.

I know our utility companies here only go back 2 years if they fail to bill a resident, regardless of how long the failure to bill occurred.

For example, we just found out that the last bank of street lamps that were installed in our subdivision were never picked up by the electric company here. They were installed in 2002. We just received a bill that goes back 2 years instead of 7.

DwightT
(Idaho)

Posts:664


04/08/2009 7:22 AM  
Before we say that the HOA wasn't dissolved, I'd like to hear a little more about why Beth say that it was. I agree with Susan and Michelle that an inactive HOA doesn't automatically mean that it gets dissolved, but there have been times when an HOA with no common areas and no real purpose other than CC&R enforcement was actively dissolved by the members. That could be what happened in Beth's case as well. We just don't have enough info. If that was the case, then there was no HOA during that period, so there would be no back dues.

If somebody is trying to restart an HOA that was actively dissolved, then it would really be a new HOA, not just a reinstatement of the old one.
MaryA1


Posts:0


04/08/2009 7:41 AM  
The fact that Beth said the HOA was dissolved by the Sec. of State leads me to believe it was an "administrative" dissolution. Here in AZ, the Corp Commission (under the Sec. of State) requires an annual report to be filed each year. If this is not done, after a certain amount of time, they will "administratively" dissolve the corp and it's not reinstated until such time as the report fees are paid up. The only problem this creates for the HOA is that their name can be given to another corp during this time. This is just an administrative procedure and although the corp is not supposed to do business during the time of dissolution if it does continue to operate it's really no big deal.

So now Beth's HOA has been administratively reinstated and it's back to business as usual. Are we to understand that no assessments were collected during the period it was dissolved? If so, I wonder how the required maint. issues were accomplished and what happened to any funds that were in the treasury at the time of dissolution. Until we know the answer to these questions we can't really opine on whether or not back assessments should be collected. I would say it would be determined by what state the treasury is in now and what maint projects, if any, are in dire need of being accomplished.
BethM
(Colorado)

Posts:4


04/08/2009 8:05 AM  
I just checked the Secretary of State website- the HOA was administratively dissolved during the last 6 years and only recently reinstated. Most of the homeowners did not even know that it was dissolved, ever. During the last 10 months our renter along with others in the complex have not paid their dues because it was discovered that the HOA didn't "exist". Now we, and others, have received letters about a lien if back dues are not paid. We are just curious if they have the legal right to do so if the HOA was not incorporated during that time. The current manager is awful, causing a lot of problems with owners and tenants and not taking care of the common areas. My husband and I want to get the other owners together with the board and vote for another manager and or hire a management company. Before we do that we want to know our obligations to paying the past dues. I have no problem paying the HOA dues each month but wonder about those that were not paid during the years of dissolution.
MaryA1


Posts:0


04/08/2009 8:10 AM  
Beth,

You may want to check this out with an attorney if you are opposed to paying the assessments. However, I believe the HOA was still incorporated. An administrative dissolution is not the same as a dissolution. If the HOA continued to operate duing the 6 six years it was admin. dissolved, then, IMO, the assessments shuold have been paid. BTW, why did you rely on your renter to pay the assessments and why didn't they inform you they had quit paying? I hope you've changed that procedure now that you see what a problem it can cause!
KevinK7
(Florida)

Posts:999


04/08/2009 8:12 AM  
Posted By MicheleD on 04/08/2009 5:41 AM

It also doesn't mean the HOA can't go back an collect assessments. The CC&Rs probably cover that somewhere in language that says something about failure to act is not a waiver of the CC&Rs.




I would think that if the HOA was inactive, and not dissolved, trying to collect the funds would not constitute a "failure to act", but an inability to act until they file the appropriate paperwork.

I would think this would be like driving on a suspended license... you have a license, it's not expired, but you're not allowed to drive until you do what is necessary to get everything back in order.
BethM
(Colorado)

Posts:4


04/08/2009 8:16 AM  
You're absolutely right, we've changed how we are collecting her rent. It was agreed upon, when she first moved in, that she would pay the HOA dues (she only had to walk the check down the sidewalk to the manager) and send us the rent. As of today, we are paying the HOA and she's paying us the full rent+HOA. We are not happy that she didn't tell us she wasn't paying and this is the first and only letter we have received that payments haven't been received by the HOA either, that's why we are looking into our options. We are seeking an attorney as well, just wanted to see what was on here for information. Thanks!
DwightT
(Idaho)

Posts:664


04/08/2009 8:22 AM  
Since this was an administrative dissolution, I withdraw my statement. The others are correct - the HOA still existed and they can probably collect past dues. If they made no attempt to collect during that time there might be a time limit involved like the 2 years that Michelle mentioned.

However, you mention that "our renter ... have not paid their dues". That leads me to wonder if you were having the bills sent to the renter instead of to you. Some rental contracts may stipulate that the renter is supposed to pay the dues and will ask the HOA to send the bills to the renter. However, regardless of the rental contract, the owner is ultimately obligated to pay the dues. If the HOA was sending the bills to the renter at your request and the renter didn't bother to pay, then you will probably be on the hook for the whole 6 years.
DwightT
(Idaho)

Posts:664


04/08/2009 8:27 AM  
Beth - looks like you posted while I was still typing a response. As I mentioned, technically you are still obligated for the whole amount (the HOA has an agreement with the property owner, not the renter). However, if it was in your rental contract that the renter was supposed to pay the dues, then you should be able to collect the past dues from the renter.
BethM
(Colorado)

Posts:4


04/08/2009 8:32 AM  
That's what we're working on, collecting from the renter. We realize that it is our responsibility, as the owners, to pay the HOA fees and DID NOT change the billing address to our renter but more curious why we are just now finding out that the dues were never paid.

Thanks so much for all your help! Very insightful!
KevinK7
(Florida)

Posts:999


04/08/2009 8:33 AM  
According to www.fair-debt-collection.com, the Statute of Limitations for Colorado are as follows:

Domestic and foreign judgments: 6 years and renewable each six years. Note: If for child support, maintenance or arrears the judgment (lien) stays in effect for the life the judgment without the necessity of renewal every six years.

All contract actions, including personal contracts and actions under the UCC: 3 years (C.R.S. 13-80-101), except as otherwise provided in 13-80-103.5; All claims under the Uniform Consumer Credit Code, except sections 5-5-201(5); All actions to recover, detain or convert goods or chattels, except as otherwise provided in section 13 -80-103.5.

Liquidated debt and unliquidated determinable amount of money due; Enforcement of instrument securing the payment of or evidencing any debt; Action to recover the possession of secured personal property; Arrears of rent: 6 years, (C.R.S. 13-80-103.5)
MaryA1


Posts:0


04/08/2009 2:02 PM  
Kevin,

I don't see how any of those apply to HOA assessments (they're not rent!).
MicheleD
(Kentucky)

Posts:4491


04/08/2009 2:03 PM  
It sounds though that the "arrears" are really no more than roughly 18 months?

KevinK7
(Florida)

Posts:999


04/09/2009 7:39 AM  
I'm not sure which it would fall under, but although they are assessments, the 10th Circuit Court of Appeals, which includes the District of Colorado, had ruled that in some instances assessments are debt and governed by the FDCPA (Ladick v Van Gemert).

Based on that, I would assume that they would fall under such limitations.
MaryA1


Posts:0


04/09/2009 7:51 AM  
Kevin,

True collections of delinquent assessments does fall under the FDCPA. But that only means the collections practices are regulated by the Feds. I don't think Beth's problem is addressed in the FDCPA; i.e. whether the assessments can be collected during the time the HOA was admin dissolved.
KevinK7
(Florida)

Posts:999


04/09/2009 8:06 AM  
I had misread one of the earlier posts... I thought that the HOA just started asking for payment for older assessments... I didn't see the part that the renter stopped paying after discovering the dissolution...
JaneC6
(Arizona)

Posts:1


01/16/2012 3:10 PM  
Since you live in AZ, I'm interested in finding out how to get a HOA that has been administratively dissolved by the Corp Commission reinstated - if we cannot get an officer of the HOA to file the necessary paperwork (annual report)?-
LarryB13
(Arizona)

Posts:2336


01/16/2012 9:03 PM  
Several responses to this thread discuss Arizona corporations. I have created two of my own AZ corporations over the last 15 years and may be able to shed some light on the subject.

First, AZ Corporation Commission (ACC), not the Secretary of State, is the agency that grants corporate charters. The ACC is an independent commission and it does not answer to anyone except the voters. Every corporation is required to file an annual report with the ACC. If a corporation fails to file annual reports for three consecutive years, the ACC will administratively dissolve the corporation.

Administrative dissolution has the same effect as if the corporation dissolved itself. It’s gone. There is no “reinstatement” process.

Since the corporation is gone after administrative dissolution, the name is available and anyone can file new Articles of Incorporation using that same name. It will not, however, be a continuation or rebirth of the old corporation; the ACC will treat it as an entirely new corporation.

For an HOA, this presents a big problem. If I bought into a subdivision where I had to join the incorporated non-profit XYZ HOA and the association is dissolved for failing to file annual reports, can someone – anyone – compel me to join a new association with the same name? I have not seen this issue addressed in any recent Arizona court decisions.

Continuing to operate as a corporation after the corporation has been dissolved could also be a problem, especially for those who claim to be the board of directors. This is not an area where I have substantial knowledge or experience, but I would not want to be on that board.

The only prudent course of action would be to consult with an attorney specializing in corporate law.

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