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Subject: Terminating 1 HOA when you have 2 HOAs
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Author Messages
JjF
(Arizona)

Posts:5


06/21/2020 3:29 PM  
I would love to know what will happen to the common area of my HOA. There is talk among the neighbors of dissolving it. It is very small under 40 members. We also pay into another HOA, a larger one.We pay more for the smaller, useless one. So if we disband the smaller one which the builder set up, will the larger HOA that we pay into take over the common grounds care? We are tired of paying into 2 HOAs that basically do the same thing. The larger one at least offers some playgrounds, tennis,parks and dog park. The one we currently have just pays to care for a small common ground area.
JohnT38
(South Carolina)

Posts:337


06/21/2020 3:50 PM  
Posted By JjF on 06/21/2020 3:29 PM
I would love to know what will happen to the common area of my HOA. There is talk among the neighbors of dissolving it. It is very small under 40 members. We also pay into another HOA, a larger one.We pay more for the smaller, useless one. So if we disband the smaller one which the builder set up, will the larger HOA that we pay into take over the common grounds care? We are tired of paying into 2 HOAs that basically do the same thing. The larger one at least offers some playgrounds, tennis,parks and dog park. The one we currently have just pays to care for a small common ground area.




What makes you think the larger HOA would agree to pay the expense of your common areas?
SheliaH
(Indiana)

Posts:3307


06/21/2020 3:51 PM  
Has anyone spoke to the larger HOA it see if it's willing to take over the common areas run by the smaller HOA? If not, you need to begin having that conversation. If it's willing, I'm sure there some legal stuff that needs to be done to fold the responsibility into the larger HOA. It'll also mean your assessments will need to be raised to cover the costs of caring for those common areas.

This isn't as simple as the less than 40 homeowners coming together and deciding to dissolve. You may need to come up with a plan if the larger association decides NOT to take over your common areas.
TimB4
(Virginia)

Posts:16808


06/21/2020 4:06 PM  
Jj,

Typically, an association can not simply be abolished without addressing various issues.

If your Association provides services, something needs to be done to:
a) see that the existing contracts for services are paid to their end
b) see if the services can be absorbed by another entity or individual members.

If your Association owns common areas, these must be addressed by selling, donating or seeing if another entity will take over the responsibilities. This can be very difficult if roads are part of the common area.

A decision on what to do with the funds the Association holds (operating/reserve funds).

A vote by the membership to:
1) abolish the corporation known as HOA inc
2) Amend the declaration to remove all requirements (services, common area, assessments, etc.) of the deed restriction.


There is likely a lot more and the members will definitely need the assistance of an attorney.

JjF
(Arizona)

Posts:5


06/21/2020 5:20 PM  
The vote to abolish the HOA was unanimous and the same property management company runs both HOAs. So the same number and contact number is on both bills I get. Who would I contact about this? Platinum Management has people answering the phones who seem to know nothing. The only thing that small HOA pays for is common lands surrounding our homes, like the backwash area and entrance. Very small areas.
MelissaP1
(Alabama)

Posts:9413


06/21/2020 7:53 PM  
It wouldn't be a mortgage company. What to do is in your documentation. Most likely Articles incorporation or CC&R's. Will need a lawyer to process the disbanding and unincporporation.

Former HOA President
TimB4
(Virginia)

Posts:16808


06/22/2020 12:51 AM  
Posted By JjF on 06/21/2020 5:20 PM

The vote to abolish the HOA was unanimous . . . Who would I contact about this?





I think the vote was premature.

Simply voting to abolish would not, in my opinion, do the job.
You need to amend the actual wording of the deed restriction.

Question - Was this a board vote or a membership vote?
Question - when you say unanimous was this a truly 100% of the membership or only those at the meeting?



Who to contact -

1) The Association attorney to see what steps now need to occur.
(you may need to take several more votes). Actually should have been done prior to the vote.

2) The board of the other Association (not the management company).
Request a meeting to discuss the issue.


TimB4
(Virginia)

Posts:16808


06/22/2020 12:53 AM  
Posted By JjF on 06/21/2020 5:20 PM

XXX Management




Please review the forums posting rules
LetA
(Nevada)

Posts:989


06/22/2020 6:33 AM  
JjF Master and Sub associations are very common in the Southwest. No offense JjF if you dissolve the sub association, you will be paying that same total assessments if by some chance the master association assumes the sub. My best advise is to petition the master association to takeover billing for both, and pay one assessment, have the master divvy the assessments between the two.
CathyA3
(Ohio)

Posts:1077


06/22/2020 7:34 AM  
This sort of set up is common around my area as well: for example, one area of a large community pays for exterior maintenance of that section in addition to the annual assessment as part of the master association.

To clear up one area of confusion that is typical with this sort of set up: the people in the sub-association are NOT "paying twice". They are paying two separate assessments for two separate sets of services. Get rid of one payment and you lose whatever services were being paid for. People tend to be all hot to trot for the first and not so much for the second.

The sub is a part of the master - it is possible that any change like what the OP proposed would also have to be approved by the members of the master association. Because, as others have pointed out, just because you don't want to pay for this "extra" stuff doesn't mean that someone else is willing to do it.

The OP's next task is to get some serious legal advice. One: is this even legally possible? If it is, how likely is it that it would be approved by all necessary parties? (I'm thinking here that those who are part of the master association only will say 'oh, h3ll no".) What are the consequences (it will be expen$ive, for one thing) and the legal implications of doing it? Many "good ideas" tend to die painful deaths when confronted with the reality of what they actually entail.
CathyA3
(Ohio)

Posts:1077


06/22/2020 8:26 AM  
For what it's worth, I worked in a community with this sort of set up (I work for a new home builder). In that community, the annual assessment paid for maintenance of the single community entrance, the pool and the clubhouse, which were used by all members. Everyone paid that assessment. The sub association paid a monthly assessment for lawn care and snow removal for that section only (those who lived outside of the sub had to cut their own grass and deal with their own snow).

There was no way that the sub association could have dissolved itself. The land in that section was common area owned by the sub. It was much like a typical condo or townhome community, and it would have been difficult if not impossible to equitably divide this common area among the individual owners. And on a practical level, how are you going to have 100+ owners mowing and shoveling what used to be common area? You'd need to hire someone to perform those services. How are you going to get 100+ individual owners to agree on who, and how much to pay, and when they should come. And who negotiates the contracts, and who collects the money from all the neighbors, and makes sure the contractors are paid? And who manages them in case they're not doing a good job? You'd have chaos. The function of the sub association is to replace 100+ squabbling owners with a board that does all this stuff. I can't think of anyone who would prefer the chaos.
BillH10
(Texas)

Posts:510


06/22/2020 9:18 AM  
Cathy, our home is located in an incorporated sub-association, with responsibilities for common area parks and other association owned land (odds and ends left over from the platting), as well as front yard landscaping maintenance which is required to be provided by the Association in the Declaration. Over the years the master association has made it very clear they will not agree to assume responsibility for managing the contractor who provides the landscaping services under the contract with our sub-association. Some of our owners have raised the question of dissolving the sub-association over the years, regardless of how many times the situation is explained to them, they do not get it. Or choose not to.

JjF: We have not managed a single family home HOA in several years, I do not recall now how the language reads. We focus on managing condominium associations. The documents of all our clients require the assent of some percentage of the mortgage holders (often 100%) before the Association can take certain actions. This may not be applicable to your HOA but it should be investigated.

I join the chorus of those recommending you seek advice and counsel from an attorney qualified/with experience in doing what you are discussing. Consulting with a lawyer who is the second cousin of your sister-in-law who is a corporate attorney or has a family law practice will not cut it in this situation.
JohnC46
(South Carolina)

Posts:9577


06/22/2020 1:18 PM  
Posted By CathyA3 on 06/22/2020 7:34 AM
This sort of set up is common around my area as well: for example, one area of a large community pays for exterior maintenance of that section in addition to the annual assessment as part of the master association.

To clear up one area of confusion that is typical with this sort of set up: the people in the sub-association are NOT "paying twice". They are paying two separate assessments for two separate sets of services. Get rid of one payment and you lose whatever services were being paid for. People tend to be all hot to trot for the first and not so much for the second.

The sub is a part of the master - it is possible that any change like what the OP proposed would also have to be approved by the members of the master association. Because, as others have pointed out, just because you don't want to pay for this "extra" stuff doesn't mean that someone else is willing to do it.

The OP's next task is to get some serious legal advice. One: is this even legally possible? If it is, how likely is it that it would be approved by all necessary parties? (I'm thinking here that those who are part of the master association only will say 'oh, h3ll no".) What are the consequences (it will be expen$ive, for one thing) and the legal implications of doing it? Many "good ideas" tend to die painful deaths when confronted with the reality of what they actually entail.




Well said.
SueW6
(Michigan)

Posts:705


06/23/2020 10:13 AM  
What about Entrance roads and water, garbage pickup and landscape maintenance? Lots to think about.
JjF
(Arizona)

Posts:5


06/26/2020 7:51 AM  
There was a small common area which had a park and walking track, but the Oro Valley was gifted this by the HOA. So we do not have anything for the higher HOA cost done. No garbage removal, no painting, no lawncare. Just backwash area and a small entrance way with turf on it. That is all they are responsible for. Yes, the vote was 100% of our members. Every homeowner weighed in. None were absent. Also, we do have a lawyer in our membership, who is taking care of the legals. Seems like a no brainer to me. Not a headache. No snow removal or anything else to give up.
JjF
(Arizona)

Posts:5


06/26/2020 7:52 AM  
Oro Valley is the city we live in.
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Forums > Homeowner Association > HOA Discussions > Terminating 1 HOA when you have 2 HOAs



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