Wednesday, February 9, 2011

5 steps to get rid of your Home Owners Association (HOA)

Neighbors talking about disbanding their HOA

If you want to get rid of your HOA, talk to your neighbors to see if they feel the same way. Image: Comstock Images/Getty Images

Want to get rid of an HOA that drives you batty with its rules, spends all your dues money, and doesn’t even mow the lawn?

It’s possible that you could dissolve your association if you live in a community that only has a few homes and no big-ticket, high-maintenance amenities like a pool.

But if you live in a condo, forget about it. You’ll never be able to get rid of your condominium association because it owns the walls, the roof, and everything but what you own—the stuff inside your condo unit. Without a condo association, there’s nobody to replace the roof, heat the hallways, and get the carpet in the lobby vacuumed.

To dissolve your HOA:

1. Read the rules.

The covenants, conditions, and restrictions, or CC&Rs in association-speak, may cover the dissolution process. If you can’t find the copy you got when you closed on your home, ask the community board for the CC&Rs.

2. Check your state law.

Your state may have laws about terminating home owners associations. Florida’s Market Records Title Act automatically dissolves home owners associations that don’t renew themselves by recording the proper paperwork in the public records every 30 years, says Donna Berger, executive director of the Community Association Network, a Florida lobbying group representing home owners associations.

3. Find out if anyone else wants to get rid of your HOA.

It takes a village to get rid of an association, or in the case of many CC&Rs, a “yes” vote from 80% of the home owners or members via petition or referendum. If a home owner doesn’t vote, that counts as a no, not a yes.

And good luck getting those “yes” votes from lenders that own any vacant, foreclosed homes in your community. They’re busy dealing with the foreclosure mess, and wouldn’t want to get involved in community politics even if they had time to respond to your request.

4. Determine what to do with community property.

In a home owners association, you own your home and lot and you’ll still own them after you get rid of your HOA. But your community association likely owns something, too, like the common space, playgrounds, pools, tennis courts, roads, or walking paths.

Figure out what’s going to happen to everything the HOA owns. Can you sell the open space and divide the profits, or pass the pool off to a not-for-profit sports organization? Maybe you can talk local elected officials into accepting the community association’s land, but only if there’s something in it for them.

If the association owns assets no one wants to buy, like a walking path, you’re probably not going to get rid of your HOA anytime soon. Here’s the rub:

  • If you get rid of the association but not its property, such as a walking path, the path still belongs to everyone who owns a home in the association.
  • You’ve wiped out the association’s ability to raise funds, but not its need to buy liability insurance that covers the walking path or its obligation to maintain the path.

5. Hire a lawyer.

Getting rid of your HOA is a legal process, so you’re going to need a lawyer. If you’re trying to get rid of your HOA and the current board isn’t down with your plans, you’ll be paying those legal fees yourself. Legal experts guesstimate those fees would start at $10,000 and go up if there’s opposition to getting rid of your HOA.

It’s possible that others in your community would agree to help pay the legal bill if they support your plans to do away with the association, but you can’t make a board pay your legal tab. Ironically, a board opposed to your plan will likely spend the dues you and everyone else pays to hire a lawyer to defend its right to continue to exist.

An alternative to getting rid of your HOA

If you just want to stop paying dues, there may be an easier way to get what you want. Maybe your HOA can give away the common amenities and then vote to reduce the dues to zero. The community association still exists, but it no longer collects dues. Someday, you and your neighbors could rouse it, but for now, it’s just lying there doing nothing—which is what you wanted all along, right?

Terry Sheridan is an award-winning journalist who has covered real estate issues for almost 20 years. She owned a condominium in Florida for 14 years and served on the board of directors twice.

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