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 How Do We Dissolve the Association?

How Do We Dissolve the Association?

Taged: Structure

 How Do We Dissolve the Association?

A reader writes:  How can we make our association go away?  We have minimal common area and it seems like we should be able to just agree amongst the few of us to maintain it and just stop paying all these high dues!<o:p _rdeditor_exists="1"> </o:p>We hear this request often, and if you have any possibility of doing it there are going to be some significant legal fees involved.  In simple terms, the issue is that you do own common area (either in undivided interest or as a corporation) and you need to find a way to transfer ownership of that common area to some legal entity willing to accept it.  If the local government required there to be an HOA, even that may not be sufficient.  First mortgage holders are going to have a say, because you have changed arrangement under which they loaned.  Basically, your Board needs to get some legal advice – and in most cases if you have common area it is going to be very difficult (I want to say impossible) to dissolve the association.<o:p _rdeditor_exists="1"> </o:p>I have seen, and actually assisted, in dissolving one homeowners association – but in this situation there was no common area and no condition of approval that required an HOA.  That is not typical.<o:p _rdeditor_exists="1"> </o:p>

You could conceivably reduce your assessments somewhat if the maintenance on the common area parcel is minimal and you do it with volunteers.  However, I would encourage you to discuss that course of action with your attorney also, and to make sure you have volunteer worker’s compensation insurance – which is generally very inexpensive.  However, in this state most of your assessments are caused by the mere fact that you have an HOA; therefore you have a Board of Directors, so you need D & O insurance.  You have property, so you need liability and property insurance.  You have to collect money, so you have bookkeeping and banking costs and the need for fidelity insurance.  You need to pay taxes.  Basically, in far too many instances the cost of actually maintaining common area pales compared to the “minimal” costs involved in just existing as an HOA.

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