4 HOA GOTCHAS

Updated: Dec 5, 2021

Getting Rid of the HOA

Unhappy owners think they can terminate a “bad” HOA by forcing the dissolution of the HOA’s corporate entity (if it has one). Not so. HOAs are real property organizations whose existence, powers, and duties run with the land. They arise from documents recorded in the county records, which are unaffected by state records. To pull the plug on an HOA typically requires a declaration amendment that is approved by most if not all owners, plus their mortgage lenders and possibly local governments. Dissolving the HOA’s corporate entity (if it has one) is only one step in a very lengthy, expensive, and complex process. Help your community, be a part of the solution. Gain a seat on the board or committee d help navigate the nuances of HOA Living. Read your governing documents, you may learn something new about where you live.

Foreclosure

Judicial or nonjudicial—do HOAs have options when foreclosing for delinquent assessments? Yes and no. HOAs with valid liens can always pursue old-fashioned, full-blown judicial foreclosure, which starts with a lawsuit and ends with a sheriff’s sale. Nonjudicial foreclosure (first Tuesday on the courthouse steps) requires a valid lien and a private power of sale. Condo HOAs have a statutory lien and power of sale, subdivision HOAs don’t. If subdivision restrictions provide a lien and private power of sale, the subdivision HOA may foreclose non-judicially (courthouse steps) but only by jumping through legal hoops that don’t pertain to condo HOAs. Subdivision HOAs must first obtain a special type of expedited court order, similar to home equity lien foreclosures. The cost of a home going to foreclosure due to non-compliance will cost a high price and the HOA (that is you) will pay for it first.

Common Areas

Folks often assume an HOA must own at least one common area to justify its existence. Not exactly. A subdivision HOA may govern a subdivision that has no common area. Why? Perhaps for architectural control. The typical subdivision has a common area that’s owned by the HOA by virtue of a recorded deed or plat. Having a community with lots of amenities will undoubtedly be more costly in HOA fees, needed efforts of all in the community than one without. The best tactic in an HOA is to work together to improve your community. A thriving beautiful subdivision in any city will benefit not only the homeowners in that subdivision but make things better for City as a whole.

Complying With HOA Documents

Below is the Hierarchy of Documents and how they take precedence for the HOA.

The laws of the land take precedence over all other HOA documents. State laws come before local laws, while federal laws outweigh everything else.
Please note: Federal/State Law will explicitly state that it supersedes an HOA governing document, otherwise the HOA document will take precedence. Whether you’re drafting your governing documents or deciding which one to follow, it’s important to always check the law first. This way, you’re not acting against the laws of the land.