HOAleader.com - Tip of the Week - September 23, 2011
Published: Thu, 09/22/11
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Fixing a Troubled HOA: Dissolution, Receivership, or Something
Else?
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A HOAleader.com reader is in a quandary. Her HOA is beset with
delinquencies and warring factions. Some owners argue the
answer is receivership or dissolution. In this week's tip, we
discuss the pros and cons of dissolution.
"Dissolution is a lot trickier than one might think," says
Matthew Zifrony, who advises homeowners and condo associations
at Tripp Scott, a Ft. Lauderdale law firm, and who's also served
as the president of a 3,000-home association.
"What creates the association is the declaration of restrictive
covenants. To dissolve, you'd need all the people affected by
the decision to agree, unless the covenant--as here--sets out a
less-restrictive way to dissolve the association. Even then, a
lot of times, the declaration doesn't only talk about what the
residents must agree to, but it mentions that all parties that
have property rights in general--which means lenders--must also
agree."
It will likely be nigh on impossible for our reader's
association to get owners' lenders to concede to dissolution.
"I'm sorry, that's not going to happen," says Zifrony. "From a
practical standpoint, dissolution is a very difficult thing to
do--and it should be. When people move into that community, it's
often because they want to be part of that association and the
lender lends knowing they'll be part of that association. To find
that reason is taken from them should be hard to accomplish."
That's not the only problem. "There are all sorts of pitfalls
involved in dissolution, not the least of which is what do
you do with the common elements?" adds Nathaniel Abbate Jr.,
a partner at Makower Abbate & Associates PLLC in Farmington
Hills, Mich., who represents associations. "There are probably
more pitfalls involved in dissolution than in struggling to make
this situation work."
Another problem? Dissolution's effect on property values.
"Even if they can get the vote, and that's not going to happen
in this day and age," says Duane McPherson, president of the
western region and Dallas/Ft. Worth divisions of RealManage, an
association management firm that oversees properties in Arizona,
California, Colorado, Florida, Louisiana, Nevada, and Texas,
"if they disband the association, property values will tank."
Is receivership a better option? To learn more about our
reader's dilemma, whether receivership might be the answer, and
other potential solutions, see our new article:
http://www.hoaleader.com/members/627.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Would You Hire this Man? Spotting Conflicts of Interest at Your
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In this week's tip, we offer a refresher on dealing with HOA
conflicts of interest. If you're like most board members, you
know you should avoid conflicts of interest. How would you have
reacted in this real-life situation.
Click here to read full article:
< http://www.hoaleader.com/public/623.cfm >
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Click here to read full article:
< http://www.hoaleader.com/public/621.cfm >
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beginning to work toward peace in your HOA.
Click here to read full article:
< http://www.hoaleader.com/public/619.cfm >
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Click here to read full article:
< http://www.hoaleader.com/public/617.cfm >
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How to Revise Your HOA's Rules
So what do you and your homeowners association board of directors
need to know about revising rules? When do you need to consult
with owners, and when can you just go forward without notice? And
even if your state law or governing documents don't require you
to provide notice, do you need to consider the message you're
sending when you revise rule after rule--some controversial--
without a chance for owners to provide feedback? Here's a smart
process for HOA rule revisions.
Click here to read full article:
< http://www.hoaleader.com/members/616.cfm >
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