Many factors affect a home’s value. The condition of the property, its location, its proximity to community services and amenities, the number of bedrooms and bathrooms, the age of its appliances and HVAC systems, and many other elements will determine the price of the home.
Another factor that can affect the desirability of a home is its status within a homeowners association (HOA). When you live in an HOA community, you agree to abide by the covenants, conditions, and restrictions of the governing documents. You must also pay the HOA fees on time. In exchange, you have access to shared amenities and community services.
Getting rid of an HOA is possible if you are concerned about selling your home or keeping up with the monthly fees. However, dissolving an HOA is very complex and requires a lengthy process.
The Difficulty of Dissolving a Homeowners Association
A homeowners association is a legal entity protected by legal documents. Governments can help regulate or enforce the rules in these communities. Dissolving an HOA requires extensive legal expertise, perseverance, and agreement from the other homeowners.
For example, in a condominium building, you will likely need support from other owners if there isn’t a termination agreement already in place.
HOAs and Governing Documents
The basis of any HOA is its governing documents, primarily CC&Rs or covenants, conditions, and restrictions. All property owners with HOA membership must adhere to the CC Rs rules to be part of this legal entity.
HOA rules can include regulations about lawn maintenance, home renovations, contributions to specific community services, and investment in future projects. The mandatory HOA fees must be paid on time to maintain membership.
These documents establish the authority of the HOA. Depending on the terms of the CC Rs, it could be challenging to dissolve the association unless you have the support of the vast majority of HOA members. This may require support from almost the entire housing development.
Methods for Dissolving an HOA
There are numerous reasons for dissolving an HOA. Most members may agree to dissolve the HOA voluntarily to become more independent as property owners. Perhaps the HOA board is overstepping its authority or breaching the contract signed with individual members. Let’s look at the main processes to dissolve the HOA you are living in.
Voluntary Dissolution
Voluntary HOA dissolution is only possible with a majority vote from the HOA membership. In many cases, a supermajority is required to end the HOA voluntarily. Even if most of the property owners in your association agree to this course of action, the winding-up process must adhere to state laws and the HOA governing documents to work.
If a voluntary HOA dissolution is possible, you should hire a lawyer to review the documents and determine what legal process must be followed to proceed. The court system may consider remaining assets, such as shared amenities, the best interest of the community, known liabilities of the HOA, and more. An attorney can help you learn more about what the process includes.
Legal Action
Your other option for dissolving the association is to pursue action against the HOA. For example, you could file a lawsuit against the HOA for breaching the contract or mismanaging the community. This could be grounds for a legal case if these decision-makers overstep their authority and enforce rules not laid out in the documents.
Pursuing legal action should always be a last resort. A complex case could last months or even years, racking up expensive legal fees. Most homeowners are unwilling to accrue these costs while waiting for the lawsuit to resolve in their favor, so consider the ramifications and debts of pursuing a lawsuit and research your other dispute resolution options first.
Alternatives to Dissolving the HOA
Dissolving an HOA is a very dramatic step to take. Unless the board is significantly mistreating homeowners, there are other ways to find a resolution to your problem. Here are some alternatives to dissolving the HOA that could solve your problem, and you don’t need a supermajority vote for all of them.
Amending the Governing Documents
As an individual homeowner, you may feel powerless against the homeowners association and the regulations of the CC&Rs. However, if you can secure support from most homeowners, it may be possible to amend the documents governing the HOA.
Rather than eliminating the HOA entirely and missing out on the benefits, you can adjust how the entity operates and the rules it enforces.
Whether these changes involve a new monthly fee for membership, selling assets in the community to save money, upgrading recreational facilities, or adjusting snow removal policies, there is a process for changing the HOA documents.
Recalling an HOA Board Member or Replacing Board Members
Your dispute may be more with board members than the regulations of the HOA itself. If specific board members are not performing their roles satisfactorily or are overstepping their authority, you can recall or replace them. This typically requires a vote among the current homeowners in the association.
This is an efficient solution to influence HOA management and decision-making, as you can elect board members who align with your preferences.
Negotiating with the HOA Board
If you have a dispute with the HOA, you can simply communicate with the board to negotiate your side. You may need temporary relief from the monthly fee because of financial hardship.
You may have been fined for a rule violation without the other member’s notice. These specific concerns and disputes can be taken directly to the board, who will hear your case and make a decision. This should be the first option for any HOA disputes.
Consequences of Dissolving an HOA
Pursuing alternatives to dissolution is usually the wiser course of action. Although HOAs can be mismanaged, they still provide significant benefits for the homeowners who live there. If you choose drastic action, there may be unintended consequences for yourself and other former community members.
Impact on Property Values
Properties in HOAs often have higher values than their counterparts. Many families strive for a desirable, safe community in an HOA neighborhood. If an HOA is dissolved, community maintenance and standards could disappear overnight. This may lead to a neighborhood that quickly loses its visual appeal, and the value of the properties in this area will also drop.
The neighborhood benefits from raised property values when these services are paid for and implemented.
Responsibility for Common Areas
If the HOA has any common areas or shared amenities, such as private pools, gyms, or small parks, there will be a question about who is responsible for maintaining them. The pool may close permanently if you and the other homeowners cannot find someone to take responsibility for it.
As a result, the quality of living in that neighborhood may diminish slightly, making home values drop even further. Plus, there will be an unsightly facility that is unused and could fall into disrepair quickly. At this point, it’s hard to find someone to take control of the facility or take responsibility for maintenance costs.
Potential for Disputes and Legal Issues
When you live in an HOA, you agree to abide by its rules with your neighbors. Once that HOA is dissolved, there is no legal basis for resolving disputes or filing complaints. Instead, you must learn to manage the responsibilities that used to be shared among all members.
If you have issues with other homeowners, they must be resolved privately rather than through a process within the HOA governance. This could even cause legal problems with your neighbors since no governing board can mediate.
Challenges of Selling Your Home in an HOA Community
Selling a house in an HOA is a challenging process. While the HOA owns the shared amenities and private roads within the community, you still own the home and have the right to sell it. However, many people find HOAs unappealing, so it could be tough to find a motivated buyer who is willing to follow the rules of the HOA and pay the monthly dues.
HOAs with strict regulations will only appeal to certain buyers, so your buyer pool will be smaller. Before purchasing a property, you may wonder, can you refuse to join a homeowners association? Understand your rights and options.
Selling to a Cash Home Buyer
One way to overcome a lack of demand for your HOA property is to sell to a cash buyer. Cash buyers will purchase homes in any condition, including those within an HOA. Selling to a cash home buyer offers numerous advantages, such as a faster closing, no financing delays, no need to make repairs or clean the property, and no showings or open houses.
The Bottom Line
Although life in an HOA involves adherence to more rules and monthly fees, it can still be an excellent fit for the right buyer. Dissolving these entities is complicated, so it is recommended that other means be pursued to resolve a dispute.
However, if you want to sell your house and move on from the HOA, you can sell quickly to A-List Properties. As a cash buyer, we can close the deal in 14 days or less once you accept our cash offer, and you won’t have to worry about paying for repairs or cleaning the property first.
If you want to sell your house in an HOA for cash, call us today at 972-526-7042 or complete the contact form.
Zach Shelley
Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.
