How to Dissolve Homeowners Association

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Dissolving a Homeowner Association (HOA) may become necessary if some extraordinary situation develops to warrant such a move. At times the individual apartment owners who are members of HOA may be concerned with the extravagant spending by the HOA, negligence in maintaining the building, the exorbitant fees the members are required to pay, inadequate security arrangements etc.

Whatever the reasons, there is a set of formal rules that needs to be followed for dissolution of your HOA.   

Procedure for Dissolving HOA

The procedure for dissolving HOA will be outlined in the basic document of the HOA containing the incorporation clauses, articles of association, byelaws and other applicable rules.

Then there are the different State laws like Uniform Common Interest Ownership Act (UCIOA) and the Uniform Planned Community Act (UPCA) that have to be scrupulously adhered to gain legal validity.

The standard rule is 80 percent of the members of HOA must vote favoring dissolution unless the HOA documents state otherwise. A termination deed must be suitably drafted and signed by those members who voted for the dissolution, and this agreement must be registered at the appropriate land office.

In States where UCIOA or UPC laws are not in force, it may be necessary to follow the laws that apply to nonprofit organizations for dissolving the HOA.

Additional Steps Needed

The dissolution of HOA can not be deemed complete unless all its business dealings are also appropriately closed. The State laws will contain the details of this process – though essentially the HOA should settle all outstanding debts and dispose off all available assets.

Note of Caution

Though dissolving a HOA is legally permissible, it is a daunting task involving a lot of procedural formalities.  But generally speaking, dissolution of HOA is best avoided and should be resorted to, only under extreme circumstances.

Dissolution of HOA will, in all probability, lead to acrimony and in-fighting amongst members and quite often it will adversely affect the resale value of the property.

Legal Help

Quite often, details regarding dissolution contained in HOA basic document may be inadequate or ambiguous necessitating hiring the services of a lawyer specializing in real estate matters. Besides, the HOA documents will seldom contain specific information about the steps to be taken post dissolution.

Again, State laws may contain legal jargons that are best understood and interpreted only by lawyers handling real estate cases. It is therefore prudent to seek legal help instead of trying to mess up the issue.

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