Breaking up is hard to do but sometimes it’s necessary. When it’s time to consider disbanding your HOA, follow these six steps to help get your organization where it needs to be.
1) Check the legal documents to determine what the deed says about voluntary membership in the HOA. Then, find answers to these questions: How many votes are necessary to dissolve the association? What will happen to commonly owned structures like the clubhouse or pool after the organization is dissolved? Can we find someone to buy and take over maintenance of these areas?
2) Survey members of the HOA community to determine the level of support to dissolve the association. Dissolution could require a majority of members to agree.
3) Research local, state and federal laws concerning HOAs in your area. There are resources like the Uniform Common Interest Ownership Act or Uniform Planned Community Act that will help you in states where the acts apply.
4) Go to your state’s Secretary of State website and look at your community’s corporation paperwork. Ask for your state’s specific rules that must be followed.
5) Contact an attorney to create a termination agreement that spells out the terms of the action including how the common areas will be dealt with and who will be responsible for maintenance after the association is dissolved.
6) Meet with homeowners to vote on dissolving the HOA. Have members who agree sign the termination agreement. File the necessary documentation with the Secretary of State, settle outstanding debts, and dispose of assets per the termination agreement.
When the end of the road is near, and it’s time to dissolve the association, make sure your HOA knows and follows the dissolution rules spelled out in the legal documents, and be sure to comply with any state requirements. Get the consent of owners, and decide how the community will be managed going forward.
Come together before separating as an organization. Communication is key when staying together is no longer an option.