If your home is part of a homeowner’s association (HOA), it’s almost certain that you knew about the organization prior to purchasing the property. Aside from being a required disclosure in most states, HOA inclusion involves regular dues, so those costs are considered by lenders as part of the mortgage application process. Knowing about and agreeing to something, however, doesn’t always mean that all parties remain satisfied. Sometimes an HOA can feel like more trouble than it’s worth, and when your community has decided that enough is enough, you may be wondering just how to get rid of an HOA.
In this article, we’re going to cover a few reasons why you may want to disband your HOA, and what action you should take.
Why get rid of an HOA?
Common reasons why a neighborhood or multi-unit building may want to remove themselves from the control of an HOA essentially boil down to problems with management, finances, or other operational problems with the HOA.
The covenants, conditions, and restrictions set forth by the HOA generally mandate how homes should be maintained and decorated.
This can involve regulation around details like styles of fencing, landscaping, and what types of vehicles (and how many) may be parked outside the property. When CC&Rs become restrictive to the point where homeowners feel that they are unable to make decisions about their own homes, tension can build.
HOA fees vary widely depending on the type of housing development and services provided, but when residents feel as though the value of the HOA does not match the funds paid, frustration quickly grows.
HOAs are meant to provide value to a community. Whether through enhanced security, beautified common areas, or concierge-style services, it’s understandable when folks become upset with an HOA that falls short on responsibilities to homeowners.
Abuse of power
If certain members of an HOA are taking their position on the board to an extreme, it’s only a matter of time until a community will be ready to speak up in protest.
But, buyer beware, it’s rare for an HOA to be dissolved, and the process can be very time-consuming and expensive.
“I don’t know that I’ve ever seen a situation where I thought an HOA would be better off coming out of existence,” says Ursula Burgess Esq., President, Board of Trustees for the Community Associations Institute (CAI). “The better route is to figure out what the problem is and resolve that so the association can operate properly.”
Through her 17 years of community association legal work, Burgess has developed a threshold question when a homeowner raises the issue of dissolving an HOA. She asks, “Why is there a perception that the HOA ‘needs to go’?”
Burgess finds that the consternation usually boils down to one of two issues: “Either the current make-up of the board is less than ideal, or there’s a question of maintenance issues within the community, and people don’t want to pay.”
While folks may have limited interest in shelling out extra cash for unexpected repairs that may not affect their day-to-day quality of life — such as a leaky stairwell in a condominium building, or landscaping improvements to a neighborhood entrance — community living is all about looking at the big picture.
HOAs, after all, “really are meant to be there for good reasons,” says Burgess. “If they’re not operating properly, then we’ve just got to go in and fix them.”
Laying the groundwork
To make big changes, you’ll need to understand what you’re dealing with.
Regularly attending HOA meetings will help you become familiar with the board members, your neighbors, and any hot topics of discussion. Meetings are also your opportunity to raise concerns that can help avoid escalating a complaint to the point of legal action.
Additionally, you’ll need a thorough understanding of those CC&Rs we mentioned.
Be sure that you have the most up-to-date version of the regulations — including any additional documentation that may outline terms for dissolution — and review them carefully. Depending on your grievance, there may be verbiage which can offer ground to stand on to resolve the dispute.
“My mother lived in a townhome for some time, and the sewer line was backing up,” shares James Delgado, a top Santa Fe-based real estate agent with over a decade of experience.
The situation was unclear as to whether the HOA would be liable for the repair expense, or if that responsibility would fall to the homeowners. Knowing that covenants can sometimes be subject to interpretation, Delgado and his mother wrote a letter to the HOA to clarify.
“We ended up convincing them that the HOA should pay because it was a common area sewer line, and they did provide the $4,000 in funds to have it repaired,” he says, though the process wasn’t without effort.
Thus, it’s important to have an understanding of regulations and keep careful records. Meeting minutes, all direct communications with HOA board members — even jotting down notes after a relevant conversation with neighbors can be helpful to construct a timeline of a persistent problem.
Removing an HOA board member
Sometimes, a problematic HOA can be changed for the better by unseating an offending board member.
If a particular individual is causing a problem — whether through dicey decisions or ineffective action — you’re probably not the only one who has noticed.
“The good news is that there is generally a mechanism that allows for members to vote out board members,” says Burgess, referring to HOA CC&Rs.
These steps usually involve bringing the issue to the attention of the board, setting a meeting time to discuss, and then taking a vote to remove that person.
In her experience, Burgess has found that a board member will often resign when it becomes clear that there is mobilization to vote them out. “People are generally good and try to act in the best interest of the people,” she notes. “If they don’t have the facts correct, it’s assumed they are acting on bad faith when really they are acting on bad information.”
Though sometimes challenging when it comes to managing your biggest investment, having a bit of compassion will go a long way toward reaching an amicable solution when there are thoughts of getting rid of an HOA.
“As human beings, we do that in our regular lives,” notes Burgess. “How many times have we felt slighted by a friend or a family member when we misperceived something and got ourselves in a knot over it; then when we had a conversation, we realized we had the wrong information or perceived something incorrectly? We all need to be cognizant of our human ability and limitations.”
In many cases, the guidelines will also allow for the vote-in of an immediate replacement of the unseated board member, so if you’re passionate about your community or have a vision for the direction of your HOA, don’t be shy about stepping up!
“I tell people all the time, if someone is very vocal in a board meeting and we have a vacancy, they should appoint that person. Let them take the energy and concern they have and use it for the betterment of the association,” says Burgess.
Why it’s difficult to get rid of an HOA
The tricky thing about dissolving HOAs is that their formation has to be approved by the local municipality, which is generally a positive move for the city. HOAs actually take away expenses that would otherwise fall to these localities — things like snow removal, for example.
“Localities aren’t necessarily on board if you want to dissolve an HOA,” warns Burgess.
If the HOA goes away, the upkeep of common area land and amenities reverts back to the locality, which means you’ll need their approval as part of your disbandment efforts.
You’ll also need to get mortgage companies on board.
HOAs add value to homes because they help ensure a certain standard of community living. When that community wants to eliminate an HOA, they could potentially compromise home value or home price growth in the neighborhood. To the lenders holding mortgages on those properties, well, the proposition may not look enticing.
Aside from the locality and mortgage companies, removing an HOA will also require approval by all — or a supermajority — of community residents. Two or three disgruntled neighbors aren’t going to cut it.
In short, dissolving an HOA is a lot of work. In most cases, it’s also very expensive.
“I can see a vote like this taking five figures in legal fees,” says Burgess. “And that’s not including the human capital of people going out and getting the votes and chasing down the mortgage companies for approval.”
While the governing documents of your HOA should include language on the process to follow for terminating the association, be aware that the procedure could potentially take years and many thousands of dollars — and there’s no guarantee of final approval at the end of that long road.
Consider what happens if there is no HOA
It’s important to bear in mind what would happen next if your community were indeed successful in getting rid of the HOA. In many cases, governing verbiage will state that if an HOA is dissolved, the common areas are then joint and severally owned by the homeowners.
“That opens a very ugly can of worms,” cautions Burgess. “If someone is injured in a common area, they would sue individuals personally. So you’re losing the protection of the HOA and gaining nothing because you still own the land and still have to maintain it.”
What’s more, without an HOA at the helm of community maintenance, your neighborhood is now just another bullet point on the municipality checklist.
“You may not even accomplish anything,” warns Burgess. “Say you get rid of the association and the roads are now maintained by the locality; you’ve lost control and are at the mercy of the locality.”
So, that snow removal your HOA would have otherwise handled — probably through a negotiated contract with an independent service provider — is now in the hands of the city, and your neighborhood will just have to wait its turn for service.
Other responsibilities that were likely managed by the HOA and will now fall to residents may include:
- Trash removal
- Amenities (recreational facilities, pools, outdoor areas, and so on)
- Road maintenance
- Building repair (in the case of a multi-unit structure)
- … and much more
You and your fellow residents will also need to figure out how to navigate any outstanding agreements held by the HOA prior to its dissolution. Service contracts, loans that may be due on community buildings, and allocation of existing funds will need to be managed, and it’s unlikely that every homeowner will feel the same way about how to best approach these decisions.
Realistically, your community may be setting itself up for what will equate to an informal HOA, where a few people may offer to take control of communications and doing the math on shared expenses, but you’ll still be lacking the legal protection and privileges afforded by an official HOA.
If you’ve ever thrown a sideways glance at a neighbor whose backyard tree has extended a branch or two on your side of the fence, consider the vast potential for conflict when it comes to working as a team to run your neighborhood.
“The grass isn’t going to be greener on the other side,” says Burgess.
Here’s what to do instead
As is true in so many areas of our lives, the key to resolution often lies in communication. When HOA members and board members understand each other’s intentions and responsibilities, the better an association can operate. Talk to your board members, talk to your neighbors, and don’t be afraid to ask questions.
Education is the second key aspect of a peaceful HOA. If you’d like a deeper understanding of community management goals — beyond attending meetings and reading through governing documents — CAI has a wealth of helpful resources for homeowners. They can also connect you with a local chapter, which can then help you find an attorney or management company for further assistance within your jurisdiction.
Finally, in rare cases, it may be possible to remove your lot or unit from the HOA, but don’t expect this path to be easy, inexpensive, or beneficial for your neighborly relationships.
In truth, there are few HOA grievances that can’t be solved with a level-headed conversation and assessment of facts. Remember, your HOA is there to benefit your home and your community; you’re all in this together.
“I believe in communication and I believe in education for everybody,” concludes Burgess. “I think when we communicate and we’re educated, that is the ideal mix of what gets us operating smoothly and everyone understanding each other’s roles. We may not be happy with every decision the board makes, but then at least everybody understands why those decisions are being made.”
Header Image Source: (Will Truettner / Unsplash)