Understanding HOA Dissolution: What Every Homeowner Should Know

There are various reasons why a homeowners association may get dissolved, and the process to start its dissolution may be initiated by either the Board itself, one its members, or by a homeowner. In general, a homeowners association or HOA is established to look after the welfare of its homeowners and oversee the upkeep and safety of the community. So why would anyone within that community ever want it dissolved?

Here’s what every homeowner should know about HOA dissolution:

1. It’s a process that should abide by federal laws and HOA covenants

Understand that dissolving an HOA is a long and tedious process, which means that if the Board initiated the move, they are likely aware that dissolution could take time. They should also be aware that such an act should be done within the legal bounds of federal laws as well as the HOA’s own covenants and by-laws.

If any homeowner is against the dissolution of the HOA, this is the time to research their rights as a member of the community. It is likewise advised they seek the assistance of a licensed attorney.

2. Dissolution must be voted on by the community

Unless the dissolution was ordered by the state for whatever legal reason, dissolving a homeowners association requires the participation of the homeowners. In general, the vote to dissolve should comprise at least 80% of the community. When the ballot to vote for its dissolution has been approved by the Board, it is important that every homeowner participate because the result will directly affect them.

3. When approved, the Board should clearly communicate succeeding steps

If the dissolution has been approved, the Board must clearly communicate to the homeowners the steps they will undertake for the smooth transition. This means they must present to the homeowner documents stating where the common funds are and how they will be used, what happens to the common areas and who will oversee their maintenance, and other such important matters.

Homeowners should also find out if the dissolution of the HOA means the community will no longer be under the jurisdiction of any HOA or if a new one will be formed.

If you wish to learn more about homeowners associations, please feel free to browse our blog page. You may also visit the community news page for more information on California homeowners associations, from covenants and by-laws to HOA management and more.