By Deborah Goonan, Independent American Communities
Now here’s a report of an HOA that has been defunct through Administrative Dissolution since 2002, but nevertheless, has been collecting assessments for the past fourteen years.
Harvest Glen is located in Cumberland, Indiana. According to this Fox59 report, homeowners have been paying $50 per year to cover the cost of common area maintenance, and submitting exterior improvements to the HOA for pre approval. Legally, the Association has no authority to do so.
Some other interesting tidbits in the report:
The treasurer is the only officer for this neighborhood “HOA.” He called a meeting on Tuesday night to clarify the situation. He claims when duties were passed down, he didn’t know about the paperwork that had to be filed to keep the HOA title.
“This is a lay individual as many are on homeowners associations and didn’t recognize all the state requirements for filing with the secretary of state,” said Paul Carroll, an attorney.
Yes, assessments are “only” $50 per year. Multiply that by every home for 14 years. That’s a sizable chunk of money. And with a sole individual in charge of the bank accounts – even if owners believe the Treasurer is completely honest – perhaps an audit is in order!
That aside, there’s a good chance the person serving as Treasurer of the non-valid HOA will attempt to reinstate the Association under Indiana statute. That would involve completing an application, and paying accumulated fines and late fees. However, once reinstated, the state of Indiana will back date the corporate registration, and the HOA can operate as if nothing ever happened.
See Ind. Code § 23-1-46-3 : Indiana Code – Section 23-1-46-3: Reinstatement – See more at: http://codes.lp.findlaw.com/incode/23/1/46/23-1-46-3#sthash.PMLs8WKO.dpuf
But here are some questions concerning homeowner private property rights:
- Why aren’t all homeowners legally required to consent to this reinstatement, even though the dissolution was administrative in nature? (Homeowners never actually voted to do away with the HOA.)
- And, if given the choice, why even continue to maintain a homeowners association? It may not even be necessary, as in the case of a neighborhood with minimal common area.
- If homeowners want to continue to share maintenance costs for common areas, shouldn’t they be fully informed of the liabilities that accompany mandatory HOA membership?
- What if homeowners still agree to keep the HOA for maintenance, but wish to do away with all the rules and restrictions? Shouldn’t owners be given that choice?
- And why should any HOA be designed to continue indefinitely, without any conscious decision of affected property owners?
As more and more planned communities mature, they may find there is no need for a homeowners association, or that the HOA is far more trouble than it’s worth. Many will simply become inactive. But there needs to be a well-thought-out process for how and when HOA dissolution should occur – one that respects the property rights of individual homeowners, and prevents “zombie” associations from being re-imposed upon unwilling neighbors.