Time To Call It Quits?


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.

New Mortgage Regulations = Strict Lender Review


Since January 2014, lenders underwriting mortgages look at your application differently, with particular attention to your ability to repay the loan.  Proving your income and assets is absolutely essential.  Are you ready to apply?


A –AFFORD: What can you afford? 


Know what you can afford.  Do the math and be realistic.  Banks and lenders will use formulas to assign you a payment amount but you should already know how much you can comfortably spend on a mortgage. The Consumer Financial Protection Bureau will help you understand the process and your rights throughout it.  Visit their site at:   www.consumerfinance.gov   Avoid mortgage brokers or lenders that encourage you to make hasty decisions or ‘fudge’ your application.  No loan is worth risking your integrity or common sense.  Know that your application will be scrutinized, so be ready.


B- BARGAIN!   Position yourself for the best rate.


Be prepared with all your financial documents.  Collect at least 2 years tax returns, 3 months paystubs, all account numbers, 3 months bank statements and papers verifying your income and debt (i.e. car note statement, utility bills, etc.).  Get a copy of your credit report and clean it up as much as possible before applying for a new mortgage.  Then, go to the Federal Reserve’s website calculator and practice pricing loans.  www.federalreserve.gov/pubs/mortgage/worksheet.pdf.




Bargain.  Don’t take the first loan you’re offered. Negotiate!  Ask for a discount in rate or fees.  Be patient.  Leave the lender’s desk.  Come again another day and the deal might be better.  Stay on top of prevailing rates to increase your bargaining power. For good rates, keep your monthly debt below 43% of your income.


C-COMPARE AND CONTROL! Do the work and get the loan.


Brokers and banks are in business to sell loans and get paid when you sign on the dotted line.  You control the process!  Educate yourself so you know a good loan from a bad one.  Don’t be swayed by friends, family, or others anxious for you to close the deal.  Check in to this website: www.federalreserve.gov/pubs/mortgage/mortb_1.htm. You will find excellent information on how to shop and compare loans.  Do your homework and survive the strict guidelines lenders must follow today.


Tempted By Technology


When the Board of Directors Misuses Email


HOA officers, like the rest of human race, are fascinated with the speed, efficiency and ease of technology.   When it comes to using email for HOA business, however, there are strict guidelines for substituting emails for meetings or for including privileged information in emails. Like cell phone messages, email correspondence can be forwarded, copied, mutilated and cited during court proceedings.  The obligation to act as a fiduciary for all homeowners, means that board members must take the time to meet and communicate properly.


When board members get sloppy with email, they subject themselves, other board officers and the general membership to lawsuits.  An ill -advised copy of email correspondence that includes confidential board communication or worse, privileged information about specific homeowners, can go ‘viral’ in a flash.  It’s best that boards keep e-mails to a minimum and avoid the risk.  When emails are used to save time, the content must be monitored and the ‘cc’ connections scrutinized.


Board officers should review email correspondence and recipient lists before pushing ‘send.’ Make sure that the ‘forwards’ are appropriate and that no previous ‘strings’ of mail are inadvertently attached.  So often we receive email that has a trail of other emails attached, sent in error.  HOA officers cannot afford to make mistakes when sending emails about board business, especially when handling sensitive legal or financial matters.  Some boards go a bit further when they make decisions or hold impromptu meetings via email.  This is beyond bad business practice and should never occur.


States consider it a blatant violation of law when boards meet and reach decisions via email.  In California, for example, it is a violation of the Common Interest Development Open Meeting Act, Civil Code Section 1363.05. This happens when boards are short on time or cannot arrange for enough members to be physically present to constitute a quorum.  To avoid breaking the law, boards should simply reschedule to a better time when officers can meet face to face, take minutes, and address the agenda and voting process properly. When boards meet and make decisions via email, they are exposing the association to lawsuits because this could be construed as having a ‘secret’ meeting.


Making decisions without the proper form could mean that the decisions are without authority and are invalid.  Too much to risk! Proceed cautiously with HOA based e-mail.


Paying Tenants to Refer Others? Georgians……Be Careful!


Don’t let money exchange hands before you know the law.  If you own a multi-unit building for example, and want to pay existing tenants to refer new ones, be careful when working with licensed agents or brokers.


The Official Code of Georgia Annotated Section 43-40-25 (a)(17) prevents a licensee from paying money to an unlicensed person for performing the acts of a licensee.  This means that only property owners can legally pay referral fees to existing tenants.


Advertising works, so make sure any ad you or your agent posts makes it clear who is paying the fee.  The best ads also explain when the referral fee will be paid.


Georgia’s code also makes it unlawful for a broker or licensee to share his or her management fee with an unlicensed person.   The licensed agent must be perfectly clear about this to you, existing tenants, and prospective tenants.


Paying referral fees in Georgia is regulated. Compliance counts! Read the code before handing over the cash.