> What do we do with the $500k we have the operating funds and reserves collected over the past 40 years?
Uhm, return it to the property owners?
The real pattern is that HOAs have been abusing their power; or in other cases are required because municipalities don't want to do their job. As a result the lawmakers will, unfortunately, overcorrect.
You pay the current owners as of the date of dissolution. The current owners bought into the HOA from the past owners, and thus assume future liabilities (or profits) from the HOA.
Edit: If/when it becomes known that there will be some kind of a payout, people selling their homes will need to adjust the price and/or expect some kind of credit from the buyer at closing.
You need a majority of the members to want to do it. All have to respond to the ballot. Past experience is that the members generally don’t vote even at the annual meeting.
That's because are so mind-numbingly dumb that no one is going to show up for an annual meeting unless there's actually something important to vote on.
Saying, "hey, show up and vote and you might actually get some money from it," will make people show up.
I would guess it will vary by state laws. How about a force liquidation of all tenants in common properties and any other joint properties to pay off the HOA debts and disband the HOA's. Maybe even treat it much like a chapter 11 bankruptcy / reorg? Or get investors to pick up properties?
There must be cases of HOA's being force disbanded / dissolved in the past to use as a template. I think it's just a majority vote from home owners and submission of articles of dissolution? If enough properties could be liquidated then a good incentive could be giving home owners back a few years of dues. As a bonus all the over-zealous rules that have grown over the decades get dissolved and people just default to county and state laws.
I think what GP is saying is that if I was a homeowner for 30 years, paid HOA fees all those years, then last year sold to someone else, who gets the HOA reimbursement then? I paid thousands over years and would presumably get nothing, while some other guy who just moved in all of a sudden gets a big check? That seems unfair.
I would assume the sale price of your property would be higher if it's part of a well managed HOA with 500k in reserves than if it's part of a dysfunctional, insolvent HOA, so the previous property owner kinda already got paid out for their contributions.
It's like selling shares of a company with significant cash reserves before/after they choose to liquidate a chunk of them into dividends or stock buy-backs, I would hope you priced the shares accordingly and have nothing to be mad about.
Imagine you dissolve a company that has a lot of money in the bank. What do you do with that money? Distributing it to the shareholders seems like the right way to dispose of it. What if somebody sold all their shares a day before? Well, they get nothing, that's how it works. The company's money should be accounted for in the share price, so it all works out, there's nothing unfair.
An HOA is no different. All the owners are also owners of the HOA. When you buy a place in the HOA you also buy into the HOA, and when you sell you also sell your interest in the HOA.
Except the HOA governing docs say the money goes to the State and it’s expected that the State provides the same amenities and services that the HOA was providing.
If State doesn’t then a non profit corporation is formed that does
Where I'm from we call a HOA a body corporate, and every home owner in the scheme has a % ownership in the BC. The title deed includes the ownership share. So if the house ownership is transferred, so is the share in the BC.
Size of the share is determined usually by the dwelling floor area divided by the sum total of all dwellings in the scheme.
So if you sell your house after decades of contributions, and then the BC is dissolved, then too bad, you sold your share in a going concern and lost your say in it's affairs.
Arguably you benefitted from the contributions from someone who came before you, and now someone will benefit from yours.
Hoa funds practically never get redistributed back to owners. I've never heard of such a case. We are only talking about it here because a legislature is talking about changing something state wide (and realistically this won't happen anyways).
So there is no realistic scenario where hoa reserves factor into home price
Reserves are money available for HOA expenses which would otherwise require new money from the owners. For that to factor into home prices, you just need buyers and sellers to be aware of this and what it means for their wallet in the future. Which may not be the norm since people are often clueless, but it doesn't seem completely absurd.
What you are saying is not typically in HOA governing documents nor State law so law would have to be changed and / or governing docs updated which would take a majority vote by all homeowners (60% in some cases per State law)
> What property owners is my point? Many are long gone
This statement makes no sense. The property owners are the ones who own the properties, today. It is very clear cut who they are, it's even public record.
Uhm, return it to the property owners?
The real pattern is that HOAs have been abusing their power; or in other cases are required because municipalities don't want to do their job. As a result the lawmakers will, unfortunately, overcorrect.