"The Arizona Condominium Act (ARS33-1228) allows for an HOA to disband if 80 percent of the members agree to it. In this case the investors were the 80 percent. Forcing the remaining owners to sell at what they called market value set at $75,000. That number was determined by an appraiser, hired by the investor-run HOA according to the termination agreement filed with the county. These folks say it was just enough to pay off their mortgages and left nothing to even put toward a down payment."
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I get lots of comments and emails from people saying they want owners to have the power to dissolve their HOA, and sometimes that's the sensible thing to do. But that can also be done by an investor-owner with 80% of the voting interests, who can then force the remaining owners to sell.
5 comments:
Hmmm. So all the other owners had mortgages with a $75,000 balance each? Not likely.
At any rate, yet again we see why this type of housing does not work at least not for the unit owners. The soon-to-be-former unit owners should be glad this occurred during today's market as opposed to say 2009-2014.
This condo law (part of the Uniform Acts that is the basis for many state laws) is not meant to aid owners in voluntarily dissolving their association. It's just a legal license for the savvy investors to steal homes, and then make even more money renting, reselling, or redeveloping.
It's not as if condo owners are getting together and saying, "let's put our who building/complex up for sale and see if anyone bites, and what they are willing to pay us."
The investors have control and the upper hand 99% of the time. And they generally don't choose to takeover and terminate condos that will require extensive repair, unless the land is extremely valuable.
HOAs ≠ condominiums.
It's not appropriate to suggest that folks might lose their home if an HOA is terminated. Ownership of HOA-burdened housing is not in any way jeopardized when the burden of the HOA corporation is removed.
In the condominium world ownership is a purely statutory creature to begin with.
However, IC_deLight, investors can still buy vacant or distressed homes in an HOA, and find other ways to force out remaining owners. I talked to a FL homeowner a few weeks ago that lives in a community of several HOA Villages (Single family detached homes and townhouses) all under one Master HOA. Investors have been buying up homes in a couple of the Villages and then renting them out. It is changing the entire fabric of HOA neighborhoods, because when the investor-landlord owners gain enough voting power to control the Village Board, they begin to amend CC&Rs to relax rental restrictions, sometimes to the point of creating AirBnB villages that were marekted as/or intended to supply permanent housing for owner-occupants.
In this situation, majority investors probably do NOT want to dissolve the HOA, because, if they were to do so, they would lose the power of their corporate voting interests, and their control of the board! Think about it. If the HOA were terminiated, properties and residents of the former HOA would become part of the county or municipality, correct? And then each RESIDENT who REGISTERS TO VOTE, gets to have an equal say in how they are governed by paid public servants chosen in real elections.
“HOAs ≠ condominiums.”
Yet they are often subject to the same set of laws, governance, and defective corporate structure. Not that they necessarily should or have to be, but they are.
And for some strange reason, there are folks in whatever it is that calls itself an H.O.A. reform movement who believe that uniform laws are what is needed.
”In the condominium world ownership is a purely statutory creature to begin with.”
And should never have been legalized in the first place, much less subsidized by the federal government.
"Before 1960, the condominium form of ownership was unknown in the United States. Beginning in the early 1960s, the states began enacting statues authorizing the condominium form of ownership, principally in response to the enactment of the National Housing Act of 1961, which extended Federal Housing Administration mortgage insurance to the condominium form of ownership. See McKenzie, supra note 2, at 95. By 1967, all fifty states had enacted condominium statutes. Id. at 95–96." (Steven Siegel. The Public Role in Establishing Private Residential Communities." Urban Lawyer. Fall 2006. Footnote 23 on page 869. PDF and TOC)
As I have noted elsewhere, my congress-critter, Jared Polis (Democrat), denies that the federal government has any responsibility for this mess. "It is just another example of how determined public officials at every level of government are to wash their hands of any responsibility for HOAs and condo associations". At the very least, the federal government should stop subsidizing the C.A.I. parasites, and stop insuring mortgages that subject home owners to unlimited liability for the debts of the H.O.A. corporation.
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