Our Small Community is Without a Home Owner’s Association, but Some of Us are Still Paying Dues, What Should we do?

Note: The DearEsq free 'ask a lawyer' site is offered as a free informational service to the public and is not intended as legal advice. Laws vary from state-to-state, and in addition every situation is unique, and relevant facts may not be known. The answer to the question posed below may not apply to in your state or to your situation. For legal advice in your state and your situation you should consult with an attorney in your state who is familiar with the rules and laws in your state.

“I live in a small (15 home) community outside Charlotte, NC. The community developer controlled the HOA initially, though within the past couple years, several new homes have been built and sold, and the new homeowners were told via realtors and at closing that there was no HOA and no fees due. In fact, one homebuyer had an annual HOA fee check returned to him at closing and was told the HOA was defunct. The rest of the community has been living under the CC&R documents and paying lake access fees. The community representatives contacted the developer about taking control of the HOA, and the developer handed over documents and bank accounts. Now, there are homes for sale listing “No HOA” including a new home built by the developer. To my knowledge, the HOA management was never changed on record at the state level, but was registered with the state of NC at its inception. Do we have an actionable HOA or not? If not, what do we need to do? Do the original CC&Rs stand?”The situation you have could either be a misunderstanding that’s fairly easy to resolve, or a big mess. In either case, I think it would be worth your while to have it reviewed by a local real estate attorney so you’re sure.

Question: In general, CC&Rs are effective because they are recorded against each of the affected properties. This means that when you buy the property, you are on notice of the CC&Rs because they will show up when the title to the property is reviewed.Having CC&Rs and having an HOA are two different things. Some CC&Rs require that there be an HOA, and others do not, so it may be that the CC&Rs are effective, but the HOA is optional, and is in fact “defunct.” But if you are paying for an HOA, everyone who is subject to the CC&Rs should also be paying.

That is why it is very odd that the recent sales were represented as having “no HOA,” since that is something which should have been seen in the title when they were being sold. So the question is, what happened? Were the CC&Rs not recorded against those properties? Is there a provision in the CC&Rs terminating the HOA when a certain percentage of units are sold? These are the sorts of things that your attorney should be able to find out.
However, you should not be in a situation where some owners have to pay for an HOA and others do not. Whether it’s everyone or no one will depend on a review of the applicable documents.