Can Someone Opt Out of a Voluntary HOA after signing CC&Rs?

@dolphinboy

You’re my hero du jour. Hang tough.

In the alternative, offer the neighborhood HOA the opportunity to buy your house at some ridiculous (maybe 10X) multiple of its fair market value.

By my reading of the current Montana statute, it’s 100%. If it’s 80%, all of this could work out very differently for you. You should definitely talk with counsel.

Why won’t you just sign this document giving all your property and earnings to me in perpetuity?

When you buy into an HOA community, you buy into a specific set of rules that you agree you are willing to abide by, with specific procedures for changing them. When he bought his property, no one told him what those rules were or how he and his neighbors could change them. What he has learned since is that he doesn’t like the rules and doesn’t want to be bound by them. Perhaps if he had known when he was buying that he was going to be bound by them, he never would have purchased the property. Perhaps he would have lowered his offering price because the house with the hassle of this particular HOA’s rules wasn’t worth it. He didn’t get the chance to make those decisions because he was not told about the HOA before he closed.

I’m confused about this too, and I’m not sure where the 80% number comes from. There is a practical problem with this though - the HOA may not be able to get 80% of the consent from the current members. The OP asked whether existing members could get out. If they want out of the current HOA, they aren’t likely to willingly sign up for a new one even if they could drag a few recalcitrant neighbors along with them.

It’s sort of like being grandfathered in with something that has been disallowed for other residents. As long as you’re not a huge jerk about it, nobody gets that upset.

If the OP is not in the HOA does this mean when he sells the new buyers are likewise free from the HOA?

Yes, unless I’m missing something.

Where did that come from?

I assumed the HOA didn’t change any rules when they re-jiggered the HOA.

But I do not know that. I would think the OP would have mentioned if the new HOA had much more offensive rules than he agreed to when buying the house.

It wasn’t my impression that the OP had agreed to these rules, by virtue of not having signed the relevant CC&Rs.

Which seems to be the fundamental premise of the OP.

Okay, that was a bit extreme, How about signing this document where you pay me some money every month and I do some things for you. Also, if you break the rules, I can fine you. Is that okay? Because that is the OP’s actual situation. No, he doesn’t know what those rules are either because no one has told him.

The OP didn’t receive or agree to any rules when he bought the house because there was no HOA.

I’m in the real estate industry (as a developer, commercial and residential land lord), and I am glad OP is going to be talking to a lawyer as some things do not make sense as they have been explained here.

HOAs and their regulations are also very much variable by State, so I don’t even want to speculate much on a State I’m wholly unfamiliar with.

That being said, OP seems to be positing this: I bought a house that was in a HOA, but they didn’t have me sign the CC&Rs, his guess is this is because they had canceled the old CC&Rs and were in the process of getting homeowners to sign new ones, making the HOA “voluntary” until that process completes. Since he didn’t sign, he’s not part of the HOA (he thinks).

In Virginia at least that is…not how any of this would work. Your property would be part of the Association via a restrictive covenant, if you didn’t sign the CC&Rs it creates a legal wrinkle, but it actually doesn’t remove the property from the restrictive covenant, and in fact likely the HOA could place liens on the property for unpaid fees.

Maybe to take a step back–CC&Rs and HOAs are not synonymous. Property covenants long predate HOAs, in fact, HOAs are a “legal invention” that utilized existing real property legal concepts (like covenants.) You can actually have restrictive covenants on your property that have nothing to do with a HOA, for example.

Generally around here, when you buy a house, you do not sign the “CC&Rs”, the covenants are already established on the property. What you sign as a homeowner is the “Declaration of CC&Rs”, basically acknowledging that you are aware of the covenants on the property. While I’m not personally familiar with a situation where this occurred, I would be surprised if failure to sign the Declaration would remove the covenants from the property, once the covenant is properly established. It may open up various causes of action you could pursue legally against other parties to your real estate transaction (including the title agency and et al.)

Now let’s address the second element here, the belief that the HOA was in the process of updating their CC&Rs, and the OP somehow took possession of the home during what would amount to a CC&R interregnum. That’s…weird, and maybe it is possible in Montana. In Virginia that would not be very likely, in Virginia if a HOA wanted to have the underlying CC&Rs changed, it would seek to get enough unit owners / homeowners to agree that it could legally change the CC&Rs. Unlike a normal HOA bylaw, most states I’m familiar with, changing the CC&Rs requires a supermajority of all members of the association. However, once the supermajority has been reached, non-signees are affected by the change and can’t “opt out” by just refusing to sign some document. In fact I’m frankly curious if what’s really going on is the HOA is trying to reach that supermajority, and that’s what they want you to agree to, and maybe the communication around all of this is bad so it’s misunderstood that is what is going on.

If that is the case you are very likely governed by the covenants that were in force on the property when you purchased it. If for some reason you weren’t made aware of these covenants and didn’t sign a presented Declaration of covenants, that likely gives you a cause of action against people involved in the real estate transaction, but I would be quite surprised if it dissolved the covenant.

In Virginia at least the old covenants don’t go into abeyance as part of some interregnum just because the HOA is in the process of trying to amend or get whole new CC&Rs passed.

My point is the OP knew he was buying a place in a neighborhood with an HOA (he said so). I would think he was aware of the rules of the HOA before purchasing (it would be a wise precaution before spending a lot of money on a house). He went to the closing with the belief he would be signing those CC&Rs suggesting he was fine with all of it at that time.

The OP – as has been stated repeatedly – really needs a Montana real estate lawyer.

IANAL, but ISTM that The Most Controlling Issue here is whether or not his property is affected by deed restrictions that set out a mandatory HOA affecting his property:

https://www.avvo.com/legal-guides/ugc/mandatory-or-voluntary-are-you-really-ruled-by-a-hoa-

This may or may not be applicable to Montana, but it does comport with my general, non-legal understanding of what mandatory/voluntary HOA means.

But, as has been mentioned, the Statute of Frauds makes this much more about what the OP did or did not sign, and much less (read: probably not at all) about what he/she was thinking.

[not Montana, but probably still fairly relevant]

100% this–the key question is was the property he purchased subject to restrictive covenants requiring membership in a HOA. If so, he is very likely bound by those no matter what he signed or did not sign.

Now, is it possible that as he theorizes, the HOA took some weird, and stupid, legal action that accidentally dissolved the enforceability of the HOA? Maybe, who knows. That’s why you need a lawyer…that’s going to be a complicated question. If the HOA did it, that would surprise me, because most HOAs would consult with a real estate attorney for making changes to CC&Rs and I assume would avoid such obvious pitfalls. But anything is possible.

Since this thread appears to be more legal opinion than legal fact, let’s move this to IMHO (from GQ).

Right. According to the OP, there was no such acknowledgment at the closing because there was no HOA at the time. That is definitely something he should discuss with his lawyer.

I agree completely with this statement.

I agree with this too but, if he were subject to a covenant, I would be very surprised that the title company and lawyer involved wouldn’t have known about it and told him about it when he purchased. The covenants are part of the chain of title. The covenants shouldn’t be hard to discover or tell him about. This seems to be the key difference in our view of the facts. Based on what the OP said, it doesn’t seem like there was a duly authorized HOA at the time he purchased or CC&Rs recorded on the title requiring him to be an HOA member. Obligatory HOA membership is a title defect he has a right to know about.

My main confusion is basically two fold, and AFAICT the OP’s post isn’t crystal clear:

  1. Did a HOA w/appropriate restrictive covenants exist on this property at some point in time, or are people attempting to establish a new one? He makes it sound like it’s the former, but then the process he describes sounds more like the latter. I’m unsure which.

  2. If there was previously a restrictive covenant on the property obligating association with a HOA, what mechanism occurred that “dissolved this and required re-affirmation by all homeowners”? That would be extremely unusual at least based on my experience, changes to covenants just mean that the old covenants remain in force until new ones reach the supermajority threshold required to take effect. He seems to me, to be describing a process in which a HOA intentionally dissolved its covenants, and then tried to get homeowners to sign new ones…which would be extremely abnormal based on my experience.

Is this how a title company discovers if there are CC&R’s on the property? By contacting the HOA? It sounds pretty flimsy for the title company to depend on someone at the HOA rather than looking up some kind of official document with the county registrar.

As I said earlier, I am not aware of HOA’s in Canada (other than condos) and I find the concept very alien to the concept of private property. It simply seems to be a way for municipalities to shirk their basic obligations.

I was also just reading a news report about a resident whose HOA was being taken to court by the DOJ for Human Rights violations for complaining that he left his shoes outside by his door. (As a 9-11 responder he has extreme sensitivity to allergens). My joke earlier about the politics being too petty was only half in jest. Why would anyone volunteer for such petty control if they could possibly avoid it?

How are covenants passed on? Are they not required to be registered with the title, like liens? Or are they documents that can spring onto an unaware home buyer decades down the road?

What is the obligation on anyone and everyone and the legal result if a sale is made on the assumption that such does not exist and it turns out one does? I would imagine a restriction or dues obligation would affect the value of a property a buyer was willing to pay. Whether there’s anything to sign or not, presumably if a covenant is in force a copy should be forthcoming before the sale. (Only the National Hockey League, AFAIK, has a history of contracts where one party signing was not allowed to see the contract) So does it mean the sale is reversed, or the obligation disappears for failure to notify, or what? (It appears this person’s lawyers did due diligence)

Well, the facts aren’t very clear and the OP should definitely talk to a lawyer. I don’t know what the old covenants said and I don’t know how they were removed. I can imagine an infinite variety of things but I can only rely on what the OP said.

The CC&Rs are registered.

Covenants, conditions and restrictions are an expression of private property rights. I have the right to not sell you my property unless you agree to certain things that I put in the CC&Rs. One of those things I can require is that you, and the people who get the property from you, be members of an HOA and be subject to its rules.

It will vary from state to state but, in general, a valid CC&R will be upheld even if the buyer didn’t have actual knowledge of it. The buyer had constructive notice because the CC&R is registered.

Different people in the process should tell the buyer about the CC&R and the HOA. Those people include the seller, the real estate agents, the title insurance company, and the buyer’s lawyer. Some or all of those people could be responsible if they didn’t tell the buyer about the CC&Rs and the HOA. The failure to tell the buyer about the HOA doesn’t free the buyer from the obligation to comply the HOA requirements.

How does a HOA or CC&R get around the rule against perpetuities?