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Dimitry Esquire
Dimitry Esquire, Attorney
Category: Real Estate Law
Satisfied Customers: 41221
Experience:  JA Mentor, multiple jurisdictions, specialize in business/contract disputes, estate creation & admin
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What can the residents do when their HOA has gone rogue? We

Customer Question

What can the residents do when their HOA has gone rogue? We are now strapped with a $2mil loan for our Golf Course here in CountryPlace, Pearland, TX. It is an over 55 community of retirees. The golf course has been signed over to the residents - but the decision making process regarding it has been done by the Board. There are 841 homes in the community. Only those attending the HOA meetings vote - which amounts to 65- to 100 homeowners in attendance at the meetings. Our Board has reminded us repeatedly of their power handed down by the State and have abused that priviledge. The budget presented monthly is strictly and overview and sufficient use of the loan funds is not forthcoming. What avenue of approach do we as homeowners have to correct this?
Submitted: 2 years ago.
Category: Real Estate Law
Expert:  Dimitry Esquire replied 2 years ago.
Thank you for your question. Please permit me to assist you with your concerns.
The answer that I will provide will likely not be favorable, so I ask that you do not blame the messenger. I will also go through all potential options and will point out weaknesses with their approach.
First of all, going to court should be the last and final step under the circumstances. The courts tend to be fairly deferential to HOAs because an HOA is ultimately self-regulating. Absent a clear case of a fiduciary duty violation, the courts tend to uphold their decisions even if wrong provided that they are fairly and properly voted in. This is still the best option if all others fail, but know that without a fiduciary breach this is an uphill climb. In addition if you file suit the HOA is free to demand assessments from all members, including you, to cover their legal fees.
The other option is to have more competent people run. Since HOAs are elected, you CAN kick them out either via a regular election, or as per your own bylaws and CC&Rs, via a potential recall vote. This is probably the cheaper outcome but yes, you would need to motivate the other residents to agree to want to change something under the circumstance. As far as the management company, they are hired and paid for by the HOA Board, so they will report to them--they won't really assist as anything here ultimately has to be done by either retaining your own counsel, or by voting or recalling the bad members so that more competent individuals can attempt to clean up this mess.
Dimitry, Esq.