Liquidation of an HOA: in what cases it may be necessary and how to carry it out correctly

In what cases is it required?

An HOA can be dissolved for many reasons.

Owners may feel that the organization has completed all necessary tasks.

And the legislation provides for the following cases of termination of the HOA:

• law violation;
• the reorganization was declared invalid by the court;
• the number of residents of the house is less than 50% of the total number of members of the organization;
• The decision to close the association of owners was made in court.

How to liquidate an HOA? Step-by-step instructions below.

Step-by-step instructions for dissolving a homeowners association

• during the registration of the HOA there was a gross non-compliance with current legislation, which is of an irreparable nature;
• conducting activities not permitted by the laws of the Russian Federation;
• carrying out actions that contradict the Constitution of the Russian Federation;
• The HOA tolerates cases of repeated or gross non-compliance with the law or other acts of government authorities.

Dear readers! The article talks about typical ways to resolve legal issues, but each case is individual. If you want to find out how to solve your particular problem , contact a consultant:

How to close by decision of the owners?

How to liquidate an HOA at the initiative of residents? So, all members of the HOA agree to close the organization. Most often, the HOA ceases to carry out its activities by mutual agreement :

• when membership fees are paid late;
• with poor maintenance of the house, lack of repairs;
• if the rights of persons living in the house are violated.

How to close an HOA voluntarily? To liquidate an HOA by decision of the owners, you must go through all stages of the procedure:

1. a decision is made to close the residents' association by voting .
2. liquidation commission is selected from among the HOA participants .
3. A message is sent to the registration authority that the organization is being closed by decision of the general meeting. Based on it, a corresponding entry is made in the Unified State Register .
4. The liquidation commission must publish a notice of the closure of the HOA in the printed publication. The note must contain the name of the organization, its address and the period during which all creditors can present their claims. Typically this period is 2 months from the date of publication of the message.
5. Creditors are also notified in writing about the closure of the organization.
6. After two months, the liquidation commission is required to draw up an initial balance sheet .
7. Next, all necessary settlements with creditors (if any) are carried out.
8. After the debt is paid, the commission draws up the final liquidation balance . This document is approved by the founders of the HOA.

After this, the liquidation of the HOA is recorded as a legal fact.

To do this, you need to provide the registration authority with:

• application for registration of liquidation, signed by the chairman of the association;
• liquidation balance sheet;
• a receipt confirming payment of the state duty.

During the general meeting of homeowners, a protocol must be drawn up .

This document confirms that the vote of the HOA members on its closure was carried out in accordance with the established rules.

The minutes of the meeting contain:

1. Information about the type of meeting.
2. Details of the meeting initiator.
3. The form according to which the vote was taken.
4. Number of HOA members.
5. Agenda.
6. Description of the meeting progress.
7. A decision that was made by voting by the participants.
8. Signatures of authorized officials.

Sample minutes of the general meeting of HOA members - decision on liquidation.

You can find a sample estimate of income and expenses of the HOA.

How to liquidate an HOA with debts: basic principles

• Violations of current legislation when creating a partnership and during its existence;
• Ineffective activities that led to the emergence of significant debt to counterparties;
• Lack of activity;
• Lack of the required number of HOA participants.

Next, the agenda items on the liquidation of the HOA are put to a vote and after the votes are counted, a protocol is drawn up, which notes all the details of the meeting, including the decisions made. After this, the step-by-step liquidation of the HOA requires mandatory notification to the territorial body of the Federal Tax Service about the decision made. The notice must be drawn up in accordance with the approved requirements. The notification is signed by the chairman of the meeting (an authorized person), and the signature must be notarized. The package of documents for the Federal Tax Service includes the notification itself and one copy of the minutes of the general meeting. The instructions for liquidating an HOA or TSN (real estate owners' association) advise doing the same. In a general sense, the liquidation procedures for HOAs and TSNs are absolutely identical for each of these forms of partnerships.

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Closure by court order

An organization can be closed by a court in several cases. And it doesn't have to be a violation of the law. For example, its management may be against closing an organization . In this situation, residents need to:

1. Create an initiative group. This is necessary to carry out certain work among the remaining members of the partnership.
2. After more than half of the residents write a letter of resignation from the organization, a lawsuit should be filed.

According to the law, an HOA, the majority of whose members are not residents of a particular apartment building, cannot continue to operate.

Therefore, the court will side with the plaintiff and make a decision on liquidation.

If residents file a lawsuit on the basis of inadequate maintenance of the house, then the initiative group must prove this fact with documents.

Otherwise, the court will have no reason to satisfy the claim . Therefore, an audit should be conducted to collect evidence about the activities of the HOA management.

This is the responsibility of the audit commission, which by law must be formed in each HOA. The audit commission's act may serve as the basis for legal proceedings.

If the reason for the closure of the HOA is a violation of the law by the management, then members of the organization have the right to contact the prosecutor's office or other regulatory body.

Then, based on citizens’ applications, an audit of the organization’s activities will be carried out. The outcome of such a check could be:

1. Giving management time to correct errors. This is possible if minor flaws were found.
2. If the activities of the founders show signs of violating the law, the supervisory authority files a lawsuit.

The court, in turn, makes one of two decisions:

• impose appropriate sanctions on the organization's management;
• make a decision to close.

In the latter case, the court independently appoints a liquidation commission , which includes both outside specialists and the initiators of the closure of the HOA (if they filed a claim).

In the future, the commission’s actions comply with the established procedure, with the corresponding entry being made in the Unified State Register.

Sample statement of claim for liquidation of a fictitious HOA.

What it is

HOA is a homeowners' association that is located in apartment buildings.

This organization is non-profit. It is created on the basis of the goodwill of property owners.

The main goal of this organization is the effective management of a house with more than 2 rooms.

The partnership and the management company are competitors in the market for providing house management services.

A partnership is a democratic method of management in which each owner has the right to vote and participates in the “life” of his home.

The management company does not give owners such “privileges”. In addition, the management company is a commercial organization, and its goal is to make a profit, which may go against the wishes of the owners of the premises.

An HOA is created and liquidated in the same way as any other legal entity, but with some nuances.

The reasons for closing a partnership may be different, but the “popular” one is that the board of the partnership failed to cope with its assigned responsibilities and did not achieve its intended goals.

The reason for such consequences is that finding a good “manager” is quite difficult.

Often it is not possible to select a chairman from among the owners of the premises, since there are no competent citizens.

Video: liquidation of HOAs and licensing of management companies

Liquidation can be either forced or voluntary. Forced liquidation is carried out only through the court.

Legislative acts

An HOA is a partnership, that is, a legal entity. Therefore, all the nuances of the activities of this type of legal entity are described in civil law laws.

And, since the members are the owners of real estate, the norms of housing legislation should also be applied. Residential buildings now contain both residential and non-residential premises.

This needed to be reflected in the law, so in 2020, appropriate changes were made to the Civil Code of the Russian Federation regarding the “renaming” of the HOA into TSN - a partnership of real estate owners.

Article 123.12 and Article 123.14 of the Civil Code of the Russian Federation are devoted to this type of house management. The main definitions are given in Art. 48 and art. 50 Civil Code of the Russian Federation.

When creating a partnership, you should also take into account Art. 135 Housing Code of the Russian Federation and Art. 136 Housing Code of the Russian Federation.

Voluntary liquidation occurs on the basis of Art. 141 of the Housing Code of the Russian Federation, and forced on the basis of the Federal Law of October 26, 2002 No. 127-FZ “On Bankruptcy”.

An entry on the termination of the activities of a particular partnership is made on the basis of Federal Law No. 129-FZ dated 08.08.2001.

Grounds for termination of activity

The Partnership is an association of real estate owners on a voluntary basis. Also, on a voluntary basis, it can be liquidated.

But there must be good reasons for this. The main reasons for liquidation are listed in Art. 61 Civil Code of the Russian Federation.

These reasons include:

The partnership may be closed for the following reasons:

• less than 50% of the votes of the total number of owners are available;
• The owners themselves made this decision.

On these grounds, homeowners voluntarily cease their activities.

And forced is carried out if:

Features of HOA liquidation

The HOA can be closed either by its members or by the court.

In both cases, the liquidation procedure is approximately the same .

The balance is also checked, debts are paid, etc.

But there are cases when the liquidation of a partnership is carried out with some peculiarities.

Which did not carry out activities

If the HOA did not carry out the activities for which it was created , it can be liquidated by a meeting of residents. This will require more than half the votes of all members of the organization. Naturally, the following conditions must be observed:

1. There should be no debts to third parties.
2. There should be no complaints from the tax authorities regarding the zero balance.

In other words, closing a homeowners' association that has not carried out any activities is only a formal procedure.

Video about the closure of the HOA

• Due to frequent changes in legislation, information sometimes becomes outdated faster than we can update it on the website.
• All cases are very individual and depend on many factors. Basic information does not guarantee a solution to your specific problems.

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Liquidation of an HOA with debts: what you should know.

A procedure such as the liquidation of an HOA is not regulated by a special article of the Tax Code, therefore, when closing this organization, one should be guided by the norms of the Civil Code of the Russian Federation and rely on the Insolvency Law. In this article we will talk about how to exclude a HOA from the Unified State Register of Legal Entities if it has debts.

Grounds for termination of activity

The life of an HOA is not limited by law.

However, due to various life situations, it becomes necessary to terminate the activities of the HOA.

The procedure can occur:

1. By decision of the members of the partnership and the general meeting of property owners in the apartment building;
2. Forcibly.

Liquidation of the HOA by a general meeting (voluntary liquidation), when the owners of the premises, regardless of whether they are members of the HOA or not, are obliged to make a decision at the general meeting to liquidate the HOA.

The decision on voluntary liquidation is made by the highest body of the management organization - the general meeting of members of the partnership. The number of votes of members who voted for the decision to terminate activities must be at least two-thirds of all votes.

Article 141 of the RF Housing Code provides for only one case when the liquidation of a partnership is inevitable.

This happens when the members of the HOA have less than 50% of the votes of all owners of premises in the apartment building.

Also, voluntary liquidation is carried out if the partnership was created for a certain period or in connection with the achievement of set goals (fixed in the charter).

Forced termination of the partnership's activities occurs through legal proceedings.

The initiators of the lawsuit may be:

• Interested owners of premises in MKD;
• State body (local government body) entrusted with the functions of housing supervision;
• Other government agencies.

Among the grounds on which it is possible to initiate legal proceedings regarding the liquidation of an HOA are:

1. Fatal violations of the law committed during the registration of the partnership;
2. Loss of a license to carry out activities to manage apartment buildings;
3. Violations of the law during the operation of apartment buildings and the management of common property of the house;
4. Conducting activities not provided for by the charter;
5. Impossibility of further management of MKD;
6. The choice by the owners of a different method of managing apartment buildings.

If a partnership has debts to resource supply organizations or other third parties, it is quite possible to carry out liquidation in the standard manner.

In this case, creditors have the right to present their claims:

• As part of the legal process;
• Liquidation Commission.

The sequence of satisfaction of creditors' claims is determined by law. Moreover, such claims must be made no later than 60 days from the date of publication of information about the liquidation.

The Audit Commission and its powers

The Audit Commission is the elected supervisory body of the housing association and consists of one auditor or several commission members, depending on the size of the HOA.

According to the provisions of Art. 150 of the Housing Code of the Russian Federation, the duties of the audit commission include:

• annual audit of the financial documentation of the HOA;
• verification of financial statements;
• drawing up a conclusion on the annual income and expenditure budget of the HOA;
• reporting to residents who are members of the association.

If members of the commission, during their inspections, discover abuses on the part of management or the activities of hired specialists, then the auditors send a demand to management to eliminate the violations.

If the commission’s requirements are ignored, its members draw up a report of violations and send it to the local housing supervision authority.

The supervisory authority has the right to initiate an appeal to the court with the aim of liquidating the HOA or forcibly removing its management.

The Audit Commission also has the right:

1. apply to the court with a demand to liquidate or reorganize the HOA;
2. convene a general meeting to report to residents about management violations and decide the future fate of the HOA.

The Audit Commission is elected from among the owners of premises at general meetings for a period of 2 years.

It is important to take into account that the commission cannot include elected members of the board of directors of the partnership.

Procedure of the commission after the trial

After considering the claim in court, the created commission works to complete the functioning of the liquidated partnership. Step-by-step instructions have been developed for its actions:

• A notification is sent to the Tax Office, and the fact that the partnership is in a state of liquidation is recorded in the register of legal entities. A notification about the creation of a commission or the appointment of a liquidator of the HOA is also sent there.
• A notice of closure is published. The text of the announcement mentions the basic information about the HOA (address and name), indicates the fact of dissolution and the procedure for its implementation, indicates the timing of the closure of the partnership and the period when creditors have the right to make claims. This can be done within two months from the date of the announcement. The creditors themselves also need to be notified.
• The commission prepares an interim liquidation balance sheet. We are talking about a regular balance sheet with the clarifying note “liquidation”. It contains information about the property of the abolished HOA, notes the claims of creditors, and indicates the results of their consideration.
• Full or partial satisfaction of creditors' claims is made. The order of the calculations made is regulated by Art. 64 Civil Code of the Russian Federation.
• Next comes the preparation of the final balance sheet. The issue of approval of the financial report is dealt with by the owners or the body that decided to launch the closure procedure.
• If necessary, a package of documents is sent to the Pension Fund according to the reporting forms adopted by the Pension Fund Board. The procedure is carried out if the HOA has recruited staff to carry out maintenance work.
• A package of documents is sent to the tax service.

Process results and reasons for failure

If the court has decided to satisfy the claim and the procedure for liquidating the HOA has not been violated, the tax authority issues a certificate stating that the partnership has been liquidated and a note appears in the register confirming this fact.

Sometimes liquidation does not reach its logical conclusion. This situation arises for various reasons and at different stages. The tax service may find errors in paperwork. During the trial, the fact may emerge that the register does not contain a record of the commenced procedure for terminating the existence of the HOA. Or the claims of the collective plaintiff will be declared illegal due to the perceived violations in them.

In addition to the above reasons leading to the termination of the HOA, the following may become clear during court hearings or during the work of the audit commission:

• there is irregular payment of membership fees;
• house maintenance is carried out with violations;
• there are non-compliances with sanitary and technical standards;
• the rights of residents who are not members of the HOA are infringed.

If these facts are revealed, the court will hold accountable persons holding leadership positions in the hierarchy of the partnership. But it can simultaneously refuse to liquidate the plaintiff. To thoroughly prepare for court hearings, it is better to seek the help of a professional lawyer.