Criteria for HOA Validity
State law and founding documents set clear criteria for HOA validity. Here's how to objectively evaluate any claim to HOA power:
​Validity Criteria
HOA validity can be judged on four criteria, and it's an all-or-nothing deal: All four criteria must be met. Click here for more detail.​
​
-
HOA PROVISION. The subdivision’s declaration must contain an HOA provision.
-
LEGAL ENTITY. The HOA organization must be some type of legal entity, most often a nonprofit corporation.
-
PROPER FORMATION. The entity must be formed under appropriate authority and procedure.
-
LAWFUL OPERATION. An entity must endeavor to comply with all aspects of the law, founding docs, and org policy.​
​​​
HOA Litmus Test
Work through the flowchart below. If you at any point land on NO, stop -- the entity in question is not a valid HOA. ​​​​​​
​
​
HOA Validity in Thaynes Canyon
​The Declaration of Thaynes Canyon Subdivision, which was recorded by the developer in 1971, contains an HOA provision in Section III. The developer at the same time also incorporated a nonprofit entity named Thaynes Canyon HOA. That properly formed entity was lawfully operated until its dissolution in 1986.
Twenty years later, in 2006, a group of lawsuit plaintiffs without election or vote incorporated a new entity, calling it “Thaynes Canyon 1 HOA” (TC-1). Although the group used “HOA” in its corporation name and alleged HOA power, its claims were inherently invalid: The entity was neither properly formed nor lawfully operated in compliance with state code and governing documents. TC-1 was dissolved by the state in 2021.
​
To be a valid, and HOA must meet all four criteria above. Here's how the entities that have claimed power in Thaynes stack up:
​​​
What now?
-
Do we want to remain exploitable by groups calling themselves “HOA”s – whether or not governed by election and vote, whether or not protected by incorporation, whether or not properly formed, and whether or not lawfully operated?
-
Do we want to spend the time, energy, and resources required to safeguard the power and liability inherent in the Declaration’s HOA provision?
-
Or shall we amend the Declaration to remove its HOA provision and decisively declare that Thaynes Canyon has no HOA?
​
​
