Re: Bankrupt HOA in California
My question is if our HOA goes bankrupt is it true the State steps in and accesses each home owner?
That would make sense. In effect, when you create a HOA you are telling the local city/town "Hey, we'll take care of our own stuff if you leave us alone.". With that the HOA sets it's own bylaws and can assess residents that fail to adhere to them. You pay a HOA fee instead of property taxes (or the property taxes are reduced...) to cover teh services that the HOA provides and the city doesn't. The HOA becomes a community within a community.
If the HOA fails and goes bankrupt than it would make sense that the some governmebnt entity would step in and assess propert taxes at the rate used for the rest of the city/town. I would think it would be the city or county though - not at state level. The HOA would no longer be maintaining roads/grounds, etc... so the city would step in and take those over again.