Is it possible to establish a separate HOA for the Townhouses and Condominiums?

Question:

Our community has Townhouses and Condominiums. They all fall under one HOA. Is it possible to establish a separate HOA for the Townhouses and a separate HOA for the Condominiums?

– Louis

 

Answer:

Hi Louis,

Yes, in New Jersey, you can dissolve your existing HOA and form two separate HOAs — one for the townhouses and another for the condominiums. Your existing governing documents should tell you how you can proceed with the dissolution of the HOA. This will usually require a vote from the membership.

Make sure the board examines the common elements of the community to know if these can be divided. You will also need to divide the association’s funds. Furthermore, you will probably need to terminate current contracts with vendors and make some adjustments to insurance policies where possible. Don’t forget to factor in how this division will affect existing mortgages. The new associations would have to create new governing documents and elect separate boards. Navigating all of this will take work, and it is best to consult legal counsel before proceeding.

Another option is to have one master association with two sub-associations. The master association would take care of the common elements that can’t be divided. Then, the sub-associations can manage their own buildings and common elements. To make this setup work, all governing documents should establish how each HOA works independently and interact with one another.

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