Georgia's “take over a failed HOA” statute gets its first appellate reading, and it is narrow
Georgia's “take over a failed HOA” statute gets its first appellate reading, and it is narrow
2026-09-10 · Georgia · Courts
What happened. Georgia has a little-known statutory escape hatch for owners whose association has stopped functioning. On 16 June 2026, the Court of Appeals construed it in detail for the first time — and the owners who invoked it lost.
Boaz v. Thirteen Hundred on Lake Nottely Property Owners Association, Inc., No. A26A0455. Pipkin, J., with Dillard, P.J., and Gobeil, J., concurring. Published; affirmed.1
The problem the owners had
Four owners on Lake Nottely sued their association directly for breach of contract, breach of fiduciary duty, intentional infliction of emotional distress, fraud, tortious interference, defamation, punitive damages and fees — and asked the court to dissolve the association and remove the board.
The association moved to dismiss for want of jurisdiction: the claims were derivative, the declaration never made an affirmative election to be governed by the POA Act, so the Georgia Nonprofit Corporation Code's derivative-action gate at O.C.G.A. § 14-3-741 applied.
That gate requires a director, members holding 5% or more of voting power, or 50 or more members. The owners conceded they could satisfy none of it.
The statute they turned to instead
They argued that O.C.G.A. § 44-5-60(d)(5) is a statutory carve-out giving individual standing. It is a genuinely useful provision that few Georgia owners know exists.
Subsection (d)(5)(A) lists six governance failures:
- failure to incorporate or to maintain the corporate registration;
- failure to appoint directors and elect officers;
- failure to maintain and produce a director and officer list on written request;
- failure to call member meetings;
- failure to prepare an annual budget and assessment and distribute it within 30 days of the start of the fiscal year; and
- failure to pay property taxes on common property for two or more years.
Subsection (d)(5)(B) then gives a 30-day cure notice, after which:
“any plot owner… shall have standing individually, and not solely through a derivative action, to institute an action… in order to obtain declaratory judgment to grant the plot owner or owners control of the entity by ordering an election and setting the terms thereof, or issuing any other orders appropriate to transfer control of the entity.”
Why they still lost
On the remedy, not the standing theory. The court wrote:
“Assuming without deciding that OCGA § 44-5-60(d)(5)(B) allows plot owners to bring a direct action… the trial court's dismissal of Appellants' action was proper because Appellants failed to establish they had standing, even under this statute. Indeed, Appellants did not seek a declaratory judgment requesting a new election or transfer of control as provided for by the statute; instead, they sought to have the entire Association dissolved and declared illegal, remedies for which the statute does not provide.”
The court disagreed with the trial court's reasoning and affirmed as right for any reason.
How to use § 44-5-60(d)(5) properly
The decision reads as a defeat and functions as a set of instructions. For an owner in a genuinely failed Georgia association, four things follow.
Match your facts to the list. The six failures in (d)(5)(A) are exhaustive. “The board is hostile,” “the assessments are too high” and “the president is self-appointed” are not on it. “No member meetings have been called” and “no annual budget was distributed within 30 days of the fiscal year” are.
Send the 30-day notice, and keep proof. Subsection (d)(5)(B) conditions the standing on a cure notice. An action filed without it is an action without the statutory standing that is the whole point of using this provision.
Ask for what the statute offers, and nothing more. The statute authorises a declaratory judgment granting the owners control — ordering an election, setting its terms, or other orders appropriate to transfer control. That is the prayer for relief. Boaz is the case that says asking for dissolution instead is fatal.
Do not staple tort claims to it. The Boaz plaintiffs bundled fraud, IIED, defamation and punitive damages into the same action. Those are the claims that made the whole thing look derivative.
The other half of 2026: two decisions closing the direct-action route
Boaz did not stand alone. Nine days later the Court of Appeals decided St. Michael's Bay Homeowners Association, Inc. v. Hadden-Kaser, No. A26A0490 (25 June 2026), and reversed a trial court that had let members sue directly.2
There, two members complained that the association had spent common-budget money maintaining a community dock, paying Army Corps of Engineers permit fees and facilitating dock use “for the benefit of the 28 dock slip privilege owners,” and sought an accounting, recovery of misappropriated funds and a six-part declaratory judgment — including whether board members who hold slips are disqualified under Georgia's nonprofit conflict-of-interest statute, O.C.G.A. § 14-3-860.
The court applied the standard rule — to sue individually a plaintiff must allege “an injury which is separate and distinct from that suffered by other shareholders, or a wrong involving a contractual right… which exists independently of any right of the corporation” — and held claims based on misuse of corporate funds are derivative.
The important move was extending that to the declaratory-judgment count: “Just as ‘[t]he right to fair and reasonable election procedures inures to the benefit of all members,’ so does the right to have the Association be managed pursuant to its governing documents, contracts, and the law.” Harm to non-slip-holding members was “an indirect injury,” and indirect injuries do not support a direct action. The injunction claim fell with it.
What the pair means together
2026 was a hard year in Georgia for individual owners trying to litigate board governance directly. Between them, Boaz and St. Michael's Bay establish:
- Claims about how association money was spent are derivative, and derivative means § 14-3-741's numbers — a director, 5% of voting power, or 50 members.
- Recasting a governance complaint as a request for a declaratory judgment does not avoid that.
- The one genuine individual route is § 44-5-60(d)(5), and it is available only for the six listed failures, only after a 30-day notice, and only for the transfer-of-control remedy.
What Georgia's new statute adds
A cheaper alternative, and it arrives on 1 January 2027. Section 43-17A-5 lets any person residing in an owners' development complain to the Secretary of State within 180 days, with no numerical threshold, no derivative gate and no filing fee described in the statute.
It is not equivalent to a lawsuit — the hearing officer's conclusions are not self-executing, and the Secretary of State has no power to order an association to pay anybody. But for the owner who cannot muster 50 members and does not fit the six failures in § 44-5-60(d)(5), it is the only forum Georgia has ever offered.
What to watch next
Whether Georgia's new complaint process absorbs the cases that Boaz and St. Michael's Bay shut out of court. If it does, the derivative-standing gate becomes much less important in practice. If the hearing officers prove to be adjudicators without remedies, owners will be back in front of the Court of Appeals arguing the same points.
Related Georgia HOA Topics
- Boaz v. Thirteen Hundred on Lake Nottely Property Owners Association, Inc., No. A26A0455 (Ga. Ct. App. 16 June 2026) — slip opinion ↩
- St. Michael's Bay Homeowners Association, Inc. v. Hadden-Kaser, No. A26A0490 (Ga. Ct. App. 25 June 2026) — slip opinion ↩
- Senate Bill 406, as passed (26 LC 49 2879S) — signed copy, Office of the Governor ↩
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