HOA Status

Started by MikeK8 • 9 replies • 1967 views

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MikeK8 (California)
Posts: 10

Posted:

We have 4 units HOA created 30 years ago as unincorporated association. I
learn from other website site that we supposed to file with State form SI-CID
and SI-100, which we never did.
We also did not file Article of Incorporation, and Federal /State taxes.

So here my questions:

1 .Does our HOA exist, or suspended, or not exist?
2. What is consequences for not to do that filings, which takes lot of work and
time?
3. What if we will ignore that for another 30 years and will continue just
collect assessments and pay our bills?

I appreciate your help.

TimB4 (Tennessee)
Posts: 21,059

Posted:

To try and answer your questions:

1. An agreement "contract" between all members is still in place. There may be penalties for failure to file paperwork with the State but that does not dissolve the contract.

2. Unknown by me. I would expect late payment/filing penalties (financial wise) Suggest that you contact the State office directly and ask for assistance in completing the forms.

3. Ignoring the filing of State paperwork can continue to mount financial penalties. Additionally, now that you are aware of the issue, claiming you were unaware of the filing requirement (if you ignore the issue) will probably not get you any sympathy as it might now. Additionally, if the State ever decides to review and consolidate/share records it's possible that the issue could be discovered by the State - which could result in a major financial obligation owed by the members.

If the filing process takes a lot of work, I would suggest you contact a paralegal or certified document preparer to assist. It may take some money to pay them to complete the forms for you but, thats what people do if they don't want to take the time themselves.

Tim

RyanD1 (California)
Posts: 38

Posted:

MikeK8,

I agree with Tim, you really should contact the State now and get it resolved. By procrastinating, your only adding additional penalties.

Also, you should make sure that you association insurance does not require that you are incorporated. Some insurance policies require that you are incorporated or else they won't cover you in the case of an accident.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Mike - just curious, what is your annual operating budget?

MikeK8 (California)
Posts: 10

Posted:

About 14K/y

MikeK8 (California)
Posts: 10

Posted:

Thanks Tim and Ryan for enlightening this matter.

One more concern: we didn't file for Articles of incorporation.
Is that what we must do? Per bylaw we are unincorporated association.

Mike

TimB4 (Tennessee)
Posts: 21,059

Posted:

Having reread your OP, I would suggest that you gather some funds together and seek some professional advise. Here are some links to assist your research:

CA Secretary of State - Business Web Site Check out their forms, samples and fees page

Instructions for completing CA form SI-CID

CA Department of Corporations Web Site

The CA Association of Homeowners Association Web Site

I also suspect that if you have Articles of Incorporation, you were probably formally incorporated (but I do not know CA law). Additionally, Do you know if your Association has any tax identification numbers? You would have needed this to file taxes.

SusanW1 (Michigan)
Posts: 5,202

Posted:

How did you open a checking account?

An association is OK - does not have to be incorporated - at least in MI.

MaryA1 (Arizona)
Posts: 388

Posted:

Mike,

Per the Davis-Stirling Act an HOA is not required to be incorporated. Unincorparated assn means you are not a corp therefore are not required to file articles of inc. (see applicable section copied below). The BOD may want to contact an HOA attorney to find out whether it is to the benefit of the assn to incorporate as a nonprofit. I believe being inc. would relieve the property owners of any liability and there may also be tax benefits, therefore it may be a good thing to incorporate.

BTW, you do not "file for" articles of incorporation. The articles are written up, usually by the declarant, but in this case the board would write them up and they are filed with the corporation commission of the state.

-----------------------------------------------------------------------------
Davis-Stirling Act:
1351(a) "Association" means a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development.

MikeK8 (California)
Posts: 10

Posted:

Thanks everybody for replays.

It a lot of material we need to learn and to do.

But good news that we are seems to be existing and alive.

Thanks again.

Mike

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