HOA no longer listed with VSCC

Started by JoanneL • 8 replies • 1921 views

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JoanneL (Virginia)
Posts: 22

Posted:

Forgive me for the length of this post. I resigned from my HOA board in March 2002. I was on it for 3 yrs and we filed an annual report (or registration?) with the VA State Corporation Commission each yr. Last Aug. the treasurer revealed to me that he had never filed the annual report & fee and allowed our registration to expire. I checked the VSCC web page and it shows the last report filed was in 2001 when I was an officer. I also discovered the VSCC had purged our association from the VSCC records in 2007.

When I received my dues invoice in Nov. of 2010 (quarterly dues), I sent a note to the treasurer that I would pay my dues when I received proof the Association is registered again with the VSCC. I expressed my concern that if our association wasn't registered, the county could take over our common area and devalue my property. I received another invoice (with late fees) in January. I checked the VSCC web page again, and the officers still haven't registered our association with the VSCC.

I'm trying to find out how this annual report affects our Association. I question whether the officers can collect dues and impose late fees when (1) they let the registration expire 9 yrs ago, and (2) the VSCC purged our association from the records.

We have had one meeting in 9 yrs. The officers have never held a meeting (which they are required to do) to let members inspect the books on what money was collected vs. what was paid out to contractors for maintenance/improvements.

SusanW1 (Michigan)
Posts: 5,202

Posted:

In spite of all you say, you must pay your dues.

LawrenceC1 (Georgia)
Posts: 480

Posted:

Registering the HOA as a corporation is more a formality than anything else. The state wants corporations to register so that it can collect taxes. Since most HOAs owe no taxes there is little practical reason to file. Since it is usually a state law that corporations, even non-profits, must register, your Board is in breech of its obligations. But, as SusanW points out, just having the board in violation of some law does not invalidate the CC&Rs or cancel your obligation to pay dues.

I know it's frustrating to see the Board break the law, but there's little that you can do about it except voting them out at the next election.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Joanne,

I understand why you chose to withhold your assessments. However, that is not the best way to achieve what you want done. Since you served on the Board, you know that failure to pay assessments carries with it certain consequences.

You certainly have the personal option to chose not to pay the assessments and hope that by withholding them the Board will give in to demands. However, you must also be willing to incur and pay any late fees and penalties if the Board fails to give into those demands. When you were on the board and a homeowner demanded that the Board does xyz or they will not pay their assessments I would expect that you would look into the issue and irregardless of why the board failed to comply with the members demand, you would assess fines and penalties as this would be the proper enforcement procedure for anyone who failed to paid their assessment on time.

It does not matter if the Association is registered as a corporation or not. Being a corporation does not affect the ability of the Association to collect assessments or pay bills. It does not prevent the Association from enforcing the covenants and guidelines. This ability is typically authorized in the Declaration of Covenants. Incorporated or not, the Association is still subject to the Virginia Property Owners Association Act.

Failing to be incorporated could possibly make the Association no longer considered a separate entity in the eyes of the law. This could inhibit the ability of the Association to file legal actions in a court of law. If during the time frame that the Association was no longer registered as a corporation and they filed legal papers stating that they were could have possible repercussions. The Board should check with an attorney on that issue.

I suspect that if your Association failed to maintain their registration with the State that they might have also failed to properly file with the Common Interest Community Board which would be a violation of VA law,
§ 55-516.1.

You stated that the Association has had one meeting in the last nine years. Why wasn't this an issue with you 8, 7, 6, 5 etc. years ago? It may have been easier to have corrected all of these issues back then.

I would suggest the following:

1. Pay your Assessments, you could request a meeting with the board to see if they will waive the late fees. However, they do not have to do this.

2. Send a certified letter, copied to the Associations Attorney, requesting the following:

1. That the Association re-register as a corporation with the State

2. Request confirmation that the Association filed with the CICB as required under § 55-516.1

3. Request that the Association call an annual meeting as required under your governing documents (if your documents so state) and that this date be provided.

4. Gather a group of interested homeowners and get back on the board to correct issues that might be there which you are unaware of.

The reason why I said to send it certified is that you will want a paper trail if the Association chooses to ignore your requests. I am hoping that with a copy of the letter to the Associations attorney that the Attorney would provide advise to the board that they do the job they volunteered to do.

Tim

JoanneL (Virginia)
Posts: 22

Posted:

Hi Tim. Over the years, I have asked when our annual meeting will be held, they say they'll let me know and then nothing happened. Their excuse is they're too busy. They think their responsibilites are limited to collecting dues and paying vendors. When I was an officer, we had an association lawyer file documents and forms. Based on my conversation with the treasurer, he has never contacted the lawyer. All the documents were turned over to him at the time he was elected in 2002. It concerns me the association's documents haven't been maintained.

TimB4 (Tennessee)
Posts: 21,062

Posted:

I agree with your concern. It is certainly a valid concern. This is why I suggested sending a copy of the letter to the Association attorney, as it's been my experience that the attorney is usually the registered agent for the corporation. Once they find out things have been dropped, they may contact the Association to try and straighten it out or at least give them advise. Again, this should be a copy not a direct communication to the firm (as you don't want to be billed for the lawyers time).

Since the response is that they are too busy, you might want to volunteer to coordinate the meeting for the Association. Set the date, book the local school or meeting room, print the notices, etc. Then, on your own, solicit proxies and elect people that will follow through with all the duties of the position they volunteered to serve in.

Tim

JoanneL (Virginia)
Posts: 22

Posted:

Hi Tim. Over the past 8 yrs, I have taken the initiative with assisting the officers by soliciting bids for work on our common area and filling out the towing contract to renew it. Last August, the Treasurer revealed that the President still had not renewed the towing contract (that I had filled out in 2009). To learn that along with the registration not being filed for the past 8 yrs was a shock.

I can't assist them anymore, especially when my efforts are not acted on. My note to the Treasurer was playing poker -- to bluff him into registering our association again.

Thanks for the idea of writing a letter. I hope that forces them to start fulfilling their fiduciary responsibilities.

JoanneL (Virginia)
Posts: 22

Posted:

Since my original posting, the treasurer has been harassing me about my tree. I told him I didn't have the money to trim it and he said he was going to see a lawyer. I pointed out (1) the other five owners on the street whose trees are also overgrown and he should request they trim their trees too and (2) the officers had not held an annual meeting in 9 years to set a budget and let members inspect the books for past expenditures. His response was to call me rude and crazy.

I've checked with four other members on the street who also have trees in their front yards and none of them have been approached by the Association to trim their trees.

I've written a letter to the officers asking them to re-register the Association and apply the rules to everyone. We have three owners who are several years behind in their dues, but no action (legal or otherwise) has ever been taken against them.

GlenL (Ohio)
Posts: 5,491

Posted:

Well you can complain to us if it makes you feel good but if I were you; I would organize my neighbors, get some volunteers and recall the Board. Now the above advice is predicated on your post that the BOD is not doing things correctly. If the majority of H/O after being presented with your "evidence" feels that they are doing an OK job then you might need to rethink things.

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