not for profit corporation in New York

Started by RalphR1 • 8 replies • 1318 views

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RalphR1 (Colorado)
Posts: 52

Posted:

Our community is a 55+ HOA formed as a Not for Profit Corporation. We have a certain member who currently has several court cases against us and also has an outstanding fine/lien balance in excess of $55,000. The court case has been ongoing for years with no resolution in sight. Can the HOA buy out this resident and resell his home without making any profit and thereby adhere to the not for profit rules, regulations, and laws.
Thanks,....Ralph

MelissaP1 (Alabama)
Posts: 13,836

Posted:

That would be a foreclosure. A foreclosure can be done by a HOA IF their documents and state law allows it. However. I STRONGLY advise against it unless under the right circumstances. NEVER EVER EVER foreclose on a house a bank may be foreclosing on. The bank gets paid FIRST and Foremost no matter what. A foreclosure can do the work of the bank basically. It still may not get paid or paid back any of the money owed IF the owner owes money to the bank or owes more than it's worth.

You have to factor in the legal costs of filing a foreclosure, Possibly buying it at auction, assuming the rest of the mortgage. and repairs maintenance to the property. foreclosure is NOT a money making option. It is a "Stop the bleeding" tactic. Some states even have a grace period where the owner can buy back the property. My state has a year of "right to redemption". Any improvements made would have to be part of the redeeming.

I have done a foreclosure on a homeowner. The circumstances were right enough to follow through. I just caution against it as it has to be a certain type of circumstance becore the HOA may see any benefit and then it's just to rid themselves of the member...

Former HOA President

JonD1
Posts: 2,350

Posted:

Ralph:

Perhaps you might provide some more information.

Are you a Board member? Do you have first hand details of the matter you describe? Just what is the owner suing the property for or did the property sue them?

Just what or how is the unit now under a $55,000 lien. You state in part fines. It is my understanding in NY you cannot place a lien for unpaid fines alone.

Did this owner fail to pay CCs or dues too?

Than I can understand the lien being in place but $55,000 sounds rather high.

Your question about buying the owner out just what would be the benefit of that? Do you think that might bring to conclusion the legal actions?

As to your non-profit status IMO that would not be affected if you were to buy say someone else's unit and then resell it if you pu the funds back into the property's assets.

RalphR1 (Colorado)
Posts: 52

Posted:

JonD1,
Thanks for the reply. This problem resident has a number of lawsuits against former Board members, the Administrator, and the Office Manager, as well as the HOA being a party to them as well. His claims include Board's past actions as "illegal", false arrest, being shoved by the administrator while having a verbal dispute, etc. He is also claiming that all of this has caused him anxiety and heart problems as well. There are currently to "restraining orders" against him by both the office manager and the administrator.
The fines have been accumulating for various reasons but primarily for violating his restrictions of using the facilities. He is and has been considered a member NOT in good standing ever since his initial fines have not been paid. Every time he uses the common facilities he is fined $100, disrupts contractors and/or our maintenance employess another fine; his many small claims court cases that he has lost include court costs, and interest charges on the increasing "MONTHLY" fines. His lawyers have insisted that he continue paying his monthly assessments and he is current and up to date on these, thank goodness!
I am a newly elected(09/2011) member of the Board of Directors. My thinking is to "stop the bleeding", make a settlement with him(if possible), buy him out and get rid of him. This has been going on for years now and he will never change--he actually comes and sits in our faces at certain activities.

RalphR1 (Colorado)
Posts: 52

Posted:

JonD1
I sent you a reply, however it is under a new post......SORRY

RalphR1 (Colorado)
Posts: 52

Posted:

MelissaP1,
I expanded on my issue and its in a new post........Thank You

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Ralph

You did say the homeowner is up to date with his dues. Am I correct?

You also said he owes $55,000 in fines at $100.00 per fine. Are you saying he has been fined 550 times?

You say several have restraining orders against him but he shows up. Are not some of those show ups in violation of the restraining orders?

LarryB13 (Arizona)
Posts: 4,099

Posted:

Ralph:

Few people understand the meaning of "non-profit."

A non-profit may make a profit. That's what allows non-profits to operate thrift stores and hold bake sales.

What a non-profit cannot do is distribute its profits to its members.

Your HOA could purchase the angry owner's unit and sell it at a profit. That money would have to stay with the HOA, which can use it, like any other income, any way it sees fit. But the association cannot divide the profits from the sale among the members.

The main distinction between a for-profit business corporation and a non-profit is that the non-profit does not distribute dividends.

JonD1
Posts: 2,350

Posted:

Ralph:

What part of NY are you located in? We had a similar problem some time back and then one night this party had visitors and no one ever heard from them again. And no one looked real hard for them. That's one solution.

I agree with Larry not for profit does not require you not make money just the members do see a profit in their pockets. But your soluion in my opinion is not the solution. Many people don't fully understand that status for condo properties or HOAs.

How would you clear up his property for sale with $55,000 in fines hanging over his head? Or will you just forgive those?

Sounds like his plan is not working all that well either. Just what has he accomplished with all his actions? Other than being a PIA.

I understand you are looking for a quick and easy solution but buying his property at full market value, fair market value, today's market value is that a good investment for the property? Who would deal with his A hole during the sale.

My advice use the legal system as often as possible. If he acts out of line call the police and report him. Take the time to properly resond to any and all of his legal acions. Won't be easy won't be quick but in the end in my opinion the best way to handle people such as this.

Again, it is my understanding in NY you cannot put a lien on a unit owner because of unpaid fines and fees. He did get good legal advice in keeping his dues payments current.

And if he acts in a manner to harass you or others call the police file a complaint and request a criminal order of protecion be issued. Sounds like the courts have been willing to do this in other cases.

This way if anyone with an order is present he cannot be in the vicinity.

We have dealt with a PIA now for several years. Simpleminded drunk who has been arrested and jailed several times. Today as a matter of fact he was arrested again and charged with 8 criminal counts. Each carriyng up to 1 year in jail.

That's what his behavior got him. Took to much time and effrot but now HE is the one with big problems not the people he has annoyed.

Good luck.

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