incorporated HOA vs. NonIncorporated HOA

Jason, an HOA can apply as a non profit corporation with your secretary of state. Incorporation's primary advantage is to provide a "corporate shield" (indemnification) for the Board members.

Hi Jason:

By the Association becoming a "corporate entity" and having such things as Directors & Officers insurance coverage, liability coverage, etc. then if someone sues the Association, the Association's liabilty insurance and/or D&O coverage provide a shield against the liability of the Board members or the membership at large.

In Oregon, for instance, if a HOA is not incorporated, it cannot sign contracts, etc. and therefore cannot have a management company (contact), landscaper (contract), nor insurance (contract). In that case, if somebody slips & falls on commmonly-owned areas or common elements, then the liability falls to each and every homeowners (but they collect from someone with a deep pocket of money and/or assets). If the Board is sued and there is no corporate entity, then the lawsuit names individual homeowners who then either tap their own liability coverage or into their own assets to pay for a lawyer and pay for a judgement if they lose.

In general, it rarely would make sense not to incorporate.

J. Patrick Moore, CMCA