HOA is a MESS

Always helps to know where you are located... Some advice is very state specific.

Some general advice: Minutes and actions of HOA should be available to all members, per the open meetings laws of most states. Follow up on that, and force them to open their notes.

Proxies are not allowed in all states. Arizona, for instance, outlawed them last year.

Presidents can be paid for some duties: they can't be paid to be president, but they could be paid to do landscaping, for example, if the money would otherwise be paid to other groups. The amount must be reasonable, and should be open to bidding, for example.

Do you know where I can find a West Virginia Law on proxy voting inan HOA. After reading this proxy time after time. Not only does it state we can hand carry the proxy to a board memeber. It also said that a proxy not turned in will be a YES vote. Help me please!

Roger,
It is my understanding that if a board member does do work for the HOA and gets paid (grass cutting) he or she needs to be insured or the HOA can be brought up on charges if someone gets hurt?

When my HOA was poor, I did a lot oof volunteer labor to fix the poor infrastructure. I was only reimbursed for materials as verified by receipt. That was not a big "no-no." And it helpd the community save a significant amount of money when it was struggling, and only on Common Areas. Board firings in my Association can be with or without reason, presumably by a majority of the Board.

Bring a LOT of owners to the next regular Board meeting once you have told them the same story. Have all or a majority of owners sign a petition to have the Pres resign or they will fund court action. The Pres should have avoided the appearance of conflict of interest, but is not necessarily bound by it. What your Pres has done is more than a conflict of interest. Your docs probably forbid compensation of Board members. But it could be argues that he is not the "Pres" while mowing lawns, just a laborer. But no-notice cutting on lots is troubling, although if written warning has been done right, it may be OK, with just a bad appearance.

Continuation of my reply

If the three who quit felt the same way, you could have successfully made a motion and passed it within the Board that the Pres was to cease and desist if not outright voted him off the Board.

Still, the whole membership needs to know the story with a letter signed by the three who quit.

When our association took over from the declarant control it was in mid year. We had to live with the budget that they had prepared for our association and many needed line items were missing. Such as postage expense, the developer ran his communication through his office expense, and we litterly had to had deliver our local mail. Yes we too had a very poor HOA to start, and all board members went out and picked up tumble weed and wind blown trash after the common area maintenace contract ended in Oct. But as we have had to deal with more and more legal issues it became very apparent that we need to only hire licensed and fully insured contractors, and we insist on that from even the cleaning company that comes into our clubhouse.

Any Board member that works and gets paid for his activity should have a contract, license and liability insurance.

Bonding is not a big issue except for in our case where we contract an accounting firm to do our financial dealings. Only if a big construction project, would bonding be wise.

I have found that the MC that we dealt with always insisted on licensed and insured contractors, and they also tried to sneek in one that wasn't at times and still charge the higher rate and it is well known that MC's sometimes get kick-backs from the contractors.

Rule your own Association, do your own contracting with legal advice and you will save more money than contracting non-licensed contractors.

Barbara, no, you don't have to submit their forms for them. It is smart to retain a copy of the declarations from your subs, in case THEY get audited (more likely) or the HOA gets audited (fairly unlikely). Those signed items are decent proof that you did "normal, business-like" diligence in collecting documents, etc.. If your board has a history of working with rather shaky contractors, they may not be enough to sway an auditor, but if the rest of your dealings are fairly normal, those will suffice.

Another route for IRS purposes would be a Taxpayer ID, rather than an EIN. Basically the same, just different forms.

Brian B Sir with all do respect you do not understand you are not doing there work by submitting the 1099m You sir are the employer period understand that fact. The form is made out by the employer to the IRS notifing them that wages,salaries or tips were paid to a entity that possess a Social Security Number. It is your responsibility.

Reference Dawns original posting Yes its possible that they paid lawyers a lot of money. It may have been on issues that you are not even aware of . When lawyers are used to do anything includeing answering a Telephone they charge $250 dollars per hour prorated accordingly. Understand that is normal for a HOA. We have succeeded inhiring a atty to do our collections but he insurers that the member pays the freight not the HOA. That is calld being a good stuart of funds put in your trust.

Now onto the President doing work for the HOA and being paid for his/her time so what do you know of anyone doing it cheaper or are you mad that you cant do it or is it sour grapes? Did you ever stop to realize what things cost, have you ever asked?

Personally in my assoc we try hard not to do things like that cause we do our homework and realized a long time ago that that is bad news to do that as it gives the opinion of people doing things wrong.

Brian, MC's are normally not hired as employees; they are Agents for the association.

Roger: You are wrong and I will send you a message with the exact irs law. MCs are employees of the BOD period. If you think not show me where it says I cant fire my MC for cause. A contract is signed and they are an employee. If I do work for a Church and it exceeds $600 dollars a year they ssue me a 1099 and send a copy to the IRS. That sir is the law period.

John, please provide your citation/IRS information here (and not just privately to roger), because this is an interesting topic, and we can all learn the rights from wrongs. I know that every bit of info helps me, and i am learning about this topic already, and hope to learn more...

John, I believe you are wrong. I hired a contractor to do some work on my house for about $6,000. I paid the contractor (a company). I do not expect to send them a 1099. Neither do I expect to send a 1099 form to the company that repaved my driveway.

As for "firing" a MC, I don't think "firing" is the correct term. Depending on the wording of the contract you can terminate their services. You may consider this to be "firing" and it may have the same effect, but it's not "firing" them. If I decide to discontinue my agreement with Comcast for cable TV, I am not "firing" them.

I will try to answer you questions 1 at a time.

1. When you hire a contractor you are the employer. If you think not lets say he is a roofer and he falls and gets hurt, you have no contract his lawyer sues you. Kiss your home good bye cause he is gonna get it in court unless you have a contract that states he has workmens comp insurance . That is a Florida and New York Law. As far as the 1099 is concerned you are absolved of the requirement for a 1099 by virtue of the fact you are not a corporation or a registered business when work is accomplished on your home. But if you claim your home as a business you can show expenses but you must be registered and have a tax ID code number
.But A HOA or A Condo Assoc, or A Co-op is a corporation period. Each state is different but all Not For Profits are required to file data to the IRS. On a yearly basis The reason for that is you are required to file a Yearly Tax Form as a HOA. You will be charged a flat tax of 30Percent for all income not achieved as Assessments. If the IRS goes for a full scale audit you have been showing pay outs to different vendors. So it only makes sense for them to ask where are the copies of the 1099s to verify monies changed hands. without a paper trail the IRS can disallow almost anything they feel is above or beyond norms. Remember Tax Law in America is not English Law but is setup as French Law. Thats why there is a seperate Tax Courts.
English Law is innocent unless proven otherwise. French Law is Guilty unless otherwise proven.

Reference terminology firing, termination of a agreement is all the same it also known as restructureing or downsizing but it is still the same NO MO DOUGH. Most MC contracts use the term cessation of duties which also means firing its samantics. Never ever forget with all Vendors the BOD does based on there docs have the right of termination or firing. They dont like it buts that is what it boils down to

Have a nice day

Meaning in English if you get a check for $5000 from a tv station for the use of community property the first 30 percent is property of The United States Federal Government. Then you get into state, city,county taxing authority. But never ever forget a HOA is a

Brian, I do not concur with many of John's statements. Most HOA's do not hire employees. They hire independent contractors. The association contracts with a MC to be their Managing Agent and in the Agreement there is wording allowing either party to terminate the Agreement. When there is no employee I do not think an IRS form 1099 is required. A contract and insurance, mechanics lien, indemnification, etc. should always be considered when work is done for either an association or an individual homeowner.

I suggest hiring both Terminex (Truly Nolen) and Terri Spindley as an independent contractors - neither as an employee. For additional information on advantages of not having employees one can go to google.com and search "independent contractor".

John may wish to further clarify his comments and post his references. Perhaps his experience has been with employee/employer relationships.

First, an "employee" must be a single person, not a group of people. These would be "employees".

Second, when one hires an "employee", wouldn't one be required to pay unemployment insurance and withold social security and federal, state, and local income taxes? Be subject to minimum wage laws? Fair hiring laws? Fair labor laws?

When we hire a contractor, he/she is responsible for all of the above. We pay the money and see the results.

to help confuse and clarify..

Ron, not necessarily would you have to pay minimum wage, work comp, etc. for hiring a single employee. In general, US laws about wages, fair labor, EEOC, etc. apply to businesses with minimum amounts of employees. The minimum amount varies by statute, but it may take 2, 4, 8, 12, or 25 before said laws kick in.

An interesting thing about the 1099 "rules" is the ruling of primacy: If you read the IRS instructions about the 1099 form in general, it states that BUSINESSES must comply with the filing of the forms, and specifically defines a Business in the documents to exclude HOA's. It then states you can look at the rules for the various 1099 forms (1099 A, 1099 B, 1099 INT, 1099 MISC) for further instructions. Only in the instructions for the 1099 MISC does the IRS specifically state that non-profits are to be included in filing the forms.

Thus, one could argue that an HOA intended to comply, read the PRIMARY rules for filing of 1099's, and determined that they didn't, by definition, apply. Therefore, there was no reason to read the minutae under each (assumed) non-applicable form, to see if the rules changed.

I liken it to a set of laws that state "All US citizens Born or Raised in Texas must file one of the following forms: FOrm A, FOrm B, Form C, or Form D. See the applicable forms for instructions on who should file each.".

Then, in the directions for Form C, it tells you "All US Citizens born or raised in Texas, or Arkansas, must file this form.".

How many people from Arkansas, seeing the primary rule, would read all the rest to see if they had to fill out the form or not? I bet ZERO would.

which leads us back to the filing of a 1099 for a single person/employee.. doing the 1099 puts the burden on the "hiree" person to file their withholding, SS, etc., rather than each of the hundreds of people/companies who hire them in a year. The 1099 makes the "employer" tell the IRS how much money they gave the employee, so they can check to make sure the employee paid taxes, SS, withholding, etc. on it.

You are right, the IRS liked to nail BOTH halves of the equation, the homeowner for not treating the maid as an employee, or even as an independent contractor (and thus, filing 1099's) and the maid, for not doing withholding, etc. on the money earned. eventually, the IRS wants to know where all the cash went...

Brian: Do you have a job? Who do you think pays the soc sec and all the other expenses of a large corpoation. When Worker Second Grade farms are sent out(W-2) a copy goes to the IRS.
Whenn you become part of a BOD you become fiscally responsible for what ever takes place. You also have a fiduciary responsibility to your association to do what is right and proper. You become the defacto employer.
That makes you responsible for anything to do with the financial aspects of your association.I have many times hired 1099 type of businessess and make it part of the contract that they furnish us a copy of there workers comp in Florida. NY is a different situation cause in New York the state runs the workers comp it is run totally by them. Each employee or 1099 pays 1.50 per week per person to the state.Thats where they get the money to fund it.