Help - Is our association acting illegally?

As a new Board Member of my HOA, it has come to my attention (through an attorney investigating service issues with our management company), that we have lost our corporation status in the state of Virginia due to non-payment. It was terminated over a year ago, without our (the Board's) knowledge.

The Virginia State Corporation Commission has indicated to me that it can be easily reinstated (and a packet will be sent to do so to the management company at fault) but I am concerned that we have been doing business under this HOA's name that is no longer incorporated for some time now.

Any comments by anyone who has acted under similar circumstances?

SamanthaW - Prior to your notification of loss in HOA status, you knew nothing therefore gross negligence will probably not apply, though if the HOA is adversely effected, someone may still claim gross negligence.

More importantly is what you, personally are going to do to remedy the situation now that you are a fiduciary for the Association. Now that you know, you must act swiftly to restore status. If it was me, and others did not act swiftly as well, I'd be off the Board in the blink of an eye with a letter certified mail return receipt requested with cc to my attorney as to my reason why. Additionally, I would request a certificate, or some kind of proof of HOA status on a yearly, bi-annual basis, or whatever, so it never happens again.

I'm baffled at the reply post "Like most laws, your not violating any until someone gives notice the law is broken.". That statement is 100% incorrect. That's like saying if you steal something and don't get caught you didn't break the law.

SamathaW...."It was terminated over a year ago, without our (the Board's) knowledge. "

No, you have not done anything illegal. This happened in my HOA. I was not on the Board but I was keeping tabs on everything and I notified the Board. I told them we were about to lose our statue and they did nothing for 4 months until it finally happened. We were charged a fine to reinstate. As Roger said, the Board and the Association were not protected if there was a law suit....But remember even if you have a MC, the BOARD holds first responsibility to see that the MC is doing all the things they are suppose to do. Get this done as soon as possible and make sure all information is up to date, with the new Board members listed.

Hi Samantha:

As stated above, it is very important to get your corporate status reinstated as quickly as possible, and if that doesn't happen, the resignation by certified letter would be the way to go.

From what you put in your post, it sounds like you have a troubled management company. Normally, the MC would handle that work for the HOA; if it was a new company, that would include filing as the registered agent for the HOA.

It may be prudent for the Board to begin soliciting bids from other management companies, and review the termination clause in your current contract.

The BoD may also want to check with your attorney as to the ramifications of losing corporate status in Virginia, and if there are any particular steps that should be taken, in addition to reinstating corporate status. If needed, you attorney may be able to help terminate your management contract more quickly.

J. Patrick Moore, CMCA