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VirginiaM (New York)
Posts: 23
Posted:
I belong to what I thought was classified as a property owners association in LI, NY. I have been questioning way the board conducts business and have been doing some research on the organization itself and HOAs in general. I just found out that we are classified as a G.IRC(c)(7) organization which is I from what I can tell from the information on line "a Social and Recreational Club". Does this mean that we are not a POA but something different altogether? Any idea what rules govern this type of thing or where I can research it further?

Thanks in advance for your replys!
EdR (Texas)
Posts: 170
Posted:
Surely a homeowner would have a choice between being in a social and recreational club (paying for it) and not, as opposed to an HOA which everyone pays the same. I will say, however, that our HOA has been turned into a s&r club and all are paying for it and certain select few (board members) are deciding who uses it after they get first dibs at it. Hence the reason for their takover on the board. It happens!
EdR
LisaS (Illinois)
Posts: 341
Posted:
You say that you are 'classified as a social & recreational club'. My question would be, classified by whom? If your Covenants & Restrictions say that you are an HOA or POA, then that is what you are.
Associations can be different things under different circumstances (i.e. some incorporate, some become a non-profit corporation, some claim status as a social club for tax purposes, etc. )but this does not change the Covenants.

Lisa
VirginiaM (New York)
Posts: 23
Posted:
Thanks you for your reply!!! We are, I thought, a POA because of the two properties involved but the BOD call us a "private community" and try to act like it is a HOA. Here is why my research started...we only have a set of bylaws (amended/dated 1981) and a copy of the charter (dated 1949). We have two properties that are "deeded" to all the homes. The only place the dues amount is listed is in the bylaws and although they have been increased twice the bylaws were never updated - because the BOD says that changing the dues amount/number does not mean they are changing the bylaws. This is where I have an issue. There are also other areas in the Bylaws that they do not abide by. I think they resist changing them because it will mean that they acknowledge that they are supposed to follow them.

One BOD member has even gone to the extent of saying "we don't go by the bylaws, never did, never will" the current President said in the past he doesn't really understand them because of the legal language used (?!?). When doing research online I came across a website that has information on non-profit organizations and ours was listed and that is how I discovered it is classified as "social & recreational" with the IRS and NYS. They have not filed any tax returns as far as I can tell since 2000 and I was told (by a director) they don't have to because they are non-profit. I have alot of concerns about the way the org is run however since the dues are relatively low and the BOD rather hostile if you question/go against them, not too many people want to get involved. Last year I proposed to change the bylaws to spell out the actual dues (and included that they needed to have a majority vote to change them, have an assessment or take out a loan on behalf of the community) which I thought would be supported but I still don't think there is much interest. Certain directors badmouth me as a freak, disgruntled and troublemaker and even my husband questions fighting them because they are so nasty. There are however some members who absolutely refuse to pay dues and haven't for years and I know the BOD is afraid of them. A former Pres told me that they can never use a collection agency because the Assn has no legal rights and even our ownership of the property can be questioned. What to do? It is already used as a private beach club by some dirs - so maybe my best bet would be to drop it altogether and see what happens. Sorry about being so long winded .... but I thought I would put it out there about the "social & recreational" thing because maybe that is another angle I should research. Not being an attorney makes this stuff hard to figure out! I have been told before to try and have the current BOD removed but that is alot easier said than done and I am trying to find all the legal back up I can for our next meeting in June.

Thanks to all for listening and for your advice. Any and all is welcome.
RogerB (Colorado)
Posts: 5,067
Posted:
Virginia, look at your 1949 Charter carefully to try to determine exactly what it established. If two properties were deeded to all of the homes, then it presumably defines the homes involved and may setup the organization. Are you paying taxes on the two properties deeded to all homes? Are these the property whose ownership can be questioned?

Bylaws need to be complied with for any organization otherwise why have them? If the legaleze is not understandable then form a bylaws comnmittee and rewrite to make them understandable to the members.

Many people confuse a non-profit organization and not having to pay taxes. Only certain specific non-profits are exempt. Some non-profits may not owe anything but they still need to file. You could start your research on this by reading the instructions for IRS form 1120-H.

RogerB

VirginiaM (New York)
Posts: 23
Posted:
Thank you Roger for your reply. I looked at the charter document they have on line and it is kind of confusing to figure out what the heck it is because it is between only a couple of the few original property owners and the town. It says stuff about "a member corporation" but not a POA or HOA. Would it be spelled out or vague? Regarding taxes, I assume they are paying the property taxes, which amount to less than $1,000 a year because that is what is posted on the budge they give out. Is there a way to track this down through the IRS on how much was paid over the years?
LisaS (Illinois)
Posts: 341
Posted:
Property taxes can be checked with your municipality (county, town, etc.) If your yearly budget states they are being paid and you feel that they are either 1.) not owed or 2.) not being paid and delinquent, then you should find out.

The IRS can tell you whther or not your association is paying income tax...and how much.

I am sure that Association-type language was a lot different in 1949 than it is now. Basically, if yours is set up as a corporation of some sort then you likely have an association of some sort. Ther fact that the documents are from 1949 is no less valid. Your BOD needs to formally change the documents, create the legal bylaws, etc. How can anyone be expected to subject themselves to ever changing rules that are not enforceable anyway? Putting the dollar amount of the dues in the bylaws is not a good idea- because as prices/taxes/etc. rise, you would have to keep changing the bylaws. There should be a 'budget' meeting where dues are set, questions can be asked, etc. The numbers should speak for themselves.

Good luck-
Lisa

Perhaps your town or local HUD office can assist you in your questions, or point you in a direction.

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