Mandatory Dues

Started by WayneK • 5 replies • 631 views

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WayneK (Texas)
Posts: 2

Posted:

Our HOA was never deeded any commnon property and consequently the IRS revoked its tax exempt status.

However, they continue to charge mandatory dues which are payable directly to a the Golf and Country club.

They are imposing penalties for unpaid dues and threatening property liens.

Am I correct in assuming that this not be a mandatory membership HOA and any mandatory dues would be inappropriate?

DouglasK1 (Florida)
Posts: 2,046

Posted:

CCR's, convenants, or deed restrictions attached to your deed would establish an association (if any), and define if it is mandatory or voluntary. If your deed does have such encumbrances, you would most likely have a valid association. Tax exempt status or not determines what the association has to pay to the IRS, it does not determine if the association exists.

Escaped former treasurer and director of a self managed association.

WayneK (Texas)
Posts: 2

Posted:

Due to an audit the IRS stated that because the HOA did not own any property they were not qualified to assess dues. Were they incorrect in their finding?

In other words the golf fees could not be collected by the HOA but would have to be paid directly to the golf club.

I interpret The Texas property laws (Codes 207 and 209) as only applying to HOA's that can assess dues for the repair and maintenance of commonly owned property.

DouglasK1 (Florida)
Posts: 2,046

Posted:

I've never heard of the IRS making such a determination, maybe somebody else here has.

If the association thinks that they can assess and collect dues, and you think they can't, I would suggest getting a lawyer's opinion. If the lawyer agrees with you, perhaps a strongly worded cease and desist letter from them to the association will change their minds. If it doesn't, this could easily end up in court for a judge to decide, either when they sue for a judgement or foreclosure, or when you sue to release the liens you think are improper.

Escaped former treasurer and director of a self managed association.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Hmmm ...

Is the HOA connected in some way to the Club?

To my knowledge, an HOA can certainly exist without common property - the only thing required, usually, is for the CCRs and Deeds to connect. i.e. if the CCRs say there is an Association, and there are deeds noting this, there is an association.

Trace from the CCRs ...

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Am I correct in assuming that this not be a mandatory membership HOA and any mandatory dues would be inappropriate?

There is obviously piles of paperwork that is the back story to this very short question and impossible to answer without looking at all the paperwork.

What has the lawyer for your HOA said about this?

HOA tax exempt or not? Here are some examples:
https://www.irs.gov/pub/irs-tege/eotopicr82.pdf

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