More of WTF

Started by LetA • 15 replies • 807 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

LetA (Nevada)
Posts: 2,679

Posted:

So at the most recent board meeting, the one that was rescheduled; I ask the PM If we would have any issues buying gate clickers in bulk and selling them to owners that need them so we can hastily remove the gate code from the system and have permission access only via the telephone call box.

I was told we couldn't sell gate remotes because we would be a business, yet wait for it, we sell replacement keys to the pool WTF I don't get it.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Property manager (PM) is a moron. Most of them are. Just because he says something in a confident authoritative voice, doesn't mean its true.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I think he misunderstood. You can sell those remotes AT COST. Sell it for more than what they cost then it can be taxed. If you sell them for the expense it cost to buy them, then it does not. Your a non-profit. You spend as much money as you collect. Same with these remotes. Sell them at the cost it took to buy. Simple as that.

Former HOA President

MarkM19 (Texas)
Posts: 1,459

Posted:

Melissa,
When you say sell it at Cost it can also include administrative fees right? Someone has to program the system. The System cost money to maintain and actually be purchased.

Our board has just purchased our own Card Access system and had it installed and we do the programming once everything is setup. I actually have an appointment with them today to do some additional programming. All of this is part of the cost of the system. All of these costs are part of the System costs and not just the opener cost.

In our case we bought the Card Access system for under $5,000 and then we purchased Fobs for about $4.00 each. We sell the Card Access for $25.00 each with a limit of 2 per household. If you sell Access for exact cost who would pay for maintenance and also what would keep a HO from buying 10 Fobs and selling them on the Internet saying Access to your pools to non homeowners?

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By SteveM9 on 02/27/2020 5:30 AM
Property manager (PM) is a moron. Most of them are. Just because he says something in a confident authoritative voice, doesn't mean its true.

I agree.

SheliaH (Indiana)
Posts: 6,964

Posted:

Since I didn't hear the conversation and don't know what else was said, I don't know if the property manager's response made sense or not, although it does seem odd. On the other hand, the code would need to be reprogrammed with a new clicker, so it may not as simple as you think.

In fact, did anyone else think to ask whoever sold you this system as to what's the best and most cost effective way to address this issue? How often are people losing these clickers anyway - if you find the association has to replace them every time you turn around, perhaps you need another system.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Yes you can charge administrative/labor fees the HOA had to pay out. The HOA has to pay out that expense and the owner is just basically reimbursing them for all their expenses. It may or may not cost a thing to program or provide.

If this were a court case, these expenses would be considered "damages". Thus would need to be paid to make someone "whole".

Former HOA President

BenA2 (Texas)
Posts: 1,273

Posted:

Quote:

Posted By MarkM19 on 02/27/2020 6:05 AM
Melissa,
When you say sell it at Cost it can also include administrative fees right? Someone has to program the system. The System cost money to maintain and actually be purchased.

Our board has just purchased our own Card Access system and had it installed and we do the programming once everything is setup. I actually have an appointment with them today to do some additional programming. All of this is part of the cost of the system. All of these costs are part of the System costs and not just the opener cost.

In our case we bought the Card Access system for under $5,000 and then we purchased Fobs for about $4.00 each. We sell the Card Access for $25.00 each with a limit of 2 per household. If you sell Access for exact cost who would pay for maintenance and also what would keep a HO from buying 10 Fobs and selling them on the Internet saying Access to your pools to non homeowners?

There is nothing preventing an HOA from selling clickers or anything else at a higher cost and it makes sense to include indirect expenses in the cost. Melissa is right that you MAY have to pay taxes but you only pay federal taxes if, at the end of the year, your taxable revenue is higher than expenses.

The key to it not being a business is that you are only selling the clickers to members. If you sell something or provide a service to the general public then there could be negative consequences.

In this case the manager might be happy if you provide the clickers and charge a "fee" but it's just semantics. In the end, the board makes these decisions, not the manager.

LaskaS (Texas)
Posts: 1,025

Posted:

wow.. i'm shocked at how many of you are completely wrong about what a non-profit is.

it's a business organization that serves some public purpose and therefore enjoys special treatment under the law. Nonprofit corporations, contrary to their name, can make a profit but can't be designed primarily for profit-making.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By LaskaS on 03/04/2020 1:13 AM
wow.. i'm shocked at how many of you are completely wrong about what a non-profit is.

it's a business organization that serves some public purpose and therefore enjoys special treatment under the law. Nonprofit corporations, contrary to their name, can make a profit but can't be designed primarily for profit-making.

This comes up periodically. People confuse non-profits with charitable organizations, which do serve a public purpose. Very few HOAs or COAs are designated charitable organizations as the IRS defines them. Community organizations do not serve a public purpose because they serve only the members of that organization, not the general public, which is how the IRS determines whether nonprofits are charities or not.

You maybe could make an argument that HOAs and COAs make society as a whole better by offloading the cost of maintaining infrastructure (eg. roads) onto private citizens and having a legal framework that organizes the governance of these communities. But that does not mean that they serve the public a whole. They serve only their own members plus the businesses that make money from developing and maintaining them.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Posted By LaskaS on 03/04/2020 1:13 AM
wow.. i'm shocked at how many of you are completely wrong about what a non-profit is.

The vocabulary each state uses to legally classify a HOA/Condo for tax reasons are different. Thus confusion......

AugustinD
Posts: 5,144

Posted:

My impression is that the biggest impact on a HOA's tax status comes from the definitions of "nonprofit" and "charitable organization" in the federal Internal Revenue Code. As is often repeated here, nearly all HOAs are nonprofits, but it is rare that they are also charitable organizations qualifying them as tax exempt under IR Code 501(c).

Lots here have expertise on this.

GenoS (Florida)
Posts: 4,276

Posted:

A lot of talk in this thread about non-profit corporations. There's a different type known as a "corporation not-for-profit". Virtually every HOA and condo in my state is one of those. They are not "non-profits". There are very few non-profit corporations in the world of condos and HOAs.

AugustinD
Posts: 5,144

Posted:

In Florida, HOAs and Condos fall under the Florida "Not for Profit Corporation Act."

Elsewhere (like California and Texas) the equivalent statute seems to be frequently called the state's "Nonprofit Corporation Act" or similar, with the word "Nonprofit."

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By AugustinD on 03/04/2020 5:43 PM
In Florida, HOAs and Condos fall under the Florida "Not for Profit Corporation Act."

Elsewhere (like California and Texas) the equivalent statute seems to be frequently called the state's "Nonprofit Corporation Act" or similar, with the word "Nonprofit."

In California, HOA's most of its rules would fall under the Nonprofit Mutual Benefit Corporations, that works for the benefit of a select group of members rather than for the general public.

ToniG2
Posts: 15

Posted:

In my prior HOA we had a monthly newsletter. We sold advertising. However, the advertising paid for the production of the newsletter. There was no "profit" shown by the HOA.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here