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ConchoP (Texas)
Posts: 208
Posted:
Our HOA was an unincorporated Non-Profit in Texas. Our attorney said we should file to be a Non-Profit.

Initial Directors were named, and the certificate of formation became effective when the document was filed by the state in late September.

My question is, what is the process from here? The attorney is supposed to be drawing up a set of draft Bylaws, and as I understand, the Initial Directors vote on them (not homeowners); I assume after that, a date is set for the election of board members.

I'm I understanding this correctly?
When the certificate of formation became effective, did that nullify the old Bylaws?

Our annual dues are usually sent out in January, however if we don’t have Bylaws voted in by January how would we handle annual dues?

JohnC46 (South Carolina)
Posts: 14,265
Posted:
How would we know? Ask your lawyer to explain.
ConchoP (Texas)
Posts: 208
Posted:
I knew someone would say that... lawyer has been behind because of a death in the family.

Just figured maybe someone out here would know the process sorry to bother you JohnC46, I knew posting was a risk, but one I was willing to take.
TimB4 (Tennessee)
Posts: 21,059
Posted:
In my opinion, it should not have invalidated the old bylaws.

In fact, they should be used as a template if the Attorney is writing new bylaws.

Remember to file paperwork annually to keep corporation status active (typically a form that identifies names and addresses of Directors, Officers and managing agent).

As others have said - check with your attorney.

Regarding annual assessments - authority for that should be based on the deed restrictions and not the bylaws.
Hence, business as usual in that area.

ConchoP (Texas)
Posts: 208
Posted:
Quote:
Posted By TimB4 on 11/04/2022 12:16 PM
In my opinion, it should not have invalidated the old bylaws.

In fact, they should be used as a template if the Attorney is writing new bylaws.

Remember to file paperwork annually to keep corporation status active (typically a form that identifies names and addresses of Directors, Officers and managing agent).

As others have said - check with your attorney.

Regarding annual assessments - authority for that should be based on the deed restrictions and not the bylaws.
Hence, business as usual in that area.




Thank you!

Yes, in Texas, it seems that we file paperwork with the state every four years.

The annual assessments are in both our deed restrictions and bylaws. Deed restriction address due dates and bylaw address amounts and how much they can be increased.

This gives me a reason to push the attorney for more answers.
AugustinD
Posts: 1,027
Posted:
-- IMO the main authority to which one should look here is the Texas Nonprofit Corporation statute, BO 22, https://statutes.capitol.texas.gov/Docs/BO/htm/BO.22.htm

-- The certificate of formation is Texas's phrase for "articles of incorporation."

-- Per BO 22, I presume a majority of the members of this HOA voted to incorporate.

-- Who adopts the initial bylaws (of the new corporation) depends on what the certificate of formation says. Does the certificate say this power belongs to the owners? Or does the certificate say this power belongs to the board?

-- I myself would assume the old bylaws remain enforceable under the law of contracts until the new bylaws are adopted. Why? Because the covenants for this HOA likely reference the bylaws, so the bylaws become contractual terms. But there could be a lot more to this. I expect adopting the new bylaws sooner rather than later would be best.

-- Is your HOA subject to TPC 209? Find out.
BillH10 (Texas)
Posts: 1,217
Posted:
Concho

In Texas you file what paperwork every four years?

Perhaps you need a new lawyer. Documents must be filed with the state annually.

You did not mention a Declaration, only the Bylaws. Is the Declaration in the works as well?
BillH10 (Texas)
Posts: 1,217
Posted:
Oh, and as was asked by Augustin, what type of Association is this?

Is it subject to Texas Property Code 209 or the Texas Uniform Condominium Act Chapter 82?
ConchoP (Texas)
Posts: 208
Posted:
Our letter from the States says: Nonprofit Corporations do not file annual reports with the Sec. of State but do file a report not more often than once every four years.

We are under TPC 209

Attorney never mentioned that we need majority of the members to vote to incorporate.

The Cert. of Formation has initial directors who run the HOA until an election is held.

From what I understand, BO Sec 22.102 BYLAWS. (a) The initial bylaws of a corporation shall be adopted by the corporation's board of directors

From my understanding, our Declaration (deed restrictions) will not be changed.

SheliaH (Indiana)
Posts: 6,964
Posted:
Have you put any of these questions to the Board? I realize the attorney has been delayed because of personal matters (and those questions still have to be put to him or her, so John wasn't wrong), but that being said, I would think he or she reviewed this process with the board. If they're going to vote on this, they should be able to explain how the Bylaws came to be. Go find a board member or two and sit them down for a chat.

Or go to the next board meeting and suggest they call a special homeowners meeting to explain what's happened up to this point and what homeowners should expect.

It also seems odd that only the board would vote on the bylaws - since bylaws usually dictate how the association is to be run, it would appear to me homeowners should be able to vote on them.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
AugustinD
Posts: 1,027
Posted:
Quote:
Posted By ConchoP on 11/04/2022 12:53 PM
Attorney never mentioned that we need majority of the members to vote to incorporate.
I could be mistaken. Here's BO 22 on this:

Sec. 22.101. INCORPORATION OF CERTAIN ORGANIZATIONS. A religious society, a charitable, benevolent, literary, or social association, or a church may incorporate as a corporation governed by this chapter with the consent of a majority of its members. Those members shall authorize the organizers to execute the certificate of formation.

On the one hand, the HOA does not meet the definition of a benevolent organization and as well, the HOA would not seem to be any of the other types of organizations.

On the other hand, becoming incorporated does not seem to me to be a trivial matter.

On the third hand, I can see a reading of the Bylaws that says the Board gets to make the decision about becoming incorporated. And it's better to be incorporated than otherwise, for liability shielding. Furthermore, since the attorney said nothing, I guess I am wrong.
Quote:
From what I understand, BO Sec 22.102 BYLAWS. (a) The initial bylaws of a corporation shall be adopted by the corporation's board of directors
See the link I provided. Sec. 22.102 (a) says:

Sec. 22.102. BYLAWS. (a) The initial bylaws of a corporation shall be adopted by the corporation's board of directors or, if the management of the corporation is vested in the corporation's members, by the members.

Granted it's unlikely management is vested in the members, especially since you say your HOA is under TPC 209 (which allows both incorporated and unincorporated HOAs).

I guess my concerns on these two points boil down to a "Never mind."

ConchoP (Texas)
Posts: 208
Posted:
Quote:
Posted By SheliaH on 11/04/2022 1:07 PM
Have you put any of these questions to the Board? I realize the attorney has been delayed because of personal matters (and those questions still have to be put to him or her, so John wasn't wrong), but that being said, I would think he or she reviewed this process with the board. If they're going to vote on this, they should be able to explain how the Bylaws came to be. Go find a board member or two and sit them down for a chat.

Or go to the next board meeting and suggest they call a special homeowners meeting to explain what's happened up to this point and what homeowners should expect.

It also seems odd that only the board would vote on the bylaws - since bylaws usually dictate how the association is to be run, it would appear to me homeowners should be able to vote on them.



Hi SheliaH I should have mentioned I'm the Board President and one of the initial directors.

We plan on calling a meeting and sending out letters to all homeowners as soon as we can get clear answers.
TimB4 (Tennessee)
Posts: 21,059
Posted:
For the Texans out there:

Here is a link to applicable statutes from the TX Law Library:

Property Owners' Associations a TX.gov website
BillH10 (Texas)
Posts: 1,217
Posted:
Concho, that is not all there is to it. Yes, the filing with the Secretary of State was extended from annually to every four years.

Speak with your CPA regarding filing the Texas No Franchise Tax Due Information Report with the Office of the Comptroller.

Also, don't forget your association still must file a Federal Income Tax return although most associations have no tax due.
AugustinD
Posts: 1,027
Posted:
Quote:
Posted By TimB4 on 11/04/2022 1:31 PM
For the Texans out there:

Here is a link to applicable statutes from the TX Law Library:

Property Owners' Associations a TX.gov website
This site omits TPC 81, applicable to condo associations whose declaration was recorded prior to 1994.
TimB4 (Tennessee)
Posts: 21,059
Posted:
If you follow the link provided in that page to TPC (Texas Property Code) 82 you can also get to TPC 81.

Here are links to those specific laws:

TITLE 7. CONDOMINIUMS CHAPTER 81. CONDOMINIUMS CREATED BEFORE ADOPTION OF UNIFORM CONDOMINIUM ACT

(a) This chapter applies only to a condominium regime created before January 1, 1994. A condominium regime created on or after January 1, 1994, is governed by Chapter 82.

(b) A condominium regime created before January 1, 1994, to which this chapter applies is also governed by Chapter 82 as provided by Section 82.002.

ITLE 7. CONDOMINIUMS CHAPTER 82. UNIFORM CONDOMINIUM ACT

(a) This chapter applies to all commercial, industrial, residential, and other types of condominiums in this state for which the declaration is recorded on or after January 1, 1994. A condominium for which the declaration was recorded before January 1, 1994, may be governed exclusively under this chapter if either:

(1) the owners of units vote to amend the declaration, in accordance with the amendment process authorized by the declaration, to have this chapter apply and that amendment is filed for record in the condominium records in each county in which the condominium is located; or

(2) a declaration or amendment of declaration was recorded before January 1, 1994, and the declaration or amendment states that this chapter will apply in its entirety on January 1, 1994.

(b) An amendment to a declaration under Subsection (a)(1) that implements a vote of the unit owners to be governed by this chapter may not affect the rights of a declarant or impose duties on a declarant that are greater than or in addition to the declarant's duties immediately before the date of the vote or amendment.

(c) This section and the following sections apply to a condominium in this state for which the declaration was recorded before January 1, 1994: Sections 82.005, 82.006, 82.007, 82.053, 82.054, 82.102(a)(1)-(7), (a)(12)-(21), (f), and (g), 82.108, 82.111, 82.113, 82.114, 82.116, 82.118, 82.157, and 82.161.

c-1) Section 82.121 applies to a condominium for which the declaration was recorded before January 1, 1994

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