Is there any Federal law relating to HOA's?

Started by CharlieM1 • 12 replies • 5110 views

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CharlieM1 (Colorado)
Posts: 6

Posted:

This may seem like a silly question but is there any Federal law relating to HOAs? Please bear with me on this!
(I appreciate that there are certain pieces of Federal legislation that may not be about HOAs specifically, but mention how they may or may not be applied in the circumstance of a HOA)

My understanding is that the hierarchy of legislation goes:

1. Federal Law
2. State Law
3. County Law/Ordinances
4. City/Town Law/Ordinances (if applicable)
5. HOAs Declaration of Protective Covenants
6. HOAs Articles of Incorporation
7. HOAs By-Laws
8. HOAs Rules/Regulations/Policies

If one document lower on the hierarchy has provisions that are 'looser' than one higher up, then the one higher up is enforceable. Ultimately, rules/regulations/policies are then likely to be the 'tightest' and they can be made, changed, removed or added to on a whim by the BoD without any input from the members?

I know that different States may, or may not, have HOA specific laws. Colorado has CCIOA (but HOAs can opt out under certain circumstances with conditions attached)

SusanW1 (Michigan)
Posts: 5,202

Posted:

Only that the IRS regulations might be considered a Federal law that the HOA must follow. The EIN number is mandatory and is the first thing applied for. Then, the IRS non-profit designation is vital to the HOA. The corporate status comes from the State.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By CharlieM1 on 12/19/2008 7:14 AM
This may seem like a silly question but is there any Federal law relating to HOAs? Please bear with me on this!
(I appreciate that there are certain pieces of Federal legislation that may not be about HOAs specifically, but mention how they may or may not be applied in the circumstance of a HOA)

My understanding is that the hierarchy of legislation goes:

1. Federal Law
2. State Law
3. County Law/Ordinances
4. City/Town Law/Ordinances (if applicable)
5. HOAs Declaration of Protective Covenants
6. HOAs Articles of Incorporation
7. HOAs By-Laws
8. HOAs Rules/Regulations/Policies

If one document lower on the hierarchy has provisions that are 'looser' than one higher up, then the one higher up is enforceable. Ultimately, rules/regulations/policies are then likely to be the 'tightest' and they can be made, changed, removed or added to on a whim by the BoD without any input from the members?

I know that different States may, or may not, have HOA specific laws. Colorado has CCIOA (but HOAs can opt out under certain circumstances with conditions attached)

Charlie,

There are a number of Fed. laws which apply to HOAs; however, there are not Fed laws specific to HOAs that I'm aware of. The hierarchy you've posted is correct except that I would not include Fed law, Co. and City/Town ordinances. As I mentioned, there are no Fed laws specific to HOAs, so it doesn't make sense to say Fed laws take precedence -- precedence over what? Also, there may be some State statutes that do no supercede a particular HOA covenant, so even though I might include state statutes, not all might apply. With regard to Co, City/Town ordinances; HOAs must abide by them but the covenants may be more restrictive so to say they take precedence is not correct. Regarding the rules & regs; in most instances they are not required to be voted on by the members. But,regardless, they are lowest on the totem pole but still have the same enforcement powers.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By SusanW1 on 12/19/2008 7:23 AM
Only that the IRS regulations might be considered a Federal law that the HOA must follow. The EIN number is mandatory and is the first thing applied for. Then, the IRS non-profit designation is vital to the HOA. The corporate status comes from the State.

Susan,

The nonprofit designation does NOT come from the IRS, it comes from the state along with the corporation status. The IRS only gets involved if the HOA applies for tax exempt status through one of the 501(c) designations.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Please site your sources.

Any info I have known says the state grants CORPORATION status, but the IRS is the only entity that can grant NON PROFIT status.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By SusanW1 on 12/19/2008 8:12 AM
Please site your sources. Any info I have known says the state grants CORPORATION status, but the IRS is the only entity that can grant NON PROFIT status.

This should bring everybody up to speed. The State of Michigan (and most other states) does indeed "grant" nonprofit status to a corporation. Here is the information about the State of Michigan statutes and procedures for incorporating as a nonprofit corporation.

A nonprofit corporation is formed under the Michigan Nonprofit Corporation Act.

Also, from Michigan, check out this web page:

NonProfit Corporation Act
Public Act 162 of 1982

http://www.legislature.mi.gov/(S(oaeyug45kilghar3wlzmn0ey))/printDocument.aspx?objectName=mcl-Act-162-of-1982&version=txt

GlenL (Ohio)
Posts: 5,491

Posted:

Charlie there are also rules from FHA which mandate HOA's allow for reasonable accommodation for homeowner's or their tenants with disabilities. And if any of your facilities are open to the public then the ADA may apply but as a general rule it doesn't.

Studies show that 5 out of 4 people have problems with fractions

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By SusanW1 on 12/19/2008 8:12 AM
Please site your sources.

Any info I have known says the state grants CORPORATION status, but the IRS is the only entity that can grant NON PROFIT status.

Susan,

The IRS only grants tax-exempt status which they refer to as nonprofit. However, it's not the type of nonprofit that we're talking about. Check out the IRS website and you'll find that when they talk about "nonprofit" they actually mean "tax-exempt". Not all nonprofits are tax exempt. Nonprofit status for corps that are NOT taxexempt is obtained through the State Corp. Commission (or Dept). George posted in on MI. AZ also has statutes governing nonprofit corps; these statutes are called the "Nonprofit Corp. Act".

What is the info you have that says only the IRS can grant nonprofit status?

SusanW1 (Michigan)
Posts: 5,202

Posted:

I goofed in the use of terms.

REGISTER as a non profit with the State.

Function (FILE) as a tax exempt non-profit thru the IRS.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Let's flesh Glen's reply out. He is on point and has listed Disabilities act.
How about HUD regirement for the Fair Housing. Certainly discrimination. IRS required reporting even if no income. Federal laws that govern banks that lend money for mortgages and the rest of that bunch.

I bet there are a lot more. Oh, How about this new federal requirement for pools and spas. Federal laws dealing with specific crimes could be another.

JosephW (Michigan)
Posts: 882

Posted:

There is only one Federal Law that is aimed directly at HOA's and condos, and that's the "Freedom to Fly the American Flag Act". There are a number of Federal laws that often come into play, most notably Fair Housing, Handicap/Disability, and Discrimination laws, Federal regulations regarding satellite dishes, as well as IRS items, and as Robert pointed out, the new Pool regulations. There are also a number of Federal laws that might come into play during develpment and sales, as Florida has found out, with respect to Land Sales, also EPA issues, but not very frequently.

Joe

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BrianB (California)
Posts: 2,820

Posted:

it all depends on how far you want to take the question:
Fair Credit and reporting act, if the HOA tries to have someone else collect their debts. As mentioned, the satellite/dish laws, IRS regs, FHA, ADA, ADAAA, etc.. the new pool safety act, and probably many others if the HOA is doing business as some covered entity (clubhouse makes food for sale, perhaps the FDA?). I bet the Nuclear Regulatory Agency probably has some rule somewhere that Exit signage (radiation source) is covered by, if you look deep enough.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

How about the FCC?

But has the question now become: Is there a Federal Law that covers HOA excusively? I think that is a big difference and may well far under Brian's question of how far you want to take the question.

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