HOA

This year has been a year of changes, and of surprises.
When I was first elected President back in 2013, I and
the rest of the new board were informed that the [[HOA Name]]
was a nonprofit HOA and therefore did not need to file
taxes (which was not true). Earlier this year, after we finally located
an attorney who specializes in Home Owners Associations (HOAs),
we discovered that we are in fact not a homeowner’s association,
but a type of volunteer organization known as a “neighborhood as-
sociation”. Neighborhood associations are run by unpaid volunteers
from the neighborhood, and are funded solely by voluntary contri-
butions, which is how the [[HOA Name]] actually operates. Actual home-
owners associations are run by full-time salaried professionals, and
typically receive $200-$300 per month from residents in HOA fees
that are used for maintaining houses and common areas, general
upkeep of the subdivision, and of course to pay their employees.
Apparently (we don’t know for sure) the architects that built
the subdivision intended the [[HOA Name]]
to be a HOA, but neglected to give that “HOA” ownership of all
the properties in the subdivision, which is normally how things
are done. Ownership of all the properties in the subdivision is in
fact the primary characteristic of an HOA, and without ownership
of those properties, according to IRS rules, an HOA is simply not
an HOA. So, in effect, we are merely a neighborhood association
that calls itself a homeowners association, an HOA in name only.
Regarding our nonprofit status, if an organization does not file
taxes for three years, it automatically loses its nonprofit status,
and according to the IRS, we have not filed taxes since 2007. As
a result of losing our nonprofit status, we automatically converted
to a type of for-profit organization called a C corporation.
So, we are a for-profit C corporation that has been operating as a
nonprofit HOA for a long time, possibly several decades. The mem-
bership voted against the idea of being a for-profit corporation back
at the June meeting, so in order to gain nonprofit status, we submitted
a request to the IRS to acquire nonprofit status, and thus be a nonprofit
in reality. If we are granted nonprofit status, then we can legally call
ourself a nonprofit and continue to operate as we do now (except we
can no longer call ourselves an HOA). If not, we will need to operate
as a for-profit, which will mean significant changes for the [[HOA Name]]and
how it operates. We will discuss this and other next steps for the [[HOA Name]]
at the Spring meeting on March 17th. See page 3 for details.