Can an HOA that lost incorporation status continue to charge assessments on common properties?

Asked over 1 year ago - Angier, NC

A homeowners association (incorporated) received common properties (from a residential developer 25 years ago. They let their corporation status lapse with the state, but still charge residents for the maintenance of the properties.

Attorney answers (3)

  1. James H. Slaughter

    Contributor Level 3

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    Answered . Homeowner association issues in North Carolina can be complicated, so you definitely should speak with a community association attorney in your area about your specific facts. For instance, not all HOA's are nonprofit corporations. The N.C. Planned Community Act took effect January 1, 1999, and requires that homeowner associations created after the date of the Act be incorporated no later than the date the first lot in the planned community is conveyed. However, that statute (unlike some others) was not made retroactive and does not apply to older associations (although it is a good idea for all planned community to be incorporated). Requirements that older planned communities be nonprofit corporations or what they can do/can't do will be heavily controlled by the language of the governing documents, such as the Declaration and/or Bylaws. Also, depending on how the corporate status lapsed, it is likely easily corrected by the filing of delinquent reports or fees.

    A lawyer who is familiar with community association law should be able to advise you on all the moving parts, such as planned community statutes, nonprofit corporation statutes, and governing documents. Good luck!

  2. Cheryl Rivera Smith

    Contributor Level 20

    Answered . In Texas, there is no absolute requirement that an HOA be incorporated. If status has lapsed, then they may operate as a de facto corporation.

  3. Jody Lynn Peskin

    Contributor Level 13

    Answered . In Georgia the incorporation status is to protect the individual owners from liability, as much as anything else. The covenants still run with the land and control the common area. The requirement for maintenance of these common areas, and having insurance, etc... is still necessary even when the incorporation status has lapsed (whether by accident or design). So the courts have held the obligation of homeowners to continue to pay assessments remains.

    This is not intended to be legal advice or create an attorney-client relationship. If more information is needed,... more

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