Reader Questions - Is Our HOA Incorporated, Questioning the New Management

Hi Mr. Richardson,

I read your column recently about making sure my HOA is active. I went to the Secretary of State web site and typed in my legal HOA name, but it said ‘no record’.

I asked the president of my HOA, he said that he does not know if it is a corporation or an unincorporated association. And so he does not know if our HOA is active or not. What should I do to find out more about our HOA?

Thank you so much, your column has been very helpful,

G.C., La Habra

Dear G.C.,

If your HOA does not show up on the Secretary of State web site (http://kepler.sos.ca.gov), there are two main possibilities: Either your HOA is not a corporation or its corporate name is different than the commonly known name of your association. You should be able to answer this question from your association bylaws, and possibly from your CC&Rs. One or both of those documents should in the first few pages identify your association. In fact, the Bylaws usually on the first page will refer to “Shady Acres, a non-profit mutual benefit corporation” or “Shady Acres, an unincorporated association.”

If your association is not a corporation, it would not normally be expected to be found on the web site – in spite of Civil Code 1363.6 (starting in 2014 found at Civil 5405) which requires that all common interest development associations, incorporated or not, register with the state. For unincorporated associations, there is no penalty for failing to register and update the association’s information. However, corporations can be suspended, which is far more serious.

Thanks,
Kelly

Questioning the New Management

Dear Mr. Richardson,

After years of in-house management, our president contracted with an outside management company, which is her right. However, other than the name and address for this company, she has provided no other details. In trying to research this company, I came up with zero. I requested information from the president so that before I mail my monthly dues I could at least get some knowledge of the company and if it is legitimate – no response. Several of us want to know if we can put our dues into some type of separate account until we are able to check out this company or do we just have to accept her decision, carte blanche.

Thank you for any help you can give us,

J.B., El Monte

Dear J.B.,

I would question whether hiring a new vendor is your president’s “right”. That is for the board to decide. No individual officer or director should be hiring or terminating vendors – the board does that.

Investigating the new management company is not your job, that is a function of your HOA board of directors. It appears that the board has not had communication on this to the members. When such an important new vendor is hired, a board should make sure proper notification and introduction is made to the members.

Please do not withhold your assessments. Paying them into a separate account is still withholding your assessments. You can subject yourself to a lien, collection costs and attorney fees. If you are unhappy with the board or one of its decisions, that is not a good plan of action.

Best regards,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.