Industry Insider

Eliminate the Risks of Not Having Adequate HOA Reserve Funds (CA)

The risks of not having enough HOA reserve funds for your community are as serious as the risks of not having enough emergency savings for your family. Imagine needing to pay for college tuition increases or costly medical expenses without having enough money set aside to do so. Now imagine fellow homeowners having their family budgets crushed by emergency assessments because there aren’t enough HOA reserve funds for repairs. They’ll likely call you as a board member to complain!    Read the article……………

Adequate Reserves – (Finally!) Defined

Many, if not most Governing Documents require the Board to set aside “adequate Reserves” to care for the common areas. But what exactly are “adequate Reserves”?  I was recently challenged to define the concept of adequate Reserves by a number of attorneys and D&O carriers. The attorneys wanted to know how to give liability exposure counsel to Boards to help them avoid claims of “inadequate Reserves”. The D&O carriers wish to understand what is and isn’t responsible behavior, as it affects their loss exposure from claims levied by disgruntled homeowners.   Read the article……………….

What is HOA Exempt Function Income?

Homeowner (and condominium) associations hold an unusual place in the tax world. On the one hand, most do not squarely meet the definition of a 501(C) nonprofit. On the other hand, they are not in business pursuing a profit. In fact, the vast majority of HOAs are small, volunteer-ran associations that function solely to enforce covenants and maintain the common areas of its residential members.      Read the article……………..

How to Determine Your HOA’s 1120-H Exempt Function Expense Percentage

Homeowner (and condominium) associations hold an unusual place in the tax world. On the one hand, most do not squarely meet the definition of a 501(C) nonprofit. On the other hand, they are not in business pursuing a profit. In fact, the vast majority of HOAs are small, volunteer-run associations that function solely to enforce covenants and maintain the common areas of its residential members.     Read the article……………..

Does My HOA Need to File Form 1099-MISC?

All businesses and organizations, including homeowner associations, are required file 1099 Forms, including Form 1099-MISC, when they make certain payments to others. The legal structure of your HOA (or condo association) does not matter. If it makes any payments that require filing Form 1099-MISC, it must do so or face a stinging array of possible penalties.    Read the article…………….

The HOA Exempt Function Test

Homeowner (and condominium) associations hold an unusual place in the tax world. On the one hand, most do not squarely meet the definition of a 501(C) nonprofit. On the other, they are not in business pursuing a profit. In fact, the vast majority of HOAs are small, volunteer-ran associations that function solely to enforce covenants and maintain the common areas of its residential members.   Read the article…………….

Does your HOA qualify for Form 1120-H?; HOA No Private Inurement Test

Homeowner (and condominium) associations hold an unusual place in the tax world. On the one hand, most do not squarely meet the definition of a 501(C) nonprofit. On the other, they are not in business pursuing a profit. In fact, the vast majority of HOAs are small, volunteer-run associations that function solely to enforce covenants and maintain the common areas of their residential members.     Read the article……………….

Do HOAs Need to File a Tax Return?

If you own a home in a planned community or development, there is a good chance you are a member of a homeowners’ association (HOA). One perplexing aspect of HOA management is following the tax reporting requirements of the IRS. Some common questions our office receives are “Must our HOA file a tax return?” “What return must it file?” and “What happens if we haven’t filed for a number of years?” In today’s article, I will address some of these fundamental questions. My goal is to clarify some of the confusion associated with HOA tax reporting and help your HOA avoid the frustration and additional expense that often accompany noncompliance.    Read the article……………

Getting A Mulligan (Do-Over) for Your Board in 2018

Whether we call them mistakes, oversights, slip-ups or boo boos, we all make them including volunteer board members who are often hamstrung by both operational and time constraints.
The new year provides an optimal opportunity to correct items from 2017 or even earlier.  The law allows a corporation which has taken authorized actions but which were done in a procedurally incorrect manner to ratify those actions by approving them again, but this time following proper procedure.
Have any of the following occurred in your community?

1.    You made alterations to the common elements or association property but failed to obtain the requisite membership approval.

2.    You did not hold your annual meeting on the date specified in the documents and a member called you out on it.

3.    You had to discard several election ballots because you did not have voting certificates on file for those units.
4.    You were challenged when you attempted to enforce a rule or restriction because a prior board failed to enforce or failed to properly adopt that same rule or restriction.
5.    You took a Board action (filled a vacant seat, signed a contract, fired an association employee, levied a special assessment or adopted a budget, etc.) outside the scope of a duly noticed Board meeting and vote.

6.    Your members passed an amendment and you failed to record it or an amendment was prepared and never presented to the membership for a vote.

Here are the solutions to the foregoing problems:


1.    We can prepare and pass a membership vote which would allow your members to approve of and ratify all prior changes, additions and modifications made by the Association to the Common Elements and Association property or any other action that required a membership vote which was not taken.

2.    We can amend your documents to give your Board more flexibility when setting the date and time for the annual members’ meeting and election so you do not risk a technical violation in the future.

3.    We can amend your documents to eliminate the requirement for a voting certificate for husband and wife and other co-owners of units other than units owned by corporations or business entities.  Doing so will eliminate most of the confusion and time-consuming fuss at your meeting to determine whether or not the outer envelopes were properly signed by the voting certificate holder.  Along those lines, implementing online voting will also eliminate these outer envelope judgment calls at your election.

4.    Just because a prior board has not strictly and uniformly enforced certain provisions of your governing documents does not mean your board is forever prohibited from doing so.  We can undertake a process known as republication which will allow you to breathe new life into those unenforceable restrictions and once again allow you to successfully enforce them.

5.    Prior unauthorized or procedurally improper actions require a discussion regarding the nature of those actions and preparation of the necessary materials to ratify same.

6.    If the membership vote was within a relatively recent period of time, we can proceed with recording that amendment or amendments; if not we may need to start the process over again. If you have been sitting on an amendment which was prepared but never voted upon, depending on the age of the amendment, we may need to review and revise that language.

This list is not comprehensive.  There may be other items where a transition in management or in the composition of the Board may have resulted in items falling through the cracks. If you have questions about how to correct any of these problems in your community, you can email me at dberger@bplegal.com or by phone at .1-844-CAREBP1.

Parking Spaces – Should Your Association be Charging and Collecting Sales Tax? (WI)

Yes! Thankfully, if the association has not been doing so, there is a way to reduce your back-tax liability, interest and penalties.

  • Do you have parking that is rented out by the Association?
  • Do you charge different monthly assessments for those with a parking spot?
  • Do you charge a fee for a boat dock or storage of a boat, canoe or similar water craft?

Read the article……………….