Most HOA boards know that there are annual disclosures that have to be completed and sent out to the membership each year. But did you know that nearly all states also require that a homeowners association organized as non-profit corporations has the responsibility to file an annual report with the Secretary of State? Failure to do so could result in the Association losing its “Good Standing” status.
Many Boards overlook this step when completing their annual disclosures, either because there is a change in management or board governance or the HOA board is just ignorant – but ignorance is not an excuse!
Posted by: HOA-USA.com
Has Your HOA Lost It’s Good Standing With the Secretary of State?
The consequences of not filing an annual report with the Secretary of State can include a change in corporate status to inactive, delinquent, administrative dissolution or loss of good standing. For clarification, dissolution does not mean the corporation has ceased its existence nor does it terminate the authority of the corporation's registered agent. Fortunately, restoring Good Standing status can generally be remedied by filing an updated annual report and paying late fees or fines. Having a current annual report also ensures that the corporation can receive Service of Process in the event of lawsuits, tax notices and other official communication.
Click here to learn more about the serious consequences of losing Good Standing status.
Most states require that the report be submitted annually; however, some states only require a biennial submission. Despite the fact that a few states do not require nonprofit corporations to file an annual report, it is considered best practice to do so. Some states have different guidelines for 'corporations' versus 'non-profit' corporations. The fees are typically in the $25-$50 range. Most annual reports can be submitted on-line with options to pay by credit card or by mailing the form and a check. The deadlines for filing also vary by state.
[Continue to full article]
So, whose job is it to make sure the annual report is submitted to the Secretary of State? Usually, it’s the responsibility of the board secretary, however, it can often be careful to make sure all of the details are taken care of correctly. If your HOA board is feeling overwhelmed by completing annual disclosures for the Association or submitting the annual report to the Secretary of State, consider hiring an HOA manager to help.
Contact The Hignell Companies today to start the conversation.