Oklahoma Law for Homeowners Associations (HOA)
Current most popular post: Assessment liens in Oklahoma
Oklahoma Statutes is where Oklahoma Homeowners Association board members go to for guidance. The following, while certainly not complete, is being compiled, as information is shared. If you have information to share please post it as a comment so that it can be confirmed and then added to the page.
CAN YOU HAVE AN HOA WITHOUT A CORPORATION?
It is true that you can have a Homeowners Association without a corporation. However, if a corporation is set up for the Homeowners Association, those forming the corporation are required to first obtain signatures of 100% of the homeowners agreeing to a mandatory Homeowners Association and file it with the county: 1975 Oklahoma statute. This statute also shows the requirements to set up an HOA: to manage and maintain areas owned by the Homeowners Association and/or enforcing the covenants. First, does your Association own land or facilities? Second, does your Associations covenant allow your board of directors to enforce the restrictions or is it “every man for himself” against his own neighbor?
- Contracts Title 15. (A Covenant is the agreement/contract. This tells what makes a contract.) (How much interest does your Covenant specifically state the HOA board of directors can charge? Board members, don’t get tripped up on this. Be sure you have a clear understanding: Oklahoma Interest on Judgments) Just because something is mentioned in the by-laws does not necessarily make it lawful. It is what is in the covenants that counts, as covenants (the contract) trumps by-laws. See Precedent of HOA documents Also, see creation of liens below which states a lien is created by contract of the parties. We cannot say this enough: A covenant is a legal contract. Does your Associations covenant (no, not the by-laws–the covenant!) specifically state that a lien can be put on a homeowners property by the Association? If so (and ONLY if so), then the board of directors must follow all state and federal laws on how the lien is put on. (§ 852. Owners Association clearly states in C. that no lien may be placed unless the homeowner was informed in writing upon joining the owners association of the existence and content of the owners association restrictions and rules, and of the potential for financial liability to the individual owner by joining said owners association.)
- A breach of contract occurs when a party to a contract (the Association or the homeowner ) fails to perform according to the terms of the contract. When homeowners and the Association enter into a contract, each is obligated to perform according to the covenant in exchange for the other party’s obligation to perform according to the covenant. The contract obligates both to perform as both agreed. Each party is receiving something of value. (Example: In many covenants [your contract] it will state that the assessments can only be used for certain things such as “actual repair, upkeep and maintenance of the facilities”. However, if money is used for other things the board has failed in their obligation and violated the terms of the contract.) Contracts are relationships recognized by the law that can be enforced by a court if one or more of the parties fail to perform according to the contractual provisions.)
- A contractual relationship consist of rights that belong to the contracting parties and duties the contracting parties owe one another.
- Both parties may enforce a valid contract. If the parties attempt to form a valid contract but fail for any number of reasons, then either a void contract or a voidable contract is formed. Avoidable contract is not a void contract, nor is it completely valid. When a contact is voidable, one of the parties may elect whether or not to enforce the contract against the other party. However, courts will not enforce a contract where there are misrepresentations.
Fiduciary Duties Owed by Directors and Officers
Under the Oklahoma General Corporation Act (OGCA) Board members of HOA’s are charged with two primary fiduciary duties to the corporation and members: to serve their community in the best interests of the entire community, avoiding any personal conflict of interest in making decisions. Fiduciary responsibility is the duty of loyalty to the best interests of the whole community and the duty of exercising care for the whole community in all actions. These are referred to as the duty of care and the duty of loyalty.
Duty of Care requires directors to inform themselves of all material information reasonably available to them before making a business decision, and to act with the requisite degree of care in making the decision.
Duty of Loyalty demands that the best interests of the corporation and its shareholders take precedence over any personal interest or bias of a director. The “business judgment rule”, where boards make decisions based on good business judgment: considering all available information on a subject, consulting with experts on an issue and listening to all sides of an issue. Board members are indemnified against liability for their actions by state statutes as long as they can prove they are acting in the best interests of their community.
The Business Judgment Rule creates a presumption that in making a business decision the directors acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interest of the corporation. However, the protections of the business judgment rule do not apply unless the directors are shown to have actually exercised their business judgment in a matter.
If the board has failed to act, or has abdicated its responsibilities it makes no difference why the director or officer failed to pursue the best interest of the corporation. The director’s or officer’s “intentional dereliction of duty” or “conscious disregard for one’s responsibilities,” can constitute a violation of the duty of good faith (and therefore the duty of loyalty).
- Corporations Title 18
- § 1065. Inspection of Books and Records If the corporation refuses to permit an inspection or does not reply to the demand within five (5) business days after the demand has been made, a homeowner can take the HOA board of directors to district court (small claims) for an order to compel an inspection of the books and records, and to make copies or extracts therefrom, during the usual hours for business. Further, § Article 2 section 28. Corporate Records, Books and Files: The records, books, and files of all corporations shall be, at all times, liable and subject to the full visitorial and inquisitorial powers of the State, notwithstanding the immunities and privileges in this Bill of Rights secured to the persons, inhabitants, and citizens thereof.
- § 1014.1. Interpretation and Enforcement of the Certificate of Incorporation and Bylaws Homeowners can force the board of directors to follow what the certificate/articles of incorporation states or the bylaws by simply taking them to small claims court. (Ex: the board of directors refuses to do an audit and no amendment was ever made to the by-laws; the homeowners have the right to go to small claims court to have the audit done or the HOA produce the notice of the meeting showing how all homeowners were notified that there was to be a vote to amend the bylaws, the official meeting notes where the vote was taken as the “minutes” will show who all was in attendance in order to verify that it was correctly done, the proxies if they were used, and that the correct percentage of votes were cast in order for it to have been changed. Where is the record of who voted? The secretary of the HOA is required to document and retain that information for the corporation.You should also ask to see the amended document. ) Fees to go to small claims court are nominal. Note: check your bylaws to verify exactly what it takes to amend them. Important: if there is a conflict between what the certificate of incorporation shows and what was put into the by-laws, the certificate of incorporation trumps by-laws. Precedent of Documents that Govern an HOA
- § 1057. Voting Rights of Shareholders – Proxies – Limitations Oklahoma statute allows either specified or blank proxies. “Specified” is the best way to go as it helps to keep board members honest. By-laws can be written to allow only specified. (Court can determine the result of any vote by members. Title 18 Chapter 22 Section 1070 The district court can determine the result of any vote of members. (Board members, it is best to use a specified proxy for this reason!! You don’t want the expense of going to court. ) Service of the application upon the registered agent of the corporation shall be deemed to be service upon the corporation, and no other party need be joined in order for the court to adjudicate the result of the vote. The court may make such order respecting notice of the application as it deems proper under the circumstances.)
In a civil case, the plaintiff has the burden of proving the facts and claims asserted in the complaint. For example, when the HOA is bringing a case against the homeowner the HOA has the burden of proof as to that allegation. The main standards of proof include clear and convincing evidence and preponderance of the evidence. See Slander of Title
- § 35. Regulation of Lien of Judgment The lien of a judgment is regulated by civil procedure. 1975 Oklahoma statute states “No lien may be placed or mortgage foreclosed unless the homeowner was informed in writing upon joining the owners association of the existence and content of the owners association restrictions and rules, and of the potential for financial liability to the individual owner by joining said owners association. (“Joining the association” would typically mean at closing when they signed the papers, they should have been informed in writing. Were they or was it slipped into their abstract? Be careful there. HOA board members must also be extremely careful making claims that they are foreclosing on a home which has Homestead Exemption filed on it. According to O.S. §, 12 706 Judgment liens on a homestead are exempt from forced sale pursuant to Section 1 of Title 31 of the Oklahoma Statutes and Section 2 of Article XII of the Oklahoma Constitution. ) (Do your board of directors really want to foreclose and get stuck with taking over a mortgage if they find a home that doesn’t have homestead exemption? Associations are not the first to be paid in a foreclosure process. Taxes, courts, First and possible second mortgages need to be satisfied prior to the Association when the property is foreclosed. If there isn’t enough money, then the Association gets nothing and the Association may be stuck with the legal expenses. Further, there are statutes that must be adhered to: § 1020. Limitations Upon Real Estate Ownership: any real estate acquired in collection of debt shall be sold and disposed of within a certain period of time from such acquisition. And if the board fails or refuses to file a statement as required they shall, upon conviction, be deemed guilty of a misdemeanor and punished by a fine not exceeding One Thousand Dollars ($1,000.00). The state shall have a lien against any piece, parcel or tract of real estate to secure the payment of all penalties, interest, and fees accruing from such unlawful owning or holding of any such real estate.
- § 6. Creation of Liens states that a lien is created by contract of the parties or by operation of law. (IF a lien is “created by contract” the Covenant would be the contract, not the by-laws. Does your covenant (not the by-laws, but the covenant) state that you can be liened? See Contracts Title 15.)
- O.S. §, 12 706 Creation of Lien. A judgment shall be a lien on the real estate of the judgment debtor within a county only from and after a Statement of Judgment has been filed in the office of the county clerk in that county. O.S. §,12 706 states that presentation of a Statement of Judgment and tender of the filing fee, shall, upon acceptance by the county clerk, constitute filing. (Title 16 Conveyances Title Examination Standards Judgment Liens, Execution and Attachment states C. JUDGMENTS PURSUANT TO THE SMALL CLAIMS PROCEDURE ACT.
A judgment lien, pursuant to a judgment rendered in the small claims division of the district court, can be created on or after October 1, 1982, on the real estate of the judgment debtor within a county by filing a STATEMENT OF JUDGMENT . in the office of the county clerk in that county. (Was there a statement of judgment filed on your property before a lien was put on ?) A judgment is the final decision of the court at the conclusion of a lawsuit. (Board members must be sure to take every single step. Missing just one can be serious business.
- Homeowners Association board members must be sure to follow all the proper steps to file a lien. Title 42 may be a start but there is way more that must be done. Ignoring even one step by uninformed board members can lead to unlawful liens placed, thereby setting the association and themselves up for lawsuits.
CONSIDER THE COST OF FILING LIENS: Homeowners have shared that their attorneys have shared with us that some of the important steps that must follow the assessment letter to get to the Statement of Judgment before a lien can be put on. The following fees were found at USPS and http://www.oscn.net/applications/oscn/deliverdocument.asp?citeID=439758
- Demand letter-Make a Demand for Payment or Property before you file your lawsuit. You must make a demand of the party from whom you are seeking relief for the money you are claiming or the property you are seeking to reclaim. When you have made a written demand and have been rejected or have received no response, and have determined that your claim is one allowed to be brought in Small Claims Court, you are ready to begin. (Protect your HOA and send it certified $2.95 /”return receipt requested” $2.35 for mail receipt.)
- Filing fees $18.00 (Upon the filing of the document which opens each civil case, in addition to the fees listed below (dispute mediation) $2 12 O.S. §1809 Law Library Fund Assessment in addition to other fees $ 6 28 O.S. §152; Oklahoma Court Information System Revolving Fund Fee $ 10 28 O.S. §152 )
- Affidavit Affidavit for recovery of money, replevin or interpleader up to $l500.00 $45.00 12 O.S. §1764 (Affidavit: a pleading stating the case against the homeowner -An affidavit is a signed statement, duly sworn to, by the maker thereof, before a notary public or other officer authorized to administer oaths. The venue, or county wherein the affidavit was sworn to should be accurately stated. But it is of far more importance that the affiant, the person making the affidavit, should have personally appeared before the notary and have made oath to the statements contained in the affidavit as required by law. Under the Penal Law (§210.00) the willful making of a false affidavit is perjury, but to sustain an indictment therefore, there must have been, in some form, in the presence of an officer authorized to administer an oath, an unequivocal and present act by which the affiant consciously took upon himself the obligation of an oath; his silent delivery of a signed affidavit to the notary for his certificate, is not enough. (People v. O’Reilly, 86 NY 154; People ex rel. Greene v. Swasey, 122 Misc. 388; People v. Levitas(1963) 40 Misc. 2d 331.) A notary public will be removed from office for preparing and taking the oath of an affiant to a statement that the notary knew to be false. (Matter of Senft, August 8, 1929; Matter of Trotta, February 20, 1930; Matter of Kibbe, December 24, 1931.)
- NATURE/TYPE OF PROCEEDING FEE REFERENCE : Civil Actions for less than ten thousand dollars - $148.00 28 O.S. §152, 19 O.S. §220
- Service of summons (issued by the clerk that notifies homeowner to appear and answer the complaint. This is usually delivered simultaneously with the service of process (§ Rule 2. Service and Proof of Service) that notifies defendants that a suit is pending against them and they must respond to it. Issuing each summons for each person $5.00 28 O.S. §152.1 Service or attempted service by Sheriff in A Civil Case (service upon each person, unless at same address) $50.00 28 O.S. §152.1 See also § 51. Style of All Process and § 52. Appointment of Person to Serve Process or Order – Power of Server – Fees)
- Mailing charges: In small claims cases, for each person $10* 28 O.S. §152.1, 28 O.S. §31 (* or actual expense, whichever is greater) (Plus the actual cost of all postage in each case in excess of $10.00)
- Filing of lien- $15.00 O.S. §,12 706 states that presentation of a Statement of Judgment and tender of the filing fee, shall, upon acceptance by the county clerk, constitute filing. A judgment lien can be made pursuant to a judgment rendered in the small claims division of the district court, on the real estate of the judgment debtor within a county by filing a STATEMENT OF JUDGMENT if the HOA wins. (If HOA loses HOA most likely will be responsible for all attorney fees and court costs.)
ADD UP THE ABOVE FEES TO SEE WHAT IT COSTS FOR EACH LIEN FILED. MANY TIMES IT IS MORE THAN THE ASSESSMENT. That means not only is that assessment not going into the coffer but assessments of other homeowners may have to be used to attempt to collect it. That isn’t smart to throw good money after bad. Sometimes it is best to just let it go so your HOA doesn’t get upside down trying to collect on one. (A bird in hand, is worth two in the bush….Just sayin’.)
See also Rules of Civil procedure for the United States District Courts: http://www.law.cornell.edu/rules/frcp
*Seventh Amendment In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved. When a jury is requested $350.00 28 O.S. §152.1,
19 O.S. §220 (This can be costly to the HOA should the homeowner prevail!)
* Regarding the Statement of Judgment from above. A 1988 amendment to 12 O.S. § 706 required the additional act of filing an affidavit of judgment in the office of the county clerk in the county in which the land is located. The proposal of the Title Examination Standards Committee in its 1988 Report, 59 O.B.J. 3098, 3104 (1988) to reflect this change in this standard was approved by the Real Property Section, December 8, 1988, and adopted by the House of Delegates, December 9, 1988. (In Oklahoma, after 1988 in order for a lien to be filed on a homeowner there must be an affidavit of judgment which will show the case number and the decision.) See also motions: Every motion shall be accompanied by a concise brief or a list of authorities upon which movant relies. (HOA board must show that genuine issue of material fact exists and that, by law, the undisputed facts support a judgment in the movant’s favor. Once the movant meets this burden, the opposing party is given a chance to refute the movant’s argument. (This is why proper procedure must be followed before a lien can be placed on property.)
*LIENS Your associations by-law should have been written to contain within them that a lien can only be put on property after a statement of judgment issued by the court has been filed with your county, since that is an Oklahoma law. The by-law should also state the length of duration of the lien. However, it is important to note that State Law takes precedent over by-laws as you can see in the following Oklahoma Statutes:
*D. DURATION OF A JUDGMENT LIEN. § sec 23.1. Judgment Liens
The lien of a judgment, pursuant to O.S. §, 12 706 , runs from the date the judgment lien is created until the judgment lien is extinguished
by the failure to extend the lien of the judgment pursuant to § 759. Filing and Indexing of Execution – Appraisement of Property C. To extend a judgment lien beyond the initial or any subsequent statutory period, prior to the expiration of such period, a certified copy of one of the following must be filed and indexed in the same manner as judgments in the office of the county clerk in the county in which the statement of judgment was filed and the lien thereof is sought to be retained:
1. A general execution upon the judgment;
2. A notice of renewal of judgment;
3. A garnishment summons issued against the judgment debtor; (IMPORTANT: SEE GARNISHMENTS BELOW) or
4. A notice of income assignment sent to a payor of the judgment debtor.
E. RELEASE OF JUDGMENT LIEN. § sec 23.1. Judgment Liens
A release of judgment lien, pursuant to O.S. §, 12 706 , must be filed in the office of the county clerk in the county in which the lien is to be released, unless the judgment lien was extinguished as set out in Paragraph D above.
2. The lien of any judgment which has been satisfied in full, vacated or become dormant or otherwise unenforceable and which has not been released by the judgment creditor shall be released by the court upon written motion. O.S. §, 12 706
A lien is extinguished by the mere lapse of the time within which, under the provisions of civil procedure*, an action can be brought upon the principal obligation. (*Civil procedure) (What do your by-laws state regarding the length the lien is good?)
C 2. It shall also be the duty of the county clerk, immediately after the filing of a Release of Judgment Lien, to make a notation in each entry in the judgment index made when any Statement of Judgment was filed with respect to the judgment being released, of the date of filing of the Release with the county clerk, the name of the judgment creditor on whose behalf the Release is filed, and whether the Release states that it is only a partial Release.
D. Execution of Judgment. Execution shall be issued only from the court which granted the judgment being enforced.
E. Release of Lien of Judgment. The lien of a judgment upon the real estate of judgment debtor in any county, which has not become unenforceable by operation of law, is released only upon the filing in the office of the county clerk in that county of a Release of Judgment Lien, or a copy thereof certified by the court clerk of the court which granted the judgment.
1. A judgment lien may be released, in whole or in part, by filing a Release of Judgment Lien with the county clerk by the judgment creditor or his or her attorney.
a. A Release of Judgment Lien shall either recite the name of the court which granted the judgment, the number and style of the case, the name of each judgment debtor with respect to whom the lien is being released, the name of each judgment creditor in favor of whom the lien was created, or otherwise adequately identify the judgment lien being released and the judgment debtor against whom the lien is indexed. The Administrative Director of the Courts shall prescribe a form of Release of Judgment which may be used at the option of the judgment creditor.
b. If the release is only partial, it shall also contain a description of the lands then being released from the judgment lien or identify the particular judgment debtors, if less than all, with respect to whom the lien is then being released, or both, as the case may be.
c. A Release of Judgment Lien may also be filed with the court clerk of the court which granted the judgment but filing with the court clerk does not release any judgment lien created pursuant to this section.
2. The lien of any judgment which has been satisfied in full, vacated or become dormant or otherwise unenforceable and which has not been released by the judgment creditor shall be released by the court upon written motion. (It is important to remember that the HOA is required to remove a lien once the property owner pays the delinquent HOA debt or if they have put it on in error (i.e. without first obtaining a statement of judgment.)
a. The motion shall be accompanied by an affidavit stating the grounds for the motion, and shall contain or be accompanied by a notice to the judgment creditor that, if the judgment creditor does not file with the court a response or objection to the motion within fifteen (15) days after the mailing of a copy of the motion to the judgment creditor, the court will order the judgment lien released.
b. A copy of the motion shall be mailed by certified mail by the party seeking release of the lien to the judgment creditor at the last-known address of the judgment creditor, and to the attorney of record of the judgment creditor, if any. There shall be attached to the filed motion, and to each copy of the motion to be mailed, a Certificate of Mailing showing to whom copies of the motion were mailed, the addresses to which they were mailed, and the date of mailing.
c. If the judgment creditor does not file a response or objection to the motion within fifteen (15) days after the mailing of a copy of the motion, the court shall order the judgment lien released.
d. When a judgment lien is ordered released by the court, the court shall cause a Release of Judgment Lien, in the form provided by the Administrative Director of the Courts, to be prepared. Instructions shall be printed on such form advising the judgment debtor to file the Release in the office of the county clerk of the county in which the real estate is situated in order to obtain the release of the lien of the judgment upon the real estate of the judgment debtor in such county.
e. The party filing the motion for release shall pay all costs of the proceeding and any recording fees.
F. Effect of Filing or Recording a Judgment. The filing or recording of a judgment itself in the office of a county clerk on or after October 1, 1993, shall not be effective to create a general money judgment lien upon real estate, but a certified copy of a judgment may be recorded in such office for the purpose of giving notice of its contents whether or not recording is required by law.
G. Acceptance by County Clerk. The county clerk shall accept for filing and file any Statement of Judgment or Release of Judgment Lien without requiring any formalities of execution other than those provided in this section.
www.hoatalk.com on Liens Scroll down to poster PamelaB2 in Missouri. She posted about Oklahoma.
The following are more recent comments we have received:
*Publish notice of an amendment meeting (for bylaws) in the main local newspaper at least fourteen (14) days prior to the amendment meeting. (Our attorney advised, in order to protect the board of directors, we do this in addition to notifying every homeowner, by mail, of the meeting.)
When writing or amending your by-laws it is important to remember that they cannot conflict with the Certificate/Articles of Incorporation. If there currently is a conflict the Certificate/Articles of Incorporation the courts are the de facto. Precedent of Documents that Govern an HOA
HOLDING BOARD MEMBERS PERSONALLY LIABLE
*Piercing the corporate veil- Board members should tread carefully, as the court could decide to do this and hold board members personally liable, just like with slander of title. Unfortunately for board members Oklahoma is a state that allows treble (triple) damages.
*Due to the litigious society we now live in our attorney suggested we each personally purchase an umbrella policy(through our homeowners insurance) if we were going to be on the board of directors. This is even if the board decides to get Directors and Officers (“D & O”) insurance.
GARNISHMENTS CAN BE A REAL WASTE OF TIME
* It can be a huge waste of homeowners association money to attempt to lien a homeowner whose account you will not be able to garnish. The Federal Trade Commission (FTC) protects federal funds in ones account and Oklahoma protects other funds. Included, but are not limited to, are those who receive Social Security, SSI, Unemployment, welfare, veterans benefits, police and fireman’s pensions, county and public employees retirement, teachers, civil service retirement and disability, civil service survivors benefits, Railroad retirement, military annuities and survivors, alien property custodian, prepaid burial benefits, proceed from group life insurance policy, alimony, support, separate maintenance or child support, student assistance, foreign service retirement, compensation for injury, death or detention of certain homeowners, personal wage exemption because of undue hardship.
(Exemption Oklahoma State law: 75% of earnings exempted; more if hardship established. All federal exemptions apply.)
OKLAHOMA INTEREST RATE LAWS
Does your covenant even state that the Homeowners Association can charge interest? If so, does it state a percentage? If it specifically says the Homeowners Association can charge but yet, does not give an amount the Homeowners Association board can charge only what it shows HERE.)
In Oklahoma there is an amount that can be charged pre-judgment and if a judgment is won a post-judgment amount. (In 2012 the Prejudgment Interest Rate 0.05% and Postjudgment Interest Rate 5.25%. It is important to note that the post judgment amount can only be charged if the Homeowners Association takes the homeowners to court and is given a Statement of Judgment from the court, that the board of directors can then use to file a lien.)
According to Section 3 of Article XIV, Oklahoma Constitution, any person taking, receiving or charging a rate of interest greater than that allowed will forfeit the entire interest. Moreover, any person or his/her legal representative can recover double the amount of usurious interest paid to any person, firm, or corporation.
Further, check to see if your covenant (your contract) actually allows for “late fees”, which are different from the penalty. This might be another fee the board CANNOT charge.
Contested Election of Directors; Proceedings to Determine Validity Title 18 Chapter 22 Section 1070 The district court can determine the validity of any election, appointment, removal or resignation of any director or officer and the right of any person to hold, such office. The court has the power to enforce the production of any books, papers and records of the corporation relating to the issue. In case it should be determined that no valid election has been held The court may make such order respecting further or other notice of such application as it deems proper under the circumstances.
(Were homeowners properly notified of the meeting according to OK statutes? Was there the required quorum for election purposes?)
*Election Inspectors: In attorney Matthew L. Winton’s blog he states: A final tip regards the inspection of elections. For incorporated associations, Oklahoma law requires elections to be administered with at least one inspector. To read the applicable statute, click here. One provision in 18 O.S. 1075.1 requires inspectors to execute an oath of inspection.
*“Setting a legal precedent“: The facts of one case often resemble the facts of a prior case. To reason by analogy, the lawyer analyzes how the law might apply to the client’s case by comparing facts of the client’s case to prior cases. This process is referred to as “Setting a legal precedent”.
RE: Virginia Graeme Baker Act where pools will have to be drained down to install the proper anti-entrapment devices by May 28, 2012
Homeowners Associations with swimming pools must be careful when draining the pool. Department of Environmental Quality (DEQ) is responsible for monitoring what drains into creeks and they do fine. To avoid fines, you may want to check with them if you have a creek that it could accidentally drain into.
FORMING YOUR HOMEOWNERS ASSOCIATION
HOMEOWNERS’ ASSOCIATIONS AND THE INTERNAL REVENUE SERVICE
A homeowners’ association can elect under the provisions of Code section 528 to receive certain tax benefits that, in effect, permit it to exclude its exempt function income from its gross income. Here is what the IRS website states is required in order to be able to take advantage of exempting assessments from taxes:
- A membership organization formed by a real estate developer to own and maintain common green areas, streets, and sidewalks and to enforce covenants to preserve the appearance of the development may be exempt as a social welfare organization if it is operated for the benefit of all the residents of the community.
- The Homeowners Association must supply evidence that areas (such as roadways and park land that the Homeowners Association owns and maintains) are open to the general public and not just its own members.
- At least 90% of the association expenses for the tax year must consist of expenses to acquire, build, manage, maintain or care for its property.
WHETHER WE LIKE IT OR NOT: The above shows that in order for an Homeowners Association to avoid being taxed on assessments that ALL park land that the Homeowners Association owns and maintains is open to the general public. Click the above link to read it for yourself.
More on the green areas owned by the Homeowners Association:
Yes, an Homeowners Association can receive fines and even liens if they own it and do not mow it often enough, so that the city has to do it. Check also under your city ordinances for more information.
When forming your HOA see also:
The legal requirements to form a mandatory HOA (Association MUST own land and/or the board can enforce covenants)
MAKE SURE YOUR HOMEOWNERS ASSOCIATION FACILITIES ARE COMPLIANT
- Update to Virginia Graeme Baker Pool and Spa Safety Act (C0mpliance required by May 28, 2012)
- Are your HOA facilities ADA compliant? March 15, 2012 grace period expired. Only the pool lift requirement was extended.
- Statement of Judgment required for filing of liens. If a lien was put on without a Statement of Judgment the HOA board of directors can be held personally liable for Slander of Title. O.S. §,12 706 states that presentation of a Statement of Judgment and tender of the filing fee, shall, upon acceptance by the county clerk, constitute filing.
- Recording a meeting
- Lobby to get changes made in your state
- Should assessments be used for social events
- Directors duty to attend meetings
- Architectural and Design Committee
- Updating from pools to splashpads
- Nominating committee survey
- Conflict of interest
- Merging homeowners associations
- Homeowner Association Law in Oklahoma
Scroll up to see COMMENTS on the left hand side of the page.
- Oklahoma laws for homeowners associations
- Assessment Liens in Oklahoma
- Statement of Judgment Required before filing HOA lien
Homeowner Association ~ Home Owner Association ~ Home Owners Associations
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