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Subject: Self management
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Author Messages
CarlaS2
(Colorado)

Posts:28


04/08/2018 4:04 PM  
Can any of you guys please share your self management with a condo hotel? I’m looking for your experience & thoughts.
LetA
(Nevada)

Posts:456


04/08/2018 8:35 PM  
What do you exactly mean by condo hotel?
CarlaS2
(Colorado)

Posts:28


04/09/2018 4:10 AM  
Posted By LetA on 04/08/2018 8:35 PM
What do you exactly mean by condo hotel?




Michigan Dept. of Revenue just issued a ruling, that HOA must be a not for profit. With the vacation rental market, the properties are condo wanting to be run as a hotel for select owners rental revenue.

If I understand the discussion correctly, just trying to get anyone’s experience with this type of property.
GenoS
(Florida)

Posts:2225


04/09/2018 4:21 AM  
Posted By CarlaS2 on 04/09/2018 4:10 AM
Michigan Dept. of Revenue just issued a ruling, that HOA must be a not for profit. With the vacation rental market, the properties are condo wanting to be run as a hotel for select owners rental revenue.

If I understand the discussion correctly, just trying to get anyone’s experience with this type of property.

Can you explain a bit more, please? I seriously doubt many here have ever heard of such a thing. Also, "the properties are condo wanting to be run as a hotel for select owners rental revenue," isn't very clear.
AugustinD


Posts:1045


04/09/2018 6:10 AM  
Carla, is it certain individual unit owners who receive the income from renting their condos on a day-to-day basis and who do the management of their own individual condo insofar as renting it out is concerned? Or does the HOA as a whole receive this rental income and do the management? If it is the individual unit owners, I think your condo is still a not-for-profit.

Also do your governing documents say anything about short-term rentals, as in day-to-day or week-to-week rentals?
LetA
(Nevada)

Posts:456


04/09/2018 6:17 AM  
Is there at least two association payments made each month? Like a master association and sub?
CarlaS2
(Colorado)

Posts:28


04/09/2018 7:04 AM  
Only one assessment I believe.

Here’s the wording:

Michigan Nonprofit Corporation Act clearly provides that a nonprofit corporation may be “incorporated to carry out any lawful purpose or purposes not involving pecuniary profit or gain for its directors, officers, shareholders, or members.” MCL 450.2108(3). Consequently, operating a rental management program for a profit would be a violation of MCL 450.2108.


It’s a new twist with the short term rental market.
JanetB2
(Colorado)

Posts:4108


04/13/2018 12:04 AM  
Posted By CarlaS2 on 04/09/2018 4:10 AM
Posted By LetA on 04/08/2018 8:35 PM
What do you exactly mean by condo hotel?


Michigan Dept. of Revenue just issued a ruling, that HOA must be a not for profit. With the vacation rental market, the properties are condo wanting to be run as a hotel for select owners rental revenue.

If I understand the discussion correctly, just trying to get anyone’s experience with this type of property.


The full statute you noted from Michigan states:

450.2108 Definitions; M to P.
Sec. 108.

(1) "Member" means a person that has a membership in a corporation in accordance with the provisions of its articles of incorporation or bylaws.

(2) "Nonprofit corporation" means a corporation incorporated to carry out any lawful purpose or purposes that involve pecuniary profit or gain for its directors, officers, shareholders, or members.

(3) "Person" means an individual, a partnership, a domestic corporation, a domestic business corporation, a foreign corporation, a foreign business corporation, a limited liability company, or any other association, corporation, trust, or legal entity.

(4) "Predecessor act" means an act or part of an act repealed by this act, or an act or part of an act repealed by an act that this act repeals.

(5) "Private foundation" means a tax exempt corporation described in section 501(c)(3) of the internal revenue code of 1986, 26 USC 501, that is classified as a private foundation under section 509(a) of the internal revenue code of 1986, 26 USC 509.

It would appear to me that any “Nonprofit corporation” as defined cannot have a pecuniary profit (essentially monetary) gain for directors, officers, shareholders, or MEMBERS (as would be the case for any HOA). However, I would contend that would only apply to the HOA regarding profiting from rental and NOT the owners.

QUESTION: You are noted from Colorado and yet are asking about Michigan statutes?
BenA2
(Texas)

Posts:521


04/13/2018 8:08 AM  
Posted By CarlaS2 on 04/09/2018 7:04 AM
Only one assessment I believe.

Here’s the wording:

Michigan Nonprofit Corporation Act clearly provides that a nonprofit corporation may be “incorporated to carry out any lawful purpose or purposes not involving pecuniary profit or gain for its directors, officers, shareholders, or members.” MCL 450.2108(3). Consequently, operating a rental management program for a profit would be a violation of MCL 450.2108.


It’s a new twist with the short term rental market.



Couldn't an association have a rental management program where they don't profit? As I understand nonprofits, as long as revenue is spent for the operation and benefit of the organization, it is not profit.
JanetB2
(Colorado)

Posts:4108


04/14/2018 10:21 AM  
Actually Carla both you and I misread that statute:


(2) "Nonprofit corporation" means a corporation incorporated to carry out any lawful purpose or purposes that involve pecuniary profit or gain for its directors, officers, shareholders, or members.

It does not state that the Nonprofit cannot have monetary gain and instead describes that it can have profit.
LetA
(Nevada)

Posts:456


04/14/2018 11:01 PM  
Posted By CarlaS2 on 04/09/2018 4:10 AM
Posted By LetA on 04/08/2018 8:35 PM
What do you exactly mean by condo hotel?




Michigan Dept. of Revenue just issued a ruling, that HOA must be a not for profit. With the vacation rental market, the properties are condo wanting to be run as a hotel for select owners rental revenue.

If I understand the discussion correctly, just trying to get anyone’s experience with this type of property.





Any and all rentals are private contracts between the unit owner and the renter. Your HOA can pass CC&R's to prohibit short term rentals as well as your state and local
municipality. Your HOA has noting to do with a unit owner's revenue from short term rentals like Airbnb.

My suggestion is pass a clause in the CC&R's to prohibit short term rentals or limit rentals to a minimum of 30 days or 6 mos or one year.

I would also twist your legislations arm at the local level to pass legislation to limit short term rentals.

As a security officer that has worked in high-rise condos, short term rentals are a major PAIN IN THE ARSE.
JohnC46
(South Carolina)

Posts:7594


04/15/2018 7:12 AM  
The OP asked about self management of a condo/hotel. As the hotel is open to the public and funds might be mixed, my initial blush is such an operation is beyond self management by a few homeowners.
JanetB2
(Colorado)

Posts:4108


04/16/2018 9:40 PM  
Posted By JohnC46 on 04/15/2018 7:12 AM
The OP asked about self management of a condo/hotel. As the hotel is open to the public and funds might be mixed, my initial blush is such an operation is beyond self management by a few homeowners.


If remember there was another post by the OP with regards to the Condo’s requiring the Owner’s to rent via through the HOA instead of Owner’s renting themselves. If owner’s rented their own condo’s the HOA was wanting to charge a fee. It potentially is another part of the same situation, but asked in a different manner.
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