Property Owners Association

Your corporation is filed with the State as a corporation and the IRS gave you the designation as a non-profit corporation, (some call it a not-for-profit corporation) You are NOT a charitable, 501c3 non-profit, like the Salvation Army, which takes in donations from the public.

You should have Articles of Incorporation and an IRS Designation letter in your files, along with the bylaws, convenants, an official list of members and Board of Directores, and any other governing documents. This stays in the care of the secretary, in a binder.

There is an excellent discussion of non-profit and not-for-profit corporations (merely different names) in Wikipedia at
. It includes links to many related questions.

A tax exempt classification is a separate issue and is governed by IRS rules. See the lead post by the IRS on Social Welfare Organizations at
. It contains a link to IRS 501(c)(4) tax exempt organizations. Under some conditions, an owners association may qualify, as the IRS paper describes. The IRS 501(c)(4) paper contains a section on Homeowners’ and Tenants’ Associations.

Non profit corporations are not permitted to make a profit or retain any but a small amount of contingincy funds. The rest must be invested in the operation or growth of the corporation or is subject to high tax rates. If they are tax exempt, the profit can end that status.

Not for profit corporations are not intending to make a profit, but may find themselves in a situation where they actually do, and they are not subject to the same huge tax rates. They can retain significant sums (think reserve fund) for possible future expenses or other uses. They generally pay taxes on their profits.

It's more complex than that, but in a nutshell that's a view of it.

Both of these are in contrast to an ordinary corporation whose primary purpose is to make a profit, and then is subject to taxes on that profit.

Good Morning to all, I am currently new to this forum and would really appreicate anyone whom can help me get a firm hand on this Home Owners Association Laws and By Laws. I am currently in the middle of developing ground in Tennessee, and Would like to create a postive enforcement on this new community, but in the other hand, I do not want them to be to strict but they have to be enforced. I have read several different types and aspects on laws and by-laws and being a gated community, I want our community members to feel safe in their enviroments and live in a clean up todate subdivision. If any suggestions or pointers in the right directions would be greatful.....Thanks

Natasha,
I own a property in Tennessee. After much research including calls to the Attorney General and the State Board of Real Estate monitoring, I found out that the State of Tennessee does not have any regulations on HOA's. There are some for condo and mobile homes, but none on HOA's.

The Developers draft their own sets of documents and I must say that the set I have is rather good. But there are some chinks in the armor, basically that the Developers are in total control without any State interference so anyone coming up or over, better read them thar Docs first.

I am very interested in getting some State involvement and protection so anyone interested in Tenn, please let me know.

Being in Florida with volumnes of Statutes, I am shocked that there are states without laws and interest in getting some started might be fun??? Maybe not!