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Subject: Small Arizona HOA
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Author Messages
JohnG
(Arizona)

Posts:7


12/01/2005 9:37 AM  
We have a very small HOA in Arizona (15 properties). Can anyone tell me if we are required to register the HOA with the state corporation commission?
DCWilliams
(Wyoming)

Posts:6


12/05/2005 10:34 PM  
If you choose to register your HOA as a non-profit corporation you should contact your Secretary of State where you live. They probably have a website where you can obtain information. There are good tax and legal liability reasons for incorporating. If your Secretary of State grants you non-profit corprate status remember that you are still obligated to submit federal tax returns even if your HOA makes no profits from your activities. Our HOA has no profits, only dues from homeowners to pay for maintenance costs, but we still are required to submit IRS Form 1040H each year. For more information on this go to www.irs.gov where you will be able to read online IRS Publication 557.
CarolB
(Arizona)

Posts:9


12/06/2005 7:18 AM  
There's both legal and tax advantages to incorporating. Here's the link to the Arizona Corporation Commission's FAQ page. I am VP of an HOA in Chandler and we file our annual reports which cost $35.
http://www.cc.state.az.us/corp/faqmanual.htm#cf
LarryV
(Arizona)

Posts:4


12/06/2005 7:44 AM  
Probably depends on the reasons the HOA is organized. Incorporating will help protect you. If the association owns land property and you are in Maricopa County (don't know about the other counties), then you can save on real estate taxes by a procedure of grouping them together and registering that with the county assessor.
JohnG
(Arizona)

Posts:7


12/06/2005 8:34 AM  
Thank you for your response.

The CC&Rs provide for the establishment of an Architectural Control Committee and set guidelines for certain construction standards (i.e. minimum square footage and side or rear facing garages), but there are no provisions for the Committee to enforce the standards and no consequences if the lot owner doesn't comply with the architecural guidelines. The CC&Rs also talk about a "Board", but there is not provision for establishing the Board (i.e. elections). The developer that wrote the CC&Rs never registed the non-profit HOA with the state, so there is no Articles of Incorporation, Bylaws, etc. (He retired, but is still around and can help us if needed.) All lots are sold and only two are not built out.

My question is should we amend the CC&Rs first to establish a Board and enforce the architecural guidelines or should we register the HOA first and accomplish this in the Bylaws. The registration forms will ask for the names of the officers, but we don't have any yet.

Thank you.
JohnG
(Arizona)

Posts:7


12/08/2005 1:09 PM  
The HOA will not own any land, nor are there any common areas in the community. The HOA will be set up to enforce compliance with the CC&Rs and help protect other rights of the property owners.

At this point, I'm looking for the proper steps to set up the HOA. Any suggestions where to start?

Thanks.
RogerB
(Colorado)

Posts:5067


12/08/2005 4:20 PM  
JohnG, I would consider taking the following steps:
1. Check the CC&R's to see if they have a provision for amending. If this provision exists, then;
2. Draft necessary amendments using an attorney experienced in HOA matters in AZ;
3. Provide copies of the proposed amendments to all members and then solicit vote to amend the CC&Rs. After approval file this document with the appropriate governmental group (normally the County Clerk and Recorder of each county included in the association);
4. Draft proposed Bylaws, provide to all members, and then solicit vote to approve by the members. After approval;
5. Nominate, vote, and elect Board members at a members meeting;
6. Board meets and elects officers;
7. Draft articles of incorporation, get Board approval, and apply to the secretary of state of Arizona for non-profit corporation status. (You can probably view examples of other HOA's Articles of Incorporation on the state of Arizona web site under the secretary of state.)

The vote on the CC&Rs is of all members, not just those present at a meeting. Set the percent required for approval to amend at a maximum of 67% to a minimum of a simple majority (depending on AZ requirements). I find a mail ballot with a letter explaining the pros and cons of each vote to be very effective. You may have to follow up with door to door contact to get most of the votes since no response is equivalent to a vote against. If desired you could also include a ballot to vote on the Bylaws at the same time.

The vote on Board members can be done at a homeowners meeting which has a quorum present. Election is often by a majority vote of those present.

It can be worth the effort.
Good luck,
Roger

JohnG
(Arizona)

Posts:7


12/09/2005 3:59 PM  
Thank you very much for your guidance.

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