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Subject: Anybody want to try helping a newby manager?
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GregF4


Posts:0


03/17/2011 9:20 AM  
O.k. the "Declarant" (the guy who built the place/contractor) set up the Declaration of covenants: Conditions and restrictions and reservation of easements for XX Townhouses LLC (limited liability COMPANY) a planned unit development subdivision (PUD)

The very first paragraph in the DofC states: "Declarent has deemed it desirable, for the efficient preservation of values and amenities in the real property described above, to create a NON-PROFIT CORPORATION under the UTAH NON-PROFIT CORPORATION AND COOPERATIVE ASSOCIATION ACT to which should be delegated and assigned powers of owning, maintaining and administering the common area and administering and enforcing the covenants restrictions and collecting and disbursing the assessments and charges hereinafter created, which said corporation is sometimes referred to as the association."


I just took over as president and the business name is XX Condos LLC.... (I don't know when or who switched it from "Townhouses" to "Condos" or if it is a new entity all together???) so far it looks like our association hasn't been keeping books, holding meetings or electing board members. As far as I understand the entity XX LLC has been passed down to whoever would take it. Right now I am on it as "Member" and the former president is on it as "Registered Agent"

This all seems messed up to me but I don't know much about what has happened in the past, if our non-profit corporation were to have switch to a Limited liability company shouldn't I have been informed since I have lived here when the contractor gave the first president the power? Have we just been unknowingly passing around the right as declarant this whole time? I need some guidance please...
GregF4


Posts:0


03/17/2011 10:20 AM  
I just found this article while browsing the internet---

"Some states do allow non-profit LLcs
It is my understanding that some states allow non-profit LLCs. I'm an attorney in Missouri, and a friend at the local Secretary of State office made a passing comment one day that he was seeing more and more non-profit LLC filings, which was the first I had heard of them.
I personally am still researching the issue, but I find the idea of a non-profit LLC very enticing. One distinction here in Missouri is that the non-profit corporations statute in Missouri requires 3 directors, while the Missouri LLC statute allows for single-member LLCs. As such, I think you could actually create a non-profit LLC with only one director and avoid the 3-director rule under corporations.
As LLCs are much less formal and have less meeting structure and such, a non-profit LLC would be a good thing for those looking to form a non-profit without some of the structures required of corporations. I have no knowledge of how the IRS handles non-profit LLCs, though, in regards to filing for 501(c)(3) status."

I wonder if Utah allows that? That would explain our Situation, wouldn't it?


GregF4


Posts:0


03/17/2011 12:14 PM  
"I just took over as president and the business name is XX Condos LLC.... (I don't know when or who switched it from "Townhouses" to "Condos" or if it is a new entity all together???) "

P.S. I just looked it up and it is a different entity. The old one with the contractors name on it is expired. That means that the first president who took over directly after the contractor, created a Limited Liability Company Entity to manage our HOA instead of the Non-Profit Corporation that was suggested in the D of C.

Only the manager at the time has been on the Entity as Member and Registered agent unless he gives it to somebody else then he is registered agent and the new guy is "Member" temporarily until they switch it to new guy as both Registered agent and member.

Is that illegal?

Can you be a non-profit LLC in Utah?

Can I start a new entity for us as a non profit Corporation?
GlenL
(Ohio)

Posts:5491


03/17/2011 5:07 PM  
Questions for an attorney versed in real estate law.

Studies show that 5 out of 4 people have problems with fractions
MelissaP1
(Alabama)

Posts:9642


03/17/2011 5:32 PM  
Questions for a lawyer versed in CORPORATE/BUSINESS law.... HOA's are Corporations NOT Real Estate...

What has happened is the Builder/Contractor is the LLC. They turned over the HOA to the homeowners making the HOA a Non-Profit Corporation which is to filed with the STATE with Articles of Incorporation paperwork. I believe you have to apply for non-profit status with the IRS. That would need the advice of an ACCOUNTANT on that.

If indeed your builder/contractor has surrendered their control to the owners, the paperwork needs to be UPDATED with such wording. This is a hard and long process I won't lie. It usually requires a "special meeting/Quorum" and signatures of 75 to 90% of the members to make changes. The Articles of Incorporation and By-laws are usually 75% to change and 90% for the CC&R's. The CC&R's should be filed at your local COUNTY courthouse in the RECORDS department. They are PUBLIC documents.

Depending on the size of your HOA the expense of this IMPORTANT documentation changes/updates can cost $2 - 5K. If you consult an attorney, they may be able to draft the ability for you to "skip" having the special meeting if it's easier to go door to door. Which this will take 2 documents to be signed. 1 agreeing NOT to attend the special meeting and the other the actual vote/approval. I've been through this myself and it is worth it in the end.

As far as the "Condo/Townhouse" issue...It is completely related to your State Tax definition. When I applied for my Homestead Exemption, they did not have "Patio home" as an option. It was either Condo or single family home. This is most likely the reason for the difference in your paperwork as well.

Former HOA President
TimB4
(Virginia)

Posts:17007


03/17/2011 6:14 PM  
Here are some links that might help:

IRS web site about LLC

Utah Division of Corporations


Per the IRS site:

"A Limited Liability Company (LLC) is a business structure allowed by state statute. LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation.

Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single member” LLCs, those having only one owner."


IMO, when the Builder transferred the Association to the members, the membership created it's own Association then had the builder, for the sum of $10 convey the entire plat to the HOA.

Tim
GregF4


Posts:0


03/18/2011 9:49 AM  
Melissa- "What has happened is the Builder/Contractor is the LLC. They turned over the HOA to the homeowners making the HOA a Non-Profit Corporation which is to filed with the STATE with Articles of Incorporation paperwork. I believe you have to apply for non-profit status with the IRS. That would need the advice of an ACCOUNTANT on that."



We are an LLC and have "Articles of Organization" that means we are NOT incorporated right? There is a difference between "Articles of Organization" and "Articles of Incorporation" Correct?

If that is the case, SHOULD the contractor/Builder have filed articles of incorporation before he turned it over to us,or is it o.k. that he didn't?

If we have applied for non-profit status in the past, how would I Confirm that? Should it be referenced somewhere on our tax returns?
GregF4


Posts:0


03/18/2011 10:00 AM  
Changing Your Business Structure
Changes in Organization or Ownership
If you already have an Employer Identification Number (EIN), you may need to get a new one if either the organization or ownership of your business changes. If you incorporate a sole proprietorship or form a partnership, you must get a new EIN.
--------------------------------------------------------------------------------------------------------------------------------

*I got a new EIN when I took over, Does that cover my hide from past presidents mistakes in the event that we get audited or something?


MelissaP1
(Alabama)

Posts:9642


03/18/2011 10:43 AM  
A few sources: Go to your local county courthouse's record's department to pull the existing documents. Incorporation paperwork is at STATE level.

Another source is a office supply store. There is actual documents/CD packages there that should help. They are about $20 or less depending if you want the CD or not. You will find it in the area for "Lease agreements" and other such documents for do-it-yourself. If they don't have it, then copy the company's name and google them. I've seen the paperwork for incorporating and such on a few occassions.

Good advice on the EIN information too.

Former HOA President
GregF4


Posts:0


03/21/2011 11:48 AM  

Tim- "IMO, when the Builder transferred the Association to the members, the membership created it's own Association then had the builder, for the sum of $10 convey the entire plat to the HOA."

Tim, if something like that did happen, how would I confirm it?

*I could talk with the contractor

*I could talk with the first president who set up the new Entity

Do I have any other options?

Also, assuming that happened, Shouldn't there have been papers filed like "articles of organization" etc.. with the new entity?
JanetB2
(Colorado)

Posts:4211


03/21/2011 2:22 PM  
Hi Greg:

Have you heard back yet from the tax accountant or do you have previous year tax information? These forms could help give a clue as to how everything has been filed in the past with regards to potential LLC status.

Also, I was trying to remember if this site showed any Articles of Organization when you look at anything under the find filed documents: https://secure.utah.gov/bes/action

JanetB2
(Colorado)

Posts:4211


03/21/2011 2:42 PM  
Here is some information on Limited Liability Company for Utah if you go a little deeper from the link Tim provided above:
http://corporations.utah.gov/business/llc.html

The issue also is which LLC are you filed as because there are a few options some of which are: Domestic, Professional, Low-Profit, etc.

If you hover over the “Business Entities” tab a drop down box opens. Again move down over Limited Liability Company and the different options will be within another box. If you click for example “Domestic” at the bottom it will have Forms and Guide Sheets. Take a look at these and see if anything looks familiar when you compare to what you potentially have on hand or have viewed on-line for your HOA.


GregF4


Posts:0


03/21/2011 2:42 PM  
Posted By JanetB2 on 03/21/2011 2:22 PM
Hi Greg:

Have you heard back yet from the tax accountant or do you have previous year tax information? These forms could help give a clue as to how everything has been filed in the past with regards to potential LLC status.

Also, I was trying to remember if this site showed any Articles of Organization when you look at anything under the find filed documents: https://secure.utah.gov/bes/action






I haven't heard from the tax accountant yet but I do have taxes for 2008 and 2009. (They say that we were incorporated 09-03-2008)

When I looked up our LLC on - https://secure.utah.gov/bes/action- Under "view filed documents" it has:
01/16/2009 Annual Report
02/02/2009 Annual Report
12/07/2010 Annual Report
09/02/2008 Application
I wanted to make sure that at least one of these looks like it would contain Articles of Organization before I pay to view them. Would they possibly be under "Application"?
GregF4


Posts:0


03/21/2011 3:00 PM  
Posted By JanetB2 on 03/21/2011 2:42 PM
Here is some information on Limited Liability Company for Utah if you go a little deeper from the link Tim provided above:
http://corporations.utah.gov/business/llc.html

The issue also is which LLC are you filed as because there are a few options some of which are: Domestic, Professional, Low-Profit, etc.

If you hover over the “Business Entities” tab a drop down box opens. Again move down over Limited Liability Company and the different options will be within another box. If you click for example “Domestic” at the bottom it will have Forms and Guide Sheets. Take a look at these and see if anything looks familiar when you compare to what you potentially have on hand or have viewed on-line for your HOA.






Janet I was looking at this site earlier, it's good to know I was on the right track. Our LLC is Domestic
I think what I am trying to figure out is If the contractor who had the old entity properly transferred the business to the first manager when he(1st manager) created a new entity. This site says that:

The Articles of Transfer must include the following information:
a. the name of the company;
b. the filing date of original articles of organization;
c. the jurisdiction to which the company shall be transferred;
d. the future effective date of the transfer if it is not to be effective upon filing;
e. that the transfer has been approved by the members;
f. that the existence of the company as a domestic company of Utah shall cease when the articles of transfer
become effective;
g. the agreement of the company that it may be served with process in Utah for any proceeding for
enforcement of any obligation of the company arising while it was a company under the laws of Utah;
h. if the company does not apply for authority to transact business in
GregF4


Posts:0


03/21/2011 3:03 PM  
Sorry my computer froze up, Where do I find the Articles of transfer?
JanetB2
(Colorado)

Posts:4211


03/21/2011 3:05 PM  
I would think that it potentially would be the application. You probably should have a copy of this anyway if you do not currently have on hand.
JanetB2
(Colorado)

Posts:4211


03/21/2011 3:12 PM  
Here is a page regarding contact information for that department. Maybe you should give them a call and see what they have on file, they have a toll free number. http://corporations.utah.gov/contactus.html
GregF4


Posts:0


03/21/2011 3:43 PM  
Posted By JanetB2 on 03/21/2011 3:05 PM
I would think that it potentially would be the application. You probably should have a copy of this anyway if you do not currently have on hand.





I got It- Articles of Organization of XXCondosLLC The question is... does this new entity have to abide by our governing documents (CC&r's) as well as the Utah laws for Limited Liability Companies?
JanetB2
(Colorado)

Posts:4211


03/21/2011 4:28 PM  
Hi Greg:

Good job … finally have what have been searching for and could not locate.

All HOA’s abide by corporate/company laws whether Limited Liability Company, Non-Profit, etc. depending on how they are formed. They also abide by their HOA governing documents and the State Statutes for either Homeowner Association or Condominium which ever they fall under.
JanetB2
(Colorado)

Posts:4211


03/21/2011 4:38 PM  
Posted By GregF4 on 03/21/2011 3:03 PM
Sorry my computer froze up, Where do I find the Articles of transfer?

You will not have Articles of Transfer ... that would only pertain to transfering the company to another state besides Utah.

GregF4


Posts:0


03/21/2011 5:21 PM  
Posted By JanetB2 on 03/21/2011 4:28 PM
Hi Greg:

Good job … finally have what have been searching for and could not locate.

All HOA’s abide by corporate/company laws whether Limited Liability Company, Non-Profit, etc. depending on how they are formed. They also abide by their HOA governing documents and the State Statutes for either Homeowner Association or Condominium which ever they fall under.




YAY! I'm learning! LOL....
Here is the thing that still stumps me though- The CC&R's were written up by the contractor in 1996 (the same ones I got when I purchased my home in 2007) The contractor was with the Entity XX TOWNHOUSES LLC that is the name on our Declaration of covenants.
He didn't want to be in charge anymore so in 2008 My neighbor took the initiative and created a new entity XX CONDOS LLC (domestic) for our HOA purposes. Should he have filed our original CC&R's in connection with this new Entity somehow?
Do you get what I am asking? How do I find out if this new Entity is legally bound by our original Declaration of covenants?
GregF4


Posts:0


03/21/2011 5:32 PM  
On another note, I ran across an article that said
"In non-condominium associations, it is the association that owns whatever is common, All owners are members of that association. Depending on what state you live in there are many different names for a homeowners association. States with Common Interest Acts often call them planned communities. They are also called owners associations, property owners associations, PLANNED UNIT DEVELOPMENTS, and sometimes community associations....

Whatever you call them, because the association owns whatever is common and all of the owners are members over the association, it is NOT a condominium."

Our original D of C's say that we are a Planned unit Development subdivision.
JanetB2
(Colorado)

Posts:4211


03/21/2011 5:36 PM  
Hi Greg:

I am wondering if he just goofed and put Condos instead of Townhomes on the form. What I would recommend is to telephone them (info above) and see what they state. It could be something that they can easily fix so everything is showing correct or they will let you know how best to proceed.

JanetB2
(Colorado)

Posts:4211


03/21/2011 5:53 PM  
He potentially was approved through the local government as a PUD as he was building townhomes. I was trying to find the definition in Utah code, and have not found yet. Here is definition from another state and which potentially would be similar to yours:

Residential structures in a PUD might be free-standing homes or may consist of two or more townhomes separated by party walls. With townhouse construction, owners might own a traditional looking lot with fenced front and back yards or they may own a "footprint" lot, i.e., the dirt upon which the structure sits and nothing more.

Maintenance responsibilities in PUDs can vary considerably. In some, owners are responsible for everything on their lots--all structures and all landscaping. In others, the association takes care of the landscaping. In some, usually those with townhouse construction, the association is responsible for exterior structure maintenance such as painting and roofs. The variations depend on how the developer drafted the CC&Rs.

GregF4


Posts:0


03/21/2011 6:41 PM  
Posted By JanetB2 on 03/21/2011 5:53 PM
He potentially was approved through the local government as a PUD as he was building townhomes. I was trying to find the definition in Utah code, and have not found yet. Here is definition from another state and which potentially would be similar to yours:

Residential structures in a PUD might be free-standing homes or may consist of two or more townhomes separated by party walls. With townhouse construction, owners might own a traditional looking lot with fenced front and back yards or they may own a "footprint" lot, i.e., the dirt upon which the structure sits and nothing more.

Maintenance responsibilities in PUDs can vary considerably. In some, owners are responsible for everything on their lots--all structures and all landscaping. In others, the association takes care of the landscaping. In some, usually those with townhouse construction, the association is responsible for exterior structure maintenance such as painting and roofs. The variations depend on how the developer drafted the CC&Rs.




Our backyard is only partially fenced to allow neighbors to walk through with their garbage cans. Some neighbors on the opposite side of our lot blocked off their backyard with rocks (our ccr's say we can't change the fences or party walls) One lady said that we own our back yards and people can't go in her back yard because she wants her privacy. The former president/that same ladies husband, said that the association is in charge of fixing the buckling cement in so and so's back yard...
I don't think any of us really know.lol
If it helps, I looked up the PLAT for our PUD and the lots say 44.00' by 18.00' I got a measuring tape and measured from my front door through my back yard to the end of the fence and it was closer to 44.00' than when I measured to my back door. So I assume we own our back yard and the association is not responsible for repairs in it. But I may have measured wrong.
JanetB2
(Colorado)

Posts:4211


03/21/2011 6:53 PM  
Your Declaration should describe what is common area or community property. This would be the areas that the HOA is responsible for maintaining. Everything else would be maintained by each individual homeowner.

I have an extra copy of my HOA documents in a binder with tabs dividing (i.e. Article of Incorporation, By-Laws, Declaration, State Statutes, etc). I then thoroughly read through them with different colored highlighters. You could get away with just one color and highlight items that are the HOA responsibility. In the future if you need to reference, then those items for HOA will stand out and makes it quicker to reference.


TimB4
(Virginia)

Posts:17007


03/22/2011 5:16 AM  
Posted By GregF4 on 03/21/2011 11:48 AM

Tim- "IMO, when the Builder transferred the Association to the members, the membership created it's own Association then had the builder, for the sum of $10 convey the entire plat to the HOA."

Tim, if something like that did happen, how would I confirm it?

*I could talk with the contractor

*I could talk with the first president who set up the new Entity

Do I have any other options?

Also, assuming that happened, Shouldn't there have been papers filed like "articles of organization" etc.. with the new entity?





Check the county land records. We have a deed of sale showing the sale.

If a new entity was created, check with your State's Corporation Commission as this is who would have those records.

Tim
GregF4


Posts:0


03/22/2011 9:01 AM  
Posted By JanetB2 on 03/21/2011 6:53 PM
Your Declaration should describe what is common area or community property. This would be the areas that the HOA is responsible for maintaining. Everything else would be maintained by each individual homeowner.

I have an extra copy of my HOA documents in a binder with tabs dividing (i.e. Article of Incorporation, By-Laws, Declaration, State Statutes, etc). I then thoroughly read through them with different colored highlighters. You could get away with just one color and highlight items that are the HOA responsibility. In the future if you need to reference, then those items for HOA will stand out and makes it quicker to reference.






Yup your right it says right there in plain English, I should have known. Thanks for the tip, I think I'll break out the highlighters now!
GregF4


Posts:0


03/22/2011 9:09 AM  
Thank you Tim! I will.
GregF4


Posts:0


03/23/2011 9:27 AM  
Original Entity created by contractor reason for organization: act as contractor, repairing, construction etc..To engage in general speculative home building, sell,etc.. to act as principal agent/broker, maintain and operate real preoperty etc...and to engage in any other lawful business activities to which it is organized.................................................

Filed with COUNTY for- XX TOWNHOUSES LLC (Our contractor)- Our Declaration of covenants/amendments made, Warranty Deeds, and Trust Deeds

Filed with Division of Corporations and Commercial Code for- XX TOWNHOUSES LLC (Our contractor)- Annual Reports, Articles of organization of XX TOWNHOUSES LLC
-------------------------------------------------------------------------------------------------------------------------------
New entity created to manage HOA..reason- The company shall have unlimited power to perform any and all lawful acts pertaining to management etc... Organized under the Utah Limited Liability Act..........................................................

Filed with COUNTY for- XX CONDOS LLC (The entity created when our first manager took over from contractor) - NOTHING

Filed with DIVISION of CORP..- XX Condos LLC (New entity ") -Annual reports, Articles of organization of XX CONDOS LLC

-------------------------------------------------------------------------------------------------------------------------------

1- The previous manager said that "Papers have been filed" concerning unpaid dues of two owners. One owner up and abandoned the lot it was listed under foreclosures. (Our Declaration says you can not do that for any reason) The other owner was apparently "taken to court" according to the previous manager.

Am I searching In the wrong place for conformation of these things? Do I need to call the county and ask if they have any additional filings that may not be showing up in the online search?

2- Our Declaration of covenants was filed with the old entity, and there is no record confirming a sale of the plat or anything. The new entity has 0 filings with the County.

Does this mean that there has been an error and the new entity is not lawfully bound by our Declaration of Covenants? Only its own articles of organization and the Utah code?
JanetB2
(Colorado)

Posts:4211


03/23/2011 9:58 AM  
Hi Greg:

The important item is the properties are bound to the Declaration, so it can be enforced. It could be when they changed the HOA to XX Condos they did not update the Declaration to reflect the name change and file with the county under the new name. You might speak with an attorney (many will do a free consultation) and see what is the best method to insure everything is filed correctly under the same entity.

Out of curiosity … has anyone sold their unit after the name change was made or is everyone still the original owners?

GregF4


Posts:0


03/23/2011 10:30 AM  
Posted By JanetB2 on 03/23/2011 9:58 AM
Hi Greg:

The important item is the properties are bound to the Declaration, so it can be enforced. It could be when they changed the HOA to XX Condos they did not update the Declaration to reflect the name change and file with the county under the new name. You might speak with an attorney (many will do a free consultation) and see what is the best method to insure everything is filed correctly under the same entity.

Out of curiosity … has anyone sold their unit after the name change was made or is everyone still the original owners?





Janet you are awesome by the way! Yes, the first manager changed the name, then moved about 2-3 months later..my brother bought his place and they had him sign that he would obey the original Declaration nothing had been changed in his copies.
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