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Condo | HOA Lawyers

Why Corporate Status is Important

The very first thing that Kaman & Cusimano do when we are hired by a community association is verify whether it is properly incorporated.  In today’s litigious society, the threat of a lawsuit is always present, and one of the greatest concerns facing board members is whether or not there is the potential for personal liability.  As a volunteer board member you should not have to worry that you will be facing a lawsuit, in which your personal assets could be attached.

One of the main ways to protect against personal liability is to make sure the association is registered with the Secretary of State as a non-profit corporation.  By being a non-profit association, a corporate wall is formed.  As a result, the corporation is treated as a separate legal entity, which becomes responsible for the debts and decisions that are made in place of individual board members or home owners. Consequently, incorporating the association serves to limit liability to board members.  If the association is sued, the legal corporate entity should be named in the lawsuit, and the individual officers should not be brought in.  Thus, being properly incorporated serves as a shield to personal liability for each board member.​

In order for an association to retain its corporate status, the board must fill out renewal documents with the Secretary of State every five years.  Additionally, by law, in order to be considered a corporation, the association must hold both an annual owner meeting, and board meeting, and keep minutes of major decisions.  Moreover, the association must also keep detailed financial records.

Finally, the association must also name a person or entity to serve as its statutory agent.  A statutory agent is also registered with the Secretary of State, and by law becomes the person or entity designated to receive service of process when the association is named as a party in a legal action such as a lawsuit or summons.  We recommend that Kaman & Cusimano, through the K&C Service Corporation, be appointed the statutory agent for all associations we represent.  By being your statutory agent, we will automatically receive a copy of any lawsuit or legal document that association is named in.  By making Kaman & Cusimano the statutory agent for the association, it will ensure the board does not miss any important deadlines in responding properly to the lawsuit or summons.​

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