Published in the ECHO Journal, March 2013
If your homeowners association is a corporation, has it been suspended and you don’t know why? Or, do you know why, but don’t know where to start to revive it? This artic.
Most homeowner association powers, rights and privileges can be suspended or forfeited in California by:
- The Secretary of State for failure to file the required Statement of Information and Statement by Common Interest Development Association; and/or
- The Franchise Tax Board for failure to file a tax return and/or failure to pay taxes, penalties or interest, even if nothing is due.
What to Do
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Check the status of the HOA (corporation) by going to the California Secretary of State’s web site (www.sos.ca.gov) and clicking on “Business Entities”, then look for “Online Services” (on the left) and click on “Business Search”. Follow the instructions for “Search Type”. If your HOA is in suspended status, go on to No. 2 below.
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File (in person, by mail, or online) the required Statement of Information (Form SI-100) and Statement by Common Interest Development Association (Form SI-
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Contact the Franchise Tax Board (FTB) for “revivor” requirements. You must contact the FTB and complete an Application for Certificate of Revivor (Form FTB 3557) and submit the application with a proposed relief letter to the FTB.
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If you do not know what has been filed or not filed, you may request a Business Entities Records Order Form (BE-IRC) from the Secretary of State, pay the required fee and request copies of documents submitted to the Secretary of State. This will give you a start.
Suspended Status
The HOA will remain suspended until both the Secretary of State and the Franchise Tax Board revivor requirements are met. Once all requirements are met, the FTB will issue a “Certificate of Revivor”. Usually, a HOA is suspended for failure to file the two statements; however, if the Business Entities Records Order Form comes back indicating that tax returns have not been filed, you need to immediately contact your accountant and/or tax preparer.
Important Consequences
- Your HOA must be current and active with the Secretary of State before the HOA can sue anyone in California (Cadle Co. v. World Wide Hospitality Furniture, Inc. (2006) 12 Cal.App.4th 504). If your HOA is not, any person who attempts to exercise the powers, rights and privileges of a suspended corporation may be criminally punished by a $250.00 to $1,000.00 fine and/or up to one year in prison [Ca. Rev. & Tax ยง19719 (a),(b)].
- Loss of corporate name, during the suspension, another corporation may use your name.
- Loss of right to sue or defend lawsuits.
- Loss of right to engage in real estate transactions.
IMPORTMANT: keep your corporate status current. File all forms and tax returns in a timely manner!
Tom Fier is an Attorney at Law with a homeowner association practice in San Mateo, CA.