HOA Nut House

Interesting suggestion. But if the non-profit status is removed, wouldn't the "for-profit" corporation be required to make the homeowner/members all shareholders? And file public financial statements? And then actually be held accountable?

Interesting . . .

Actually, I've been looking into this suggestion... here is what I've found....
I want to make it clear I am not a lawyer, nor a tax professional....

Not all corporations file "public financial statements" Only those who sell shares of their company on the open market, generally on the various exchanges NYSE, NASD etc. " S " corporations do nothing more than file a generic annual report that updates who their statutory agent is, address, BOD, etc., it does not require them to include any financials. But even " C " corporations who are not listed on the exchanges do not have to file "public financials" I believe U-Haul is such a corporation, see if you can locate any public financials on them.

The first concern I hear from individuals living in HOAs when I bring up this topic, is the "fear of paying taxes" on profits.... being a "for profit" corporation would subject the membership to taxes on profit. However, I have looked into this also, and made inquiries. If the corporation does not make a profit, then it pays no taxes. Additionally, if it were to finish the year "under budget" thereby implying a profit, there is one definite solution and another that I would have to investigate further as to the legality of it.

1) Return any excess to the membership, under the category of "Return of Capital" this is not taxable as a "capital gain" it is merely returning initial invested capital.

The 2nd (the one I'd have to investigate further)
2) Put 1/2 of the excess into the "reserve account" for future expenditures, and return the other half to the members as a "capital return"

I do think eliminating the non-profit status of HOAs would change the dynamic of how they operate, and that would become more accountable to the membership.