Requirements for Homeowner Associations
Most active subdivision and condominium associations in Missouri are nonprofit corporations. Those associations are created and empowered, under their respective indentures and declarations, to enforce the covenants, terms and conditions applicable to their communities for the betterment of all residents. The association may be tasked with maintaining not only the pool, but also sidewalks, streets, buildings, tennis courts and common areas, as well as handling miscellaneous tasks confronting the subdivision.
According to Missouri’s Nonprofit Corporation Law, a corporation is required to keep as permanent records the following documents:
- Articles or restated articles of incorporation and all amendments then currently in effect
- Bylaws or restated bylaws and all amendments to them currently in effect
- Minutes of all meetings of members and the Board of Directors
- Records of all actions taken by the members or directors without a meeting
- Records of all actions taken by the committees of the Board of Directors
- Appropriate accounting records
- Documentation as to the number of votes to which each member is entitled
- Articles or restated articles of incorporation and all amendments to them accurately in effect
While an association that is a nonprofit corporation has to maintain the records specified above, subject to limited exceptions, a member or a member’s agent or attorney is permitted to inspect the corporation’s records only at a reasonable time and location specified by the association.
The HOA is also responsible for purchasing and maintaining insurance to address and cover the common areas within the neighborhood or condominium that are shared by all homeowners. These insured structures, often covered by a “Master Insurance Policy” should be specifically detailed within the HOA’s governing documents. Additionally, if the HOA employs individuals, the HOA may wish to consider adding liability insurance to cover the errors or actions of the employees.
Because each indenture and declaration is different, it is impossible to state just how far the rights of the homeowner in a subdivision or of a unit owner in a condominium go in permitting review of the association’s records. But in each case, the rights will not be less than those rights granted to members of the organization under which the association is organized—usually a nonprofit corporation, very infrequently a for-profit corporation, or occasionally an unincorporated association.
Occasionally, a HOA runs afoul of its limitations or fails to enforce or impartially and fairly enforce the subdivision indenture or condo declaration. In such a case, after being notified of a purported situation in violation of its governing documents, the HOA either has to defend itself or make adjustments to its operating procedures. And after notice, if no correction occurs, appropriate action by the owners to enforce the indenture or declaration may be appropriate.
Unpaid directors, officers and volunteers of a Missouri nonprofit corporation enjoy immunity from certain acts other than those that are intentional or reckless. However, that immunity works only with regard to tort liability, not statutory liability that is imposed by the Internal Revenue Code. Alignment with the financial “rules of the road” is one of the Board of Directors’ responsibilities that must not be abandoned under any circumstance.