For a summary of new laws, both statutes and
case law, prepared by Gary
Kessler, see
2009 Changes in the Law.
PROPERTY TAXES
QUESTION: Is real estate
owned by the association as common area subject to local property taxes?
ANSWER: No. Each member’s property values are
increased by the common areas and thus reflect the value attributable to the
common areas. Hence, each owner pays a higher tax, which reflects that added
value. Double taxation would result if the association also paid real property
taxes on the common areas. In planned developments, there is a specific code
section that applies:
Rev & Tax Code Section 2188.5.
Accordingly, most associations do not have a
property tax obligation. However, there may be exceptions and boards should use
CPAs who specialize in homeowner associations to prepare their tax returns.
NOTE: just because
an association is nonprofit does not mean it is tax exempt. Even when no taxes
are owed, tax returns must be filed.
Thank you to Helene Fransz, Esq. and to Steven Schonwit CPA for their input on this question.
WHEN ARE FEES
DELINQUENT?
QUESTION: If we receive association dues
by mail on the 16th, which is when late fees are assessed, should we honor the
date that the envelope is postmarked?
ANSWER:
As provided for in
Civil Code §1366(e), regular and special assessments are delinquent 15 days
after they become due, unless the CC&Rs provide for a longer time period.
If the envelope was postmarked on or before the
15th but arrives after the 15th, late penalties should not be levied.
SPECIFIC
MOTIONS
QUESTION: Does the specific wording of a
motion need to be included in the minutes or just the intent of the motion? For
example,
Intent: RM
made a motion to decrease the dues;
Specific: RM made a motion to decrease the dues by 10%.
ANSWER:
The motion needs
to be specific. If motions are vague, they are open to different interpretations
and disagreements. Directors will have different memories of the intended size
of the decrease and the effective date. It is also good to include some language
explaining the purpose of the motion, such as: "Due to a significant
reduction in insurance premiums and an unexpected drop in utility costs, the
treasurer forecast a large surplus in the budget. So as to zero-out the surplus,
the Treasurer made a motion to decrease the dues by 10% to take effect in the
next billing cycle.
FEEDBACK
Political Contributions.
Regarding last week's article on political contributions, if the
association is a 501(c)4 tax-exempt corporation I would suggest they consult
with their CPA/tax accountant. We have been advised that political contributions
or forming a PAC may result in our losing our tax exempt status. -Carol
H.
RESPONSE: Good point! -Adrian
New Decade. In
reference to Gary Kessler's statement about the beginning of the second decade
of the 21st Century, I believe the second decade starts on January 1, 2011.
2010 is the last year of the first decade. -Margaret H.
A
super-informative newsletter this morning re nuances of governance. Thank you.
Please tell Gary that the decade is not over. Unless I'm mistaken a decade
constitutes ten years and we are just now starting the tenth year of the first
decade of the century. -S.Y.
RESPONSE: Technically, you may be correct. However, common usage has
"0" as the start of the decade, as in "the Roaring 20s, the Psychedelic 60s, the
1980s." I don't know what they'll call the decade that just ended--the
"double aughts" ... "the nulls" ... "the zeros"?