I write to ask a question regarding incorporation of small condo associations. We are in a bit of ambiguous space where the bank we visited won't let us open an account on behalf of the association without incorporating. I attribute this to the bank being unfamiliar with the DC Condo Act and the unique status and protections available to unincorporated condo associations.
When we go to research the appropriate corporate structure, the DCRA website is less than helpful on how a small condo association should incorporate and obtain tax exempt status. I am very familiar with corporate formation laws, banking laws, and limitations of liability. This is just an intersection where I can't get a concrete answer besides me piecing together my background. I imagine with a number of condos coming online in Bloomingdale, someone has come across this. If so, can anyone weigh in on what procedures were used? Are there resources in the mayors office that can assist us?
Is there a bank that is more familiar with local laws governing condo associations that can assist us?
I opened our small condo association's bank account at Wells Fargo. I did need a EIN from the Federal government but that can easily be obtained. You just want to select the option for a "Condo / HOA." Beyond that all they asked for where the bylaws and the meeting minutes where we selected Wells as our bank.
ReplyDeleteEverything Nathan just said is on point. My association uses Bank of Georgetown and we had to go through the same process (EIN number, meeting minutes, copy of the bylaws...). I think the bank that you referred to gave you bad information.
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DeleteThank you for your post. Is your condo association incorporated (or the subject of some other corporate structure)? Or, did you obtain the EIN as an unincorporated entity? Also, how are the dues treated from a tax perspective?
DeleteUnincorporated entity. For the most part dues are exempt as long as they are to fund maintenance, opex, or reserves. If you had some non exempt activity such as receiving rent for a commercial space in the building there would probably be some tax due. Otherwise my understanding is the only liability we will have is interest on any reserve funds, which should be small as we just started our association this year and the reserves are just accumulating. There is a tax form to file at year end.
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