Most property owners association (POA) boards are aware of annual disclosures that need to be completed and sent to its membership on an annual basis. However, nearly all states have their own POA reporting requirements, too.
The annual report is one of the most important documents your POA must prepare. The POA board of directors–which is selected by members through regular elections in associations–are typically responsible for drawing up and sending out this report.
This guide explores how a POA is answerable to the state, what an annual POA report is, and the consequences of failing to file one.
An annual POA report is a compilation of all the association’s activities over the past year. This is the way to keep members informed of the POA’s financial standing, which is especially important for transparency purposes when members are paying dues. It assures POA members that the board in charge is using their fees responsibly and for the betterment of the community.
Annual reports also help prevent fraud within the association and summarize the POA’s achievements. Members in a POA don’t always regularly keep up with POA activities and sometimes believe their rules are too restrictive; the annual report can be a good way to educate and highlight accomplishments.
The annual report is usually filed with the Secretary of State once each year. Some states set the requirement to every other year. The board should be familiar with the state’s laws and reporting requirements.
The primary purpose of filing an annual POA report is to update the state and membership on important information about the association. The report contains data on topics such as:
The responsibility of preparing and submitting the report falls mainly on the Secretary of the POA, but all board members should review the information before the report is filed. Sending reports with false information or errors will reflect negatively on the association and have unfavorable repercussions.
A surprisingly large number of POA boards fail to file an annual report with their Secretary of State. Not filing can have serious ramifications, including:
However, it is possible to restore the status of good standing with the Secretary of State by submitting an updated report and paying any outstanding penalties or fines.
The content of a POA report varies from state to state, so you need to check with the appropriate authorities to determine what should be included in your report.
In general, an annual POA report contains the following:
The report should also highlight the board’s notable achievements. This can include community improvements and put a spotlight on the work the board has been putting in behind the scenes.
Your POA needs to be careful about what is included in the report. While you are required to summarize finances and highlight accomplishments, you still need to protect confidentiality.
The POA report should not include sensitive information about the POA and property owners. It should also not include private information about any ongoing lawsuits, but it is important to share the status of the litigation.
If your POA is not sure if certain details should be included in the report or whether POAs have to be incorporated, it should consult with the association’s counsel.
An annual report is an important part of any POA. It recognizes the POA for a job well done and provides transparency among POA members and the state.
For more helpful information, be sure to check out our guide on whether a property owner can withdraw from a POA!
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