HOA Board Members Want to Create a PAC: Our Experts Respond, "Whatever For?"
HOAleader.com - Tip of the Week - March 22, 2024
In this week's tip, we answer an HOAleader.com reader's question about whether a condo or HOA board could form a political action committee.
Our experts say can you and should you are two separate questions.
Let's start with the technical question: Can a condo or HOA board, whether independent or one representing a subassociation, create a PAC?
Maybe, depending on your state and your governing documents. "I've never seen a law that says you can't have a PAC," says Robert E. Ducharme, founder of Ducharme Law in Stratham, N.H., who specializes in representing community associations. "Anybody can create a PAC."
But PACs are complicated and governed by laws you'd need to dig deep into before acting, says Patricia A. Ayars, founder of Ayars & Associates in Glastonbury, Conn., who has been practicing association law for more than 30 years.
"This is an odd question," she says. "Any group of members could get together to form a PAC. In most states, you have to register and follow certain procedures. In Connecticut, registration is through the State Elections Enforcement Commission. You need a chair, a treasurer, and a bank account, and you must file
periodic disclosures.
"But having a board itself do it is a problem," she adds. "The board is supposed to act in the best interests of the association and to use funds for association purposes. They can't force unit owners to contribute to
a PAC.
"The association may also be violating its own certificate of incorporation that defines its purposes," says Ayars. "And what would the tax authorities think if the association was collecting money and using it for noncommunity
functions?"
Scott D. Weiss, CCAL, a partner and the Tennessee office chair at Kaman & Cusimano in Nashville, Tenn., who represents more than 800 condos/HOA communities throughout the state, has similar concerns. "That's not something an
HOA should be involved in at all," he says. It wouldn't be legal in Tennessee for a board to create a PAC with association funds. Any PAC created would have to be completely separate from the HOA."
In California, forming an association PAC
is likely possible, though it's a question never asked of David C. Swedelson, the principal at Swedelson & Gottlieb, a law firm that represents associations throughout California.