Legal Considerations for Your Neighborhood Association

Neighborhood Innovation Series

By Adrienne B. Haynes, Esq.

Managing Partner, SEED Law

The role of a neighborhood association is to connect residents and owners in a specific community, preserve and honor history, facilitate the collective vision, and communicate a region’s priorities to the larger community. Neighborhoods represent a beautiful mix of community capital and having a well-organized association can help make sure that residents and owners stay connected over time.

When working with neighborhood associations, our focus is on the following primary objectives:

Firm Foundation. The most common entity choice for neighborhood associations is a nonprofit corporation. It’s important to ensure that all laws regarding nonprofit governance and recordkeeping are adhered to, including timely responses to required State and Federal filings, including annual registration reports. Failure to do so could result in an administrative dissolution, which results in no longer being able to conduct business and loss of nonprofit status.

Structured and Diligent Leadership. A neighborhood community is only as strong as its resident’s engagement, and informal and formal leadership should be encouraged. Developing a committed board of directors is important in a neighborhood association’s short and long term sustainability. Most have a board of at least three members with residency requirements for leadership. An organization’s bylaws should be crafted to the way the organization will operate and communicate board governance and expectations.

When developing a board, expectation setting is important for both existing and prospective leaders. Be clear about the overall strategy and scope of the commitment, including role responsibilities, engagement expectations, and term limits. This encourages a healthy environment for dialogue and knowledge sharing.

Leaders should take care to make sure that the board and general membership reflects the entirety of those who have chosen to call the neighborhood home. This can help make way for dignity and real relationship, organizational sustainability. It can also make a neighborhood more attractive to those looking to return or relocate.

A Pro Team. Being a leader in the neighborhood or community does not mean you have to have it all figured out. If it’s being done well, it means there is a network of leaders and advisors that help with strategy, governance, and foresight. In a neighborhood association, this can include:

· The neighborhood’s residents and owners

· Representatives from businesses in the region

· Elected officials and city employees

· Staff of local community development corporations

· Chamber of Commerce leaders

· Board members of community improvement district

· Economic development agencies or experts

· Local universities and research institutions

· Environmental experts

· Philanthropic partners

· Media partners

· Regional and national community partners (Mid-America Regional Council (MARC), Local Initiatives Support Corporation (LISC), Neighborworks America, Brookings Institute.

In considering what other pro team members may help, these professional service providers may help.

Documented Relationships. Just as the relationship with the board of directors is documented in the bylaws, a neighborhood association should document the relationships created over time. This helps the organization retain community capital and honor, learn from, and leverage its history.

The documentation a neighborhood association may keep includes the necessary governing documentation, funding commitments and MOUs, grant records and data, contracts for vendors, and lists of key partners and neighborhood residents. The more organized your relationships, the easier it is for neighbors, partners, and potential sponsors to trust that the organization is sustainable and can receive and administer any charitable grants or donations in a responsible manner.

A Succession Plan. The leadership and membership profile of a neighborhood association undoubtedly changes over time. Working with new and existing board members to document institutional knowledge and regularly seek out new members, perspectives, and innovation based on the clear plan for impact will make it easier for the organization to be resilient.

If this is not done well, neighborhood associations can struggle to keep a community connected and important compliance deadlines could be missed, resulting in an administrative dissolution.

This article is an overview of neighborhood association and nonprofit legal considerations, and does not cover every legal right or obligation, consideration, exception, or restriction. These decisions are complex and should be well researched and discussed with the community and professionals before being made.

To schedule a consultation with a SEED Law attorney, you can give us a call at (816)945–4249 or schedule your consultation today here.

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Adrienne B. Haynes

Adrienne B. Haynes

My name is Adrienne B. Haynes and I focus my time, talents, and treasures on the intersection of law, entrepreneurship, and community designed innovation.