In a move that has raised serious concerns, two board members of our unincorporated nonprofit association have taken it upon themselves to form a new nonprofit corporation without the vote or consent of the community they represent. This is yet another example of Kelle and Kelly deciding for everyone else what they believe is best, without following the necessary legal processes.
It’s widely understood that changes to the bylaws of our association require a member vote. So, how is it possible for them to change the entire legal entity of our association without our consent? This drastic action appears to be motivated by the misconception that becoming a nonprofit corporation will somehow allow us to raise funds through charitable contributions. This notion is erroneous—property owners associations and homeowners associations may sometimes qualify to be tax-exempt, but they never qualify as a charity.
The timing of this move is also highly suspect. Records show the new entity was established on May 28th, the day after Memorial Day, just days after the annual elections were postponed. These elections were initially scheduled for May 25th but were delayed due to Kelle’s claim that she was overwhelmed by minor water seepage in her laundry room. This excuse rings hollow, especially since many others in the community were dealing with far more significant flooding. Curiously, despite the apparent overwhelm that prevented the elections, there was still enough time to change the association’s legal status behind closed doors.
It’s important to note that we are (and legally still remain) a small, unincorporated nonprofit association. As such, our legal and recordkeeping obligations are minimal. We keep a simple record of money in and out, and as long as we don’t make a profit, we are not required to file taxes. This straightforward approach aligns with the guidance provided on the Texas Secretary of State’s website.
Interesting question – do Travis and Joe know that they were listed as directors in a brand new nonprofit corporation?
However, by forming a new nonprofit corporation, Kelle and Kelly have imposed new legal and recordkeeping burdens on our association. This change introduces an ongoing annual expense and increases the complexity of our financial management, limiting the pool of members qualified or willing to take on the role of treasurer. Moreover, it introduces additional legal compliance obligations. Not only must we adhere to our bylaws and the Texas Property Owners Protection Act, but we must now also comply with the Texas Nonprofit Organization Business Code, which supersedes the other two.
As it is, the proper and legal dissolution of this fraudulently formed corporation will cost money. That bill needs to land squarely on Kelly and Kelle’s desk, as the “founder” and “registered agent” of this mess. Our actual association may need a lawyer to disentangle any business that has been performed under this fraudulently formed corporation. Once again, this bill needs to be sent to Kelle and Kelly.
Given the board’s track record of struggling to comply with existing bylaws and state regulations, this change only opens the door to more potential legal pitfalls. How many more violations—both civil and criminal—will this move expose our association to?
This situation requires immediate action. Since Kelle and Kelly did not follow the proper procedure to authorize this corporate formation, we, the property owners, must reject this change. It’s clear: the community was not consulted, and we do not approve of this shift. We are a small neighborhood with straightforward needs, such as road maintenance. Incorporating our association will only increase administrative burdens and create more opportunities for non-compliance.
It’s time to make your voice heard. This unilateral decision-making is unacceptable, and we must stand up for what is best for our community. Let’s reject this unnecessary and costly corporate status that has been forced upon us without our consent.
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