All
North Carolina nonprofit corporations are required to maintain a registered
office and registered agent pursuant to § N.C.G.S. 55A-5-01. However, many
board members, and some association managers, may not fully understand the
purpose and duties of the registered agent.
The
registered agent’s sole duty is to keep the nonprofit corporation apprised of
any notices, processes or demands served on the agent on behalf of the entity.
For example, property taxes may be owed on property owned by the association
and the local tax department may need to submit bills to the association. Local
government does not keep up with whether an association is professionally or
self-managed, or by what management company, and they need a single address to
use for communications. The registered agent provides this point of contact,
and it is to this address that bills, notices of reevaluation, and other
important communications will almost always be sent. And, if a community association is sued, the
registered agent is likely the party to whom the summons and complaint will be
sent. Rule 4(j)(6) North Carolina Rules of Civil Procedure provides for service
of pleadings on domestic or foreign corporations by mail or personal delivery
to a corporation’s officer, director or managing agent, or by such service on a
registered agent. In other words, a copy of the important documents will have
to be personally delivered to someone with the authority to act on behalf of
the corporation. Because there is no central database of information on
community associations in North Carolina, a plaintiff may not be able to easily
determine who the corporation’s officers, directors or managers are, but they
can easily find out the identity of the registered agent. This information is
available online at https://www.sosnc.gov/online_services/search/by_title/_Business_Registration_Agent.
Because this is the easiest and most
direct way for someone to sue a community association, it essential that the
person you have listed with the Secretary of State is correct. Once service is
obtained on a registered agent, the clock will begin to run for the corporation
to take action. If the association fails to respond to a filed complaint, it
can have dire consequences, particularly in a litigation situation where
financial recovery is sought. A nonresponsive corporation can be subject to
entry of default and default judgment, and no Board wants to find out after the
fact that it was sued and that a financial or other judgment has now been
entered against it. The corporation- and its attorney- will then find
themselves in the unenviable positon of effectively begging a court to set
aside the judgment that probably would not have occurred if the association had
simply kept its registered agent information up to date. In my experience, saying “we forgot to check
or fix our designation of registered agent” for a period of years is not likely
to garner a great deal of sympathy from any judge.
Most
community associations choose their management company, if they have one, or
their attorney or some other long-term service provider to serve as their
registered agent. This removes the burden of monitoring for filings and important
notices from the individual board members, and eliminates issues that may
result from frequent board member turnovers. It does not make sense to have
someone who last served on the board ten years ago as the registered agent, or
someone who no longer lives in the community. Under North Carolina law, a
registered agent may be any individual who lives in North Carolina and whose
business address is identical to the registered office; any domestic business
corporation, nonprofit corporation, or limited liability company whose business
address is identical to the registered office; or any foreign business
corporation, nonprofit corporation, or limited liability company authorized to
transact business in this state and whose business address is identical to the
registered office. And, if the registered agent is a business entity required
to be filed with the Secretary of State’s Office, the entity must be active
upon the business registry in North Carolina. Most management companies
and attorneys charge minimal fees to serve as a registered agent. Whomever the
association chooses to use, that person must exercise care in reviewing
correspondence promptly to make certain that important notices and documents
are not overlooked.
It
makes sense to periodically check the North Carolina Secretary of State’s
website to make sure that your association has a properly designated registered
agent. If you see a name you don’t recognize, investigate further. The process
to remove an old registered agent and replace the designation is very simple,
can be accomplished online at minimal charge, and could save the association a
great deal of pain in the long run.
For assistance with
identifying or changing your registered agent, or other corporate or community
association related matter, contact one of Black, Slaughter & Black, P.A.’s
attorneys in our Charlotte, Greensboro, Triangle or Coastal offices.
Author: Harmony Taylor
Articles have been Reprinted with permission from Black, Slaughter, Black.
* These articles and related content on this website are provided without warranty of any kind and in no way constitute or provide legal advice. You are advised to contact an attorney specializing in Association Management for legal advice related to your specific issue and community. Some articles are provided by thrid parties and online services. Display of these articles does in no way endorse the products or services of Community Association Management by the author(s).
