This week I was asked to review a construction contract valued at about $50,000. In addition to problems because the contract was written by the contractor with very favorable terms for the contractor, we discovered that the association used the wrong corporate name. It appears that the association has been using the wrong legal name for more than a decade. When the association incorporated with the Secretary of State, it asked for a different name than the association’s name as stated in the condominium Declaration.

Why does this matter? Obviously it has not caused any problems for more than 10 years, as the association continues to conduct business in the wrong name, and all the parties who interact with the association have been OK with it. The problem will come when an owner or another contracting party has a dispute with the association. If the insurance is covering a different legal entity, coverage could be challenged. If a contract is signed by the wrong entity, it could be challenged.

Worse (and yes this can really happen) any collection or enforcement efforts could be thrown out by a court because the named entity that filed the lawsuit does not exist, or has no legal rights.

This problem can be solved by filing new incorporation documents, but that could require renewing all contracts (of all kinds). It could also be solved by incorporating under the correct legal name, and having the name that has been previously used registered as a trade name. It would cost an extra $20 a year in fees, but may be the better option.

Double check to ensure that your Association is incorporated under the name specified in your Declaration.  If it is not, consult your association attorney for the best way to correct any problems that may arise as a result.

If you have any questions we can answer, please feel free to leave a comment or contact us directly.  We look forward to continuing this conversation with you in our future posts!