Q: I am the president of a large residential homeowners association (“HOA”) in North Carolina, and a professional management company manages our HOA. Our board of directors has been asked to approve a change in our Registered Agent (and the Registered Office) from a North Carolina law firm to our community manager and his office. Thus, the community manager and the Registered Agent would be the same person. Is this arrangement proper, legal, or advisable?
A: Every business entity in North Carolina, including nonprofit corporations like HOAs, is required by state law to have a Registered Agent and Registered Office on file with the corporations division of the office of the North Carolina Secretary of State. The Registered Agent is the person upon whom legal notices are to be served in any lawsuit or other proceeding involving the HOA. Pursuant to the law (NCGS 55D-30), “The sole duty of the registered agent to the entity is to forward to the entity at its last known address any notice, process, or demand that is served on the registered agent.”
The agent may be “an individual who resides in this State and whose business office is identical with the registered office”; a business organized in North Carolina with an office in this state; or an out-of-state business registered to do business here, and with an office in this state. The Registered Office “may be the same as any of its places of business or any place where it conducts affairs.”
Because the sole duty of the Registered Agent is to forward to the corporation any legal notices served upon him/her on behalf of the corporation, there should be no problem with your community manager serving as your Registered Agent. There is no conflict of interest, and it is common practice for management companies or their employees to serve as Registered Agent for the HOAs they manage. Of course, if you are more comfortable having a board member or your HOA’s attorney serves as your agent, that’s fine as well. Just keep in mind that board positions turn over frequently, so if you choose a board member to serve as your agent then someone needs to be tasked with substituting a new agent if that board member moves from the neighborhood or resigns from the board.