Q: Can an 'adminstratively dissolved' non profit continue to make and enforce contracts?

Our HOA was administratively dissolved in 2009. We bought our home in 2020. The HOA has yet to reinstate their conpany and are trying to collect dues from us.

1 Lawyer Answer
Matthew Morris
Matthew Morris
Answered

A: A short answer is "no and yes."

Here's a longer answer: Any corporation in Kansas, including a nonprofit corporation, will generally lose their ability to engage in the purpose for which they were formed once they have been administratively dissolved. That's the "no" part of the answer.

But, there are two exceptions, and they are the "yes" part of the answer. First, the corporation will automatically remain in existence for "the term of three years ... or for such longer period as the district court in its discretion shall direct" in order "gradually to settle and close their business, to dispose of and convey their property, to discharge their liabilities, but not for the purpose of continuing the business for which the corporation was organized." Collecting new dues from an owner who did not move in until more than 10 years after the organization was dissolved does not likely fall into that exception, but there is a (very) slim chance this "wind-up" period is in play.

Second, a corporation, including a nonprofit corporation, can apply for reinstatement by catching up with any administrative deficiencies that caused the Secretary of State to dissolve it to begin with. So, for example, if a corporation was dissolved for failing to file annual reports, they can be reinstated by filing the missing reports and paying past-due fees. Once the nonprofit has done that, they are not only back in business, but anything that they did during the time that they were dissolved is given full force and effect. The relevant law is Kansas Statute Annotate Chapter 17, Article 70, Section 17-7002. "Upon the filing of the [reinstatement] certificate ... the corporation shall be renewed or reinstated with the same force and effect as if its articles of incorporation or authority to engage in business had not been forfeited or void pursuant to this code or had not expired by limitation." That reinstatement "shall validate all contracts, acts, matters and things made, done and performed within the scope of its articles of incorporation or authority to engage in business by the corporation, its officers and agents during the time when its articles of incorporation or authority to engage in business was forfeited or void pursuant to this code, or after their expiration by limitation, with the same force and effect and to all intents and purposes as if the articles of incorporation had at all times remained in full force and effect."

So that's the big "yes" part of "no and yes." Even if the nonprofit is dissolved (for now) it takes very little for the organization to achieve reinstatement and have all their actions retroactively made valid.

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