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.