House Corporation 101
Chapter housing varies considerably from chapter to chapter. Some own their own chapter house, some rent from private owners, some rent from the university, some are in a fundraising mode to build a house while others have no facility at all and no immediate plans to do so. At each of these locations, there may be an entity comprised of volunteer alumni that calls itself “house corporation”.
As the term “house corporation” suggests, there should be a legal entity behind the name. While this would seem obvious, a “house corporation” is not a corporation at all if it has never legally filed for incorporation or has let the corporation charter lapse. Having a legal corporation is extremely important for liability purposes. It helps legally protect volunteers from personal liability. If you are unsure of the legal status of your house corporation, have a local corporation attorney review the state records or assist in setting one up. House corporations have a number of duties and functions including:
1. Holding Meetings & Taking Minutes. The house corporation board generally meets at least once a year or more often to discuss chapter house business. Minutes are the legal record of what business was transacted at each of these meetings. Minutes summarize actions, they don’t recite the whole meeting
word for word. Remember: Minutes are minutes, not seconds or hours. That means not too much and not too little. Record minutes keeping in mind those that did not attend that need to understand what happened.
2. Adopt bylaws. Bylaws are like the official game plan on how a corporation is to be run and operated. Bylaws also state the rights and powers of the shareholders, directors and officers.
3. Hold Annual Elections. Director term of office is often two or three years and it’s best to stagger the terms so not all director terms expire at the same time. Continuity is a good thing.
4. Perform Annual Reporting. States generally require the filing of an Annual Report which includes payment of a fee and completion of a form which identifies the current key officers.
5. File Annual Tax Returns. All corporations must file an annual tax return even when no tax is owed.
6. Operate Within Your Governing Documents. The articles of incorporation and bylaws give the board specific authority which has limitations. They can be amended if the board wants to change that level of authority but the board should not exceed authority without doing so. Liability insurance coverage may be invalidated if the board exceeds its authority.
7. Secure Proper Insurance. While many chapters are insured by Risk Management Foundation (RMF) for Fire, Hazard and General Liability Insurance, the house corporation should also secure Directors & Officers (D&O) Liability coverage to protect volunteers that serve on the house corporation board. For more on D&O, contact RMF at rmfeducation.org. At minimum, each director should carry personal umbrella liability insurance to protects himself while serving on the house corporation board.
8. Regularly Inspect and Correct Unsafe Conditions in the Chapter House. You need to visit the house to know what the condition is. Do this at least once each school term.
9. Maintain Arms Length Relationship with Active Chapter. Do not interfere with active chapter operations. Keep the relationship between the house corporation and active chapter strictly landlordtenant. Do not collect the chapter’s dues or house bills for them. Communicate with the undergraduates, yes. Attempt to direct and control them, no.
10. Take advantage of Grand Trustee resources. To assist the Grand Trustees in determining the highest housing priorities, complete and return surveys when requested. Attend House Corporation Training which is underwritten by Sigma Chi. The things you learn will be invaluable.
11. Volunteer and encourage others to do the same. Give of your time and experience to grow more Sigma Chis.
Serving on a Sigma Chi house corporation is a noble calling. There is always room for a few more good men. When you decide to step up, make sure your house corporation is more than a name. Contact your province Grand Trustee for help.