Nonprofit Corporations Members Legal Liability In California

The homeowners association is a California nonprofit mutual benefit corporation. (See Corp. Code, 7110 et seq.) "Such corporations are formed principally for the mutual benefit of their members . . . ." (Comments on Legis. Com. Summary, Deering's Ann. Corp. Code (1994 ed.) foll. 7110, p. 207.) "A member of [such] a corporation is not, as such, personally liable for the debts, liabilities, or obligations of the corporation." (Corp. Code, 7350, subd. (a).) "Members of mutual benefit corporations, like shareholders, have no personal liability for the debts of the corporation except to the extent the alter ego doctrine applies or they owe money to the corporation." (Comments on Legis. Com. Summary, Deering's Ann. Corp. Code, supra, foll. 7350, p. 272.) As one court has explained: "A nonprofit corporation, like a business corporation, has all the powers of a natural person in carrying out its activities. (Corp. Code, 7140.) These powers specifically include the power to enter into contracts. (Corp. Code, 7140, subd. (i).) A contract in the corporate name 'binds the corporation, and the corporation acquires rights thereunder whether the contract is executed or wholly or in part executory.' (Corp. Code, 7141, subd. (b).) Correspondingly, a member of a nonprofit corporation 'is not, as such, personally liable for the debts, liabilities, or obligations of the corporation.' (Corp. Code, 7350, subd. (a).)" (Gantman v. United Pacific Ins Co. (1991) 232 Cal. App. 3d 1560, 1567 [284 Cal. Rptr. 188].)