By Deborah Goonan, Independent Americaan Communities
In New Mexico, Democratic Senator Mimi Stewart has introduced legislation to amend the Homeowners Association Act. The original draft of SB 244 makes several additions to existing statute.
- Defines conflict of interest and adds provisions requiring disclosure of potential conflicts involving board members and community managers. For example, if one of the bidders on a contract were a board member’s family member, the board member would have to disclose that fact at an open meeting. The bill does not prohibit such conflicts of interest, so long as they are disclosed.
- Requires the seller disclosure statement to reveal to a buyer any covenant or architectural violations of the property.
- Adds banks statements, account ledgers, and utility records to the list of financial information to which owners are entitled to access. Also adds “any electronic record of action taken by the board,” presumably votes by email or online voting by board members.
- A legal requirement of the association to provide access to written requests for records within 10 business days. Willful failure to provide access would entitle the lot owner to a $50 per day fine against the association beginning on the 11th business day. The bill does not specify how a homeowner will enforce this provision.
- Requires each elected board member to certify, in writing, within 90 days, that he or she has read the governing documents and agrees to uphold them. A board member shall be suspended from service for failure to provide written certification.
- HOA would be required to provide a copy of annual budget, along with a list of fees and fines approved by the board.
- With regard to voting by proxy and absentee ballot, the bill carves out an exception for large associations: “Nothing in this section shall be considered in conflict with or a replacement of voting member councils or representative voting systems created by the community documents.” In other words, this clarifies that in large scale associations do not have to provide a direct voting right to lot owners on matters affecting the Master Association.
- Permits owners to vote for an annual audit, even if not required by the governing documents.
- Creates a $400 cap on the fee charged for a seller disclosure certificate, with adjustments for inflation every three years.
- Makes the HOA Act applicable to all HOAs in New Mexico.
- Provides new provisions for removal of board members, open board meetings, prior notice for annual meetings, and requirements to keep a record of meeting minutes.
- Provides legal authority for HOAs to levy fines or suspend access to common facilities for violations to Covenants, Conditions, & Restrictions (CC&Rs), unless otherwise prohibited by the governing documents. Provides the lot owner with an opportunity to submit a written statement or attend a hearing, prior to the board rendering its final decision to fine or suspend access to common facilities.
- Provides lot owners with a full array of alternative dispute resolution options, in addition to civil litigation.
- Bill, if enacted, would apply beginning July 1, 2017.
Analysis:
Overall, these are fairly standard amendments that have been enacted in several other states, among them Arizona, California, Florida, Illinois, and Virginia, to name a few.
Some provisions – such as requirements open meetings and access to association documents – provide minimal protection for housing consumers. The main obstacle in other states, where such laws have existed for several years, is the homeowner’s lack of a practical, affordable means of enforcement.
Other provisions – such as enabling associations to fine homeowners and failing to allow absentee ballots for lot owners in large-scale associations – further restrict the rights of homeowners.
Requirements for better disclosure are always welcome, but, again, how will a consumer enforce these provisions or seek compensation for damages in the event of non-disclosure? The homeowner or buyer must still resort to civil litigation to resolve such disputes.
The most critical factor in enacting any kind of regulation of common interest Association-Governed Communities is making certain that the law truly serves the public interest for consumers, and that all owners and residents have simple, affordable access to justice.
Legislation Would Expand Consumer Protections for New Mexicans Living in Homeowners Associations
By NEW MEXICO SENATE DEMOCRATS • JAN 30, 2017
(Santa Fe, NM) – This week, Sen. Mimi Stewart (D-Bernalillo) filed SB 244 which significantly expands consumer protections available to New Mexicans living in homeowners associations.
According to industry data, there are approximately 260,000 New Mexicans residing in nearly 2,000 community associations (both homeowner and condominium) across the state.
“The fact is a significant number of New Mexican families are impacted by the operations of home owner associations and their interests and needs should be protected,” Sen. Stewart remarked. The state legislature took initial steps in 2013, led by Sen. Stewart through passage of the New Mexico Homeowner Association Act (HOA Act), but more oversight is required.
Read the bill:
https://www.nmlegis.gov/Sessions/17%20Regular/bills/senate/SB0244.pdf
