By Deborah Goonan, Independent American Communities
Legislation to include single family planned communities with HOAs dies in committee
A few months ago, I told you about a group of homeowners in Iowa who worked on legislation for homeowners associations. Iowa currently has statues governing condominium and cooperative associations, but not planned communities with single family homes governed by homeowners associations.
Early in the Legislative session, HF 158 was introduced in the House with seven sponsors. The bill progressed through subcommittee, but was never brought to the House floor for a vote prior to the end of the Legislative session.
Modeled after Uniform Acts for Common Interest Communities that have been written by industry trade groups, HF 158 contains many standard provisions that already exist in a majority of states.
HF 158 would grant specific powers and duties to the “unit owners association,” not all of which are beneficial to its member homeowners and residents. For example, the bill states that the association has the right to impose monetary fines upon, or withdraw certain privileges from, a homeowner who violates one of the restrictive covenants. (Inexplicably, the bill refers to a “NEW SECTION . 499C.201 Unit owners association —— powers and duties.” and then goes onto describe powers and duties typically granted to the Executive Board of the association.)
The bill also spells out a process for transition from developer-controlled to member-controlled association, provides requirements for advance notice of an annual meeting of the members, makes requirements for open board meetings (with several exceptions and caveats), and requires the association to retain and, upon request, provide members prompt access to official records of the corporation.
As drafted, the bill would override governing documents of existing HOAs, a provision that critics claim is unconstitutional, since it would impair contract rights of existing associations. Enforcement of the bill’s provisions would require the member to pursue action in Civil Court, where the prevailing party could be awarded attorney fees.
As usual, there is no provision for low-cost, accessible assistance for consumers to protect and uphold their rights.
The owners’ group informs me that bill’s sponsor plans to reintroduce this legislation next session.
Read the HF 158
State Rep. Scott Drury sponsors “loser pays” amendment of Condominium Act
Current statute provides for a condominium association to recover attorney fees from a unit owner when the association prevails in litigation against the owner. HB 3755 would balance the playing field, allowing the court to award attorney fees to the unit owner that prevails in litigation with a condo association.
Under the current Condo Act, the unit owner faces a far greater risk of financial loss than the association. The amendment would remove perverse incentives for condominium association attorneys to instigate association lawsuits against unit owners.
As expected, Community Associations Institute’s Illinois Chapter opposes this consumer protection legislation.
Read and track HB 3755:
HB 3755 was just assigned to the Civil Procedures Subcommittee
Dubbed as a Homeowners Bill of Rights, SB 398 is progressing in Senate committees
SB 398 creates 28 pages governing and regulating HOAs. As explained in a previous blog, the name of this bill is very misleading. SB 398 creates dozens of new rights for HOAs, but actually restricts and limits many rights of its member homeowners. The bill would also create a priority lien for HOA assessments.
Read and track SB 398:
Status: Referred to Senate committees
HB 1063 also referred to committee
HB 1063 is the bill, also explained in a previous blog, that would create an onerous and impractical process for a member homeowner to appeal an action of the HOA board to impose a fine or punitive action as a result of the member’s alleged violation of the CC&Rs. To appeal the board’s decision, a homeowner would be expected to petition fellow association members, and the HOA would then ask unit owners to vote on whether or not to reverse the decision and any invalidate any penalty.
Read and track H 1063:
Status: Referred to House committee
Legislative bait and switch with consumer protection bill for members of HOAs?
A few months ago, Rep. Rosemary Brown filed HB 432, to reintroduce legislation that would give the Attorney General, through the Bureau of Consumer Protection (BCP), the authority to “investigate and mediate” homeowner or shareholder complaints with their homeowners, condominium, or cooperative associations.
HB 1774 had been sponsored by Brown last year. The bill went through several amendments, was approved in the House, but died in the Senate. As I explained previously, the amended version of HB 1774 was considerably watered down by lobbyists for the community association industry, offering little meaningful consumer protection.
A few weeks ago, HB 595 was introduced, apparently replacing HB 432. HB 595 picks up where the amended version of HB 1774 (2016) left off. The bill would authorize the BCP to accept certain narrowly defined consumer complaints involving HOAs, under certain conditions. Note that the current language of HB 595 removes the words “investigate and mediate” from the authority of BCP, effectively removing the power of the agency to actually DO anything for consumers.
Before the BCP would even consider taking a complaint, association members would have to jump through 2 hoops. First, the member would be required to attempt to resolve their dispute with the HOA through ADR (Alternative Dispute Resolution). Second, the member would have to remain “in good standing” with the Association, meaning that if the HOA alleges a breach of the Covenants or a past due payment of assessments, the complaint would be deemed invalid.
Under HB 595, all new planned communities would be required to adopt an ADR process. Existing communities may adopt ADR policies and procedures in their bylaws, but are not required to do so. Apparently intended to promote “buy in” of consumer advocates and existing HOAs for HB 595, Brown is now co-sponsoring an April meeting with CAI, to discuss ADR.
However, if the HOA were allowed to establish and control the ADR process, consumers would likely be at a disadvantage. ADR internal to the Association would effectively prevent consumer complaints from ever reaching the AG, and any legal settlements with member owners and residents would be confidential. With no public record available, home buyers would remain unaware of the incidence of consumer complaints.
It is eye-opening to read both versions of the bill for 2017.
Read HB 432 (presumed dead):
Read and track HB 595:
Status: Under consideration in the House