HOA, Condo, Co-op Legislation updates (May 2017 – AZ, CO, FL, HI)

By Deborah Goonan, Independent American Communities

Arizona

Governor Doug Ducey has signed HB2411. The bill amends current Statute with regard to open meetings, recording of meetings by members of the association, and secret ballot requirements. An unrelated amendment was also included – section 33-440, which specifies that property owners may make amendments to a previously recorded declaration of covenants in the absence of a homeowners’ association or a board of directors.

Critics say that Ducey’s approval of HB2411 is in direct contradiction to his veto of  HB 2321, a bill that would have prohibited cumulative voting in association-governed communities.

For more information see:

Ducey OKs Homeowner Association Bill After Vow Not to Do So

After saying his administration would not be in the business of regulating homeowner associations, Gov. Doug Ducey has signed legislation doing just that. (AP, April 28, 2017)

The bill also breaks the “one subject” rule, according to George K. Staropoli. See Rogue AZ Senator violates AZ Constitution

 

 

Colorado

Touted as necessary to spur new condo construction, HB 1279 awaits Governor John Hickenlooper’s signature.

The bill requires a majority vote of unit owners to approve moving forward with construction defect litigation. Unlike previous versions of the bill that did not gain approval of the Legislature, HB 1279 specifically excludes votes from developer and affiliate-owned units, bank-owned units, and “units owned by owners who are deemed nonresponsive” to the request for a vote. The statute goes on to define nonresponsive. In effect, a membership vote would only count votes of actively engaged unit owners with no connection to the developer. For condominium consumers, this is a small step in the right direction.

More information:

Measure to spur condo construction finally passes, but it’s not “a magic bullet”
Bill that eases builders’ legal burden for construction defects helps, but immediate building boom unlikely

 

Florida

Conflicts of interest, criminal penalties

The biggest news in the Sunshine State is that the Legislature voted unanimously to pass HB 1237, a comprehensive bill that prohibits conflicts of interest and that creates criminal penalties for several egregious, but all too common, misconduct by condominium boards and their official agents (managers and attorneys). The bill has been summarized in an earlier blog:

FL Legislature passes condo bill including criminal penalties

See also, this blog post by Attorney Eric Glazer, for additional details.

Condo Termination amendments

With regard to condominium termination, late in the session, SB 1520 was substituted for HB 7055, and then approved by both houses of the Legislature, awaiting Governor Rick Scott’s signature. This is an amendment to condo termination procedures as follows:

718.117 – CONDO TERMINATION
If 5 percent or more of the total voting interests of the condominium reject a plan of termination, a subsequent plan of termination pursuant to this subsection may not be considered for 24 months after the date of the rejection. (Source: http://www.hoa-condoblog.com/EGBlog050817.html

The bill previously required 10% of unit owners to object to a termination, in order to delay a subsequent termination plan by 18 months. In other words, the law would allow a smaller number of unit owners to block or delay a condo termination instigated by a hostile investor. The previous clause allowing for declarations to specify a lower percentage of unit owner votes for termination has been deleted. Therefore, to move forward with a condo termination will now require at least 80% of unit owners to vote in favor, as long as less than 5% of unit owners object to the termination proposal.

The dreaded cap on estoppel fees

SB 398 limits fees that can be charged for an estoppel letter in conjunction with the sale of a unit in a condominium or homeowners association. The new fee range is capped at $250 – $400.

More bills

HB 653 mirrors criminal penalties of HB 1237 and condo termination amendments of SB 1520, but also requires condo associations with more than 150 units to create a website with password protected member access to association records.

More information:

2017 Florida Condominium and Homeowners Association Legislation

Marketable Record Title Act (MRTA)

Thankfully, this year’s attempts to amend MRTA statutes have failed once again. (For general information about MRTA see Florida legislation would ensure that HOAs can never expire, written in 2016.) HB 735 passed in the House, and was amended in the Senate. The bill was withdrawn from consideration due to lack of agreement on specific provisions. Read the most recent analysis on the Senate Amendment.

The bill would have made it easier to revitalize expired CC&Rs (Covenants, Conditions & Restrictions), requiring only a majority vote of property owners, rather than the current requirement of two-thirds vote of approval to reinstate CC&Rs. There are obvious Constitutional considerations at play with regard to imposing covenants and restrictions upon property owners who may not want them revived.

The bill would also have allowed the board of a homeowners association to automatically renew active CC&Rs every 5 years, without a vote of membership or the board, in order to prevent expiration. Essentially, HB 735 and its companion bill SB 1046 would have created the mechanism for a perpetual HOA that could never expire, except by supermajority vote of members to dissolve the association.

Like a zombie, MRTA amendments will likely reappear next legislative session.

 

Hawaii

Both HB 1498 and HB 832 were passed by the Legislature, and await Governor David Ige’s signature.The bills include minor amendments with regard to a unit owner’s right to access certain records of the association, and the board’s fiduciary duty to provide access.

Also on the Governor’s desk: SB 369. The legislation will prohibit retaliation or discrimination by the Association or one of its agents against a unit owner who files a complaint against the association. However, a unit owner’s single recourse against retaliation or discrimination is to file civil action, a potentially costly method of seeking relief or damages.

HB 1499, a bill that would have allowed a unit owner to request mediation with regard to legal fees attached to delinquent assessments, died in committee.