HOA, Condo, Co-op Legislative Highlights (Sept 2017)

By Deborah Goonan, Independent American Communities

 

California

California residents of common interest developments have moved one step closer toward upholding their First Amendment rights to freedom of speech and assembly. CA SB-407, An act to add Section 4515 to the Civil Code, has been signed by the Governor, and is now enacted as of September 12, 2017.

The bill was unanimously approved by both houses of the State Legislature.

The new law prohibits association-governed communities from enacting or enforcing any policy which prohibits free assembly of members and residents on common or privately owned property, with regard to political issues involving the Association. An Association must now permit residents to organize and participate in political discourse involving both internal and external issues that may affect the community or the general public.

The Association must allow members and residents to use common space facilities without imposing a fee or a requirement to pay money towards the Association’s insurance policy.

Canvassing and distribution of written communications pertaining to political issues must be permitted by an Association, and cannot be prohibited, as through enforcement of a “nonsolicitation clause” in the governing document.

Members and residents who are denied their rights under the law can enforce those rights by filing a claim in civil court or small claims court. The Association is subject to court order enforcing the law, as well as a penalty of up to $500 per offense.

Read the full text of SB-407 here:

http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB407

 

According to report in the Central Valley Business Times, the legislative measure was supported by the American Civil Liberties Union, Center for California Homeowner Association Law, Golden State Manufactured Homeowners League, Non-Profit Housing Association of Northern California, and the Community Associations Institute.

HOA residents’ political speech rights get state protections

http://www.centralvalleybusinesstimes.com/stories/001/?ID=33286

Illinois

In another small but important positive step for housing consumers, association-governed communities are now specifically required by law to provide, upon member request,  a list of all member phone numbers and email addresses. The amended statute also removes the previous requirement that any records request be for a “proper purpose.”

Readers might recall that, back in April, lobbyists for Community Associations Institute were not in favor of removing the “proper purpose” condition for records requests. Fortunately, the Illinois Legislature used common sense, to address the concern that a condo owner might misuse contact information of its members.

An owner requesting access to membership contact information (or official ballots) can now be required to sign a statement promising not to use such information for commercial purposes.

 

IL SB-0189, Act 100-0292

Furthermore, records requests of any kind are now to be honored within 10 business days rather than 30 business days.

Another unpublicized small victory for condo owners: if a unit owner objects to a forced sale (termination, or deconversion) of the association, he or she is entitled to the greater of the value of the unit OR the outstanding mortgage debt on the unit, less any delinquent assessments or fees owed to the association. Members must also be provided with a relocation allowance.

At least a condo owner that is forced to go along with a buyout offer will not be burdened with paying off a remaining first mortgage balance. However, the former owner would still be obligated to repay a second mortgage, and may still realize a loss in equity if the sale price is lower than original purchase price, plus added improvements.

The amendments are not retroactive, and do not apply to previously completed sales.

On the other hand, a few troublesome new loopholes have been added to the Common Interest Community Act.

Curiously, the amended act only requires associations of at least 100 units to use generally accepted accounting principles (GAAP), as if members of smaller associations would not also benefit from adherence to the same reporting standards.

And, amendments also specify how a board of managers may choose among several options to address a surplus or deficit at the conclusion of each fiscal year – unless current governing documents already spell out a particular course of action. Those options may include, for example, returning excess funds to members, using the funds to offset a future operating budget, or rolling over the funds to a reserve account. Members can object to the board’s course of action, if 20% sign a petition within 30 days of receiving notice of the board’s decision. However, the usual convoluted vote-to-reject-the-board’s decision principle applies, as follows:

Unless a majority of the total votes of the unit owners are cast at the meeting to reject the board’s selection and select a different option, the board’s decision is ratified.

 

See source links below for details.

IL SB-0189 Status page:

http://www.ilga.gov/legislation/BillStatus.asp?DocNum=189&GAID=14&DocTypeID=HB&SessionID=91&GA=100

Read the new law (100-0292, 55 pages):

http://www.ilga.gov/legislation/publicacts/100/PDF/100-0292.pdf

 

New Amendments to the Illinois Condominium Property Act and Illinois Common Interest Community Association Act

http://www.jdsupra.com/legalnews/new-amendments-to-the-illinois-44685/

 

Dirty Laundry Bill Becomes Law

http://www.111eastchestnut.org/2017/08/27/dirty-laundry-bill/

Excerpt:

Changes in the new law include: The Association must now provide Association members’ phone numbers and email addresses. And the types of files one might request is greatly expanded, e.g. books and records including but not limited to itemized and detailed records of ALL receipts and expenditures for the association’s current and 10 immediately preceding fiscal years. That’s just about everything.

Exceptions include: Documents relating to employment, discipline or dismissal of association employees; documents relating to lawsuits pending or threatened against or on behalf of the association or its board; documents relating to common expenses or other charges owed by other members; and documents provided to an association in connection with the lease, sale, or other transfer of a unit other than owned by the person requesting. Sans that, the file cabinets are all yours.

Most importantly, a requesting owner will no longer need to provide the amorphous hide-the-ball association-lawyer-determined “proper purpose.” Now you need only ask.

 

New Jersey

The New Jersey Planned Real Estate Development Full Disclosure Act (PREDFDA) now contains several important amendments to election and voting procedures in homeowner, condominium, and cooperative associations.

Under certain circumstances, the board of an association may amend bylaws without a vote of membership. If the bylaw amendment is being made to comply with current law, no membership vote is required. Otherwise, the board can get around the requirement for a full membership vote on most other issues, by providing a rejection ballot to all owners. The bylaw amendment is rejected only if at least 10% of membership ballots are returned.

In other words, the new process allows the board of an association to exploit the apathy of owners in order to make it easier to amend the bylaws.

The “rejection ballot” procedure does not apply to amendments of Covenants, Conditions, & Restrictions (CC&Rs).

And the association is not required to officially amend its bylaws in compliance with current law, as the law will override any contrary bylaw provisions.

NJ SB 2492, PREDFDA amendment pertaining to bylaws

 

The amendments also spell out specific requirements for providing advance notice of elections, and require a disclosure that a proxy may be revoked up until the election has commenced. There is some legal controversy as to the new language regarding absentee ballots, but in most cases, they are probably both allowed and required. See below source links for details.

See below source links for full details.

A Board of Trustees May Now Amend the By-Laws Without a Vote of the Unit Owners

https://www.natlawreview.com/article/board-trustees-may-now-amend-laws-without-vote-unit-owners

 

New Trustee Election Procedures Mandated by PREDFDA: Planned Real Estate Development Full Disclosure Act

https://www.natlawreview.com/article/new-trustee-election-procedures-mandated-predfda-planned-real-estate-development

 

Amendments can be read here:

http://www.njlawblog.com/files/2017/08/s2492-PREDFDA-amendment.pdf

 


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