By Deborah Goonan, Independent American Communities
Highlights of new and pending state legislation as of Feb. 2019. State laws featured from: CO, FL, HI, and NH.
New real estate sales forms reflect stricter disclosure requirements
Colorado Real Estate Commission approved a new Contract to Buy and Sell Real Estate (Residential) effective January 1, 2019 (“Buy Sell Contract”) to comply with tighter home buyer disclosure requirements of the Colorado Common Interest Ownership Act.
State law now requires a seller of HOA, condo, or co-op property to supply much more than a copy of the governing documents at the time a sales contract is executed. Among the additional information to be disclosed to home buyers: recent meeting minutes, a list of insurance policies, a copy of the budget and other financial statements, information about the reserve account (if applicable), and more.
For full details, see the screen shot of disclosure requirements, taken from updated Real Estate “Buy and Sell Contract.”
See section 7.3 on the new form:
The end of mandatory arbitration for condo disputes?
Several legal experts say that the Florida Department of Business and Professional Regulation (DBPR) state-mandated condominium arbitration program isn’t working as intended. They criticize the process as costly and ineffective. Therefore, the word in Tallahassee is that new legislation will do away with condominium arbitration requirements for good.
If that happens, Florida’s condominium associations will be required to start with professional mediation to resolve all disputes, as is the case for disputes involving planned communities with homeowners associations.
The death of condo arbitration may be near By Eric Glazer, Esq.
“It is apparent that legislation will be filed soon which will totally eliminate the condominium arbitration program. Instead, most condominium disputes will require mediation while other disputes will be subject to a summary proceeding in a court of law.”
Should investors be allowed to vote in HOA recalls?
Meanwhile, real estate investors plan to oppose HB 155, a proposal that would no longer have the right to vote for a board recall in their homeowners’ association (HOA). The bill, as currently drafted, states that recall voting rights only apply to owners who reside in the planned community.
This bill probably won’t go far in the Legislature. Thousands of people who own homes in the Sunshine state don’t live in them year-round, if at all.
The fascinating part in the following attorney’s article is that he blatantly admits that investors hold an advantage in HOAville. After all, a property owner does not have to live in the community to wield considerable political power and influence over the HOA’s collective finances.
And remember, because votes are allocated one per home and/or land parcel, it’s not uncommon for some investors to cast multiple votes in elections and recall petitions.
We can assume that owner-occupants are behind this bill, as they try to protect their HOA boards from being taken over by investors who own many single family homes as rental properties.
So, to anyone who thinks that only condo associations are vulnerable to hostile takeover, think again.
“No Man’s Life, Liberty, or Property are Safe While the Legislature is in Session” – First HOA Bill Filed for the 2019 Florida Legislative Session! by Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
Criminalization of fraud in condo associations
In an attempt to rein in out-of-control condominium associations, SB 610, if enacted, would create criminal charges as summarized by action:
Board members or managers who taking kickbacks – felony of the third degree
Board members who deny access to association records two or more times in a
single year – misdemeanor of the second degree
“Any person” caught destroying “accounting” records, or intentionally not creating them – misdemeanor of the first degree
“Any person” who resists producing records, in order to avoid detection of a crime – felony of the third degree
“A person” who uses the association’s debit card for any non-approved expense – theft charges
Engaging in fraudulent voting activities* – felony of the third degree
*Fraudulent voting activities include: tampering with ballots or voting certificates, buying votes, voter intimidation, notary fraud, as well as aiding, abetting, or engaging in any conspiracy to corrup the voting process.
Track SB 610
Condo owners can dispute fines, collection charges via mediation
Last year Hawaii enacted a law that is set to expire in 2020. Act 195 gives condo owners a tool to prevent foreclosure and to dispute and mediate the imposition of fines or predatory collection fees.
In the past, management agencies and HOA collection firms have been able to collect their fees ahead of paying off any past due condo assessments. Act 195 turns this abusive process on its head.
The law makes it clear that, under no circumstances, can a unit owner withhold common charges, which must be paid before mediating any dispute over fines and additional monetary charges.
Still, Act 195 gives condo owners the chance to clear up any errors or misunderstandings, negotiate lower fees and fines, and arrange for more affordable payment plans.
But if owners don’t take advantage of the mediation process, state Legislators might simply allow these safeguards to expire in 2020.
Condo Owners May Not Know They Have New Power
The significance of Hawaii’s Act 195 is still lost on many owners who do not realize the opportunity it provides.
By Marcia Kimura / January 16, 2019
Last year’s passage of Hawaii’s Act 195, which will expire at the end of June 2020, is an affirmation of condo owners’ constitutional rights to challenge unfair monetary charges associated with delinquent condominium maintenance or special assessment payments.
While it requires condo owners in default of maintenance or common element expense dues to pay these amounts immediately or in accordance with a payment agreement with management, before disputing these sums, it also allows that incidental charges to those core expenses such as late fees, penalties, fines and legal fees can be disputed through mediation before paying them. Thus, the former priority of payments process enabling management to deduct these noncore amounts first from installment payments by owners is also prohibited.
Industry trade group opposes bill that would give condo owners more power to reject an annual budget.
At one time, it was standard practice for condo boards to propose a budget, and ask owners to approve the budget by vote at an annual meeting. But in 2016, Community Associations Institute (CAI), a trade group, pushed through an amendment to state law to make it easier for condo boards to get their budget passed.
Current NH statute allows for automatic approval of a proposed budget, unless two-thirds of all unit owners attend the annual meeting to reject the proposal.
Of course, that makes it nearly impossible for condo owners to curb the board’s runaway spending.
So this year, State Rep. Jim Webb is reintroducing a bill that would give owners more control over the annual budget. HB 160 proposes that, in order to reject an annual budget, half of all unit owners would attend the annual meeting, in person or by proxy. If at least half of those owners at the meeting vote against the proposed budget, it would be officially rejected.
Predictably, CAI opposes HB 160. The trade group insists that owners select board members to “represent” them, and, if the owners don’t like the board, they can simply vote for a new board.
That’s the usual flippant response.
Reality check: Assuming that more frugal condo owners are able to overcome numerous obstacles to a fair election, by the time they replace the extravagant board, owners may already committed to spending a lot of money on expensive pet projects or long-term contracts.
NH condo owners want more control over how their fees are spent
By DAVE SOLOMON New Hampshire Union Leader, Jan 21, 2019
Track and read HB 160