HOA, Condo & Co-op legislation highlights (June 2019, CO, IN, MD, NV, WA )

By Deborah Goonan, Independent American Communities

This month: Colorado CAM licensure extension vetoed; no mandatory mediation for Indiana HOAs; developer HOA voting rights clarified in Maryland; construction defect law changes in Nevada and Washington; WUCIOA limitations.


Colorado

CAM Licensure extension bill vetoed by Gov. Polis

Since I last updated readers on the status of HB19-1212, the bill pertaining to continuation of licensing requirements for Community Association Managers (CAMs), I have learned that Governor Jared Polis vetoed the bill as of May 31, 2019.

That effectively ends CAM licensing as of this year, until and unless the stakeholders create new legislation in 2020.

Reading the official state letter, it appears that Gov. Polis vetoed HB19-1212 because of his anti-licensing political stance. But he also indicates his desire to see the Legislature address HOA issues, such as lack of transparency, more broadly.

See screenshots highlighting key portions of the Governor’s veto letter and Executive Order.

Here’s what Gov. Polis has to say about licensure:

CO Gov Polis HB19-1212 veto ltr

On this point, I tend to agree with Gov. Polis. Even in other states like Florida or Nevada, there’s no conclusive proof that CAM licensure has significantly reduced problems with HOA transparency, corruption, abuse of homeowner rights, or theft of association funds.

On that note, Gov. Polis issues an Executive Order as follows:

CO Gov Polis executive order HOA CAM licensure

The million-dollar question: who will be at the stakeholder meetings with DORA to make recommendations on behalf of housing consumers, as opposed to real estate brokers, investors, developers, and the community management industry?

And, more importantly, will DORA or state Legislatures be willing to stand up for the rights of homeowners and residents of HOA-governed communities in Colorado?

We’ll see in 2020.

References:

Gov. Jared Polis Veto letter for HB19-1212

Gov. Polis Executive Order on HOA issues and CAM licensure

Read HB19-1212


Indiana

HOA Mandatory Mediation/Solar Energy bill dies in conference committee

In two previous posts (here and here), I explained the HOA-industry’s push for mandatory mediation of HOA disputes in the Hoosier State.

Traditionally, the mediation process is voluntary and non-binding.

Mediation differs from Arbitration, in that a Mediator does not decide who is “right” or “wrong.” Instead, the goal of mediation is to facilitate communication so both sides can agree on a reasonable settlement to their dispute.

Mediation is almost always confidential, with no public record of the details of the dispute or settlement reached by the parties.

The proposed dispute resolution process is a bit radical, because it allows one party to force the other to attempt mediation. There would be no regard for mutual willingness to discuss settling the disagreement in good faith.

HB 1138 was controversial, and its supporters were eager to make mandatory mediation a requirement of state law.

Thus, when progress stalled on HB 1138, the original bill for mandatory mediation of HOA disputes, supporters added it as an amendment to HB 1331, the Solar Energy bill.

It’s a fairly common political dirty trick — adding provisions of a controversial bill to an unrelated bill that has a better chance of winning votes in the legislature.

And it almost worked, but not quite.

House Bill 1331 ultimately passed both house and senate with amendments. That led to a conference committee to consider both versions of HB 1331.

But this year’s session ended before the Legislature could agree on an acceptable version of either HB 1138 or HB 1331.  So, for this year, no mandatory mediation for HOAs.

Next year, who knows?

References:

View the status of  HB 1138

View the status of HB 1331 (Solar energy bill)

See an April news release about the solar energy bill, and note that there’s no mention of mandatory mediation. 

Indianapolis man battles homeowners association over solar panels
By: Richard Essex WISH-TV
Posted: Apr 15, 2019 07:59 PM EDT Updated: Apr 17, 2019 08:00 AM EDT


Maryland

Clarification of HOA developer’s voting rights for unsold lots

Senate Bill 305, recently signed into law by Governor Hogan, addresses a developer’s voting rights when some of the lots have not yet been subdivided and recorded in County records.

As of October 1, 2019, a developer will not have the right to cast votes on HOA matters for any unsold parcels that have not yet been subdivided and officially recorded in County records, regardless of any provision to the contrary in the governing documents.

Put another way, a developer must subdivide and record lots in a development plan, in order to exercise one HOA vote for each unsold lot.

References:

View status of SB 305

Read §11B–111.7


Nevada

Pendulum swings back toward housing consumers’ rights to pursue construction defect claims

AB421, recently signed by Governor Steve Sisolak, makes it easier for homeowners and condo/HOA boards to pursue developers, builders, contractors, and other experts with claims for construction defects.

Chapter 361 amendments reverse several of the onerous barriers to legal recourse, enacted in 2015.

AB421 relaxes the standards for filing a claim of alleged defects. Homeowners can now submit a notice of defect with “reasonable” detail, rather than “specific” detail. The owner’s expert need not be present for a subsequent inspection by the contractor, subcontractor, supplier or design professional.

A claimant must diligently pursue a claim under a builder’s warranty, if one exists. But the homeowner or HOA need not receive an official “insurance denial” of a warranty claim before pursing litigation.

The amended statute increases the statute of limitations for filing a defect claim from 6 years following completion to 10 years following completion. And a homeowner or HOA can file a defect claim at any time, without limitation, if such defect was covered up by fraudulent acts.

The law clarifies than an Association can sue or intervene on behalf of owners not only when defects are present in common areas or Association-owned property, but also when the Association’s governing documents create a duty of the Association to insure, maintain, repair, or replace landscape and exterior components of privately owned homes or units.

As usual, home builders and other interest groups vehemently opposed AB421. They testified before the Legislature, claiming that making construction defect litigation easier will increase the cost of builders’ insurance policies and put a halt to multifamily housing construction.

This year, the Legislature and the Governor didn’t buy it.

References:

Foes of construction defect bill say affordable housing will shrink

By Eli SegallLas Vegas Review-Journal
May 23, 2019 – 6:05 pm

View status of AB 421


Washington

Prevention of frivolous construction defect claims; limiting application of WUCIOA

SB 5334, signed by Governor Jay Inslee, makes several important changes that will affect homeowners in common interest communities.

The bill requires that defect claims of owners and HOAs document actual damages or threats to health and safety.  The intent is to prevent litigation over relatively minor defects in appearance or performance of structures or equipment.

The bill also clarifies that HOA board members cannot be held personally liable for their choice not to pursue a construction defect claim. Sometimes, litigation is not the most cost-effective solution, and board members should not be scared into litigation by overzealous attorneys.

With regard to the Washington Uniform Common Interest Ownership Act (WUCIOA), passed last year, SB5334 provides that WUCIOA does not apply to homes built in later phases of a common interest community that was established before WUCIOA was enacted.

That clears up confusion for many existing communities that are still under construction, and adding new phases of development. But it also eliminates applicability of WUCIOA provisions — for better or worse — from all but the newest of association-governed common interest developments. ♦

References:

2019 Condominium Warranty Reforms and WUCIOA Clarifications
Joe McCarthy |May 14, 2019
Stoel Rives LLP

View status of SB 5334 (2019-20)