HOA, condo & co-op legislative news (March 2020)

By Deborah Goonan, Independent American Communities

 

Updated March 21, 2020  9:55 PM EDT

Highlights of current legislative proposals across the U.S., potential effects on owners and residents of HOA-governed communities, and the perpetual battle for property rights, consumer protection.

 


Colorado

HB20-1200 Sunset Homeowners’ Association Information And Resource Center

Status: Introduced. Legislative attention shifted to addressing coronavirus (COVID-19) outbreak. 

Summary:

Proposes extending the existence of the Homeowners’ Association Information and Resource Center to 2025. The Resource Center is currently set to expire in September 2020.

Proposes an HOA Information Resource Center with the following powers and duties:

  • To receive homeowner and resident complaints against HOA-governed common interest communities
  • To investigate those complaints and mediate disputes
  • To enforce state laws by issuing subpoenas, court orders, or fines against HOA Respondents — Associations or its officers, managers, or other persons violating the law
  • To impose fines of up to $5,000 per day per violation against HOA respondents and fines up to $10,000 for retaliation against a Complainant. Fines against an Association would become a lien against the common elements.
  • To maintain a publicly-accessible database of HOA complaints

Requires all HOAs to update their registration with the HOA Information Resource Center on an annual basis, or within 30 days of any significant change in status.

SB20-126 Allow Home Child Care In Homeowners’ Association Community

Status: Introduced. Legislative attention shifted to addressing coronavirus (COVID-19) outbreak. 

Summary:

Requires HOAs to permit (accommodate) a licensed family child care home, regardless of prohibitions in the community’s current governing documents.

Restrictive covenants pertaining to architectural control, parking, landscaping, and noise would remain enforceable. However, an HOA would have to make reasonable accommodation to allow for safety and privacy fencing on the property of the licensed child care home.


Florida

SB 1128 Vacation Rentals

Status: Died in Senate Rules committee

Summary:

Provides that the state would license and regulate short term vacation rental properties and advertising platforms. Local governments would lose their current authority to license or restrict vacation rentals.

However, homeowners, condominium, or cooperative associations could still restrict or regulate vacation rentals within their communities, by enforcing declarations (covenants).

The bill is highly controversial, leading to bitter political division among Floridian property owners.

References:

Can Florida cities regulate Airbnb? This bill says no.
The Senate Commerce and Tourism Committee voted 3-2 along party lines to send SB 1128 to the Senate floor
By Mary Ellen Klas Tampa Bay Times
Published Feb. 11

The fight over Airbnbs: Will a bill open up floodgates for rentals in Palm Beach County?
By Hannah Morse Palm Beach Post
Posted Jan 27, 2020 at 2:54 PM

CS/CS/HB 623 (2020) Community Associations

Status: Passed unanimously in House, Died in Senate Innovation, Industry, and Technology Committees

Summary:

Omnibus bill proposing numerous changes to current state law, including, but not limited to, the following:

  • Offers limited Equal Protection of rights for homeowners and residents of HOA-governed common interest communities.
  • Specifies that unconstitutional discriminatory restrictions are unenforceable under state and federal law. Would create a streamlined process for HOA boards to remove discriminatory restrictions from governing documents, without requiring a membership vote.
  • Removes conflict of interest restrictions with regard to HOA contracts.  (Current state law prohibits an HOA board from contracting with service providers that are either business affiliates or family members of a board member. )
  • Defines the type of financial issues under regulation by the Department of Business and Professional Regulation (DBPR), Division of Condominiums, Timeshares, and Mobile Homes.
  • Makes a cooperative unit an interest in real property.
  • Allows HOAs to amend governing documents to prohibit rentals of less than 6 months in duration. However, any approved amendments do not apply to current property owners without their consent. Only future homeowners would be obligated to follow restrictions against short-term and vacation rentals.
  • Allows condominium and cooperative associations to request Alternative Dispute Resolution, including mediation, to settle most disputes. Also removes the requirement that parties must submit all disputes to non-binding arbitration before filing litigation.
  • Election disputes for all types of associations would not be eligible for mediation, and must be arbitrated by DBPR.

References:

2020 Community Association Legislative Update – Part I
Arias Bosinger 

See also, related bills: FL HB 689 and FL HB 1257 (overlapping provisions with HB 623)

 

SB 912 (2020) Department of Business and Professional Regulation

Status: Replaced by HB 689, died in the Senate. 

Summary:

Changes disqualifying rules for condominium board candidates — specifies that members who are not current on HOA assessments may not be elected to the board.

By comparison, current law states that an member delinquent on payment of any monetary obligation may not run for election to their HOA board. Therefore, a condo board could no longer use nonpayment of fines and other fees to disqualify candidates.

 

NEW STATE LAW: FL SB 476 Law enforcement vehicles

A homeowners, condominium, or cooperative association can no longer prohibit a member of law enforcement who is a unit owner, tenant, or guest from parking in a driveway or other designated parking space in the community.

The legislation comes as a swift response to a Florida community HOA (Eastlake Woodlands) threat to fine a law enforcement officer for parking her marked police car in her own driveway.

After its unpopular threats were publicized, the HOA backed down. But Legislators wanted to make sure that no other member of law enforcement would be penalized by their HOA.

Reference:

Florida Gov. DeSantis signs bill that bans HOA restrictions on police vehicles
Posted: 6:33 PM, Feb 21, 2020
Updated: 3:18 AM, Feb 24, 2020
By: Heather Leigh ABC Action News


Maryland

HB 30 Condominiums, Sunset Island Act; HB 1053 Condominiums and Homeowners Associations – Governing Bodies

Status: HB30 and HB 1053 passed in the House, but before the Senate could consider the bills, MD Legislature ended its 2020 session early due to outbreak of coronavirus (COVID-19).

Summaries:

Both bills propose small limits on developer control of condo and homeowners associations.

HB 30 Provides that a condominium association board may not withhold information related to a legal settlement of a dispute with the Declarant or developer.

The bill also requires prompt and full disclosure of any financial settlements with all unit owners and condo buyers.

HB 30 was drafted to end the practice condo boards holding closed-door meetings with developers to settle legal claims involving construction warranties.

Delmarva Public Radio has reported that numerous condo owners are stuck paying millions of dollars out-of-pocket to correct defects in their units built by Ryan Homes.

Some unit owners say their condo board made secret deals with the developer to settle legal claims for far less than needed to address their warranty claims. Likewise, condo buyers complain that they have purchased their units with no advance disclosure of imminent special assessments they’d have to pay to cover the high cost of repairs. 

 

HB 1053 Requires condo and homeowners associations to hold at least 2 open board meetings per year.

When the community reaches 25% build-out, the developer would be required to appoint at least one homeowner board member, someone who is not affiliated with the developer. (Note that this bill does not allow owners to elect their representative to the board during developer control period.)

A developer would also have to inform a homeowner-controlled board of any outstanding construction bonds, and any intention to request a release of those bonds by a government agency.

 

OC Condo Dispute Sparks Possible Limit on Homeowner Association Leadership
By DON RUSH • JAN 6, 2020 (Delmarva Public Radio)

Proposed Legislation Would Require Unit Owner Participation On a Condo’s Board of Directors During the Period of Developer Control (Baker Donelson)
by Raymond D. Burke | Mar 6, 2020

 


New Jersey

A2480 and companion bill S908 (Reversing “surprise assessments”)

A2480 remains under consideration for the 2020-2021 session. Currently in the NJ Assembly. Senators voted unanimously in favor of S908, now in Assembly, with amendments.

Summary:

In the past 3 years, several lake associations have imposed “surprise assessments” and placed liens on homes within the boundaries of their historically voluntary HOAs. Those fees have provoked hundreds of homeowners to file lawsuits against several lake associations.

Last year, a Superior Court Judge ruled that the Parsippany Lake Association is a homeowners association under the Planned Real Estate Development Full Disclosure Act (PREDFDA) of 2017.

Both A2480 and S908 clarify that voluntary property owners’ associations, such as lake associations, are not permitted to impose mandatory maintenance assessments upon homeowners.

The legislation follows Governor Phil Murphy’s conditional veto of similar legislation in 2019.

This year’s proposals go a bit further to protect the property rights.

Any non-mandatory Lake Association that existed prior to the 2017 amendments to PREDFDA would have to end their demands for payment of assessments and cancel all liens against property owners.

If an Association fails to revoke their lien, a property owner can file a civil lawsuit to enforce state law. If — or more likely when — the homeowner prevails in court, the Association would be required to pay the homeowner’s attorney fees.

Both A2480 and S908 have passed unanimously in the Senate.

If passed by the NJ Assembly with the approval of the Governor, the law would be retroactive to July 13, 2017.

However, as of March 5, 2020, amendments approved by the Assembly would allow a previously voluntary association to seek a court order “declaring the owners as members of the association and authorizing the association to assess the members of the association.“

References:

Assembly committee advances lake assessment bill
By Jennifer Jean Miller | New Jersey Herald
Posted Mar 7, 2020 at 10:30 PM

For full background story, see previous IAC post (Sept. 2019)
NJ GOVERNOR “CONDITIONALLY VETOES” BILL THAT WOULD PREVENT SURPRISE MANDATORY HOA LAKE FEES


New York

Status: Legislative session suspended due to coronovirus (COVID-19) outbreak. 

S2892B Relates to prohibiting eviction without good cause

Summary:

Prevents a landlord from evicting a condo or co-op tenant without “good cause.”

“Good cause” is defined as non-payment of rent. However, the bill also limits an annual rent increase to 3% or 1.5% of the Consumer Price Index, whichever is higher.

A landlord can also evict a tenant that fails to allow access for necessary repairs or improvements, creates or allows a nuisance, or engages in illegal activity.

The bill is opposed by landlords, because it limits rent increases and profit potential.

Tenant advocacy groups support the legislation as a method of rent control.

 

Reference:

Bill Would Require “Good Cause” for Co-op and Condo Evictions
Habitat Magazine | March 4, 2020

 


Tennessee

Status of both bills: Legislative session suspended due to coronovirus (COVID-19) outbreak. Both bills in committee at time of suspension. Legislature tentatively set to reconvene in June.

HB2485 Real Property (homeowners rights in HOAs); Companion bill SB2098.

Summary:

Proposes to increase homeowner rights and HOA transparency:

  • Requires an HOA to file an annual financial report, to include a list of homeowners that are past due on payment of assessments
  • Requires a no-cost disclosure packed containing certain essential HOA documents to a home buyer
  • Provides for a vote of HOA members on amendments to bylaws
  • Sets minimum requirements for content of association bylaws
  • Requires easily accessible posting of HOA board and membership meeting minutes.

HB2485 is generally supported by homeowner and consumer advocates, but opposed by trade group Community Associations Institute (CAI).

 


Utah

SB 183 Nonjudicial foreclosure amendments

Status update: SB 183 passed both houses of the state legislature, with amendments. 

Summary:

Prohibits a homeowners or condominium association from filing a nonjudicial foreclosure unless the assessment lien exceeds $11,000.

Most notably, amends existing state law, to state that an assessment lien cannot include fines, collection costs, or attorney fees.

SB 183 is intended to protect homeowners from getting caught in a perpetual debt trap, unable to pay steep costs and fees to HOA collection agents.

Predatory collection practices have historically increased the odds of losing one’s home to HOA foreclosure.

Because many of its members are HOA collection attorneys, this consumer-friendly bill is opposed by trade group Community Associations Institute (CAI).

The amended and passed version of the bill creates a two-tiered system of justice for homeowners. 

As long as a condo or homeowners association chooses to pursue non-judicial foreclosure, it cannot include any unpaid (disputed) fines imposed upon the owner as part of its lien.

However, if the homeowner demands a judicial foreclosure  in a court before a judge, then the HOA is legally entitled to include fines and related expenses in its foreclosure lien.

Read the enrolled version of SB 183 as of March 12, 2020. Utah Governor Gary Herbert has 60 days to either sign or veto the bill.

 

 


Virginia Legislature passes condo termination bill

RECENTLY PASSED BOTH CHAMBERS: HB 1548 Common interest communities; termination of condominium, respective interests of unit owners.

Status: If Governor Ralph Northam does not veto the bill by April 11, 2020, it becomes law.

Summary:

HB 1548 contains a number of amendments that make it easier to terminate a condo association. The bill gives bulk buyers and investors the advantage in setting the terms of a termination contract, compromising the rights of property owners who oppose dissolving the condominium association.

Amendments create all of the following disadvantages to owner-occupants andnon-investor owners

  • Allows fundamental changes to property rights by allowing the majority shareholders to arbitrarily reallocate each unit owner’s share of condominium sale proceeds
  • Makes it difficult or impossible for a unit owner to obtain a fair and impartial appraisal
  • Dissenting owners must pay outstanding liens and mortgages on their units, so that the buyer-investor can acquire units free of financial liabilities

The bill was pitched to Legislators as a way to prevent a few “hold outs” from allowing the “majority” to cash out their equity.

However, Legislators seem to misunderstand that the “four-fifths majority” (80%) of unit owners voting in favor of condominium termination are, in reality, a small group of non-resident real estate investors who have acquired a majority of condo units in a financially-distressed community.

HB 1548 simply increases the inherent advantage of being a well-funded bulk investor, while further eroding the property rights of individual owners with limited net worth and equity in the association.

References:

John Cowherd On the Commons with Shu Bartholomew 

Previous IAC post: VIRGINIA HOUSE LEGISLATORS FAST TRACK CONDO TERMINATION BILL
February 11, 2020 ♦