By Deborah Goonan, Independent American Communities deborahgoonan@gmail.com
Originally published June 24, 2021 9:52 PM EDT Updates: April 28, 2021 12:36 PM EDT, October 8, 2021 4:30 PM EDT
A summary of notable 2021 legislation affecting housing consumers and property owners of HOA-governed housing. Includes references to legislative websites to track progress of bills under consideration.
This post will be updated during Legislative sessions, as additional information becomes available. Contact the author at debgoonan@icloud.com with comments, corrections, or updates.
Arizona
HB 2052, homeowners’ associations: political; community activity (flags and political signs)
This bill would have set limitations on a condo or homeowners association’s powers to make or enforce rules that restrict the political freedom of residents of a condominium or planned community.
Summary of HB 2052, sponsored by Senator John Kavanaugh (R)
- Preserves owners; and residents’ rights to display political signs on their private property, including the limited common elements of a condominium. Limited common elements include front doors, porches, decks, balconies, and other spaces owned in common by the association, but designated for exclusive use by a unit owner.
- Current text of the bill states that an Association’s board could limit display of signs to a period of 70 days prior to, and 3 days following, an election, and limit total display size to nine square feet.
- Redefines political signs, to include signage in reference to community-specific elections or issues, or referendums.
- Specifies that owners and residents have the right to engage in door-to-door political campaigning for public political candidates, as well as to discuss HOA board candidates and important business issues in their community. Under these conditions, an HOA would not be permitted to prohibit such activity as “solicitation.”
- The HOA can make reasonable restrictions against door-to-door activity conducted between sundown and sunrise, and can limit political activity of non-residents to publicly accessible roads and sidewalks.
- Owners in the community would have the right to reserve space in the common areas, such as parks or clubhouses, to organize meetings for the purposes of introducing candidates or discussing community business.
Status of bill:
Passed unanimously in the House. Passed unanimously in Senate Government Committee. Died in Senate Rules Committee.
Related bill:
SB 1722 would have extended the period of time political sign displays are permitted to fifteen days following an election. (rather than just three days.)
IAC supports HB 2052 and SB 1722.
HB 2030, first responder flags; homeowners’ associations
In addition to repeating the language of HB 2052, with regard to door-to-door political campaign activity, this bill would have expanded an owner’s or resident’s right to display first responder flags on their property, regardless of the HOA’s prohibitions in the governing documents.
Arizona law already protects and owner’s or resident’s rights in an HOA-governed community, to display American, military, POW/MIA, Arizona state, and Arizona Indian nations flags, as well as the Gadsden flag.
Arizona law already protects the right to display flags on a flagpole, subject to a limited reasonable HOA restrictions.
This bill would have extended all of those same rights with regard to first responder flags.
Summary of HB 2030, sponsored by Sen. John Kavanaugh (R):
- Defines First Responder Flags to include flags honoring law enforcement officers, fire fighters, paramedics, and emergency medical technicians.
- The current version of the bill is very specific as to the description of first responder flags that must be allowed by condominium and homeowners associations.
- HOAs would still retain limited rights to restrict the placement and maximum height of a flagpole.
Status of bill:
Passed in the House, 35 – 24, with one No Vote. Passed in the Senate in both the Government and Rules Committees. Session ended without further action.
IAC supports HB 2030.
Additional Arizona bills considered this session, without passage
HB 2170, writs of garnishment; attorney fees
Following a court ordered judgment against a debtor, this proposed amendment to Arizona law adds attorney fees to the total debt that is to be paid by way of garnishment of the debtor’s wages or assets. If enacted, HOA attorneys would most likely seek to recover fees related to collections on behalf of HOA community associations.
The bill has passed 54-5 in the House, and in the Judiciary and Rules Committees in the Senate. (IAC opposes.)
HB 2619, Homeowners’ associations; declaration amendment; majority. Sponsored by Reps. Jacqueline Parker (R) and Kevin Payne (R)
Most HOA governing documents require a super majority of at least 67% of all owner interests to amend the Declarations of Covenants or Declarations of Condominium. This bill proposes reducing the vote required for amendments to a simple majority, or 51%. Opponents argue that reducing the majority vote requirement would make it too easy for a slim majority to change the rights and responsibilities of all owners within the community.
At the moment, this bill appears to be dead in House committee, but could be resurrected as an amendment to one of the other bills gaining traction in the Legislature. A companion bill in the Senate.
SB 1644, a companion bill sponsored by Rep. Rick Gray (R), specifies some limited exceptions to the simple majority requirement for specific types of amendments. For example, an amendment proposing a change in regulation of turnover from the developer, or a change in use of common areas would require a 75% vote of approval. Most other amendments could be accomplished with a 51% vote. This bill also appears to be stalled in the Senate. (IAC opposes both bills.)
Several bills also seek to regulate short term rentals, including SB 1379, HB 2481, HB 2482. These bills would require owners to register and license their short-term rental properties, would limit the number of occupants in a short term lodging property, would regulate parking and smoking outside of short term rental properties, and would allow local governments to impose fines for violations of these regulations.
Any regulation of short-term rentals will directly affect residential communities governed by homeowners and condominium associations. (IAC takes no position on any of these bills at this time.)
California
SB-391 Common interest developments: emergency powers and procedures.
Summary of SB 391
Currently under consideration, SB 391is a bill supported by HOA industry trade groups, including Community Associations Institute – California Legislative Action Committee (CAI-CLAC), California Association of Community Managers, and California Association of Realtors. The trade group members seek to expand the rights of HOA, condo, and co-op boards to hold emergency meetings electronically, without designating a specific location. (See Legislative analysis)
Opponents of the bill include the California Alliance for Retired Americans, Center for California Homeowner Association Law (CCHAL), and Habitat for Humanity California. These housing advocates say that the proposed changes, if enacted, will make it more difficult for owners to participate in meetings. They point to the “digital divide” among residents without access to electronic equipment and reliable internet access for streaming meetings. CCHAL also contends that it would become difficult, if not impossible, to witness counting of ballots at HOA-governed community elections that are not held at a physical location.
Status of bill:
Signed by Governor, enrolled, new law. Read full text, Chapter 276, here.
Earlier this session, the House added amendments which address the concerns of housing advocates. Those amendments specify that online or telephonic meetings can only take place in a government-declared emergency. All unit owners must be provided with individual notice of such meetings, with instructions and technical support enabling any owner to participate in a teleconference. Election meetings, where ballots are to be counted, must be conducted as a video conference, with the camera set up so that viewers can see each ballot being counted. (IAC favors amendments proposed by housing advocates.)
Connecticut
Update on status of Captive Insurance company funding for repair of condominium foundations.
In 2019, IAC posted two articles regarding how condominium owners in Connecticut were pleading for financial assistance to repair commonly owned crumbling concrete foundations. At the time, the captive insurance company set up to assist owners of single-family homes did not offer sufficient funding for condominium owners to move forward with costly repairs.
Foundation damage is caused by the presence of pyrrhotite, a naturally-occurring mineral that causes concrete to crack and break down prematurely. The faulty concrete mixture used to pour foundations has been traced to a long defunct quarry in Connecticut.
FEMA reports that up to 34,000 homes built between 1983 and 2000 are affected by crumbling concrete foundations. Many of those homes are condominium buildings where multiple owners share responsibility for maintenance of common property such as a basement foundation.
Today I am happy to report that in 2020, state legislators increased the cap on funding from $40,000-$70,000 per condo unit. The state’s captive insurer, Connecticut Foundation Solutions Indemnity Co. (CFSIC), established in 2017, has finally begun to fund condominium associations in need of repairs. This month, contractors began rebuilding foundations at the 34-unit Willington Ridge condominium complex in Willington.
Leading up to this day, condo unit owners had to coordinate their applications for financial assistance, and come up with a plan to cover any excess costs not paid through CFSIC.
CFSIC plans to allocate another $20 million among 51 condominiums in the state this year. So far, the insurer has funded foundation repairs for 291 single-family homes. Many more homes and condominiums have been affected by crumbling concrete foundations.
With funding set to expire in 2022, next year legislators will consider extending CFSIC through 2030. CFSIC is funded primarily by a surcharge on insurance policies.
Source:
Captive insurance company begins work on concrete foundation at Willington condo complex By Eric Bedner ebedner@journalinquirer.com Mar 15, 2021 Updated Mar 16, 2021
Florida
CCFJ tracked bills include the following:
SB 630 filed by Senator Dennis Baxley (R) Enrolled, new law effective July 1, 2021.
Official summary: Community Associations; Prohibiting insurance policies from providing specified rights of subrogation under certain circumstances; authorizing a condominium association to extinguish discriminatory restrictions; providing requirements for natural gas fuel stations on property governed by condominium associations; authorizing parties to initiate presuit mediation under certain circumstances; revising the allowable uses of certain escrow funds withdrawn by developers, etc.
List of amendments in SB 630:
- For condominium associations with insurance policies that do not allow subrogation against unit owners, a unit owner’s insurance policy cannot allow subrogation against the condo association.
- Provides renters the right to obtain a copy of the Declaration of Condominium.
- A member (owner) in any type of owners association need not state a reason for a records request.
- Clarifies that a condo or co-op association may make records available through the use of an application (“app”) as well as on a website.
- Adds provision for a any type of association to extinguish discriminatory restrictions.
- With regard to HOA board member term limits, adds the following provision: “Only board service that occurs on or after July 1, 2018, may be used when calculating a board member’s term limit.”
- Requires the association to provide at least 14 days advance notice of the annual meeting, by individually noticing each member of the Association. The notice must include an agenda.
- Increases the cap on a transfer fee charged to renters or purchasers from $100 to $150, subject to consumer price index increases every five years. Specifies that the $150 can be charged per applicant. Both spouses or parents of dependent children are each considered one applicant.
- Permits home and unit owners and/or board members to challenge a recall by court action.
- Requires all condo associations to have an Alternative Dispute Resolution plan.
- Removes conflict of interest provisions with regard to a board member’s relationship to a contractor or service provider for the association.
- Would allow a unit owner to install a natural gas feul station for their personal vehicle.
- With the exception of election and recall disputes, would give unit owners the option to pursue pre-suit mediation vs. mandatory arbitration.
- Extends condo, co-op, and HOA boards’ emergency powers to allow for video conference or electronic meetings.
- Requires HOAs governing planned communities to maintain official ballots, sign-in sheets, electronic voting records, and proxies for one year following any election.
- Increases meeting notice requirements for all types of associations.
- For HOA planned communities, rental prohibitions are not enforceable upon existing owners, their heirs, or successors, unless the parcel owner chooses to opt-in to newly enacted limitations. However, all parcel owners must abide by any conditions and restrictions officially approved by the HOA.
- Prohibits a condo or HOA from preventing members., residents, or their service or health care providers from entry to their home, even in the event of a health care emergency. This provision is in response to a condo association that refused to allow a residents to leave or enter the property, because they had tested positive for COVID-19.
- Adds a provision which allows condominium developers to use pre-construction buyer paid deposits, in excess of 10% of the purchase price, to be withdrawn from escrow and used for construction costs.
Status of SB 630:
Enrolled, new law effective July 1, 2021.
IAC sees SB 630 as a mixed bag. IAC supports many of the provisions, such as eliminating discriminatory restrictions, increasing notice requirements for meetings, and increasing a unit owner’s options to avoid litigation. However, IAC opposes the expansion of HOA board emergency powers, the increase of transfer fees payable by owners or renters, and the removal of conflict of interest provisions with regard to condominium association contracts.
SB 56 Community Association Assessment Notices Enrolled, new law effective July 1, 2021.
Important provisions of SB 56:
- Increases advance notice of foreclosure from 30 days to 45 days.
- Requires an association to provide advance notice of change of delivery method for invoices, also requires a homeowner to acknowledge, in writing, acceptance of any change in delivery method of HOA correspondence.
- Would allow a homeowner in an HOA governing a condominium, co-op, or planned community to avoid paying attorney fees in connection with payment of past due assessments. Specifically states that…
An association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the unit owner which specifies the amount owed the association and provides the unit owner an opportunity to pay the amount owed without the assessment of attorney fees.
Status of SB 56:
Enrolled, new law effective July 1, 2021.
(IAC supports SB 56)
HB 1259, Community Recall Act, filed by Arrington ; Daley ; Morales ; Tant. Companion bill SB 1688
Key provision of HB 1259:
- Would substantially alter requirements for recall of a board member in a homeowners association governing a planned community.
- Proposes that a recall petition must be signed by 60% of owners who claim their parcels as their primary homestead. In other words, non-resident and non-homestead owners would not have the right to petition a recall of a board member.
- After a recall petition is served on the association, all members may vote to accept or reject a recall. The recall must be approved by a simple majority of members who vote.
- Alternatively, if the governing documents allow for recall at a meeting, a meeting may be called by 10% of members who claim their properties as their homestead.
Status of HB 1259
Completed first reading in the House. No further action was taken, so this bill is dead.
(IAC takes no position in favor of or in opposition to this bill. Giving homestead residents sole power to petition for a recall could be wise or unwise, depending on circumstances in the the community.)
Mississippi
Jackson, MS — City Ordinance creating procedural rules for creating a community improvement district
Reference: Ordinance would spell out procedures for allowing community improvement districts (WLBT) By Anthony Warren | February 2, 2021 at 11:21 AM CST – Updated February 2 at 11:21 AM
Clarification of 2019 statute outlining the procedures for creating a local CID, or Community Improvement District (defined by state law as a tax district set up by a 510c3 nonprofit or an HOA). Proposes the following:
- Allow owners to collect e-signatures for petition to create a CID, to avoid door-to-door contact.
- Would clarify what qualifies as a property that gets to vote for or against the CID — the ordinance specifies that a CID petition requires a 60% vote of taxable parcels in favor of creating a new CID. Some had argued in favor of assigning voting rights according to taxable land area, a proposal that was ultimately rejected.
- Limits the duration of a CID to 15 years, and prohibits extension of contracts with the CID beyond its expiration date.
- Mandates that the city won’t be on the hook for any unpaid debt accumulated by the CID.
Status of Ordinance is still pending. Presumed dead.
History of CID legislation
IAC introduced readers to the murky concept of HOA-created CIDs in 2018.
The decision to create a taxable community improvement district rests on the vote of 60% of property owners within the proposed district (the 501c3 neighborhood association or HOA). Owners cast one vote for each of their taxable properties, whether they reside in Jackson (or Mississippi) or not.
One can argue that residents who do not own property within a CID pay indirectly, in the form of higher rent payments. But the state Legislature buys into the concept that, because non-owners don’t make direct payments to a CID, they need not play a role in approving CIDs.
Despite the controversial nature of community improvement districts, In 2019, Mississippi state Legislature passed House Bill 1216, to allow the creation of CIDs, but limiting the process to municipalities with a population exceeding 150,000. Jackson is the only city in the state that meets the population threshold.
The city collects CID funds as property taxes, then distributes the money to CID governing boards, to be allocated for specific projects as pre-approved by the governing authority.
SENATE BILL NO. 2610 Bill proposal to extend mandatory HOA powers to older Property Owners Associations (POAs)
Older POAs in Mississippi (and many other states) rarely have covenants and restrictions that grant Association boards the considerable powers of mandatory homeowners associations. Specifically, “modern” HOA covenants, sometimes referred to as Declarations or CC&Rs, give boards the power to enforce its rules and/or collect mandatory HOA fees under the threat of placing statutory property liens, with could ultimately lead to foreclosure.
SB 2610, co-sponsored by Senator Benjamin Suber [R] and Senator Tyler McCaughn [R], proposes extending the power of Property Owner Associations (POAs) to foreclose on liens, even though many POAs have historically relied on voluntary payment of annual dues.
For example, the planned community of Diamondhead has already incorporated as a City, eliminating the need for its POA to collect fees to provide essential services. Diamondhead’s CC&Rs are beginning to expire, and many owners who don’t use the recreational amenities don’t bother to pay POA dues anymore.See the Facebook Community Group for details.
But the POA has made several unsuccessful legal attempts to extend the Covenants, and it continues to threaten homeowners with liens if they do not pay their POA fees. The POA doesn’t have a legal leg to stand on. But, apparently, some POA activists from Diamondhead have the ear of a few state Legislators?
Fortunately, Diamondhead homeowners contacted their state representatives to voice their objection to this bill, rendering it dead in committee.
Status of SB 2610: This bill has been defeated, and is officially DEAD in Senate Judiciary Committee
Nevada
Nevada SB72 (ON BEHALF OF THE REAL ESTATE DIVISION OF THE DEPARTMENT OF BUSINESS AND INDUSTRY) New State Law
Official summary: An Act relating to common-interest communities; requiring a limited-purpose association to comply with certain requirements relating to the establishment and foreclosure of a lien for assessments; revising provisions relating to the imposition of fines that may be assessed for certain violations of the governing documents of a unit-owners’ association; revising provisions relating to meetings of the executive board of a unit-owners’ association; and providing other matters properly relating thereto.
The amended version of this bill, now officially state law, increases the power of limited purpose associations to impose liens and foreclose on those liens. A limited-purpose association is one that has been created for rural or agricultural communities, or for the sole purpose of maintaining the landscape of the common elements.
According to Nevada Statute, limited purpose associations cannot impose fines (unless allowed by their governing documents). However all other HOAs can impose fines. And this bill seeks to increase the Commission’s role in deciding which violations adversely affect health, safety and welfare of owners vs. ones that do not. It would authorize unlimited, potentially higher fines for the “health, safety, and welfare” violations.
The bill also proposes to enlarge the attorney-client privilege loophole, by permitting boards to meet in executive session (closed meeting) for virtually any legal matter, citing “attorney-client privilege,” even if the issue to be discussed does not pertain to pending or ongoing litigation.
(IAC Opposes SB72. This new law opens the door for HOAs to use the attorney-client privilege loophole to close virtually any meeting, or any portion of a meeting, that may be controversial or that discusses any “legal matter” that is completely unrelated to pending or ongoing litigation. It’s a convenient excuse for holding executive session.
Also of concern: the fine provisions, specifically authorizing the Real Estate Commission to arbitrarily decide what types of violations threaten “health, safety, and welfare” and what violations do not. The bill sets no limit on fines for violations that, in the judgment of the Commission, create real harm. This one-size-fits-all approach to authorizing boards to impose fines fails to consider the unique facts and circumstances of each HOA dispute over covenant violations. It essentially bypasses due process for property owners.)
Read the text of the enrolled law, signed by the Governor.
View Legislators voting record for SB72
Pennsylvania
House Bill 731: Community Association Data Transparency, Introduced by Rep. Rosemary Brown (R)
Adds the following legal requirements to the Uniform Condominium Act, the Uniform Planned Community Act, and Cooperative Act
- When establishing a new development, the Declarant shall record with the applicable County or Counties a record of each Common Interest Ownership Community (CIOC). The record must specify the land area, number of units or parcels, and “the infrastructure of each planned community, including, but not limited to,
- information concerning the presence of sanitary sewer,
- water and storm water systems,
- recreation facilities and
- roadways.”
- The Planning Agency of a County must maintain a record of all CIOCs containing the above information, and shall produce an annual report of all CIOCs in the state.
Status of HB731 – Referred to Urban Affairs Committee in the House on March 3, 2021.
(IAC supports this bill, because housing consumers and taxpayers have a need to know important details about their financial obligations to their communities.)
HB 1050 Municipal Services Equalization and Tax Fairness Act (Valerie S. Gaydos – R)
In a rare and bold move toward ending the practice of double taxation of owners of property in common interest ownership communities, this bill would allow HOA, including condominium and cooperative communities, to negotiate for municipal services provided to owners and residents of non-community housing.
Specifically, the authors of this bill want municipalities to EITHER provide equitable public services to HOA-governed community associations (CIOCs) OR reimburse these communities for the actual costs of providing their own services.
The bill defines the following as “municipal services:”
- Removal of trash and recycling
- Snow and ice removal from roadways
- Covering the electric bill for street lights
- Maintenance, repair, and replacement of:
- streets, roads, and bridges
- water lines and fire hydrants
- sanitary sewer lines
- Provision of police, fire, ambulance, and emergency services, and
- Any and all other services provided by the municipality. (Presumably, that includes maintenance, repair, and replacement of stormwater infrastructure, which isn’t specifically mentioned in the bill.)
The bill includes a detailed process for HOAs to engage in Arbitration with municipalities that resist negotiating arrangements to take over public services or reimburse HOAs for the de facto public services work they do.
Status of HB 1050: Assigned to Urban Affairs Committee in the House (April 20, 2021)
(IAC supports this Bill. If the state Legislature enacts the bill as currently drafted, members of HOA-governed communities could finally meaningfully reduce their financial and legal liabilities by offloading essential services to their local government. If communities are successful in shifting public services back to municipalities — where, in IAC’s opinion, they rightfully belong — membership in HOAs for homes in planned communities could once again become voluntary civic or social clubs, and, in some cases, completely unnecessary.)
Texas
More than a dozen bills have been considered this Legislative session.
Here are the highlights for a few of them:
HB3571 and SB1824 — companion bills, Relating to the regulation of security measures by a property owners’ association. (Bonnen)
- Mandates that a property owners association must allow a property owner to install personal security measures, including a perimeter fence, security cameras, or motion detectors.
- Allows the HOA to restrict the type of fence an owner can install.
Status: HB 3751 signed by Governor, now enrolled as law. (see also, SB 1588)
(IAC supports this new, but suggests future amendments to clarify that an HOA cannot enforce restrictions that would compromise the security value of the fence. For example, the HOA could limit fence height to four feet, too low to provide adequate security.)
HB2912 — Relating to a violation of the Texas Residential Property Owners Protection Act or a dedicatory instrument by a board member of a property owners’ association.
- Provides a method for any homeowner to file a petition with the local Justice of the Peace, when a member of the HOA board violates the terms of governing documents while serving in the capacity of a board member.
- In the event that the Justice of the Peace finds in favor of the homeowner, provides one or more of the following remedies:
- court-ordered removal of HOA board member
- court-ordered judgment for damages to the HOA member
- court-order to deduct financial judgment from future HOA assessments for the HOA member
Status of HB2912: as of May 2021, in Senate Business & Commerce Committee. However, provisions related to Justice of the Peace jurisdiction over HOA disputes have been added to SB 1588, which is now enrolled as law. See SB 1588.
HB3502 and SB1939 — companion bills, Relating to organization of, meetings of, and voting by condominium unit owners’ associations and property owners’ associations. (Lambert,
Darby)
- Gives HOAs, including condo associations, the authority to conduct meetings by electronic or telephonic means, with appropriate notice.
- Permits an owner to opt for voting electronically. Texas statute provides that an owner can also choose one of the following methods of voting: by proxy or absentee ballot.
Status of bill: HB3502 passed in House, but stalled in Senate Business & Commerce committee. (IAC takes no position on these bills as currently drafted and amended. While IAC is not opposed to the use of technology to conduct meetings or elections, there are concerns. Neither bill contains provisions to ensure equal access of owners to participate in electronic meetings, particularly owners without reliable internet access. Neither bill requires electronic voting hardware and software to comply with industry standards for data integrity.)
HB1202 — Relating to the amendment of a dedicatory instrument to remove a discriminatory provision
Provides a streamlined legal process for property owners in HOA-governed and non-HOA communities to remove unenforceable discriminatory provisions in Covenants and Restrictions related to property deeds.
Status: Passed House, stalled in Senate Affairs Committee. (IAC supports this bill.)
HB67 — Relating to restrictive covenants related to swimming pool enclosures. (Toth, Swanson)
- This bill states that an HOA cannot adopt or enforce any outright prohibition against a swimming pool enclosure, provided it meets local and state safety standards.
- The HOA can adopt limited rules regarding the appearance of a pool enclosure.
Status of HB67: Passed unanimously in the House. Next to Senate, in Business and Commerce Committee. This bill has been incorporated into SB 1588, which is now enrolled as law. See SB 1588.
HB3376 and SB1588 — companion bills sponsored by the Texas Real Estate Commission (multiple authors)
- Prohibits nepotism on the Architectural Review Committee of an owners’ association.
- Caps the fees an Association can charge for copies of a resale certificate at $375, and caps the fee for an updated resale certificate at $75.
- Raises the cap on a court award to an owner in a claim against the property owners association (HOA), due to its failure to provide a resale certificate to a new owner. The old cap was $500, it is now $5,000. The court may also award court costs and reasonable attorney fees to the prevailing property owner, or may order that the Association compensate the owner by deducting future regular HOA fees and special assessments.
- Requires the Association to post its governing documents, including all amendments, on the publicly accessible home page of its website.
- Requires each owners’ association to update its registration with the Texas Real Estate Commission (TREC) annually, and to include contact information for its management agent, plus the address of its publicly-available website. Imposes sanctions for non-compliance.
- An Owners’ Association is also required to file a Management Certificate with the County of jurisdiction. Failure to do so prohibits a collections attorney from billing owners for interest of attorney fees.
- Stipulates that an Association must notify a member, by certified mail, of its intention to file a delinquency credit report with credit bureaus. An Association may not report disputed charges. Owners must be offered a payment plan.
- Adds the requirement that attorney fees and collections costs must be “reasonable.” In Texas, partial or installment payments on delinquent accounts are allocated first to assessments, then to other collection costs and attorney fees.
- Provides a right of an owner to appeal to the board, regarding any adverse decisions of an Architectural Review Committee, any violation notices or fees and fines.
- The board must provide an Evidence Packet to the owner at least 10 days before the violation hearing/appeal.
- Requires the Association to audio record any hearing, and allows the owner to also record the hearing. If the Association fails to provide evidence within this timeframe, the hearing is to be postponed 15 days.
- Specifies due process requirements to provide evidence against an owner, related to any violation of the Covenants, at least 10 days prior to the hearing.
- Provides a method for any homeowner to file a petition with the local Justice of the Peace, when a member of the HOA board violates the terms of governing documents while serving in the capacity of a board member.
- In the event that the Justice of the Peace finds in favor of the homeowner, provides one or more of the following remedies:
- court-ordered removal of HOA board member
- court-ordered judgment for damages to the HOA member
- court-order to deduct financial judgment from future HOA assessments for the HOA member
- An Owners’ Association is now required to provide written notice of regular board meetings six days in advance, three days in advance for any special meeting.
- Contracts of $50,000 or more now require a competitive bid solicitation process, as outlined by the Association’s governing documents.
- An Owners’ Association cannot adopt or enforce any outright prohibition against a swimming pool enclosure, provided it meets local and state safety standards.
- The HOA can still adopt limited rules regarding the appearance of a pool enclosure.
- Amends current state law to provide that an owners’ association shall not enact or enforce any provision in HOA governing documents that prohibits a property owner or resident from displaying one or more religious objects on the owner’s private property.
- Current state law in Texas only allows for an owner or resident to display a small religious object on the door to their property. This bill would expand owners’ and residents’ rights to religious displays anywhere on private property.
- Clarifies that an HOA need not allow display of religious objects on common property or within easements.
Status: SB 1588 now enrolled as law.
(IAC supports this new law.)
SB581 — Relating to regulation by a property owners’ association of certain religious displays (multiple authors)
- Amends current state law to provide that an owners’ association shall not enact or enforce any provision in HOA governing documents that prohibits a property owner or resident from displaying one or more religious objects on the owner’s private property.
- Current state law in Texas only allows for an owner or resident to display a small religious object on the door to their property. This bill would expand owners’ and residents’ rights to religious displays anywhere on private property.
- Clarifies that an HOA need not allow display of religious objects on common property or within easements.
Status of bill — Passed unanimously in the Senate, Currently in House Business& Industry Committee. The contents of this bill have been incorporated into SB 1588, now enrolled as law. See SB 1588. (IAC supports this bill.)
SB1951 — relating to property owners associations (Paxton)
- Prohibits a board of directors from amending Bylaws without a vote of members, unless the Declaration of Covenants specifically grants the board that power.
- Requires a membership vote of property owners representing a majority of voting interest to amend the Bylaws, unless the Declarations provide for a lower percentage of voting interests.
- Prohibits the removal of voting rights for a homeowner, regardless of any alleged covenant violation or past due assessments owed to the association,
- Carves out an exception for POAs located in a metro area with a population of at least 2.8 million
- Grants owners rights and powers to initiate a special meeting to recall one or more board members.
Status of SB1951 — currently in Senate Business & Commerce Committee (IAC supports this bill.)
These additional HOA-related bills have stalled in the Legislature
HB2387 Relating to suits to collect past due property owners’ association assessments. This bill directs Property Owners Associations collection disputes to a Justice Court, with an option for no-cost mediation for homeowners. It also sets limits on the amount of recovery for attorney fees, and stipulates that an owner participating in a payment plan can avoid lien and foreclosure by an HOA. (read text)
HB1383 — Relating to the authority of certain entities and individuals to prevent individuals from accessing private property for the purpose of registering voters or communicating political messages. Would allow door-to-door political canvassing in HOA or condo regulated communities. (Read text.)
HB1970 – Relating to property owners’ association fines. Would require HOAs to annually disclose a schedule of ”reasonable“ HOA fines to each property owner. (Read text.)
HB3844 – Relating to the establishment of the department of consumer affairs services for property owners and property owners’ associations within the office of the attorney general. Oddly, this bill would not only provide a complaint process for property owners against their HOA, it would also provide a complaint process for a property owners’ association (HOA), presumably against their consumers (property owners). (Read text.)
HB3952 – Relating to requiring property owner’s associations and condominium associations to be registered with the secretary of state. Notably, if the condo association failed to register with the secretary of state, it would be prohibited from collecting condo fees and assessments! (Read text.)
HB3857 – Relating to requirements to file a property owners’ association assessment lien. Would require an HOA to send three certified mail delinquency notices to an owner, and then wait 180 days, before filing a lien on the property. (Read text.)
Utah
GOOD NEWS! New law (Amended Section 57-8-8.1) signed by Governor in March 2021: S.B. 31 Condominium and Community Association Regulation Amendments (Curtis S. Bramble)
- prevents HOA from denying the right of a lot owner to install a security camera on their property.
Read full text of legislation. (57-8-8.1)
Virginia
HB 1816 Property Owners’ Association Act/Condominium Act; use of electronic means for meetings and voting. 2021special session 1.(David L. Bulova) Companion/identical bill SB1183 (Siobhan S. Dunnavan)
The amended chapter makes the following changes to open meeting and voting requirements in HOA-governed communities in the Commonwealth of Virginia:
- Changes the definition of “Electronic means” as follows: “means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient of such communication. A meeting conducted by electronic means includes a meeting conducted via teleconference, videoconference, Internet exchange, or other electronic methods. Any term used in this definition that is defined in § 59.1-480 of the Uniform Electronic Transactions Act shall have the meaning set forth in such section.”
- The legal definition in Uniform Electronic Transactions Act is very broad, so as to encompass conducting business by the use of e-mail and text messages.
- Applies to both property owner and condominium associations.
- Expands methods of voting in HOA elections and on business matters to include in person, by proxy, by absentee ballot, and by electronic means.
- Removes the requirement for at least two board members to be physically present at an accessible location, while conducing video or teleconference meetings. Also removes the requirement that the HOA provide audio equipment to ensure all non-present board members and owners can easily hear all participants of the meeting.
- Requires that, if HOA voting is by electronic means, it must be by secret ballot, protecting the identity of the voter. Otherwise, another method of voting must be used.
- The HOA must provide an “alternative” method of conducting business for any member of the association that does not wish to participate by electronic means. The bill does not specify or provide guidance on acceptable “alternatives.”
Status: Enacted as state law, Acts of Assembly Chapter text (CHAP0009)
IAC believes there are several problematic provisions of this amended law. First, the new law removes the requirement for a physical location for HOA meetings. Second, the HOA need not provide a reliable means for owners to actively listen to, and participate in HOA meetings. These two amendments, combined with the expanded definition of “electronic means,” open the door for HOAs to conduct votes on important community matters using less formal procedures, including email or text messages. Therefore, the law effectively reduces opportunities for members at large to participate in the HOA decision-making process at an open meeting forum.
The details are further explained in the following article written by a practicing attorney in the state of Virginia, John Colby Cowherd:
Modernizing HOA Law or Exploiting a Crisis? JAN 27,2021 / BY JOHN COLBY COWHERD
Read HB1816 (full text upon passage)
HB 1842 Property owners’ associations & unit owners’ associations; rulemaking authority concerning smoking. (Mark L. Keam)
- Increases the power of HOA board to adopt rules and regulations limiting smoking in HOA common areas, as well as within interior or dwelling units in attached housing communities. The HOA may enforce rules, to include imposing fines or other sanctions as allowed by state law and the community’s governing documents.
- Clarifies that members can repeal or amend any objectionable HOA rules and regulations with a majority vote of members present at a special meeting.
Status: New state law; Acts of Assembly Chapter text (CHAP0131)
Read full text of HB1842, as enacted.
Further reading:
Smoking in condo communities is a topic so hot the legislature is taking it up By JULIE ULRICHFOR THE VIRGINIAN-PILOT |FEB 01, 2021 AT 9:23 AM
Washington
HB 1482 – 2021-22; Addressing foreclosure protections for homeowners in common interest communities.Sponsors: Walsh, Orwall, Lekanoff, Leavitt, Sutherland, Jacobsen, Dufault, Pollet
- Applies to all common interest communities, including property owners and condominium associations
- HOA cannot foreclosure a lien, unless unpaid assessments are equal to the greater of:
- $200 or
- Three months worth of assessments
- Past due amounts pertaining to the HOA’s right to foreclose may not include fines, late fees, interest, or HOA collection and attorney fees
- Creates official written notice of lien procedures, which are required before an HOA can foreclose its lien
- The HOA must wait an additional 180 days after it provides written notice of lien to the property owner
- The written notice of lien must include information pertaining to how the property owner may seek assistance from a housing counselor or attorney.
Status: signed by Governor, now enrolled as law.
Read full text of HB 1482 as passed by Legislature.
IAC favors the new legal provisions that improve notice of lien requirements and slow down the HOA foreclosure process.
However, IAC opposes the following provisions:
- Under the amended law, an HOA can still foreclose on a home for relatively small sums of past due assessments.
- Washington State law still allows for nonjudicial foreclosures.
- The amended law does not prohibit an HOA from adding fines, late fees, interest, collection costs and attorney fees to its lien — the law merely states that the HOA cannot include costs, other than past due assessments, in determining when to begin foreclosure proceedings.
- State law does not cap the amount of attorney fees and collection costs that can be recovered by foreclosure, nor does it stipulate that the sale price of a foreclosed property be commercially reasonable.
- Additionally, the HOA itself may purchase the property at the foreclosure auction.
SUBSTITUTE SENATE BILL 5024 AN ACT Relating to reducing barriers to condominium construction
The name of this bill does not transparently describe its purpose. Here’s a summary of what this bill does to benefit Declarants (developers), and holders of escrow funds (title insurance companies, real estate brokers, and escrow companies):
- If part of a written sale contract, this bill permits a declarant (developer or builder) to use purchaser’s deposit funds to pay for construction costs, as long as the declarant obtains a bond in favor of the purchaser for the amount of that deposit.
- The bill absolves escrow holders of the purchase deposit of any liability for inappropriate or early release of bond funds. (putting the onus on the purchaser to monitor construction progress and release of funds)
- Limits a pre-sale construction deposit to 5 percent of the sale price.
- Requires that a condominium building enclosure inspector must be “the architect of engineer of record” for a project.
Status: Signed by Governor, now enrolled as law.
Read SB 5024 as passed by Legislature.
IAC notes that the legislation appears to be designed to make it easier for the declarant to build new condominiums with purchasers’ money, while providing little to no impartial oversight of the construction process. The housing consumer receives very limited bond protection, while sales and title agents receive liability protection if the construction or sale process is derailed.
Nationwide: Trade Group legislative activity in 2021
Not allowing a good crisis to go to waste, CAI has used it LACs to promote four different initiatives related to the COVID-19 pandemic. Three of the four proposals are somewhat controversial among Legislators and homeowners in HOA-governed communities.
- Limited liability for HOAs/condo/co-ops if someone gets COVID on common property (Alabama, Arizona, Florida, Idaho, Indiana, and Montana passed these protections in 2021)
- Allows boards to meet virtually during the state of emergency
- Allows for electronic voting in associations
- Streamlines the process for boards to remove discriminatory language from Covenants (these are already unenforceable, but still exist in older deed restrictions)
Two of these initiatives are likely to garner widespread public support: Limited liability for COVID infections and Removal of discriminatory language from old deed restrictions.
The other two initiatives — a push for virtual board and membership meetings, as well as allowing for electronic voting in HOA elections — are controversial among homeowners who don’t have a high level of trust in their HOAs.
Actions to limit COVID liability for HOA-governed communities
Across the U.S., multiple stakeholders have introduced bills or enacted state legislation to limit liability of homeowners, condominium, and cooperative associations with regard to the alleged spread of COVID-19 infections on common property within the community. Many HOAs across the U.S. have been reluctant to reopen their shared recreational amenities (such as pools or clubhouses), to avoid the possibility of costly lawsuits against the community association.
In fact, the national HOA-industry trade group, Community Associations Institute (CAI) has been actively lobbying in favor of limited liability for HOAs. It also tracks bills with a map and list of states that have already enacted COVID liability protections. At this time, 19 states have passed limited liability laws.
Several other state Legislators, including those in New Jersey and Pennsylvania, have introduced bills with similar language.
The legislation follows a national trend where business corporations, health care providers, educational institutions, and governments seek to prevent being sued by their clients or patrons that may suffer illness or death after catching COVID while they are away from home.
According to HOA model legislation written by CAI, as long as providers of housing, health, educational, and business services make a good faith effort to comply with official health advisories, they will be immune from legal liability. The hope is that limited liability laws will prevent lawsuits against HOAs by owners, tenants, or guests who succumb to COVID, and who claim they acquired the infection on community property.
