Construction Defect Actions Notice Vote Approval

The bill requires that, before the executive board of a unit owners' association (HOA) in a common interest community brings suit against a developer or builder on behalf of unit owners based on a defect in construction work not ordered by the HOA itself, the board must:

• Notify all unit owners and the developer or builder against whom the lawsuit is being considered;
• Call a meeting at which the executive board and the developer or builder will have an opportunity to present relevant facts and arguments and the developer or builder may, but is not required to, make an offer to remedy the defect; and
• Obtain the approval of a majority of the unit owners after giving them detailed disclosures about the lawsuit and its potential costs and benefits.

The meeting of unit owners commences a 90-day voting period during which the HOA will accept votes for or against proceeding with the lawsuit. Statutes of limitation are tolled during this period. The HOA is required to keep copies of its mailing list and maintain records of the votes received. The voting period may end in less than 90 days if sufficient votes are received to approve the lawsuit before 90 days have elapsed.

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)