Homeowners' Association Board Accountability And Transparency
With regard to a unit owner's delinquency in paying unit owners' association (HOA) assessments, fines, or fees, section 1 of the act:
- Requires an HOA to first contact the unit owner regarding the delinquency by, in addition to sending a notice of delinquency to the unit owner by certified mail and by posting a copy of the notice on the unit owner's property, contacting the unit owner by at least one other method of communication, including first-class mail, an e-mail, or a text message. The HOA must keep records of its contacts to the unit owner regarding the delinquency. The unit owner may identify a language other than English in which the unit owner wants the HOA to send all correspondence and notices to the unit owner. The unit owner may also identify another person to serve as a designated contact for the unit owner.
- Prohibits an HOA, or a property management company acting on behalf of an HOA, from referring the delinquent account to a collection agency or attorney unless a majority of the HOA's board of directors vote to refer the matter on the record at a hearing;
- Prohibits an HOA from imposing daily late fees or fines and requires the HOA to provide a unit owner a period to cure a violation of any HOA governing documents before the HOA may fine the unit owner and, with respect to a violation that is not a threat to public safety or health, to provide the unit owner 2 30-day periods to cure the violation before the HOA may take legal action against the unit owner, which legal action for unpaid fines cannot include foreclosure. A violation that the HOA reasonably determines is a threat to public safety or health requires only a 72-hour period to cure before the HOA may fine the unit owner.
- Along with section 3, prohibits an HOA from charging a rate of interest on unpaid assessments, fees, or fines in an amount greater than 8% per year;
- Requires an HOA, on a monthly basis, to send each unit owner with an outstanding balance owed to the HOA an itemized list of all assessments, fines, fees, and charges owed;
- Prohibits an HOA from assessing a fee or other charge for providing the unit owner a statement of the total amount that the unit owner owes the HOA;
- Requires an HOA to adopt a policy to provide, with a notice of delinquency, information regarding an alleged violation, a description of the steps that the HOA must take before it can take legal action against the unit owner, and a description of the types of legal action that the HOA may take against the unit owner;
- Before an HOA may initiate a foreclosure action against a unit owner, requires that the HOA offer the unit owner a repayment plan to pay the debt in monthly installments in an amount determined by the unit owner so long as installments are in amounts of $25 or greater, and the unit owner either declines the offer or, after accepting the offer, fails to make at least 3 monthly payments within 15 days after the installments were due; and
- Along with section 6, authorizes a party seeking to enforce rights or responsibilities arising under an HOA's governing documents, in relation to the unit owner's delinquency, to file a claim in small claims court if the amount at issue does not exceed $7,500 exclusive of interest and costs.
Section 2 authorizes the executive board of an HOA to conduct a disciplinary hearing or determine whether to refer a delinquency matter in executive session, but the unit owner who is the subject of the disciplinary hearing or referral of a delinquency matter may request and receive the results of the vote taken on the matter.
Section 4 provides that fees, charges, late fees, and attorney fees may be subject to a statutory lien but are not subject to foreclosure and places limitations on attorney fees. Section 4 also prohibits a member of an HOA's executive board, an employee of a community association management company representing the HOA, an employee of a law firm representing the HOA, or an immediate family member of an executive board member, a community association management employee, or a law firm employee from purchasing a unit on which the HOA has foreclosed its assessment lien.
Section 5 requires an HOA to apply a unit owner's payments first to any unpaid assessments and then to any unpaid fines, fees, or charges. Section 5 also allows a unit owner to file a civil action against an HOA if the HOA violates any foreclosure laws. The unit owner may seek damages in an amount up to $25,000 plus costs and reasonable attorney fees.
(Note: This summary applies to this bill as enacted.)