BLG Newsletter: Proposed Legislation vol. II

by Candice J. Gundel, Esq.

This month I will continue the review of proposed legislation as it relates to community associations. 

I briefly mentioned the estoppels legislation in my January 2016 newsletter.  SB 0722 and HB 0203 still continue to move forward at this time, but HB 0203 has undergone some association friendly amendments recently.  Specifically HB 0203 was amended to increase the estoppel fee provision and allow associations and their agents to collect an estoppel fee in advance of a real estate closing.  While these amendments are a step in the right direction, both SB 0722 and HB 0203 still contain many provisions which will be detrimental to community associations and I encourage you to contact your Legislator to oppose both of these bills. 

HB 1357 and its companion SB 1716 also propose significant changes to community association statutes.  These bills contain several nuanced changes to the documents that must be maintained in the official records of the association.  Additionally, they limit the statutory official records inspections to only those documents where physical copies maintained.  This limitation will seemingly either force associations to keep physical copies of all documents or render the inspection provisions useless as many documents are now maintained electronically.   For condominium associations with greater than 500 units and homeowners associations with greater than 7500 parcels the proposed bills will require those associations to maintain extensive websites, digital records, and notices that are accessible to all owners.  The proposed changes to chapter 720 for homeowners association extends and makes the state reporting requirement permanent.

Most concerning in HB 1357 and SB 1716 are the proposed changes to collection of assessments.  Both bills propose to limit an association’s ability to pledge assessment recovery or bad debt as collateral and also limit an association’s ability to contract with a vendor for the recovery of assessments.  The bills require an association take significant additional steps prior to initiating formal collection for delinquent assessments. The bills further require that all associations attempt to coordinate a payment plan with delinquent owners and if an owner is willing to enter into a payment plan the association is prevented from pursuing any other legal remedy for collection.  The bills go on to limit or prevent an association from foreclosing a claim of lien or delegating the authority to foreclose to a collection vendor. The term collection vendor is not defined in the proposed bills except to say “a third party.”  With such a broad description a collection vendor may include any company other than the association or any person other than a member or employee of the association, including but not limited to contract managers, management companies, attorneys, and other collection agencies.

While some of the official records and conflict provisions of HB 1357 and SB 1716 are well intentioned the actual bill text, if passed, will work to handcuff associations in their ability to decide how official records are maintained and how to proceed in the collection of delinquent assessments. The barriers to assessment collection proposed in HB 1357 and SB 1716 should be adamantly opposed and I strongly encourage you to contact your Legislator in opposition.