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New law gives HOA flexibility with rules

Q: At a recent homeowners association meeting, the representative of our management company told us the board did not have to enforce all of our covenants, conditions and restrictions, but rather could selectively pick and choose which ones they wanted to enforce.

This seems illogical to me and I hope you might clear this up.

A: Your management company is correct based on new law with certain caveats.

Prior to the passage of Senate Bill 204 in this past legislative session, associations were required to equally enforce the rules and regulations of the association. 

Section 33 of this new law changes the equal enforcement of an association’s governing documents.  The law states that a board may determine if it wants to take enforcement action against a homeowner either for unpaid assessments or for violations. 

The board does not have a duty to take enforcement if it determines, that under the facts and circumstances presented, the association’s legal position does not justify taking any action or further action, or that the covenant, restriction or rule is likely to be construed to be inconsistent with current law. 

The board does not have to take action if it determines that the violation, which may exist or may have occurred, is not so material as to be objectionable to a reasonable person or to justify the expending of the association’s resources, or is not in the association’s best interests to pursue an enforcement action. 

Finally, the fact that the board may not pursue enforcement of one set of circumstances does not prevent the board from taking enforcement action under another set of circumstances but it may not be arbitrary or capricious in taking enforcement action.

This section of the law could turn out to become a nightmare, or the “full-employment act”  for attorneys.  It turns back the clock. 

The equal enforcement provision was first passed because of complaints from homeowners to the Legislature that association boards were acting subjectively and not objectively in dealing with homeowner issues and violations. 

As a community manager of associations, this change to the law can be a positive one as it allows for flexibility in the decision-making process by the boards but it also calls for caution and objective thinking.  The association boards will need to be able to rationally explain why an action was taken or not taken if challenged by a homeowner who files a complaint with the ombudsman office.     

Q: Our association reached a settlement in a construction defect lawsuit. All the repairs have been made and we have funds remaining. Rumor has it that these remaining funds are to be distributed to the owners of record at the date of the settlement. Is this statement correct or incorrect?

A: I would not know if that is a correct statement or not. You would have to check with your association.

Generally speaking, that is not case as the construction funds would be under the control of the association to begin the rehab repairs.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. To ask her a question, email support@hlrealty.com.

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