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Legal Issues


Homeowner's Association Bill Dies During First Funnel Week - March 8, 2017

As you may know, earlier this year a bill was introduced at the Iowa legislature that included proposed changes to the law applicable to homeowner’s associations. The bill, House File 158, was entitled the “Iowa Common Interest Ownership Act” (the “Act”). The Act proposed several changes to the current law and we believed such proposed changes were generally detrimental to association boards, association management companies, and developers of such communities.  We are pleased to inform you that the Act failed to progress past the first legislative funnel of 2017 last week and is, therefore, ineligible for any further consideration during the current legislative session. In addition, a Senate companion bill, SF 178, was not voted on by the subcommittee. Therefore, both HF 158 and SF 178 are ineligible for consideration this legislative session and are dead this legislative session.

 

However, due to the significant impact the Act would have if again introduced in future legislative sessions, it is important to understand the implications of the Act on common interest communities in Iowa. The Act focuses on the management and affairs of common interest communities, and would impose certain responsibilities and obligations on the associations managing those communities. The Act applies to both homeowners associations and horizontal property regimes, referred to in the Act as common interest communities. A summary of the bill is provided below, and we will again alert you if similar legislation is again introduced in future legislative sessions.

 

Summary of the Bill

Retroactive effect:

Notably, the Act provided that it would be retroactive in its effect and declares any provisions of declarations or regulations contrary to the Act as unenforceable and void. However, there appeared to be significant practical and legal questions as to how certain provisions of the Act could even be applied retroactively.

 

Developer control limited:

The Act limits the amount of control a developer, referred to in the Act as the declarant, has to appoint the board of directors of the common interest community during the development and finalization of the project. Under the Act, once the developer has sold at least 25% of the units, at least one board member must be a unit owner not appointed by the developer. The board membership requirement increases as more units are sold, with one-third of the board being non-developer appointed owners when 50% of units have sold and when 75% of units have sold, the developer cannot have any board control. These mandates are all significant changes to the current state of the law.

 

Meeting restrictions:

The Act also put certain restrictions on meetings called to discuss and decide on common interest community matters. Under the Act, association boards are required to give at least 10 days notice for any non-emergency meeting. Under the Act, notice of the meeting must be provided by mail or email and cannot be hand delivered unless mail and email are unavailable. Further, each unit owner must be given a reasonable opportunity at any and all meetings to comment on any matter affecting the common interest community or the unit owners association.

 

Inspection records:

The Act also requires that associations retain certain records for inspection and copying by unit owners, including receipts and expenditures, minutes and meeting records, original association documents, financials for the past three years, contracts, design or architectural requests, and ballots for one year after the election, action, or vote. Finally, the Act provides that a prevailing party in any lawsuit to enforce the provisions of the Act can recover reasonable attorney’s fees.

 

Questions?

Please contact Attorneys Jodie McDougal and/or Jonathon Schroeder at 515-288-2500 or jodiemcdougal@davisbrownlaw.com and jonathonschroeder@davisbrownlaw.com should you have any questions regarding the Act or should you desire for our lobbying department to work on your organization’s behalf. We will again alert you if similar legislation is introduced in future legislative sessions.