Bill Text: MA H3569 | 2009-2010 | 186th General Court | Introduced
Bill Title: Further regulating homeowners in common interest communities
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2009-01-20 - Public Hearing date 6/2 at 10:30 AM in Hearing Room A1 [H3569 Detail]
Download: Massachusetts-2009-H3569-Introduced.html
The Commonwealth of Massachusetts
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PRESENTED BY:
Michael A. Costello (BY REQUEST)
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To the
Honorable Senate and House of Representatives of the Commonwealth of
Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the passage of the accompanying bill:
An Act regulating homeowners in common interest communities.
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PETITION OF:
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Name: |
District/Address: |
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Monica M. Bradlee |
53 Warren St, Apt 204 |
The Commonwealth of Massachusetts
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In the Year Two Thousand and Nine
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An Act regulating homeowners in common interest communities.
Be it
enacted by the Senate and House of Representatives in General Court assembled,
and by the authority of the same, as follows:
SECTION 1. The General Laws are hereby amended by inserting after chapter 183B the following chapter:-
CHAPTER 183C.
BILL OF RIGHTS FOR HOMEOWNERS
183C: 1. Application and Definitions
1. Application. This statute applies to common-interest communities of single-family detached homes. The provisions protect homeowners with respect to actions by their association or its directors, officers, employees, managers, and other agents, but are not intended to alter the rights of homeowners or associations with respect to lenders, real estate agents, or developers.
2. Definitions.a. “Common-interest community” means a real-estate development or neighborhood in which individually owned lots or units are burdened by a servitude that imposes an obligation that cannot be avoided by nonuse or withdrawal: i. to pay for the use of, or contribute to the maintenance of, property held or enjoyed in common by the individual owners, or ii. to pay dues or assessments to an association that provides services or facilities to the common property or to the individually owned property, or that enforces other servitudes burdening the property in the development or neighborhood.
b. “Homeowner” means the owner of property burdened by a servitude described in
c. “Association” means an organization, including homeowners as members, created to manage the property or affairs of a common-interest community.
d. “Common property” means property rights of an identical or a similar kind held by the homeowners as appurtenances to their individually owned lots or units.
e. “Declaration” means the recorded document or documents containing the servitudes that create and govern the common-interest community.
f. “Governing documents” means the declaration and other documents, such as the articles of incorporation or articles of association, bylaws, architectural guidelines, and rules and regulations that determine rights or obligations of homeowners or that otherwise govern the management or operation of an association.
g. “Corporate documents” means the declaration and other governing documents required to be filed or recorded under state law (such as articles of incorporation or articles of association), as well as other governing documents (such as bylaws) that state law requires an association to adopt even if not filed or recorded.
h. “Operating rule” means any rule or regulation not stated in the corporate documents, whether adopted by the directors or by homeowners in a vote, that applies to the management or operation of the association or to the conduct of the business and affairs of the association, including (without limitation) user fees, charges for any violations of the governing documents of the association, and other fees or charges.
i. “Rule change” means adoption, amendment, or repeal of an operating rule.
j. “Directors” means the persons who constitute the association’s senior governing body, in articles of incorporation or articles of association, or in other governing documents.
k. “Ombudsperson” means the chief executive of the state Office of Ombudsperson for Homeowners, or the designated representative.
l. “Notice” means, with respect to any person, sending regular and certified mail (return receipt requested) to the person’s last known address. For homeowners, it means each address where the association sends its annual assessments, written in plain English.
183C: 2. The Right to Security against Foreclosure
1. Limit on Creating Foreclosure Power. No association may foreclose against a homeowner on any lien without express authority granted by the declaration. Foreclosure power cannot be added by amendment, except by unanimous homeowner vote.
2. Non-Judicial Foreclosures, and Precipitate Foreclosures, Prohibited. No association may foreclose against a homeowner on any lien unless, in addition to compliance with all other applicable laws, the association obtains a court order that specifies the assessments due, confirms the association followed proper procedure, and allows at least three months before the sale date for the homeowner to pay the court-specified debt.
3. Predicates for Judicial Foreclosure. No association may seek an order to foreclose against a homeowner on any lien unless, in addition to compliance with all other laws governing foreclosure of a mortgage on residential real estate, (a) the lien secures only a debt for an assessment authorized by a declaration recorded before the homeowner bought the home, (b) the directors by a two-thirds vote approve the foreclosure action, and (c) the assessment past due on the date of the vote exceeds $2,500. Notwithstanding the foregoing, any lawfully recorded lien (including liens that do not themselves provide a suitable basis for foreclosure) may be enforced on conveyance of any interest in a home, including conveyance by otherwise proper foreclosure sale.
4. Right to Cure. Each association shall, in governing documents, establish rights to make payments that ensure the following:
a. Homeowners may at any time make full or partial payment on any amount due. Any homeowner payment shall be credited first toward any past due assessment or other amount due to avoid foreclosure.
b. At least for homeowners who suffer job loss, disability, divorce, or family medical expenses, the association shall without penalty allow a homeowner 30 days after an assessment to propose an installment plan. Upon receiving the homeowner’s installment proposal, the directors shall designate a committee to meet with the homeowner privately, and the association shall provide a written response to the homeowner. If the association does not approve the request in full, the response shall allow the homeowner at least 15 days after denying the request to pay without incurring attorney fees. Nothing prohibits the directors from approving an installment plan more lenient than provided by existing rules, in which case the directors shall amend the existing rules so that all homeowners shall receive fair notice and equal treatment.
c. Within five days after any vote by directors to seek foreclosure, the association shall give the affected homeowner notice of the vote, and include the ombudsperson’s Notice of Foreclosure Rights. Within five days after filing any lawsuit seeking foreclosure, the association shall give the ombudsperson Notice of Foreclosure Filing.
d. If a homeowner pays all overdue assessments after directors properly vote to seek foreclosure, a court order nonetheless may permit foreclosure if (i) the homeowner has not paid all overdue late charges plus all attorney fees actually and reasonably incurred after the directors’ vote; and (ii) the declaration authorizes foreclosure for such nonpayment.
e. Upon a homeowner’s request, within three days, an association shall provide the amount due to avoid foreclosure, including past due assessments and any other amounts allowed by paragraph 4d or approved by court order under paragraph 2.
5. Minimum Bid and Notice of Redemption Rights. If an association forecloses against a homeowner, and sets the home for sale, the following provisions apply:
a. A price below 75 percent of the equity, measured by appraised fair market value less senior liens subject to which the successful bidder takes title, makes the sale void.
b. Within 30 days after the sale, the association shall provide the homeowner notice including the date and time of sale, the buyer’s name and purchase price, and the ombudsperson’s Notice of Right of Redemption. Within ten days after sending this notice, the association shall record, in the real property records of the county where the home is located, an affidavit stating the date on which the association sent the notice and containing a legal description of the lot.
6. Right of Redemption after Foreclosure. Except to the extent that governing documents provide greater rights, after a foreclosure sale by an association the homeowner has
a. a right of redemption not less than if a secured lender foreclosed; and
b. at least 180 days, after recording of notice under paragraph 5b, to redeem the home.
183C: 3. The Right to Resolve Disputes without Litigation
1. Required Notice of Violation. Before an association may seek foreclosure, file suit, charge any fee (including attorney fees), limit common area use, or take other action against a homeowner for violation of governing documents, except for an emergency action as provided in paragraph 9, the association must, in addition to compliance with other law and governing documents, do the following:
a. Provide notice to the homeowner twice, at least 21 days apart, that
i. describes the basis for the claim, including how the homeowner allegedly violated quoted terms of the governing documents;
ii. states any amount the association claims is due, describes how the homeowner can remedy the violation, confirms the right to comply without waiving the right to dispute the violation, and (where applicable) gives notice of the right to request an installment plan for assessments;
iii. describes the ombudsperson, including that the ombudsperson has a list of no- and low-cost mediators and other information; and
iv. states the homeowner has a reasonable period to cure--of at least 21 days after the second notice, unless the homeowner had an opportunity to cure a similar violation within the past six months, and that during the cure period the homeowner can obtain a hearing as provided in paragraph 2 or mediation as provided in paragraph 3, and can contact the ombudsperson as provided in paragraph 4, without incurring any attorney fees charged by the association; and
b. If the certified mail notice is not delivered, reasonably try to confirm the homeowner’s current address and either resend the notice as in paragraph 1a or, if no other address can be found, reasonably try to hand-deliver the notice, the period to cure starting anew from this notice.
2. Right to a Hearing. After notice of paragraph 1a, homeowners have the right at no cost to a hearing to verify facts and seek resolution with the directors or a committee designated by the directors. If the directors use a committee, any agreement must be enforceable, to be ratified by the directors unless it conflicts with law or the governing documents, and the homeowner must be allowed to appeal to the directors. In addition:
a. the association shall hold the hearing within 30 days after the association receives the homeowner’s request and shall provide notice of the date, time, and place at least 10 days before the hearing; the homeowner may request postponement, which shall be granted if for not longer than ten days; additional postponements may be granted by written agreement of the parties; the homeowner may record the meeting; and the committee (and, on any appeal, the directors) shall issue a written decision including the notice required by paragraph 5; and
b. the association shall extend the period to cure under paragraph 1a(iv) until 15 days after notice of the written decision by the committee or directors, whichever is later.
3. Right to Confidential Mediation. After notice of paragraph 1a, except with respect to disputes involving only an assessment or small monetary charge (less than $___), homeowners shall have the right to one-half day of neutral mediation, with the proceedings to be kept confidential and not admissible in court except as provided by state law. The requesting homeowner(s) shall pay 50 percent of the mediator’s charge and the association shall pay the balance. If after 30 days, the parties cannot agree on a mediator, the homeowner shall have the right to contact the ombudsperson as provided in paragraph
4. If the parties agree on a mediator, the association shall extend the period to cure under paragraph 1a(iv) until 15 days after the mediation.
4. Right to Petition the Ombudsperson. After notice of ¶ 1a, except with respect to disputes involving only an assessment or small monetary charge (less than $___), homeowners shall have the right to petition the ombudsperson upon payment of a filing fee not to exceed $___. The association shall cooperate in any investigation pursued by the ombudsperson. The association shall extend the period to cure for 30 days, and for a longer period if requested by the ombudsperson.
5. Right to Options. After receiving notice of a decision under paragraph 2, homeowners shall have the right, within 15 days, to invoke either the procedure of paragraph3 or paragraph 4. The notice of decision under paragraph 2b shall specify this right.
6. Right to Extend Time to Cure. During the period to cure as provided in paragraph 1, as extended in paragraphs 2 to 4, the association shall not incur attorney fees chargeable to the homeowner, and shall not take any enforcement action except for emergency action allowed by paragraph 9.
7. No Lawsuit Without Directors Voting. No association may sue a homeowner without an authorizing vote by a majority of all directors, in compliance with applicable law and governing documents that may set super-majority vote or other requirements.
8. Notice before Litigation. Except for emergency action allowed by paragraph 9, the association must provide distinct notice at least 15 days before filing suit against a homeowner, that
a. describes the basis for the suit, including how the homeowner allegedly violated specified terms of the governing documents; and
b. states any amount the association claims due, describes how the homeowner can cure the violation, and (where applicable) gives notice of the right to request an installment plan for assessments.
9. Exception for Emergencies. Nothing precludes an association from seeking a temporary injunction, or taking temporary enforcement action (such as suspension of rights to use a common property), in a good faith response to an emergency. An emergency is a situation that could not have been reasonably foreseen, poses a significant and immediate threat to the common-interest community, and makes compliance with the preceding paragraphs impractical. Any temporary enforcement action entitles the homeowner to immediate notice and the related rights above, provided enforcement action may remain in place pending (a) the final determination of homeowner rights or (b) the end of the conditions resulting in the immediate and significant threat, whichever comes sooner.
10. Additional Right to Petition the Ombudsperson. In addition to the rights of paragraph 4 and other rights in this model statute to petition the ombudsperson, except with respect to disputes involving only small monetary charges (less than $___), and upon paying the ombudsperson a filing fee not to exceed $____, homeowners shall have the right to petition the ombudsperson to challenge violations of homeowner statutory rights. Before making a petition under this paragraph 10, homeowners first shall give the directors notice of the dispute, and allow two weeks for a response, to be extended by an additional two weeks if needed to complete any procedures for alternative dispute resolution required by the governing documents; provided this shall not require more than one-half day of confidential mediation or require the homeowner to pay a fee. The association shall cooperate in any investigation pursued by the ombudsperson.
11. No Additional Charges, but Additional Options Allowed. No association may charge homeowners for exercise of the foregoing rights, but associations may offer additional options for alternative dispute resolution (ADR); provided no association may require binding ADR, otherwise require a homeowner to waive the right to go to court, or bill homeowners for mandatory ADR. In any litigation, if a party moves to compel nonbinding ADR, the court may consider the extent to which the parties already have pursued ADR.
12. Annual Notice of Rights to Alternative Dispute Resolution. Once each year, each association shall alert homeowners of their rights to ADR, including statutory rights and any others available under paragraph 11.
Section 183C: 3. The Right to Fairness in Litigation
1. Judicial Protection. Individual homeowners may sue associations to enforce statutory rights (under this model statute or otherwise) as well as their rights under governing documents, without being required to sue other homeowners; further, the association shall pay for any notice to homeowners that the court finds to be appropriate. Governing documents shall not limit judicial review or court enforcement; provided they may require ADR to the extent permitted by Section 2, The Right to Resolve Disputes without Litigation,.
2. Burden of Proof. Unless otherwise provided by statute, a homeowner has the burden to prove each breach of duty by a preponderance of the evidence. Except for ultra vires actions, or actions otherwise exceeding an association’s or director’s authority, homeowners must prove a breach caused, or threatens to cause, injury either to the homeowner as an individual or to the interests of any part of the common-interest community.
3. Compliance Under Protest. Homeowner compliance with an association’s demand for action, or demand to cease action, including (but not limited to) any demand to pay assessments or attorney fees, does not waive homeowner rights to challenge such demand.
4. Protected Homeowner Rights to Attorney Fees. In any case brought by an association or homeowner to enforce governing documents or applicable law (under this model statute or otherwise), the homeowner shall be awarded reasonable attorney fees and costs to the extent that the homeowner prevails. Attorney fees shall reflect counsel’s reasonable hourly rate and time worked, and shall not be limited by the amount the homeowner actually paid, if any.
5. Limited Association Rights to Attorney Fees. In any case brought by an association or homeowner to enforce governing documents or applicable law (under this model statute or otherwise), if authorized by the declaration, the association shall be awarded reasonable attorney fees and costs to the extent that the association prevails; provided that the reasonable attorney fees may be reduced at the discretion of the court based on finding that the judicial review benefited the association or homeowners by clarifying governing documents or applicable law, or other equitable considerations. Attorney fees shall reflect counsel’s reasonable hourly rate and time worked, limited by the amount the association actually paid.
Section 183C: 4. The Right to Be Told of All Rules and Charges
1. Governing Documents. Associations may not enforce charges or other rules against homeowners, except those set forth in plain English in governing documents. All operating rules shall be compiled in a single document, available to homeowners on request, that at the beginning provides contact information for the ombudsperson and a description of the ombudsperson’s role.
2. Disclosure to Buyers. Unless otherwise provided by statute, the following provisions apply:
a. At least 21 days before an offer to buy a home becomes binding, the homeowner shall furnish the potential buyer withes
i. the information statement prepared by the ombudsperson (including an acknowledgment for the buyer to execute) and all the association’s governing documents, excluding plats and plans;
ii. a statement of each existing assessment, any unpaid assessment currently due from the selling homeowner, and any other alleged violation of the association’s governing documents by external features of the home or landscape as of the date of the certificate, citing applicable rules;
iii. the association’s current operating budget and financial statement, including any legally required summary of the association’s reserves; and iv. a statement of the number of foreclosure lawsuits filed within the past three years, any unsatisfied judgments and pending legal actions against the association or otherwise relating to the common-interest community of which the selling homeowner has actual knowledge.
b. Upon a homeowner’s request, within ten days the association shall furnish a certificate with the information specified in paragraph 2a. A requesting homeowner is not liable for erroneous information in the certificate. A buyer is not liable for any past assessment, any future assessment greater than stated in the certificate (unless lawfully increased after the sale), or for violations of governing documents by external features of the home or landscape not stated in the certificate. For this certificate, the association may charge only actual costs, not to exceed $__.
c. Upon request by a homeowner, potential buyer in receipt of a certificate pursuant to paragraph 2b, or homeowner’s or buyer’s authorized agent, within 21 days the association shall make any legally required study of the association’s reserves reasonably available to copy and audit.
3. Limits on Default and Implied Powers. Governing documents, and statutes governing homeowners, shall be construed to favor homeowners’ free and unrestricted use of their home, and against any person seeking to enforce a limit on homeowner rights.
a. Absent specific authorization in the declaration or in paragraph 3(b) or paragraph 3(c), associations do not have power to adopt any rules that restrict the use or occupancy of, or behavior within, individually owned homes.
b. Except as limited by statute or the governing documents, associations have implied power to adopt reasonable operating rules to govern the use of (i) common property and (ii) individually owned property to protect the common property.
c. If the declaration grants a general power to adopt rules, an association also has power to adopt reasonable operating rules designed to (i) protect homeowners from unreasonable interference in the enjoyment of their individual homes and the common property caused by use of other individually owned homes; and (ii) restrict the leasing of homes to meet valid underwriting requirements of institutional lenders.
d. Except to the extent provided by statute or authorized by the declaration, a common-interest community may not impose restrictions on the structures or landscaping that may be placed on individually owned property, or on the design, materials, colors, or plants that may be used.
e. An association may borrow money subject to any limits stated in the governing documents but, unless the declaration or a court-approved order grants specific authority, the association may not assign future revenues or create a security interest in common property without approval by 51 percent of all homeowners (or more if required by governing documents) in a vote after at least 30 days notice.
Section 183C: 5. The Right to Stability in Rules and Charges
1. Seniority of Documents. In resolving any conflict among governing documents, the senior document controls. Unless the documents otherwise provide, seniority is (a) declaration over (b) articles of incorporation or association over (c) bylaws over (d) operating rules.
2. Homeowner Powers to Amend Governing Documents. For any governing document, the
following apply:
a. Except as limited by the governing document, a senior document, or statute, homeowners have the power to amend subject to the following requirements:
i. Unless the governing document, a senior document, or statute specifies a different number, an amendment adopted by homeowners holding a majority of the voting power is effective to
a) extend the term of the governing document,
b) make administrative changes reasonably necessary for management of the common property or administration of the servitude regime, or
c) prohibit or materially restrict uses of individually owned homes that threaten to harm or unreasonably interfere with reasonable use and enjoyment of other property in the community, or to amend or repeal such prohibition or restriction adopted by amendment under this paragraph 2a(i)(c).
ii. Unless the governing document, a senior document, or statute specifies a different number, an amendment adopted by homeowners holding two-thirds of the voting power is effective for all other lawful purposes except as stated in paragraph 2b and paragraph 2c.
b. Amendments that do not apply uniformly to similar homes and amendments that would violate association duties to homeowners under the model statute are not effective without approval by homeowners whose interests would be adversely affected, unless the declaration clearly and specifically apprises purchasers that such amendments may be made. This paragraph 2b does not apply to non-uniform modifications made under circumstances that would justify judicial modification.
c. Except as otherwise expressly authorized by the declaration, and except as provided in paragraph 2a, unanimous homeowner approval is required to i. prohibit or materially restrict the use or occupancy of, or behavior within, individually owned lots or units, or ii. change the basis for allocating voting rights or assessments among homeowners.
d. At least 60 days before voting on any proposed amendment to a governing document, the association shall provide notice to all homeowners, including the specific text proposed and a description of the amendment’s purpose and anticipated effects. No amendment takes effect before the association provides notice of adoption to all homeowners, certified by an association officer, and to the extent required by law, the association records the amendment.
e. Directors have no power to amend a governing document except where expressly authorized by statute or, where not otherwise contrary to statute, expressly authorized by the governing document or a senior document; provided that, if governing documents authorize directors to impose any duty or charge on homeowners, this shall be done by operating rule (as provided in paragraph 3) unless the governing document requires otherwise; and provided further that homeowners only, not directors, shall have power to amend
i. any provision that affects number, qualifications, powers and duties, terms of office, or manner and time of election or removal of directors; or
ii. any provision with respect to amendment of any governing document.
3. Limits on Operating Rule Changes by Directors. Directors may adopt, amend, or repeal operating rules only if all of the following requirements are satisfied:
a. All operating rules must be
i. in writing;
ii. within directors’ authority conferred by law or corporate documents;
iii. not inconsistent with law and corporate documents;
iv. adopted, amended, or repealed in good faith and in substantial compliance with this model statute; and
v. reasonable.
b. Paragraphs 3d and 3e apply only to operating rules that relate to one or more of the following subjects:
i. Use of common property
ii. Use of a home, including any aesthetic or architectural standards that govern alteration of a home
iii. Homeowner discipline, including any withdrawal of privileges or charges for violating governing documents and any procedure for withdrawing privileges or imposing charges
iv. Any standard for delinquent assessment installment or other payment plans
v. Any procedure to resolve disputes
vi. Any procedure for reviewing and approving or disapproving a proposed physical change to a home or to the common area
vii. Any procedure for elections
c. For the following actions by directors, ¶¶ 3d and 3e do not apply:
i. A decision regarding maintenance of the common property
ii. A decision on a specific matter that is not intended to apply generally
iii. A decision setting the amount of a regular or special assessment
iv. A rule change required by law, if directors have no discretion as to the
substantive effect of the rule change
v. Issuance of a document that merely repeats existing law or the governing documents
d. Directors shall provide written notice of a proposed rule change to homeowners at least 30 days before making the rule change. The notice shall include the text, and a description of the purpose and effect of the proposed rule change, except as provided by paragraph 3d(iii).
i. A decision on a proposed rule change shall be made at a meeting of the directors, after consideration of any comments made by homeowners.
ii. Not more than 15 days after making the rule change, the directors shall deliver notice of the rule change to every homeowner. If the rule change is an emergency rule change made under paragraph 3d(iii), the notice shall include the text of the rule change, a description of the purpose and effect of the rule change, and the date that the rule change expires.
iii. If directors determine that an immediate rule change is required to address an imminent threat to public health or safety, or an imminent risk of substantial economic loss to the association, directors may make an emergency rule change; and no prior notice is required. An emergency rule change is effective for 120 days, unless the rule change provides for a shorter effective period. A rule change made under this paragraph 3d(iii) may not be readopted under this paragraph.
e. Homeowners holding 5 percent of the voting power may call a special meeting of the homeowners to reverse any rule change.
i. To call such special meeting homeowners must, no more than 30 days after being notified of a rule change, deliver a written request to the association’s president, secretary, or registered agent, after which the directors shall give notice of the meeting to all homeowners. Homeowners are deemed notified of a rule change after receiving notice of the rule change or enforcement of the resulting rule, whichever happens first. Homeowner requests to copy or review association member lists with addresses, e-mail, and phone numbers for the purpose of seeking support to reverse a rule change shall be honored as soon as reasonably possible, in any event within three business days. Homeowners shall be allowed to use common property reasonably in seeking support to reverse a rule change.
ii. At such special meeting with a quorum present, the rule change shall be reversed by majority vote of homeowners represented and voting, unless a corporate document or statute requires otherwise.
iii. Unless otherwise provided by the corporate documents, for this paragraph 3e, one vote may be cast for each home.
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