THIS YEAR’S LEGISLATIVE AGENDAS CONTAIN SOME NEW MEASURES, SOME OLD ONES AND SOME DISAPPOINTMENTS
Legislative agendas, like a bride’s wedding wardrobe, typically contain “something old, something new, something borrowed and something blue,” the latter (blue) describing the faces of Legislative Action Committee members, holding their breath as they assess the impact pending legislation will have on condominium associations.
The approximately 30 bills affecting Massachusetts condominiums include, in addition to many familiar ones, a new measure – the Condominium Owners’ Rights Act – that would add a number of new provisions to the state condominium statute and make significant changes in it, MEEB partner Matthew Gaines, who chairs CAI-New England’s Massachusetts LAC, reports.
Although the LAC doesn’t flatly oppose the bill, he says, it finds many of its provisions problematic.
These Include:
Language requiring property managers to respond to a unit owner’s request for records within five business days and imposing stiff daily fines if they fail to comply. “The concept isn’t unreasonable,” Gaines says. But while some records can be produced quickly, others require more time, so “a hard and fast deadline isn’t feasible.”
Language expanding the information owners are entitled to review to include architectural and engineering reports, legal memoranda and legal opinion letters. Specialized reports are often prepared in anticipation of litigation and contain information that, if made public, could weaken the association’s case, Gaines says. Legal memos and opinion letters (which are protected by attorney-client privilege), should remain confidential for the same reason, Gaines says, because they discuss strategies and concepts that should not be disclosed to opposing parties in pending or anticipated litigation.
A provision requiring that condominium documents include a dispute resolution process for managing disputes between owners and boards. It’s not clear whether this would apply only prospectively, to newly created condominiums, or to existing condominiums as well. If the latter, Gaines says, associations would have to amend their governing documents. “What happens if owners refuse to approve the amendment?”
A provision requiring associations to create a preventive maintenance plan, updated at least every two years. That’s a good idea, Gaines says. But language requiring associations with 50 units or more to commission a reserve study at least once every 10 years, while reasonable for larger communities, would be burdensome for smaller ones, many of which “simply won’t do it,” Gaines notes. This provision also specifies that the studies must be conducted by “a registered architect or engineer,” whicih would exclude the many professionals who specialize in reserve studies for condos, but aren’t engineers or architects.
A provision requiring the boards of larger associations (with 50 units or more) to meet at least monthly and boards at smaller associations to meet at least quarterly. “Boards meet when they need to meet,” Gaines says. “There’s no need for a statutory requirement” mandating the meeting frequency.
A provision authorizing remote meetings and electronic voting for board meetings and meetings of owners. “We like this part of the bill,” Gaines says noting that the LAC this year has refiled a measure it has filed in previous sessions creating remote meeting and voting authority for community associations.
Although the LAC doesn’t like some provisions or portions of them, Gaines says, “The committee isn’t taking a sledgehammer and opposing the entire bill.
We’re hoping to persuade lawmakers to make some changes that will make the bill more workable for condos and less burdensome for them.”
The top priority for the New Hampshire LAC in this session, as it has been for several years, is legislation authorizing a community association to foreclose on delinquent owners to enforce its statutory superlien. The outcome this year has been not only disappointing (as in prior years) but also “disconcerting,” according to MEEB partner Gary Daddario, who chairs CAI-NE’s New Hampshire LAC.
The new and “disconcerting” twist this year developed after lawmakers indicated that the measure would not get anywhere as long as New Hampshire banks – the bill’s sole opponents this year – continued to oppose it.
Determined to create language the bankers would accept, LAC members redrafted the bill to address their concerns.
Key changes:
Required associations to give lenders notice of owner delinquencies early in the process, long before foreclosure was ‘on the table.’
Made lenders “parties of interest” in foreclosure proceedings, ensuring that they would receive service of all pleadings and motions filed throughout the foreclosure process as the case moved through the court,
Added language making it clear that small delinquencies would not be subject to the superlien foreclosure. The new language specified that foreclosure could be initiated only if:
Condo fees had not been paid for at least a year;
The association had obtained a court judgment against the owner; and
The unit had been “abandoned” – defined as vacant and deteriorating or, if occupied – the owner had ignored all notices and attempts at communication efforts for several months.
We went back to the drawing board and changed language or inserted new language that didn’t hurt our position, but that, we thought, addressed all of the bankers’ legitimate concerns constructively and head-on.”
Their response: “They thanked us for our efforts, but they said they objected fundamentally to the concept that associations should be able to foreclose.”
“We were stunned,” Daddario says. “We thought having the word ‘foreclosure’ in the title of the bill made its intention clear.
It’s hard to understand how they could have thought the bill talked about anything else. It is also hard to understand how a professional trade association could take the position that ‘we oppose your bill just…because.” With the bankers still blocking the bill, it remains stuck in committee, technically alive, but unlikely to see any further action this year.
We haven’t given up,” Daddario emphasizes.
“This legislation is essential for condominiums and the LAC is going to keep working on it until we get it passed. But we’re going to have to find a different approach – possibly using rights granted under an existing law or under an association’s governing documents – something bankers will have no right to oppose.”
CAI-NE’s Rhode Island LAC has submitted two bills this year and neither has encountered any opposition, the LAC’s co-chair, MEEB’s Janet Aronson, reports. One specifies that where a mortgagee’s consent is required to approve a change in a community association’s governing documents, that consent will be deemed to have been given if the mortgagee fails to respond within 60 days of receiving notice of the proposed change.
The second measure, also expected to win approval, would enable associations to amend their documents to allow them to conduct annual or special meeting of unit owners remotely and to allow owners to vote electronically.
The other major item on the LAC’s agenda revisits an issue lawmakers addressed last year, when they approved a measure closing a loophole that enabled some insurers to deny coverage for a condo owner’s share of the association’s master policy deductible.
That measure was passed as an amendment to the statute covering Rhode Island condominiums created after July of 1982. The LAC wants lawmakers to add the insurance measure to the statute covering older condominiums, created before July of 1982, Aronson explains. The measure has won House approval and is now moving through the Senate, which is expected to approve it, as well.