From political free speech to medical marijuana, state lawmakers are weighing in on issues that are affecting – or soon could affect – how HOAs operate. Here are few worth watching.
HOAs have governing documents that set policies and procedures for everything from hiring service providers to setting fees and disseminating information to members. Some rules are established to make things more efficient and uniform and all must comply with local, state and federal laws.
VendorSmart℠ recently reviewed changes in state laws that could affect HOAs and came up with six trends HOAs may want to keep an eye on. Some rules may not apply to your home state, but often when one state makes a rule, others soon follow.
1. An HOA’s ability to restrict certain behaviors.
HOAs have a reputation for strict policies regarding what association members can and cannot do on their property. Considering the heated state of politics in this country, it is no surprise that some HOAs have tried to ban residents from displaying flags and political signs in their yards. Many states are now discussing whether new legislation should be put in place to ensure such bylaws don’t violate the right to free speech.
2. Handling disputes and complaints between members.
A new trend we’re seeing mandates that HOAs and condos have a standard dispute and complaint resolution policy.
The Illinois Condominium and Common Interest Community Ombudsperson Act became law in 2017. The law requires associations to adopt a written policy for resolving owners’ complaints and to make that policy available to all owners upon their request. Every policy must explain how the complaint process works, include a sample complaint form, stipulate a timeline for resolving disputes and require written notice of a final decision.
3. Legal marijuana use.
As more states pass laws allowing for the legal sale of marijuana (or cannabis products) for recreational and/or medical purposes, HOAs are being forced to adapt their policies. For example, in March, Florida’s governor signed a new medical marijuana law. HOAs are grappling with what this means for residents of their communities.
Community associations must, “Establish a policy regulating the use of medical marijuana, including but not limited to, the ability of an owner to smoke medical marijuana on limited common element property or common element property…Presumably, a unit owner now has a legal right to [smoke marijuana in their unit]; however, this right may be limited by other restrictions in the governing documents,” according to the Florida Association.
HOAs in other states where marijuana is now legal will need to find ways to comply as well.
4. Fire safety regulations.
The Florida legislature recently passed a law that requires condominiums to fix problems with their engineered life safety systems (ELSS), which can include fire alarm and sprinkler systems. The new law mandates that every building that fits a certain criteria must resolve life-safety issues by the end of 2019, according to an HOA Leader update. Even older buildings must be retrofitted.
5. Amendments to governing documents.
The Florida Homeowners’ Association Act requires amendments to governing documents made on or after July 1, 2018 be recorded in the public records. The statute was amended a couple of years ago to define “governing documents” to include rules and regulations,” according to Florida Condo & HOA Law.
6. End of year financial statements.
Under changes to the Florida Condominium Act that took effect effective July 1, 2017, associations operating fewer than 50 units or parcels are no longer exempted from having to prepare an annual financial report if their revenues exceed $150,000. Reporting requirements now hinge exclusively on an association’s annual revenues, according to the following schedule.
- Less than $150,000 must prepare a report of cash receipts & expenditures
- $150,000 – $300,000 must prepare compiled financial statements
- $300,000 – $500,000 must prepare reviewed financial statements
- $500,000+ must prepare audited financial statements
Every state has different thresholds for reporting so check with your local and state governments for specific regulations.
Keeping abreast of new compliance trends and regulations from state and local governments is a key component of managing an HOA. Be sure you are up to date on the law so you do not face fines or legal action.VendorSmart℠ connects managers and HOAs with service providers across a wide variety of industries. Our software solutions help you manage bids, verify insurance and compliance documentation, and even handle invoicing and payments. If you need help vetting candidates, contact us today to get started.