From Lynn Boergerhoff, president, HOA Leadership Network |
The Minnesota Legislative Working Group on Common Interest Communities and Homeowner Associations published its priority recommendations to the Legislature on Friday, January 24, 2025. While these recommendations may appear differently in any proposed legislation, they are presented here to better understand the Work Groups member perspectives.
Background
The Minnesota Legislative Working Group on Common Interest Communities and Homeowner Associations was established by the 2024 Legislature to study the prevalence and impact of Common Interest Communities (CICs) and homeowners associations (HOAs) in Minnesota and how existing laws regulating CICs and HOAs help homeowners and tenants access safe and affordable housing”. Specifically, the Working Group examined how many HOAs exist in Minnesota, typical HOA governing documents, typical HOA fees and costs, HOA management, HOA impact on housing costs, accessibility and affordability, and how other states regulate HOAs. The predominant Minnesota laws governing HOAs are the Common Interest Ownership Act 515B and the Minnesota Nonprofit Corporations Act 317A. A report including a review and recommendations was due to the Legislature by February 1, 2025.
The Working Group members represented the MN Attorney General, MN House and the MN Senate, MN Bar Association, Commissioner of Commerce, Commissioner of MN Housing Finance Agency, HOA homeowners, housing advocacy organizations, Community Associations Institute, association managers, city government, and realtors.
Led by Chair Rep. Kristin Bahner and Vice-chair Sen. Eric Lucero, the Working Group met in 14 in-person and online meetings from September 10, 2024 through January 24, 2025 and held three public listening sessions in Maple Grove, Oakdale, and Burnsville. Meetings included comments from HOA homeowners and presentations from subject matter experts. I presented representing the HOA Leadership Network at the November 26, 2024 Working Group meeting. The Working Group also accepted written comments at its meetings and listening sessions.
Homeowner Comments and Content Expert Presentations
Homeowners attending or submitting written comments to the Working Group and at listening sessions spoke about:
- Conflict of interest in association manager relationships with vendors.
- Board fairness and reasonableness when assessing and enforcing fines and fees.
- Board policies and practices when foreclosing on homeowners.
- Difficulty speaking at board meetings.
- Due process in dispute resolution and rules enforcement.
- Difficulty gaining access to HOA records.
Presentations by content experts who spoke at Working Group:
- HOAs are a significant part of metro area housing with an estimated 1.5 million residents statewide. Minnesota HOAs spend $31 million locally on maintenance and other services.
- In some cases HOAs pay a “double taxation” in HOA assessments and public taxes for common municipal responsibilities like road maintenance and snow clearing.
- Fines and fees, unreasonable rules, attorney fees, and dispute resolution were common complaints tby HOA homeowners to legal aid services.
- The Minnesota Common Interest Ownership Act (515B) and HOA governing documents created by the developer grant board leaders authority and fiduciary duty over a wide range of governance and business activities.
- HOA Boards may face challenges if their governing documents are outdated, have undesired restrictions, or lack more modern provisions.
- Board decisions or actions may not follow due process or otherwise violate laws or governing documents.
- Several states have an HOA ombudsman, require dispute resolution by boards, restrict fines, fees, and liens, and require payment plans for delinquent dues.
- Cities do not require creation of HOAs and don’t influence their governing documents. Cities are most interested in and require proper maintenance of HOA common areas.
- HOA boards need to balance homeowner rights and protections with board authority and duties to create and enforce rules and to collect fines and fees.
- HOA boards should consider racial and disability issues, and affordable housing.
- HOA board leaders need education to understand laws and governing documents and to use best practices in governance and business operations.
- In recent years, the MN Attorney General, cities, and policy makers have received an increasing number of complaints from HOA homeowners.
- HOA boards have authority and fiduciary duties and need to balance homeowner rights and protections with HOA governance and business needs.
- In other states: Five states have an HOA ombudsman. Six states require board hearings before fines. Six states require payment plans for delinquent assessments. Nine states require dispute resolution within the HOA.
- Cities and policy makers are receiving an increasing number of complaints from HOA homeowners.
Recommendations
The most significant priority recommendations published by the Working Group on January 24, 2025 are:
- Establish an Ombudsman to receive and manage HOA homeowner complaints.
- Establish a working group to review HOA insurance.
- Require licensing of HOA association managers.
In addition, the Working Group recommends that HOA boards:
- Disclose and avoid conflict of interest with vendors when obtaining bids and awarding contracts.
- Create reasonable rules and set limits on fines, fees, and special assessments.
- Limit conditions that permit foreclosure on homeowners and require more communications when foreclosing.
- Require a homeowner open forum at board meetings and permit questioning of board decisions without incurring attorney fees.
- Encourage cities to participate in the Housing Improvement Area (HIA) loan program.
- Expand the MN Secretary of State business database to include HOA names, management companies, and board members.
UPDATE:
A full list of Working Group Priority Recommendations is now posted on the HOA Leadership Network website Resource Hub.