Late yesterday afternoon, the House Business, Labor, Economic and Workface Development Committee passed an amended version HB 1276. Highlights of the bill as originally introduced include the following:
● HOAs are not permitted to refer delinquent accounts to a collection agency or legal counsel for action unless they have adopted and comply with a Collections Policy with specified minimum provisions.
● As part of the Collections Policy, homeowners must be provided with notice of the delinquency and be informed that if the delinquency is not cured within 30 days their account may be turned over to a collection agency or legal counsel for action.
● Prior to a delinquent account being turned over to a collection agency or a law firm for legal action, a homeowner has a one-time opportunity to enter into a 6 month payment plan (association boards may extend the time of this payment plan if they wish) with their association to cure the entire amount of the delinquency. If the homeowner defaults on the payment plan or fails to pay their current month assessments, the association may immediately proceed with other action to collect on the delinquency.
● HOAs may only proceed with foreclosure if the balance of the assessments and charges secured by its lien equals or exceeds six months of common expense assessments based on a periodic budget adopted by the association.
● The board of an HOA must take a formal vote to authorize proceeding with a judicial foreclosure. This duty to take a formal vote cannot be delegated to an attorney, insurer, manager or any other person.
While no changes were made to these provisions in Committe, the bill was amended to ensure that third parties who purchase association debt or an assignment of the association’s lien must comply a homeowner’s right to a one-time opportunity to enter into a 6 month payment plan. Further, these third parties will not be permitted to proceed with foreclosure unless the balance of assessments and charges secured by the lien they purchased from an association equal or exceed six months of common expense assessments based upon a periodic budget adopted by the association.
HB 1276 will proceed quickly to the floor of the House for consideration where it is expected to receive bipartisan support. As always, keep your eye on this blog for updates on important legislation impacting HOAs!