New Mexico HOA Laws

The New Mexico Legislative session officially ended on March 16 and any legislation not signed or vetoed by the governor by April 5^th was pocket vetoed.  In regards to Homeowners Associations, SB 497 also known as the Homeowner Association Act was approved and will go into effect on July 1, 2013.

The  key provisions of the bill are as follows:

Section 4: Recording or Filing of Homeowner Association Notice and Declaration

Any association formed/established AFTER July 1, 2013 must record notice with the county clerk within 30 days.  EXISTING associations need to record with the county clerk within the next year, before June 30, 2014.  Including in the filing is the disclosure of the management company charged with preparation of disclosure documents and subdivision place and declarations.  By failing to record a notice the associations authority to charge an assessment, fine or enforce a lien for nonpayment shall be suspended until notice is recorded.

Section 5: Record Disclosure to Members

Requires disclosure to all members and be available for lot owners within 10 business days of the request.  Not fee shall be charged for making the records available for review but a  reasonable fee may be charged for copies.  A list of the 11 items for discloser can be found in this section.

Section 6: Duties of a Homeowner Association

Allows association to exercise powers as conferred in the documents, including lien a lot for assessments or fines.  By recording the declaration this constitutes notice for the lien.  Upon 10 business days of receipt of written request by lot owner, a statement of unpaid assessments shall be furnished and considered binding.

Section 7: Duties of Board Members and Officers / Budget

Board members shall perform their duties with fiduciary to the lot owners.  A budget shall be adopted annually and within 30 calendar days after adoption a summary shall be provided to all owners.

Section 8: Declarant Controlled

Regardless of what is noted in the declaration, the declarant shall terminate control no later the earlier of:

60 days after 75% of the lots are owned by someone other than the declarant.
2 years after they have ceased to offer lots for sale. 
2 years after development right to add new lots was exercised. 
The day the declarant give written notice voluntarily terminating their rights.

*Section 9: Proxy and absentee voting

Proxy and absentee ballot shall be allowed.

*Section 10: Financial audit

A community of 100+ lots has do a financial audit, review or compilation of the association annually within 180 days of the association fiscal year, unless specified in the community documents to be an audit by a CPA.  For those under 100 lots, upon majority vote the board shall provide a financial audit, review or compilation of records.

Section 11: Contract Disclosure Statement

Seller shall provide a disclosure certificate from the association no later than 7 days before closing, buyer can cancel the contract within 7 days after received the certificate.

Section 12: Sale of Lots

Within 10 business days for receipt of written request from owner, association shall furnish a disclosure certificate.  Association may impose reasonable charges for preparation of the certificate. 

Section 13: Purchasers Cancellation of Contract

If buyers cancels, they may do so by hand delivering notice to seller, without penalty and payment shall be refunded within 15 days.

*Section 14: Attorney Fees and Costs

A court may award attorney fees and costs to prevail party in a civil action provided the declaration or bylaws allow.

Section 15: Applicability

*Sections 9, 10 and 14 do not apply to existing associations created before July 1, 2013, provided any amendment to community documents comply with this act.

Sections 4 and 8 does not invalidate existing provisions.

Does not apply to condominiums which are governed by the Condominium Act.

The final version can be read here: http://www.nmlegis.gov/Sessions/13%20Regular/final/SB0497.pdf

On Monday, February 25, 2013, the New Mexico State Senate approved SB 497 by a vote of 39 ayes and 0 nays.  The bill will now progress to the House of Representatives for applicable committee and floor voting if approved by the House committee.  SB 497 is the “Homeowner Association Act” bill.  New Mexico has a Condominium Act that governs Condominium Associations but has yet to enact a similar Act that governs Homeowner Associations (in the 2011 Legislative Session HB 9 was introduced as the Homeowner Association Act but failed to pass the Senate and was not enacted that year).

SB 497 includes a section on definitions which defines terms specific to homeowner associations. 

Section 4 of the bill states that all associations formed after July 1, 2013 shall record a notice stating its existence in the applicable county clerk’s office.  Those associations formed prior to July 1, 2013 would have to record a notice of their existence before June 30, 2014 with the applicable county clerk’s office. 

Section 5 of the bill states that members of the association would be entitled to examine certain financial and other records of the association and that the association can charge a reasonable fee for making any copies to accommodate the request for the records.   

Section 6 of the bill contains language that establishes a lien on past due assessments and on past due fines from the time the assessments or fines become due. 

Section 7 of the bill states that board members elected by the lot owners shall exercise ordinary and reasonable care in the execution of their duties.  Section 7 further states that the Board shall adopt a budget annually and shall provide a summary budget within 30 calendar days after the budget is adopted to the owners. 

Section 8 of the bill focuses on the period of Declarant control and states specific time frames of when the period of Declarant control would end regardless of the timeframe mentioned in the CC&Rs.   This section also includes language that would require that homeowners be added to the Board 60 days after 25% and 50% of the lots have been conveyed to homeowners and that after the end of the period of Declarant control that the homeowners would elect a Board of at least 3 members.  

Section 9 of the bill addresses voting procedures and that votes may be cast in person, by absentee ballot or by proxy and that proxies and ballots may be used for establishing quorum for meetings of the members.   

Section 10 states that an annual audit, review or compilation be completed for HOAs with 100 or more lots and that the audit, review or compilation would need to be completed no later than 180 days after the HOA’s fiscal year end.   This section would further require that the audit, review or compilation be made available to the members or owners within 30 days after its completion.

Sections 11 and 12 of the bill provide for disclosure requirements between a seller and a purchaser of a home within an HOA so that the purchaser is made aware of the rules, restrictions and assessments that may be due.  

Section 13 provides for the possible cancellation of a home purchase contract by a purchaser in conjunction with disclosure requirements in section 11 of the bill. 

Section 14 has language regarding the awarding of attorneys’ fees to the prevailing party in a civil action between an owner and the HOA dependent upon applicable language in the HOA’s CC&Rs or bylaws.  

Section 15 of the bill provides that the Homeowner Association Act would apply to all existing HOAs in the state of New Mexico except that sections 9, 10 and 14 would not apply to HOAs created before July 1, 2013.   Section 15 also states that the bill does not apply to condominiums.   The effective date of the provisions would be July 1, 2013 according to the last Section 16.    

The most current version of SB 497 can be found on the New Mexico State Legislature website at:  http://www.nmlegis.gov/Sessions/13%20Regular/bills/senate/SB0497JUS.pdf

New Mexico Senate Bill: SB 497 (previously SB 30)  passed Senate Judiciary late, late last night (Thursday, February 21^st). The bill is expected to be voted on by the entire Senate today, February 22^nd.   

The link to the current version of the bill is as follows:
http://www.nmlegis.gov/Sessions/13%20Regular/bills/senate/SB0497JUS.pdf

The New Mexico 2013 Legislative Session began on January 15th.   We are currently tracking two HOA related bills, Senate Bill (SB) 30 and House Bill (HB) 210.   The primary purpose of both bills is to establish a Homeowner Association Act that will provide specific statutory governance for Homeowner Associations.  Both bills state that the Homeowner Association Act would apply to planned communities or HOAs established after July 1, 2013.  Please note that the Condominium Act already exists in New Mexico (since 1982) and those statutes can be found at the following link: http://www.nmonesource.com/nmpublic/gateway.dll/?f=templates&fn=default.htm
 
HB 210 was introduced by Representative Mimi Stewart and Senator William Soules.   This bill is the latest version of HB 9 that was introduced during the 2011 Legislative Session but was defeated in the Senate. A link to the introduced version of HB 210 is provided below.
http://www.nmlegis.gov/Sessions/13%20Regular/bills/house/HB0210.pdf

SB 30 was introduced by Senator Timothy Keller and Representative Alonzo Baldonado.  This bill contains some of the same language as HB 210 regarding the creation of an HOA, its duties and powers, establishes Board members and officers duties, removal of Board members, HOA budgets, provisions for member voting, disclosure of information to members of the HOA, financial audits, disclosure of information to home purchasers, and the recordation of a Notice of Homeowner Association with the applicable county clerk’s office.   Unlike HB 210, SB 30 does not address the installation of solar collectors, water conservation measures, open vs. executive session Board meeting requirements or removal of management companies and contractors.  Both current versions of these bills also address the timeframe for declarant control of the Board.  A link to the introduced version of SB 30 is provided below. 
http://www.nmlegis.gov/Sessions/13%20Regular/bills/senate/SB0030.pdf

The New Mexico Legislature website is a great resource that provides information on the Legislators (including contact information), the bills, bill status, Committee agendas and calendars, and agendas and calendars for both the House and Senate.  Be sure to check it out at http://www.nmlegis.gov/.   We will be following the progress of these bills throughout the session and will provide updates on a frequent basis.  Other key session dates are as follows:

• February 14  -  Deadline for introduction of bills
• March 16  -  Session ends (noon)
• April 5  -  Legislation not acted upon by governor is pocket vetoed
• June 14   -  Effective date of legislation not a general appropriation bill or a bill carrying an emergency clause or other specified date