SB 497 Progressing to the House Committee
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