HB0009

HOUSE BILL 9

50th legislature - STATE OF NEW MEXICO - first session, 2011

INTRODUCED BY

Mimi Stewart

FOR THE COURTS, CORRECTIONS AND JUSTICE COMMITTEE

AN ACT

RELATING TO REAL PROPERTY; ENACTING THE HOMEOWNER ASSOCIATION ACT; PROVIDING FOR THE FORMATION AND MANAGEMENT OF PLANNED COMMUNITIES; REQUIRING NOTICE AND OPEN MEETINGS; PROVIDING FOR DISCLOSURE OF RECORDS; ALLOWING AUDITS; PROVIDING FOR ALTERNATIVE DISPUTE RESOLUTION AND ATTORNEY FEES; REQUIRING DISCLOSURE OF HOMEOWNER ASSOCIATION INFORMATION TO PURCHASERS; PROHIBITING RESTRICTIONS ON THE INSTALLATION OR USE OF WATER CONSERVATION MEASURES; REQUIRING REAL ESTATE BROKERS TO DISCLOSE HOMEOWNER AND CONDOMINIUM INFORMATION TO PROSPECTIVE PURCHASERS; REQUIRING FILING OF NONPROFIT CORPORATION BYLAWS WITH THE PUBLIC REGULATION COMMISSION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 22 of this act may be cited as the "Homeowner Association Act".

SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Homeowner Association Act:

A. "association" means an incorporated association of parcel owners that is organized under Section 4 of the Homeowner Association Act;

B. "board" means the body, regardless of name, designated in the declaration or bylaws to act on behalf of the association;

C. "common areas" means any real estate within a planned community that is owned or leased by the association, other than a parcel and any other interests in real estate for the benefit of the parcel owners that are subject to the declaration;

D. "community documents" means all documents governing the creation and operation of the association, including the declaration, bylaws, articles of incorporation and rules of the association;

E. "declarant" means the person or group of persons designated in a declaration as declarant or, if no declarant is designated, the person or group of persons who signs the original declaration or who succeeds to special rights, preferences or privileges designated in the declaration as belonging to the signator of the declaration;

F. "declaration" means any instrument, however denominated, that establishes a planned community and any amendment to that instrument;

G. "development rights" means any right or combination of rights reserved by a declarant in a declaration to add parcels to a planned community;

H. "parcel" means a physical portion of a planned community designated for separate ownership or occupancy, the boundaries of which are described in the declaration;

I. "parcel owner" or "member" means the owner of a parcel in the planned community;

J. "planned community" means a real estate development that includes real estate owned and operated by an association of owners that is created for the purpose of managing, maintaining or improving the property and in which the owners of separately owned parcels are mandatory members and are required to pay assessments to the association for these purposes; but "planned community" does not include a condominium governed by the Condominium Act; and

K. "residential use" means use for dwelling or recreational purposes, or both.

SECTION 3. [NEW MATERIAL] APPLICABILITY--RESIDENTIAL--NEW PLANNED COMMUNITIES--EXISTING PLANNED COMMUNITIES--ADOPTION OF ACT--SMALL AND LIMITED EXPENSE LIABILITY COMMUNITIES--LOCAL ORDINANCES, REGULATIONS AND BUILDING CODES.--

A. Except as otherwise provided in this section, the Homeowner Association Act applies to all residential use planned communities created in the state after the effective date of that act. Amendments to the Homeowner Association Act apply to all planned communities created after the effective date of that act or made subject to that act by amendment of the declaration of the common interest community under the provisions of Subsection C of this section, regardless of when the amendment to that act becomes effective.

B. Except for a planned community described in Subsection D of this section, and only with respect to events and circumstances occurring after the effective date of the Homeowner Association Act, the following sections of that act apply to a planned community created in the state before the effective date of that act:

(1) Section 3;

(2) Section 7;

(3) Section 11;

(4) Section 12;

(5) Section 14;

(6) Section 17;

(7) Sections 18 through 22; and

(8) definitions to the extent necessary to construe any of the sections that apply under this subsection.

C. The community documents of any planned community created before the effective date of the Homeowner Association Act may be amended to achieve any result permitted by that act, regardless of what applicable law provided before adoption of that act, provided that:

(1) any amendment to the community documents authorized by this subsection shall be adopted in conformity with any procedures and requirements for amending the instruments specified by those instruments or, if there are none, in conformity with the amendment procedures of that act; and

(2) if any amendment to the community documents grants to a person a right, power or privilege permitted by that act, any correlative obligation, liability or restriction in that act also applies to that person.

D. The Homeowner Association Act does not apply to a planned community that contains five or fewer parcels.

E. The provisions of the Homeowner Association Act do not invalidate or modify any provision of any building code, zoning, subdivision or other real estate use law, ordinance, rule or regulation governing the use of real estate. A building code shall not impose any requirement upon any structure in a planned community that it would not impose upon a physically identical development under a different form of ownership.

F. Nothing in this section shall be deemed to invalidate existing provisions of the community documents of an existing planned community.

SECTION 4. [NEW MATERIAL] ESTABLISHMENT OF A PLANNED COMMUNITY--CONTENTS OF DECLARATION.--

A. A planned community may be organized pursuant to the Homeowner Association Act only by recording a declaration executed in the same manner as a deed. The declaration shall be recorded in each county in which any portion of the planned community is located and shall be indexed in the grantee's index in the name of the planned community and the association and in the grantor's index in the name of each person executing the declaration.

B. The declaration shall contain:

(1) the names of the planned community and the association;

(2) the name of every county in which any part of the planned community is situated;

(3) a legally sufficient description of the real estate included in the planned community;

(4) a statement of the maximum number of parcels that the declarant reserves the right to create;

(5) a description of the boundaries of each parcel created by the declaration, including the parcel's identifying number;

(6) a description of any real estate that is or must become common areas;

(7) a description of any development rights reserved by the declarant, and the period of time those rights shall be exercised, together with a legally sufficient description of the total number of parcels in the planned community, present and anticipated, and the type of development allowed on the parcels;

(8) any other conditions or limitations under which the rights described in Paragraph (7) of this subsection may be exercised or will lapse;

(9) a statement of the allocation of the association's financial liabilities, expenses, reserves and voting interests for each parcel in the manner described in Section 9 of the Homeowner Association Act; and

(10) any restrictions on use, occupancy and alienation of the parcels.

C. The declaration may contain any other matters the declarant deems appropriate.

SECTION 5. [NEW MATERIAL] ORGANIZATION OF AN ASSOCIATION.--

A. An association shall be organized as a nonprofit corporation in accordance with the laws of the state of New Mexico. The membership of the association shall consist exclusively of all parcel owners in the planned community.

B. An association shall be organized no later than the date on which the first parcel in the planned community is conveyed to a purchaser, and the first meeting of the association shall be convened when five of the total parcels in the planned community have sold.

C. For associations formed by parcel owners creating a planned community in an existing neighborhood, the association shall be organized after the community documents have been created and the declaration recorded.

SECTION 6. [NEW MATERIAL] QUORUMS.--

A. Unless the bylaws provide otherwise, a quorum is present throughout any meeting of the parcel owners if persons entitled to cast twenty percent of the votes in the association:

(1) are present in person or by proxy at the beginning of the meeting;

(2) have cast absentee ballots pursuant to Section 10 of the Homeowner Association Act; or

(3) are present by any combination of Paragraphs (1) and (2) of this subsection.

B. Unless the bylaws specify a larger percentage, a quorum of the board is present to determine the validity of any action taken at a meeting of the board only if individuals entitled to cast a majority of the votes on the board are present at the time a vote regarding that action is taken. If a quorum is present when the vote is taken, the affirmative vote of a majority of the board members present is the act of the board unless a greater vote is required by the community documents.

SECTION 7. [NEW MATERIAL] BOARD MEMBERS AND OFFICERS--DUTIES--REMOVAL--BUDGET.--

A. Except as provided in the community documents or other provisions of the Homeowner Association Act, the board acts on behalf of the association. In the performance of their duties, officers and members of the board shall exercise, if appointed by the declarant, the degree of care and loyalty required of a trustee of the parcel owners and, if elected by the parcel owners, ordinary and reasonable care.

B. The board shall not act on behalf of the association to amend the declaration, to terminate the planned community, to approve the annual budget or to elect members of the board or determine the qualifications, powers and duties or terms of office of board members, but the board shall fill vacancies in its membership for the unexpired portion of any term.

C. Notwithstanding any provision of the community documents to the contrary, the parcel owners, by a two-thirds' vote of all persons present and entitled to vote at any meeting of the parcel owners at which a quorum is present, may remove any member of the board with or without cause other than a member appointed by the declarant.

D. Within thirty calendar days after adoption of any proposed budget for the association, the board shall provide a summary of the budget to all the parcel owners and shall set a date for a meeting of the parcel owners to consider ratification of the budget not less than fourteen nor more than thirty calendar days after mailing of the summary. Unless at that meeting a majority of all the parcel owners or any larger vote specified in the declaration rejects the budget, the budget shall be ratified, whether or not a quorum is present. In the event the proposed budget is rejected, the periodic budget last ratified by the parcel owners shall be continued until such time as the parcel owners ratify a subsequent budget proposed by the board.

SECTION 8. [NEW MATERIAL] DECLARANT CONTROL OF BOARD.--

A. Subject to the provisions of this section, the declaration may provide for a period of declarant control of the association, during which period a declarant, or persons designated by the declarant, may appoint and remove the officers and members of the board. Regardless of the period provided in the declaration, the period of declarant control shall be terminated no later than the earlier of:

(1) sixty days after conveyance of seventy-five percent of the parcels that may be created to parcel owners other than a declarant;

(2) two years after all declarants have ceased to offer parcels for sale in the ordinary course of business;

(3) two years after any development right to add new parcels was last exercised; or

(4) the day the declarant or the declarant's designee, after giving written notice to parcel owners, records an instrument voluntarily surrendering all rights to control activities of the association.

B. A declarant may voluntarily surrender the right to appoint and remove officers and members of the board before termination of the period of declarant control, but in that event, the declarant may require, for the duration of the period of declarant control, that specified actions of the association or board, as described in a recorded instrument executed by the declarant, be approved by the declarant or the declarant's designee before they become effective.

C. Not later than sixty days after conveyance of twenty-five percent of the parcels that may be created to parcel owners other than a declarant, at least one member and not less than twenty-five percent of the members of the board shall be elected by parcel owners other than the declarant.

D. Not later than sixty days after conveyance of fifty percent of the parcels that may be created to parcel owners other than the declarant, no less than thirty-three percent of the members of the board shall be elected by parcel owners other than the declarant.

E. Not later than the termination of any period of declarant control, the parcel owners shall elect a board of at least three members, at least a majority of whom shall be parcel owners. The board shall elect the officers. The board members and officers shall take office upon election.

SECTION 9. [NEW MATERIAL] ALLOCATION OF ASSOCIATION FINANCIAL LIABILITIES, EXPENSES, RESERVES AND VOTING.--

A. The declaration shall allocate to each parcel in a planned community a fraction or percentage of the association's expenses, financial liabilities and reserves and a portion of the votes in the association for each parcel.

B. The declaration shall state the formulas used to establish the allocations. The allocations shall not discriminate in favor of parcels owned by the declarant or an affiliate of the declarant.

C. If parcels may be added to or withdrawn from the planned community, the declaration shall state the formulas to be used to reallocate the allocations and votes among all parcels included in the planned community after the addition or withdrawal.

D. The declaration may provide:

(1) that different allocations of votes shall be made to the parcels on particular matters specified in the declaration;

(2) for cumulative voting only for the purpose of electing members of the board; and

(3) for class voting on specified issues affecting the class if necessary to protect valid interests of the class.

E. A declarant shall not use cumulative or class voting for the purpose of evading any limitation imposed on declarants by the Homeowner Association Act nor may parcels constitute a class because the parcels are owned by the declarant.

SECTION 10. [NEW MATERIAL] PROXY AND ABSENTEE VOTING--BALLOT COUNTING.--

A. The association shall provide for votes to be cast in person, by absentee ballot and by proxy and may provide for voting by some other form of delivery.

B. Vote by directed or undirected proxy is allowed only for the annual parcel-owner meeting. The proxy vote shall:

(1) be dated and executed by a parcel owner, but if a parcel is owned by more than one person, each owner of the parcel may vote or register protest to the casting of votes by the other owners of the parcel through a duly executed proxy;

(2) allow for revocation if notice of revocation is provided to the person presiding over the annual parcel-owner meeting; and

(3) be valid only for the meeting at which it is cast.

C. If proxy voting is utilized at the annual parcel-owner meeting:

(1) a person shall not cast undirected proxies representing more than fifteen percent of the votes of the association; and

(2) a person shall not pay a company or person to collect proxy votes.

D. If absentee ballots are used, the ballot for any action taken at an annual, regular or special meeting of the members shall:

(1) set forth each proposed action;

(2) provide an opportunity to vote for or against each proposed action;

(3) be valid for only one specified election or meeting of the members and expire automatically after the completion of the election or meeting;

(4) indicate the number of responses needed to meet the quorum requirements;

(5) state the percent of votes necessary to approve each matter, other than for election of directors;

(6) specify the time and date by which the ballot shall be delivered to the board in order to be counted, which shall be at least seven calendar days after the date the ballot is delivered to the member; and

(7) authorize only the parcel owner to vote.

E. Votes cast by proxy and by absentee ballot are valid for the purpose of establishing a quorum.

F. Ballots shall be counted by a neutral third party or by a committee of volunteers. The volunteers shall be parcel owners who are selected or appointed at an open meeting, in a fair manner, by the chair of the board or another person presiding during that portion of the meeting. The volunteers shall not be board members and, in the case of a contested election for a board position, shall not be candidates.

SECTION 11. [NEW MATERIAL] BOARD MEETINGS OPEN TO MEMBERS--EXCEPTIONS.--

A. A parcel owner may attend any meeting of the board except for meetings of the board held in executive session as described in Subsection B of this section.

B. A meeting of the board may be closed for executive session only to address:

(1) pending or contemplated litigation; or

(2) personnel matters.

C. The subject matter discussed in executive session shall be noted in the minutes.

SECTION 12. [NEW MATERIAL] MEMBER MEETINGS--BOARD MEETINGS--LOCATION--NOTICE--AGENDAS--SPECIAL MEETING--EMERGENCY MEETING.--

A. An association shall hold a meeting of parcel owners annually at a time, date and place stated in or fixed in accordance with the bylaws.

B. All meetings of the association and the board shall be held in the state.

C. Not less than ten days nor more than sixty days in advance of any meeting of the association, notice shall be provided to all parcel owners. Notice shall be hand-delivered, sent electronically, if the parcel owner has given the association an electronic address, or sent prepaid by United States mail to the mailing address of each parcel owner or to any other mailing address designated in writing by a parcel owner. The notice shall state the time, date, place and agenda of the meeting.

D. The board shall provide notice of all board meetings to parcel owners. Notice shall be given at least ten days in advance of the meeting by phone, hand-delivery, mail, electronic delivery, posting on the association's web site, newsletter, conspicuous posting or any other reasonable means as determined by the board. Notice to parcel owners of a meeting of the board is not required if emergency circumstances require action by the board before notice can be given. The notice shall state the time, date, place and agenda of the meeting.

E. The agenda for all board meetings, unless an emergency meeting called pursuant to Subsection H of this section, and any special meetings of the parcel owners shall not change once notice of the meeting has been provided to parcel owners. The agenda for the annual meeting of the parcel owners may be modified by request of any parcel owner present at the meeting.

F. Unless the community documents otherwise provide, the board may meet by telephonic, video, webcast or other conferencing process if:

(1) the meeting notice states the conferencing process to be used and provides information explaining how parcel owners may participate in the conference directly or by meeting at a central location or conference connection; and

(2) the process provides all parcel owners the opportunity to hear the discussion so as to comply with Section 11 of the Homeowner Association Act.

G. Special meetings of the board or association may be called by the president, by a majority of the board or by members having at least twenty percent, or a lower percentage specified by the articles or bylaws, of votes in the association. The notice of a special meeting shall meet all requirements set forth in Subsection C of this section and shall also state the purpose for which the meeting is called, including the general nature of any proposed amendment to the community documents, changes in assessments that require approval of the members and any proposal to remove a director or an officer.

H. An emergency meeting of the board may be called by the president of the association's board, or by any two members of the board other than the president, if there are circumstances that could not have been reasonably foreseen that require immediate attention and possible action by the board and that of necessity make it impracticable to provide notice as required by this section.

I. The board may take action by unanimous consent as documented in a record authenticated by all the board members without meeting. The board secretary shall promptly give notice to all parcel owners of any action taken by unanimous consent. After termination of the period of declarant control, the board may act by unanimous consent only to undertake ministerial actions or to implement actions previously taken at a meeting of the board.

SECTION 13. [NEW MATERIAL] REMOVAL OF PROPERTY MANAGEMENT COMPANY OR CONTRACTORS.--Notwithstanding any provision of the community documents to the contrary, the parcel owners, by a two-thirds' vote of all persons present and entitled to vote at any meeting of the parcel owners at which a quorum is present, may require the board to terminate immediately any contract with a property management company or other contractor doing business with the association.

SECTION 14. [NEW MATERIAL] RECORD DISCLOSURE TO MEMBERS--UPDATED INFORMATION.--

A. All financial and other records of the association shall be made available for examination by a parcel owner at any reasonable time.

B. The association shall not charge a fee for making financial and other records available for review. The association may charge a reasonable fee for copies.

C. As used in this section, "financial and other records" includes:

(1) the declaration;

(2) the name, address and telephone number of the association's designated agent;

(3) the association bylaws;

(4) the names and addresses of all association members;

(5) minutes of all meetings of the association's parcel owners and board, other than executive sessions, records of all actions taken by the parcel owners or board without a meeting and records of all actions taken by a committee in place of the board or on behalf of the association;

(6) the operating budget for the current fiscal year;

(7) current assessments, including both regular and special assessments;

(8) financial statements and accounts, including amounts held in reserve;

(9) the most recent financial audit or review, if any;

(10) all contracts entered into by the association or the board on behalf of the association;

(11) insurance policies, including company names, policy limits, deductibles, additional named insured and expiration dates for property, general liability and association director and officer professional liability, and fidelity policies; and

(12) other financial information of the association.

SECTION 15. [NEW MATERIAL] FINANCIAL AUDIT.--The association, upon a majority vote of all of the parcel owners, may request that the board provide for a financial audit or review of the association's records. The audit or review shall be made available to parcel owners within thirty calendar days of its completion.

SECTION 16. [NEW MATERIAL] ALTERNATIVE DISPUTE RESOLUTION.--

A. Prior to the filing of a court action, a dispute between the association and a parcel owner shall be submitted for alternative dispute resolution. The cost of the alternative dispute resolution services shall be divided equally among the disputing parties, unless otherwise determined.

B. The parties shall agree upon a neutral party to preside over the alternative dispute resolution process. The form of alternative dispute resolution chosen pursuant to this section may be binding or nonbinding, with the voluntary consent of the parties.

C. If an agreement is reached, it shall be presented to a court of competent jurisdiction as a stipulation. The court may enter the stipulation as an order of the court. Thereafter, if either party violates the stipulation, the other party may apply immediately to the court for relief.

D. Unless otherwise agreed, either party to the alternative dispute resolution process may terminate the process at any time without prejudice.

E. As used in this section, "alternative dispute resolution" means mediation, arbitration, conciliation or other nonjudicial procedure that involves a neutral party in the decision-making process.

SECTION 17. [NEW MATERIAL] ATTORNEY FEES AND COSTS.--In a civil action between a parcel owner and the parcel owner's association, the prevailing party may, in the discretion of the court, be awarded reasonable attorney fees and costs.

SECTION 18. [NEW MATERIAL] SALE OF UNITS--REQUIREMENT FOR DISCLOSURE STATEMENT OR RESALE CERTIFICATE--EXCEPTIONS.--

A. A disclosure statement or resale certificate as provided in Sections 19 through 22 of the Homeowner Association Act is required for all parcels restricted to residential use that are offered for sale.

B. Neither a disclosure statement nor a resale certificate need be prepared or delivered in the case of:

(1) a gratuitous disposition of a parcel;

(2) a disposition pursuant to court order;

(3) a disposition by a government or governmental agency;

(4) a disposition by foreclosure or deed in lieu of foreclosure;

(5) a disposition to a person in the business of selling real estate who intends to offer those parcels to purchasers;

(6) a disposition that may be canceled at any time and for any reason by the purchaser without penalty; or

(7) a disposition of a parcel restricted to nonresidential use.

SECTION 19. [NEW MATERIAL] DISCLOSURE STATEMENT--PREPARATION--LIABILITY.--

A. Except as provided in Subsection E of this section, a declarant offering any interest in a parcel to the public shall prepare a disclosure statement conforming to the requirements of Section 20 of the Homeowner Association Act.

B. A declarant may transfer responsibility for preparation of all or part of the disclosure statement to a successor declarant or to a person in the business of selling real estate who intends to offer parcels in the planned community. In the event of any such transfer, the transferor shall provide the transferee with any information necessary to enable the transferee to fulfill the requirements of Subsection A of this section.

C. Any declarant or other person in the business of selling real estate who offers a parcel to a purchaser shall deliver a disclosure statement in the manner prescribed in Subsection A of Section 21 of the Homeowner Association Act. The declarant or any other person specified in Subsection B of this section who prepared all or part of the disclosure statement is liable for any false or misleading statement or for any omission of material fact with respect to that portion of the disclosure statement that the person prepared.

D. If a parcel is part of a planned community and is part of any other real estate regime requiring the delivery of a disclosure statement, a single disclosure statement conforming to the requirements of Section 20 of the Homeowner Association Act and to any other requirements imposed by law may be prepared and delivered in lieu of providing two or more disclosure statements.

E. This section does not apply to a declarant who is the owner of no more than one parcel in a planned community and who is offering that parcel for sale. Section 22 of the Homeowner Association Act shall govern such a sale.

SECTION 20. [NEW MATERIAL] DISCLOSURE STATEMENT--REQUIRED PROVISIONS.--

A. A disclosure statement shall fully and accurately disclose:

(1) the name and principal address of the declarant and of the planned community;

(2) a general description of the planned community, including, to the extent possible, the types, number and declarant's schedule of commencement and completion of construction of buildings and amenities that the declarant anticipates including in the planned community;

(3) the number of parcels in the planned community;

(4) copies of the declaration, other than the plats and plans, and any other recorded covenants, conditions, restrictions and reservations affecting the planned community; the bylaws and rules or regulations of the association; copies of contracts and leases to be signed by purchasers at closing; and a brief narrative description of contracts or leases that will or may be subject to cancellation by the association;

(5) a current balance sheet and a projected budget for the association for one year after the date of the first conveyance to a purchaser and, thereafter, the current budget of the association, a statement of who prepared the budget and a statement of the budget's assumptions concerning occupancy and inflation factors. The budget shall include without limitation:

(a) a statement of the amount or a statement that there is no amount included in the budget as a reserve for repairs and replacement;

(b) a statement of any other reserves; (c) the projected common expense assessment by category of expenditures for the association; and (d) the projected monthly common expense assessment for each parcel;

(6) services not reflected in the budget that the declarant provides, or expenses that the declarant pays, and that the declarant expects may become at a subsequent time a common expense of the association and the projected common expense assessment attributable to each of those services or expenses for the association and for each parcel;

(7) an initial or special fee due from the purchaser at closing, together with a description of the purpose and method of calculating the fee;

(8) a description of liens, defects or encumbrances on or affecting the title to the planned community;

(9) a description of financing offered or arranged by the declarant;

(10) the terms and significant limitations of warranties provided by the declarant and limitations on the enforcement of them or on damages;

(11) a statement that:

(a) within ten days after receipt of a disclosure statement, a purchaser, before conveyance, may cancel a contract for purchase of a parcel from a declarant;

(b) if a declarant fails to provide a disclosure statement to a purchaser before conveying a parcel, that purchaser may rescind the purchase within six months from the date of conveyance;

(d) if a purchaser receives the disclosure statement more than twenty days before signing a contract to purchase a parcel, the purchaser cannot cancel the contract;

(12) a statement of unsatisfied judgments or pending suits against the association and the status of pending suits material to the planned community of which a declarant has actual knowledge;

(13) a statement that a deposit made in connection with the purchase of a parcel shall be held in an escrow account until closing and shall be returned to the purchaser if the purchaser cancels the contract pursuant to Section 21 of the Homeowner Association Act, together with the name and address of the escrow agent;

(14) restraints on alienation of a portion of the planned community;

(15) a description of the insurance coverage provided for the benefit of parcel owners;

(16) current or expected fees or charges to be paid by parcel owners for the use of the common areas and other facilities related to the planned community; and

(17) the extent to which financial arrangements have been provided for completion of all improvements in the planned community that have not yet been completed.

B. A declarant or the declarant's designee shall promptly amend the disclosure statement to report a material change in the information required by this section.

SECTION 21. [NEW MATERIAL] DELIVERY OF DISCLOSURE STATEMENT--PURCHASER'S RIGHT TO CANCEL.--

A. A person required to deliver a disclosure statement pursuant to Section 19 of the Homeowner Association Act shall provide a purchaser of a parcel with a copy of the disclosure statement before conveyance of the parcel and no later than the date of any contract for sale. Unless a purchaser is given a disclosure statement that complies with the Homeowner Association Act more than ten days before execution of a contract for the purchase of a parcel, the purchaser, before conveyance, may cancel the contract within ten days after first receiving the disclosure statement.

B. If a purchaser elects to cancel a contract pursuant to Subsection A of this section, the purchaser may do so by hand-delivering a notice of cancellation to the offerer or by mailing the notice by prepaid United States mail to the offerer or to the offerer's agent. Cancellation is without penalty, and all payments made by the purchaser before cancellation shall be refunded promptly.

C. If a person required to deliver a disclosure statement pursuant to Section 19 of the Homeowner Association Act fails to provide a purchaser to whom a parcel is conveyed with that disclosure statement, the purchaser is entitled to rescind the purchase within six months from the date of conveyance upon delivery to the seller of a deed subject to no encumbrance attaching to the property caused by the purchaser.

SECTION 22. [NEW MATERIAL] RESALE OF PARCELS--RESALE CERTIFICATE REQUIRED.--

A. Unless exempt under Subsection B of Section 18 of the Homeowner Association Act or in the case of a sale where delivery of a disclosure statement is required, prior to conveyance, a parcel owner shall furnish to a purchaser a copy of the declaration, other than the plats and plans; the bylaws and the rules or regulations of the association; and a resale certificate from the association containing:

(1) a statement disclosing the existence and terms of any right of first refusal or other restraint on the free alienability of the parcel;

(2) a statement setting forth the amount of the monthly common expense assessment and any unpaid common expense or special assessment currently due and payable from the selling parcel owner;

(3) a statement of any other fees payable by parcel owners;

(4) a statement of any capital expenditures anticipated by the association for the current fiscal year and the two next succeeding fiscal years;

(5) a statement of the amount of any reserves for capital expenditures and of any portions of those reserves designated by the association for any specified projects;

(6) the most recent regularly prepared balance sheet and income and expense statement, if any, of the association;

(7) the current operating budget of the association;

(8) a statement of any unsatisfied judgments or pending suits against the association and the status of any pending suits material to the planned community of which an association has actual knowledge;

(9) a statement describing any insurance coverage provided for the benefit of parcel owners; and

(10) a statement of the remaining term of any leasehold estate affecting the planned community and the provisions governing any extension or renewal thereof.

B. The association, within ten days after receipt of a request by a parcel owner, shall furnish a certificate containing the information necessary to enable the parcel owner to comply with this section. A parcel owner providing a certificate pursuant to Subsection A of this section shall not be liable to the purchaser for any erroneous information provided by the association and included in the certificate.

C. A purchaser shall not be liable for any unpaid assessment or fee greater than the amount set forth in the certificate prepared by the association. A parcel owner shall not be liable to a purchaser for the failure or delay of the association to provide the certificate in a timely manner, but the purchase contract is voidable by the purchaser until the certificate has been provided and for ten days thereafter or until conveyance, whichever occurs first.

SECTION 23. Section 3-18-32 NMSA 1978 (being Laws 2007, Chapter 232, Section 1) is amended to read:

"3-18-32. LIMITATION OF [COUNTY AND] MUNICIPAL RESTRICTIONS ON SOLAR COLLECTORS AND WATER CONSERVATION MEASURES.--

A. A [county or] municipality shall not restrict the installation of a solar collector as defined pursuant to the Solar Rights Act, except that placement of solar collectors in historic districts may be regulated or restricted by a [county or] municipality.

B. A [covenant, restriction or condition contained in a deed, contract, security agreement or other instrument, effective after July 1, 1978, affecting the transfer, sale or use of, or an interest in, real property that effectively prohibits the installation or use of a solar collector is void and unenforceable] municipality shall not restrict the installation of water conservation measures, including the use of rain barrels, rainwater harvesting systems, efficient irrigation systems or low-water-use plants and landscape design, except that water conservation measures in historic districts may be regulated or restricted by a municipality. A municipality may regulate any water conservation measure deemed to be a threat to public health and safety."

SECTION 24. A new section of Chapter 4 NMSA 1978 is enacted to read:

"[NEW MATERIAL] LIMITATION OF COUNTY RESTRICTIONS ON SOLAR COLLECTORS AND WATER CONSERVATION MEASURES.--

A. A county shall not restrict the installation of a solar collector as defined pursuant to the Solar Rights Act, except that placement of solar collectors in historic districts may be regulated or restricted by a county.

B. A county shall not restrict the installation of water conservation measures, including the use of rain barrels, rainwater harvesting systems, efficient irrigation systems or low-water-use plants and landscape design, except that water conservation measures in historic districts may be regulated or restricted by a county. A county may regulate any water conservation measure deemed to be a threat to public health and safety."

SECTION 25. A new section of Chapter 47 NMSA 1978 is enacted to read:

"[NEW MATERIAL] RESTRICTIONS ON SOLAR COLLECTORS AND WATER CONSERVATION MEASURES--FINDINGS AND PUBLIC POLICY.--

A. The legislature finds that:

(1) New Mexico often faces water shortages due to the state's arid climate and water conservation measures can be used to save water, especially during times of drought;

(2) the state's climate makes it an ideal location for and the legislature has encouraged the use of solar technology to produce energy;

(3) New Mexico residents benefit from and have used solar technology and water conservation measures on their private property; and

(4) it is in the state's best interest that its residents not be limited in how solar technology and water conservation measures are used on private property.

B. A covenant, restriction or condition contained in a deed, contract, security agreement or other instrument, effective after July 1, 1978, affecting the transfer, sale, use of or interest in real property is void and unenforceable if it prohibits the installation, restricts the use, impairs the functioning or adversely affects the cost or efficiency of a solar collector as defined in the Solar Rights Act.

C. A covenant, restriction or condition contained in a deed, contract, security agreement or other instrument, affecting the transfer, sale, use of or interest in real property is void and unenforceable if it prohibits the installation, restricts the use, impairs the functioning or adversely affects the cost or efficiency of water conservation measures, including the use of rain barrels, rainwater harvesting systems, efficient irrigation systems, low-water-use plants and turf or water conserving landscape design."

SECTION 26. A new section of the Real Estate Disclosure Act is enacted to read:

"[NEW MATERIAL] DISCLOSURE OF INFORMATION RELATED TO HOMEOWNER ASSOCIATIONS AND CONDOMINIUM ASSOCIATIONS.--

A. For all real estate transactions involving real property in a condominium, as defined in the Condominium Act, or a planned community, as defined in the Homeowner Association Act, prior to conveyance, the property seller or the seller's broker shall provide a copy of the association's declaration, other than the plats and plans; the association's bylaws; and a disclosure statement or resale certificate, as applicable, to the prospective buyer or the buyer's broker.

B. A buyer's broker shall provide to the prospective buyer the association's declaration, other than the plats and plans, the association's bylaws and a resale certificate or disclosure statement, as applicable, immediately upon receiving them from the property seller or the seller's broker. The prospective buyer shall acknowledge in writing the receipt of the material.

C. The New Mexico real estate commission shall biannually inform all New Mexico real estate licensees of the requirements for disclosure set forth in this section.

D. As used in this section:

(1) "association" means "association" as defined in the Condominium Act or the Homeowner Association Act;

(2) "declaration" means "declaration" as defined in the Condominium Act or Homeowner Association Act;

(3) "disclosure statement" means the disclosure statement required by Section 19 of the Homeowner Association Act or Section 47-7D-3 NMSA 1978; and

(4) "resale certificate" means the resale certificate required by Section 22 of the Homeowner Association Act or Section 47-7D-9 NMSA 1978."

SECTION 27. Section 53-8-12 NMSA 1978 (being Laws 1975, Chapter 217, Section 12, as amended) is amended to read:

"53-8-12. BYLAWS.--

A. The initial bylaws of a corporation shall be adopted by its board of directors. The power to alter, amend or repeal the bylaws or adopt new bylaws shall be vested in the board of directors unless otherwise provided in the articles of incorporation or the bylaws. The bylaws may contain any provisions for the regulation and management of the affairs of a corporation not inconsistent with law or the articles of incorporation.

B. The initial bylaws and any subsequent bylaws, whether by amendment, repeal or new adoption, shall be executed by two authorized officers of the corporation and filed with the commission. Such bylaws shall be void until filed with the commission. The bylaws in effect for the corporation shall be maintained at the corporation's principal office in New Mexico and shall be subject to inspection and copying by the public. [If the most recently adopted bylaws are so maintained, they shall not be void, notwithstanding any requirements of prior law.] The corporation may charge a reasonable fee for copying its bylaws, not to exceed one dollar ($1.00) per page."

SECTION 28. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.

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