SENATE PUBLIC AFFAIRS COMMITTEE SUBSTITUTE FOR

SENATE BILL 491

52nd legislature - STATE OF NEW MEXICO - first session, 2015

AN ACT

RELATING TO HOMEOWNER ASSOCIATIONS; PROVIDING FOR ALTERNATIVE DISPUTE RESOLUTION; REQUIRING CERTAIN BOARD MEETINGS TO BE OPEN TO LOT OWNERS; BROADENING THE APPLICABILITY OF THE HOMEOWNER ASSOCIATION ACT; ADDING A PENALTY.

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

     SECTION 1. A new section of the Homeowner Association Act is enacted to read:

     "[NEW MATERIAL] ALTERNATIVE DISPUTE RESOLUTION.--

          A. If an association and a lot owner seek to resolve a dispute using alternative dispute resolution, the cost of the alternative dispute resolution services shall be divided equally among the disputing parties, unless otherwise determined, and the disputing 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.

          B. 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.

          C. Unless otherwise agreed, prior to an agreement being presented to a court pursuant this section, either party to the alternative dispute resolution process may terminate the process at any time without prejudice.

          D. 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 2. A new section of the Homeowner Association Act is enacted to read:

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

          A. A lot 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 reason for executive session shall be noted in the minutes."

     SECTION 3. A new section of the Homeowner Association Act is enacted to read:

     "[NEW MATERIAL] PENALTY FOR VIOLATION OF ACT.--An association found guilty of violating a provision of the Homeowner Association Act shall be fined one hundred dollars ($100) per violation per day, not to exceed ten thousand dollars ($10,000) per violation."

     SECTION 4. Section 47-16-1 NMSA 1978 (being Laws 2013, Chapter 122, Section 1) is amended to read:

     "47-16-1. SHORT TITLE.--[This act] Chapter 47, Article 16 NMSA 1978 may be cited as the "Homeowner Association Act"."

     SECTION 5. Section 47-16-2 NMSA 1978 (being Laws 2013, Chapter 122, Section 2) is amended to read:

     "47-16-2. DEFINITIONS.--As used in the Homeowner Association Act: 

          A. "articles of incorporation" means the articles of incorporation, and all amendments thereto, of an association on record in the office of the county clerk in the county or counties in which the association is located;

          B. "association" means a homeowner association;

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

          D. "bylaws" means the code of rules adopted for the regulation or management of the affairs of the association, irrespective of the name by which such rules are designated;

          E. "common area" means property within a development that is designated as a common area in the declaration and is required by the declaration to be maintained or operated by an association for use of the association's members;

          F. "common expenses" means expenditures made by, or the financial liabilities of, the association, together with any allocations to reserves;

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

          H. "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 sign the declaration and their successors or assigns who may submit property to a declaration;

          I. "declaration" means an instrument, however denominated, including amendments or supplements to the instrument, that:

                (1) imposes on the association maintenance or operational responsibilities for common areas, easements or portions of rights of way; and

                (2) creates the authority in the association to impose on lots or on the owners or occupants of such lots, or on any other entity, any mandatory payment of money in connection with the provision of maintenance or services for the benefit of some or all of the lots, the owners or occupants of the lots or the common areas. "Declaration" does not include a like instrument for a condominium or time-share project;

          J. "development" means real property subject to a declaration that contains residential lots and common areas with respect to which any person, by virtue of ownership of a lot, is a member of an association and is obligated to pay assessments provided for in a declaration;

          K. "development right" means a right or combination of rights reserved by the declarant in a declaration;

          L. "disclosure certificate" or "disclosure statement" means:

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

                (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 lot owner;

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

                (4) a statement of any capital expenditures anticipated by the association and approved by the board 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 approved 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 association of which the association has actual knowledge;

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

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

                (11) the contact person and contact information for the association;

          M. "homeowner association" means an incorporated or unincorporated entity upon which maintenance and operational responsibilities are imposed and to which authority is granted in the declaration;

          N. "lot" means a parcel of land designated for separate ownership or occupancy shown on a recorded subdivision plat for a development or the boundaries of which are described in the declaration or in a recorded instrument referred to or expressly contemplated by the declaration, other than a common area;

          O. "lot owner" means a person or group of persons holding title to a lot, including a declarant;

          P. "master planned community" means a large-scale residential development that allows for a phasing of development that will take place over a long period of time, following comprehensive and coordinated planning review by a local government and approval of design and development standards beyond conventionally platted subdivisions; provided that additional design and development standards approved by the local government shall be included in a site plan, area plan or master plan as required by the local government approving the development; [and]

          Q. "protected personal identifier information" means:

                (1) all but the last four digits of a:

                     (a) taxpayer identification number;

                     (b) financial account number; or

                     (c) driver's license number;

                (2) all but the year of a person's date of birth; and

                (3) a social security number; and

          [Q.] R. "proxy" means a person authorized to act for another."

     SECTION 6. Section 47-16-5 NMSA 1978 (being Laws 2013, Chapter 122, Section 5) is amended to read:

     "47-16-5. RECORD DISCLOSURE TO MEMBERS--UPDATED INFORMATION.--

          A. All financial and other records of the association shall be made available for examination by a lot owner within ten business days of the request.

          B. The association shall not charge a fee for making financial and other records available for review and shall provide all records electronically at no cost to a lot owner. The association may charge a reasonable fee for paper copies.

          C. Protected personal identifier information contained in association records may be redacted before inspection or copying of those records. The presence of protected personal identifier information in a record does not exempt the record from inspection.

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

                (1) the declaration of the association;

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

                (3) the bylaws of the association;

                (4) the names of all association members;

                (5) minutes of all meetings of the association's lot owners and board for the previous five years, other than executive sessions, and records of all actions taken by a committee in place of the board or on behalf of the association for the previous five years;

                (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 current contracts entered into by the association or the board on behalf of the association; and

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

     SECTION 7. Section 47-16-15 NMSA 1978 (being Laws 2013, Chapter 122, Section 15) is amended to read:

     "47-16-15. APPLICABILITY.--

          A. [Except as provided in Subsections B and C of this section.] The Homeowner Association Act shall apply to all [homeowner] associations created and existing within this state.

          [B. Sections 9, 10 and 14 of the Homeowner Association Act do not apply to homeowner associations created before July 1, 2013; provided that any amendment to the community documents of an association created before July 1, 2013 shall comply with the Homeowner Association Act.

          C. Except as provided in Sections 4 and 8 of the Homeowner Association Act, that act does not invalidate existing provisions of the articles of incorporation, declaration, bylaws or rules of a homeowner association created before July 1, 2013.

          D.] B. The Homeowner Association Act does not apply to a condominium governed by the Condominium Act."

     SECTION 8. EFFECTIVE DATE.--

          A. The effective date of the provisions of Sections 1 through 6 of this act is July 1, 2015.

          B. The effective date of the provisions of Section 7 of this act is July 1, 2016.

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