HOUSE LOCAL GOVERNMENT, ELECTIONS, LAND GRANTS AND CULTURAL AFFAIRS COMMITTEE SUBSTITUTE FOR

HOUSE BILL 374

53rd legislature - STATE OF NEW MEXICO - first session, 2017

AN ACT

RELATING TO PROPERTY; AMENDING THE HOMEOWNER ASSOCIATION ACT; PROVIDING A CAP ON TRANSFER CHARGES.

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

     SECTION 1. 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. "proxy" means a person authorized to act for another; and

          R. "transfer charge" means the total of all fees, charges and assessments, by whatever name, associated with or in any way related to the sale, transfer or other conveyance of a lot within the association, including any charges to a lot owner or the transferee or their representatives, any fee charged for the preparation and production of a disclosure certificate issued pursuant to Section 47-16-12 NMSA 1978 and any fees associated with the preparation and production of any document required by a lender, title company or other entity involved in the sale, transfer or conveyance."

     SECTION 2. Section 47-16-12 NMSA 1978 (being Laws 2013, Chapter 122, Section 12) is amended to read:

     "47-16-12. SALE OF LOTS--DISCLOSURE CERTIFICATE--TRANSFER CHARGE.--

          A. Unless exempt pursuant to Subsection F of this section, prior to closing, a lot owner shall furnish to a purchaser copies of:

                (1) the declaration of the association, other than the plats and plans;

                (2) the bylaws of the association;

                (3) any covenants, conditions and restrictions applicable to the lot;

                (4) the rules of the association; and

                (5) a disclosure certificate from the association.

          B. Within ten business days after receipt of a written request from a lot owner, the association shall furnish a disclosure certificate containing the information necessary to enable the lot owner to comply with the provisions of this section. A lot owner providing a disclosure 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 disclosure certificate.

          C. A purchaser shall not be liable for any unpaid assessment or fee greater than the amount, prorated to the date of closing, set forth in the disclosure certificate prepared by the association.

          D. A lot owner shall not be liable to a purchaser for the failure or delay of the association to provide the disclosure certificate in a timely manner.

          E. The information contained in the disclosure certificate shall be current as of the date on which the disclosure certificate is furnished to the lot owner by the association.

          F. A disclosure certificate shall not be required in the case of a disposition:

                (1) pursuant to court order;

                (2) by a government or governmental agency;

                (3) by foreclosure or deed in lieu of foreclosure; or

                (4) that may be canceled at any time and for any reason by the purchaser without penalty.

          G. [An association may impose reasonable charges for preparation of a disclosure certificate as required by the Homeowner Association Act.] Upon the sale, transfer or other conveyance of a lot within the association, the association or its representatives, including any management company retained by the association, may impose a reasonable transfer charge not to exceed two hundred dollars ($200)."

     SECTION 3. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2017.

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