HF 2711

1st Engrossment - 92nd Legislature (2021 - 2022) Posted on 03/30/2022 01:05pm

A bill for an act
relating to common interest communities; establishing procedures for levying a
fine or limited assessment or initiating a foreclosure; amending Minnesota Statutes
2020, section 515B.3-102.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2020, section 515B.3-102, is amended to read:

515B.3-102 POWERS OF UNIT OWNERS' ASSOCIATION.

(a) Except as provided in subsections (b), (c), (d), deleted text begin and deleted text end (e), new text begin (f), (g), and (h) new text end and subject
to the provisions of the declaration or bylaws, the association shall have the power to:

(1) adopt, amend and revoke rules and regulations not inconsistent with the articles of
incorporation, bylaws and declaration, as follows: (i) regulating the use of the common
elements; (ii) regulating the use of the units, and conduct of unit occupants, which may
jeopardize the health, safety or welfare of other occupants, which involves noise or other
disturbing activity, or which may damage the common elements or other units; (iii) regulating
or prohibiting animals; (iv) regulating changes in the appearance of the common elements
and conduct which may damage the common interest community; (v) regulating the exterior
appearance of the common interest community, including, for example, balconies and patios,
window treatments, and signs and other displays, regardless of whether inside a unit; (vi)
implementing the articles of incorporation, declaration and bylaws, and exercising the
powers granted by this section; and (vii) otherwise facilitating the operation of the common
interest community;

(2) adopt and amend budgets for revenues, expenditures and reserves, and levy and
collect assessments for common expenses from unit owners;

(3) hire and discharge managing agents and other employees, agents, and independent
contractors;

(4) institute, defend, or intervene in litigation or administrative proceedings (i) in its
own name on behalf of itself or two or more unit owners on matters affecting the common
elements or other matters affecting the common interest community or, (ii) with the consent
of the owners of the affected units on matters affecting only those units;

(5) make contracts and incur liabilities;

(6) regulate the use, maintenance, repair, replacement, and modification of the common
elements and the units;

(7) cause improvements to be made as a part of the common elements, and, in the case
of a cooperative, the units;

(8) acquire, hold, encumber, and convey in its own name any right, title, or interest to
real estate or personal property, but (i) common elements in a condominium or planned
community may be conveyed or subjected to a security interest only pursuant to section
515B.3-112, or (ii) part of a cooperative may be conveyed, or all or part of a cooperative
may be subjected to a security interest, only pursuant to section 515B.3-112;

(9) grant or amend easements for public utilities, public rights-of-way or other public
purposes, and cable television or other communications, through, over or under the common
elements; grant or amend easements, leases, or licenses to unit owners for purposes authorized
by the declaration; and, subject to approval by a vote of unit owners other than declarant
or its affiliates, grant or amend other easements, leases, and licenses through, over or under
the common elements;

(10) impose and receive any payments, fees, or charges for the use, rental, or operation
of the common elements, other than limited common elements, and for services provided
to unit owners;

(11) impose interest and late charges for late payment of assessments and, after notice
and an opportunity to be heard before the board or a committee appointed by it, levy
reasonable fines for violations of the declaration, bylaws, and rules and regulations of the
association;

(12) impose reasonable charges for the review, preparation and recordation of
amendments to the declaration, resale certificates required by section 515B.4-107, statements
of unpaid assessments, or furnishing copies of association records;

(13) provide for the indemnification of its officers and directors, and maintain directors'
and officers' liability insurance;

(14) provide for reasonable procedures governing the conduct of meetings and election
of directors;

(15) exercise any other powers conferred by law, or by the declaration, articles of
incorporation or bylaws; and

(16) exercise any other powers necessary and proper for the governance and operation
of the association.

(b) Notwithstanding subsection (a) the declaration or bylaws may not impose limitations
on the power of the association to deal with the declarant which are more restrictive than
the limitations imposed on the power of the association to deal with other persons.

new text begin (c) No less than 15 days before levying a fine pursuant to subsection (a)(11), levying a
limited assessment, or initiating a foreclosure, an association must provide written notice
to a unit owner that:
new text end

new text begin (1) indicates the amount, date, and reason for the levy or foreclosure;
new text end

new text begin (2) identifies the violation for which a fine is being levied and the specific section of
the declaration, bylaws, or rules and regulations allegedly violated;
new text end

new text begin (3) states that all unpaid fines and assessments are liens which, if not satisfied, could
lead to foreclosure of the unit;
new text end

new text begin (4) describes the right of the unit owner to be heard by the board or a committee appointed
by the board;
new text end

new text begin (5) states that if the assessment, fees, charges, or fine is not paid, the amount owed may
increase as a result of the imposition of attorney fees and other costs of collection; and
new text end

new text begin (6) informs the unit owner that foreclosure prevention and other homeownership
assistance is available from, and includes the contact information for, the Minnesota
Homeownership Center.
new text end

new text begin (d) No attorney fees are chargeable on the unit owner for the 15-day period and, if
applicable, any period up to and including the time a decision is rendered by the board, or
a committee appointed by the board, after a hearing.
new text end

new text begin (e) For the purposes of this section "limited assessment" means an assessment for an
expense other than common expenses or special assessments that is limited to a particular
unit owner.
new text end

deleted text begin (c) deleted text end new text begin (f) new text end Notwithstanding subsection (a), powers exercised under this section must comply
with section 500.215.

deleted text begin (d) deleted text end new text begin (g) new text end Notwithstanding subsection (a)(4) or any other provision of this chapter, the
association, before instituting litigation or arbitration involving construction defect claims
against a development party, shall:

(1) mail or deliver written notice of the anticipated commencement of the action to each
unit owner at the addresses, if any, established for notices to owners in the declaration and,
if the declaration does not state how notices are to be given to owners, to the owner's last
known address. The notice shall specify the nature of the construction defect claims to be
alleged, the relief sought, and the manner in which the association proposes to fund the cost
of pursuing the construction defect claims; and

(2) obtain the approval of owners of units to which a majority of the total votes in the
association are allocated. Votes allocated to units owned by the declarant, an affiliate of the
declarant, or a mortgagee who obtained ownership of the unit through a foreclosure sale
are excluded. The association may obtain the required approval by a vote at an annual or
special meeting of the members or, if authorized by the statute under which the association
is created and taken in compliance with that statute, by a vote of the members taken by
electronic means or mailed ballots. If the association holds a meeting and voting by electronic
means or mailed ballots is authorized by that statute, the association shall also provide for
voting by those methods. Section 515B.3-110(c) applies to votes taken by electronic means
or mailed ballots, except that the votes must be used in combination with the vote taken at
a meeting and are not in lieu of holding a meeting, if a meeting is held, and are considered
for purposes of determining whether a quorum was present. Proxies may not be used for a
vote taken under this paragraph unless the unit owner executes the proxy after receipt of
the notice required under subsection deleted text begin (d) deleted text end new text begin (g) new text end (1) and the proxy expressly references this notice.

deleted text begin (e) deleted text end new text begin (h) new text end The association may intervene in a litigation or arbitration involving a construction
defect claim or assert a construction defect claim as a counterclaim, crossclaim, or third-party
claim before complying with subsections deleted text begin (d) deleted text end new text begin (g) new text end (1) and deleted text begin (d) deleted text end new text begin (g) new text end (2) but the association's
complaint in an intervention, counterclaim, crossclaim, or third-party claim shall be dismissed
without prejudice unless the association has complied with the requirements of subsection
deleted text begin (d) deleted text end new text begin (g) new text end within 90 days of the association's commencement of the complaint in an intervention
or the assertion of the counterclaim, crossclaim, or third-party claim.