HF 4199

as introduced - 91st Legislature (2019 - 2020) Posted on 03/05/2020 01:41pm

A bill for an act
relating to real property; creating an Office of Ombudsperson for Common Interest
Communities; creating a common interest community court calendar program;
providing for resolution of common interest community disputes; requiring
alternative dispute resolution in certain cases; providing for recovery of attorney
fees; imposing fees and appropriating money; amending Minnesota Statutes 2018,
sections 515B.3-106; 515B.4-116; proposing coding for new law in Minnesota
Statutes, chapters 45; 484; 515B.

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

Section 1.

new text begin [45.0136] OFFICE OF OMBUDSPERSON FOR COMMON INTEREST
COMMUNITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Creation. new text end

new text begin The commissioner shall establish a common interest community
ombudsperson office with the powers and duties prescribed in this section. The commissioner
shall appoint an ombudsperson who is an attorney and has experience with chapter 515B
(Minnesota Common Interest Ownership Act).
new text end

new text begin Subd. 2. new text end

new text begin Duties. new text end

new text begin The common interest community ombudsperson shall:
new text end

new text begin (1) assist unit owners in understanding their rights and responsibilities under the laws
governing common interest communities and their governing documents;
new text end

new text begin (2) assist common interest community associations and boards in carrying out their
duties;
new text end

new text begin (3) answer inquiries from members of the public regarding common interest communities;
new text end

new text begin (4) when appropriate, investigate disputes arising under chapter 515B and governing
documents, assist in resolving disputes, and provide advisory opinions regarding the rights
and responsibilities of the parties; and
new text end

new text begin (5) provide referrals to public and private agencies offering dispute resolution services.
new text end

Sec. 2.

new text begin [45.0137] COMMISSIONER TO COLLECT FEES; APPROPRIATION.
new text end

new text begin By July 1 of each year, the commissioner shall establish and collect a fee from each
association incorporated pursuant to section 515B.3-101. The fee under this section must
be based on the number of unit owners in the common interest community but in no case
shall the annual fee be less than $....... Fees due under this section are subject to a .......
percent late fee if not received by the commissioner by July 1. Fees collected under this
section are to be deposited in the state treasury and credited to a common interest community
ombudsperson account in the special revenue fund and are appropriated to the commissioner
for the operation of the office under section 45.0136.
new text end

Sec. 3.

new text begin [484.016] COMMON INTEREST COMMUNITY CALENDAR PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment; jurisdiction. new text end

new text begin (a) A program is established in the Second
and Fourth Judicial Districts to hear and determine matters related to disputes involving
rights, duties, or liabilities of unit owners and associations under chapter 515B (Minnesota
Common Interest Ownership Act) and governing documents of a common interest community
or association.
new text end

new text begin (b) Outside the Second and Fourth Judicial Districts, a district court may establish the
program described in paragraph (a) in counties that it specifies in the district.
new text end

new text begin Subd. 2. new text end

new text begin Referee. new text end

new text begin (a) The chief judge of the district court may appoint a referee for the
common interest community calendar program. The referee must be learned in the law. The
referee must be compensated according to the same scale used for other referees in the
district court. Section 484.70, subdivision 6, applies to the program.
new text end

new text begin (b) The common interest community calendar program referee shall:
new text end

new text begin (1) hear and report all matters within the jurisdiction of the program and as may be
directed to the referee by the chief judge; and
new text end

new text begin (2) recommend findings of fact, conclusions of law, temporary and interim orders, and
final orders for judgment.
new text end

new text begin Recommended orders and findings of the referee are subject to confirmation by a judge.
new text end

new text begin Subd. 3. new text end

new text begin Transmittal of court file; confirmation. new text end

new text begin Upon the conclusion of the hearing
in each case, the referee shall transmit the court file and the referee's recommended findings
and orders in writing to a district court judge. The recommended findings and orders of the
referee become the findings and orders of the court when confirmed by the district court
judge. The order of the court is proof of the confirmation.
new text end

new text begin Subd. 4. new text end

new text begin Review of referee orders. new text end

new text begin Review of a recommended order or finding of the
referee by a district court judge may be had by notice served and filed within ten days of
effective notice of the recommended order or finding. The notice of review must specify
the grounds for the review and the specific provisions of the recommended findings or
orders disputed. Upon receipt of the notice of review, the district court judge shall set a time
and place for the review hearing.
new text end

new text begin Subd. 5. new text end

new text begin Procedures; filing fee. new text end

new text begin (a) The chief judge of the district must establish
simplified procedures for implementation of the program, including designation of a location
for the hearings. The chief judge may also appoint other staff as necessary for the program.
new text end

new text begin (b) The filing fee for actions governed by this section is the same as the filing fee for
conciliation court actions under section 357.022.
new text end

Sec. 4.

Minnesota Statutes 2018, section 515B.3-106, is amended to read:

515B.3-106 BYLAWS; ANNUAL REPORT.

(a) A common interest community shall have bylaws which comply with this chapter
and the statute under which the association is incorporated. The bylaws and any amendments
may be recorded, but need not be recorded to be effective unless so provided in the bylaws.

(b) The bylaws shall provide that, in addition to any statutory requirements:

(1) A meeting of the members shall be held at least once each year, and a specified
officer of the association shall give notice of the meeting as provided in section 515B.3-108.

(2) An annual report shall be prepared by the association and a copy of the report shall
be provided to each unit owner at or prior to the annual meeting.

(c) The annual report shall contain at a minimum:

(1) a statement of any capital expenditures in excess of two percent of the current budget
or $5,000, whichever is greater, approved by the association for the current fiscal year or
succeeding two fiscal years;

(2) a statement of the association's total replacement reserves, the components of the
common interest community for which the reserves are set aside, and the amounts of the
reserves, if any, that the board has allocated for the replacement of each of those components;

(3) a copy of the statement of revenues and expenses for the association's last fiscal year,
and a balance sheet as of the end of said fiscal year;

(4) a statement of the status of any pending litigation or judgments to which the
association is a party;

(5) a detailed description of the insurance coverage provided by the association including
a statement as to which, if any, of the items referred to in section 515B.3-113, subsection
(b), are insured by the association; and

(6) a statement of the total past due assessments on all units, current as of not more than
60 days prior to the date of the meeting.

new text begin (d) The annual report must be accompanied by:
new text end

new text begin (1) a description of a dispute resolution procedure established by the association under
section 515B.3-122 or, if a procedure is not established, a description of the meet and confer
process under section 515B.3-123; and
new text end

new text begin (2) a summary of the alternative dispute resolution requirements of section 515B.3-124
that includes the following statement: "Failure of a unit owner to comply with the alternative
dispute resolution requirements of Minnesota Statutes, section 515B.3-124, may result in
the loss of the right to sue the association or another unit owner for enforcement of applicable
law or governing documents."
new text end

Sec. 5.

new text begin [515B.3-122] DISPUTE RESOLUTION PROCEDURE.
new text end

new text begin (a) This section applies to a dispute between an association and a unit owner involving
their rights, duties, or liabilities under this chapter or under the governing documents of the
common interest community or association. This section supplements, and does not replace,
section 515B.3-124, relating to alternative dispute resolution as a prerequisite to an
enforcement action.
new text end

new text begin (b) An association shall establish a fair, reasonable, and expeditious procedure for
resolving a dispute within the scope of this section. In developing a procedure, an association
shall make maximum, reasonable use of available local dispute resolution programs involving
a neutral third party, including community dispute resolution programs under chapter 494
and other low-cost mediation programs such as those listed on the Internet websites of the
Department of Consumer Affairs and the United States Department of Housing and Urban
Development. If an association does not establish a procedure for resolving a dispute within
the scope of this section, the process under section 515B.3-123 applies.
new text end

new text begin (c) At a minimum, a procedure established under this section must satisfy the following
requirements:
new text end

new text begin (1) the procedure may be requested in writing by either party to the dispute;
new text end

new text begin (2) the procedure must provide for prompt deadlines and state the maximum time for
the association to act on a request for the procedure;
new text end

new text begin (3) if the procedure is requested by a unit owner, the association must participate;
new text end

new text begin (4) if the procedure is requested by the association, the unit owner may elect not to
participate;
new text end

new text begin (5) if the unit owner participates but the dispute is resolved other than by agreement of
the unit owner, the unit owner may appeal to the association's board;
new text end

new text begin (6) a resolution of a dispute agreed to and signed by the parties binds the parties and is
judicially enforceable;
new text end

new text begin (7) the procedure must include a means by which the unit owner and the association
may explain their positions; and
new text end

new text begin (8) a unit owner may not be charged a fee to participate in the procedure.
new text end

Sec. 6.

new text begin [515B.3-123] MEET AND CONFER PROCESS.
new text end

new text begin (a) This section applies if an association does not otherwise establish a fair, reasonable,
and expeditious dispute resolution procedure under section 515B.3-122. Either party to a
dispute within the scope of section 515B.3-122 may request in writing that the other party
meet and confer in an effort to resolve the dispute. A unit owner may refuse a request to
meet and confer. The association may not refuse a request to meet and confer.
new text end

new text begin (b) The board shall designate a member of the board to meet and confer. The parties
shall meet promptly at a mutually convenient time and place, explain their positions to each
other, and confer in good faith in an effort to resolve the dispute.
new text end

new text begin (c) A resolution of the dispute agreed to and signed by the parties, including the board
designee acting on behalf of the association, binds the parties and is judicially enforceable
if the resolution is consistent with the authority granted by the board to its designee or is
ratified by the board.
new text end

new text begin (d) A unit owner may not be charged a fee to participate in the process.
new text end

Sec. 7.

new text begin [515B.3-124] ALTERNATIVE DISPUTE RESOLUTION REQUIRED.
new text end

new text begin (a) For purposes of this section:
new text end

new text begin (1) "alternative dispute resolution" means mediation, arbitration, conciliation, or other
nonjudicial procedure that involves a neutral party in the decision-making process. The
form of alternative dispute resolution chosen under this section may be binding or nonbinding
with the consent of the parties; and
new text end

new text begin (2) "enforcement action" means a civil action or proceeding, other than a cross-complaint,
involving rights, duties, or liabilities under this chapter or the governing documents of a
common interest community or association.
new text end

new text begin (b) An association or unit owner may not commence an enforcement action in district
court unless the parties have endeavored to submit their dispute to alternative dispute
resolution under this section. This section applies only to an enforcement action that is
solely for declaratory or injunctive relief, or for that relief in conjunction with a claim for
monetary damages not in excess of the jurisdictional limits under section 491A.01. Except
as otherwise provided by law, this section does not apply to an assessment dispute that does
not involve an assessment for a fine or to an action to enforce an agreement under section
515B.3-122 or 515B.3-123.
new text end

new text begin (c) A party to a dispute may initiate the process required by this section by serving on
the other parties to the dispute a request for resolution. The request for resolution must
include:
new text end

new text begin (1) a brief description of the dispute;
new text end

new text begin (2) a request for alternative dispute resolution;
new text end

new text begin (3) a notice that the party receiving the request for resolution is required to respond
within 30 days of receipt or the request will be deemed rejected; and
new text end

new text begin (4) if the party on whom the request is served is a unit owner, a copy of this section.
new text end

new text begin Service of the request for resolution may be by personal delivery, first-class mail, express
mail, facsimile transmission, or other means reasonably calculated to provide the party on
whom the request is served actual notice of the request. A party on whom a request for
resolution is served has 30 days following service to accept or reject the request. If a party
does not accept the request within that period, the request is deemed rejected by the party.
new text end

new text begin (d) If the party on whom a request for resolution is served accepts the request, the parties
shall complete the alternative dispute resolution within 90 days after the party initiating the
request receives the acceptance, unless this period is extended by written stipulation signed
by all parties. The costs of the alternative dispute resolution must be borne by the parties.
new text end

new text begin (e) The statute of limitations for commencing an enforcement action is tolled during the
following periods:
new text end

new text begin (1) the period provided in subsection (c) for response to a request for resolution; and
new text end

new text begin (2) if the request for resolution is accepted, the period provided by subsection (d) for
completion of alternative dispute resolution, including any extension of time stipulated to
by the parties.
new text end

new text begin (f) A party commencing an enforcement action shall include and file with the initial
pleading a certificate stating that one or more of the following conditions is satisfied:
new text end

new text begin (1) alternative dispute resolution has been completed in compliance with this section or
a request for resolution was rejected by the other party;
new text end

new text begin (2) one of the other parties to the dispute did not accept the terms offered for alternative
dispute resolution; or
new text end

new text begin (3) preliminary or temporary injunctive relief is necessary or there is an immediate threat
of irreparable harm.
new text end

new text begin Failure to file a certificate is grounds for dismissal unless the court finds that dismissal of
the action for failure to comply with this section would result in substantial prejudice to one
of the parties.
new text end

new text begin (g) In an enforcement action in which fees and costs may be awarded pursuant to section
515B.4-116, the court, in determining the amount of the award, may consider whether a
party's refusal to participate in alternative dispute resolution before commencement of the
action was reasonable.
new text end

Sec. 8.

Minnesota Statutes 2018, section 515B.4-116, is amended to read:

515B.4-116 RIGHTS OF ACTION; ATTORNEY'S FEES.

(a) In addition to any other rights to recover damages, attorney's fees, costs or expenses,
whether authorized by this chapter or otherwise, if a declarant, an association, or any other
person violates any provision of this chapter, or any provision of the declaration, bylaws,
or rules and regulations any person or class of persons adversely affected by the failure to
comply has a claim for appropriate relief. Subject to the requirements of section 515B.3-102,
the association shall have standing to pursue claims on behalf of the unit owners of two or
more units.

(b) The court may award reasonable attorney's fees and costs of litigation to the prevailing
party. new text begin The court shall award reasonable attorney fees and costs to the prevailing party in an
action to enforce an agreement under section 515B.3-122 or 515B.3-123 or to a unit owner
who is the prevailing party in an action arising out of the failure of an association to comply
with section 515B.3-107, subsection (a). new text end Punitive damages may be awarded for a willful
failure to comply.

(c) As a condition precedent to any construction defect claim, the parties to the claim
must submit the matter to mediation before a mutually agreeable neutral third party. For
the purposes of this section, mediation has the meaning given under the General Rules of
Practice, rule 114.02 (7). If the parties are not able to agree on a neutral third-party mediator
from the roster maintained by the Minnesota Supreme Court, the parties may petition the
district court in the jurisdiction in which the common interest community is located to
appoint a mediator. The applicable statute of limitations and statute of repose for an action
based on breach of a warranty imposed by this section, or any other action in contract, tort,
or other law for any injury to real or personal property or bodily injury or wrongful death
arising out of the alleged construction defect, is tolled from the date that any party makes
a written demand for mediation under this section until the latest of the following:

(1) five business days after mediation is completed; or

(2) 180 days.

Notwithstanding the foregoing, mediation shall not be required prior to commencement
of a construction defect claim if the parties have completed home warranty dispute resolution
under section 327A.051.

(d) The remedies provided for under this chapter are not exclusive and do not abrogate
any remedies under other statutes or the common law, notwithstanding whether those
remedies are referred to in this chapter.